If in doubt, stick it in: Difference between revisions

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So: better advice: ''[[murder your darlings]]''. Or, as our brethren [[legal eagle]]s would say, [[murder your darlings|subject one’s darlings, or procure that such darlings are subjected to, culpable homicide]].
So: better advice: ''[[murder your darlings]]''. Or, as our brethren [[legal eagle]]s would say, [[murder your darlings|subject one’s darlings, or procure that such darlings are subjected to, culpable homicide]].


There are two kinds of pointless things we habitually stick in contracts: absurd asks by the risk team, which all at the coalface know will be just as habitually rejected by any counterparty advisor with a pulse, even if the senior risk team draw come kind of delusional comfort from the fact they such terms are being sought at all; the other is matters of tedious compliance — be they accommodations of [[Prime brokerage disclosure annex|misconceived pedantries buried in developing regulation]] or internal [[policy|policy overreactions]] brought about during the recovery process from [[blunt trauma]] — in either case resulting in gnomic confections piped into the back end of your contract templates like so much kitchen dirt swept under a rug, only to fossilise there, unloved, undisturbed, until overlaid with yet more scar tissue.
There are two kinds of pointless things we habitually stick in contracts.
 
The first: absurd aspirations of the [[credit team]]. All those at the coalface know these will be rejected, just as habitually, by any counterparty advisor having a pulse. Yet the credit team seems to draw strength and even delusional comfort from knowing they are being sought at all. We know not why.
 
The second: matters of tedious internal compliance — be they accommodations of [[Prime brokerage disclosure annex|the manifold misconceived pedantries of bad regulation]] or internal [[policy|policy overreactions]] sustained in the aftermath of some collapse or other blunt trauma in the markets in times gone by. If you wonder why [[terms of business]] are such lengthy, irrational, illogical, random tracts, this is the reason. They are a graveyard for random matters of tedious compliance. Can’t we just shove something in the tobs? is a refrain the legal department will hear once a week. No matter how strong his heart or earnest his resolution, the poor fellow responsible for the TOBs will eventually lose the will to resist.<ref>You may detect the tang of personal experience here. I cannot deny it.</ref>
 
In either case the result is the same: resulting in gnomic confections piped into the back end of your contract templates like so much kitchen dirt swept under a rug, only to fossilise there, unloved, undisturbed, until overlaid with yet more scar tissue.


===Worked example===
===Worked example===

Revision as of 14:43, 20 October 2022

Negotiation Anatomy™

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Also known as Casanova’s advice or the credit officer’s refrain, “If in doubt, stick it in” — a blunt finger-post to the nearest negotiation oubliette — is an admonition that rings daily around the cloistered spaces of every institution but is only offered, in these pages, with a generous helping of irony.

“Well, it can’t hurt to ask.”

But it can hurt to ask. Every time you ask, a little part of your negotiation team dies.

So: better advice: murder your darlings. Or, as our brethren legal eagles would say, subject one’s darlings, or procure that such darlings are subjected to, culpable homicide.

There are two kinds of pointless things we habitually stick in contracts.

The first: absurd aspirations of the credit team. All those at the coalface know these will be rejected, just as habitually, by any counterparty advisor having a pulse. Yet the credit team seems to draw strength and even delusional comfort from knowing they are being sought at all. We know not why.

The second: matters of tedious internal compliance — be they accommodations of the manifold misconceived pedantries of bad regulation or internal policy overreactions sustained in the aftermath of some collapse or other blunt trauma in the markets in times gone by. If you wonder why terms of business are such lengthy, irrational, illogical, random tracts, this is the reason. They are a graveyard for random matters of tedious compliance. Can’t we just shove something in the tobs? is a refrain the legal department will hear once a week. No matter how strong his heart or earnest his resolution, the poor fellow responsible for the TOBs will eventually lose the will to resist.[1]

In either case the result is the same: resulting in gnomic confections piped into the back end of your contract templates like so much kitchen dirt swept under a rug, only to fossilise there, unloved, undisturbed, until overlaid with yet more scar tissue.

Worked example

A credit officer murmurs, distractedly, “well I'm not going to die in a ditch about it, but at least let’s give it a try.”
“Give what a try?”
“Well, say we exclude contractual liability except for loss arising from our gross negligence?”
“'gross negligence? But surely no sensible client will accept that?” you say.[2]
The risk officer shrugs. “Perhaps so”. But why don’t we give it a try?

Because asking for a term you don’t need but to which a counterparty will object has an actual cost: The time and devotion of negotiation and, via the circle of escalation, risk management resources to resolve the client objection. You can only clear it by persuading the client to accept the term, persuading your risk management team to live without it or walking away altogether.

You will expend some time and resource wherever the client objects, even if it immediately drops the point. The longer that takes the more expensive it will be. That cost may be de minimis per negotiation, but across many negotiations across a portfolio de minimis costs add up and contribute to the total cost to the organisation of the onboarding process. That is not de minimis: just ask the head of the documentation unit how often chief operating officer hungrily regards her team with a view to offshoring, rightsizing, automating or otherwise eviscerating it.

If “give it a try” has a benefit at all, has a delayed, remote and contingent benefit. The right, if you do get it, will only ever have any value in the unknown future if the circumstances prevail that entitle you to exercise the right.

See also

References

  1. ↑ You may detect the tang of personal experience here. I cannot deny it.
  2. ↑ Conventional wisdom has it that US counterparties will unblinkingly accept gross negligence standard. Which makes you wonder about conventional wisdom in America. But anyway.
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