All our other counterparties have agreed this

Among the lies habitually told in polite society today, few are more barefaced than “all our other counterparties have agreed this”. It ranks in outrage beside “your call is important to us”, “no, your bum doesn’t look big in that”, “we are taking back control” and “I can make America great again”.

It is offered in support of a contractual term which makes no commercial sense, is unlikely to achieve its intended purpose and might, in extreme cases, ruin your firm altogether.

When you make this point your salesperson, a wantonly gullible individual prone to believing anything his client says or does, will begin hyperventilating at the thought of “legal” resisting this “verbiage” and torpedoing the aspirations of his “platinum client”. For his part, the client will feign complete mystification: “But,” he will shrug, “all our other counterparties have agreed this.”

Let all your klaxons blare.

It is a preposterous lie, of course, and must be quickly picked apart. In doing so you will win no thanks from your salesperson, who will volubly hate you for your trouble: yet, one of the great pleasures of advocacy is frustrating the carnal designs of the ungrateful for their own good. For if you had a better reason for insisting on a commercial term — and any reason would be better than that — why would you not mention it?

You can rely on the in-house lawyer’s stock answer – “last I heard, we hadn’t outsourced our internal control function to our competitors” – and that should be the end of it. Or you could call your client’s bluff. Ask which of your peers has agreed such suicidal terms. Ask for copies of the contracts in which they did so.

This will outrage your client (and, on his behalf, your salesperson) but he really has only himself to blame: he brought it up. He can hardly appeal to the confidentiality of contracts which, in his previous breath, he was happy to tell you all about.

Now another broker may have agreed these terms. Perhaps it really was as supine or foolish as your client is asking you to be: it is always nice to know your competitors’ weaknesses. But that doesn’t mean you should follow suit. Most likely, the concession was subject to a giant quid pro quo your counterparty has neglected to mention. And the broker may have only appeared to concede the point, skilfully burying a countermeasure in a schedule, side letter or a crafty double negative in the definitions section.

There are many commercial and legal reasons to agree to unpalatable terms. That “all your competitors have agreed it” is not one of them.

disclaimer: The descriptions of salespeople in this article are all fictional. Any resemblance to any salesperson, alive or dead, is entirely coincidental. Like, totally. Published on LinkedIn