If you have to ask the litigation department if something’s okay, it is probably not okay.

From The Jolly Contrarian
Jump to navigation Jump to search


A hearty collection of the JC’s pithiest adages.
Index: Click to expand:

Comments? Questions? Suggestions? Requests? Insults? We’d love to 📧 hear from you.
Sign up for our newsletter.

The JC has a view that, when trying to figure out what a contract means, if you have to ask the litigation department if something’s okay, it is probably not okay. Even if the litigation department says it is okay.

He gets to that point as follows:

  1. We are interpreting our rights and obligations under a legal agreement — probably a relationship contract — with a customer we presume is valuable enough to want to keep.[1]
  2. To “ask litigation for a view” on the meaning of a contract is, tacitly, to acknowledge the fear that the customer may object to our desired interpretation violently enough to launch legal action against us.
  3. It is a truth universally acknowledged that no sane merchant launches legal action unless it is royally pissed off.
  4. If we have in mind that a likely consequence of adopting our desired interpretation is (i) the customer might sue us, but (ii) after a full trial, we would win, then we are missing the point rather expressively.
  5. The primary mischief here is not losing in court, nor even being sued by a valuable customer, but royally pissing off a valuable customer.
  6. Customers who are actively pursuing you through the courts to enforce what they believe to be their rights — whether they are ultimately mistaken about that or not — tend not to award as much business as those who are not.

Here we call to attention our old friend the commercial imperative. Commerce is a long game, friends. There very few cases indeed where the short term benefit of winning on this point, now, outweighs the longer reward of ongoing revenue, gladly imparted, by a happy customer. These rule-proving exceptions come about where (i) you don’t particularly care for the customer, though even here, there are more effective ways of declining to do business with it;[2] or (ii) customer, though hitherto valued, wanted and cared for, owes you a lot of money, and is midway through a swan dive whose outcome seems certain to involve burrowing into the side of a hill at which point all that money it owes you will go up in smoke.

Exceptions to the rule

Because the litigation department’s frame of reference is “what will the outcome be if this is litigated?” — whereas any sensible person’s perspective is “how, humanly, can we avoid this being litigated?” we can see that any answer you get from the litigation department will be tainted by the agency problem. Litigators want litigation; they like it. Litigation is what they do. It is in their nature.

Since litigation is, by any other measure, madness, we should expect anyone who has given their professional life to it to be a source of bad advice. Thus, just as whatever the litigation department thinks is okay”, is probably not okay (if you had to ask the litigation department about it, you kind of knew it wasn’t okay, right?); equally, whatever the litigation department tells you is not okay is probably fine.

We see this when asking for derogations from a (litigation department-imposed) policy insisting that, for example, all sovereigns with whom the firm contracts must waive their immunity, or that all offshore customers should appoint process agents, even for terms of business or an NDA under which you are certain never to sue them.

Litigation will say no anyway, because it would bugger things up if you did.

Rule and corollary therefore:

See also

References

  1. If you have in mind a customer for whom you care not a row of buttons, better ask yourself why this person is your customer in the first place.
  2. For example, by declining to to business with it.