Plain English - Organise
No-one needs to be told the business imperatives for clear, attractive drafting anymore. So, here's a practical guide to how to do it. Think of this as catharsis: like weeding; like pruning; like throwing out all your old rubbish and sprucing up your house because some clients are coming to stay.
Order
Client-centric: Structure the document to be as persuasive as possible to the client. You do not need to persuade us to sign this document. You need to persuade the customer to sign it. Therefore:
- Fun stuff first: Put terms that are most important to the client first. What are we going to do for the customer? What are the customer’s key benefits? What are its objectives? Get this in first. Make the customer’s first reaction, “YES!”
- Nasty stuff last: Put terms UBS cares most about — our fees, default events, indemnities etc — last (or at least, last before the boring boilerplate). Remember: legally, the sequence of the clauses doesn’t matter. Psychologically, the order matters a lot. Put the fun stuff first.
- Make the customer feel wanted.
- Little things: write, “Welcome to UBS” in big, friendly letters at the start. Why not?
- Write inclusively: “we will” and “you must”, and not “UBS shall be entitled to” and “Client shall be obliged to”. Entitled! Why would you say the firm is entitled?
- Express things in a non-confrontational way.
- Instead of "in the event that Client fails to ...,” say, “if you do not ...”.
- Instead of “the client shall forthwith upon written demand indemnify UBS” say, “you must promptly reimburse us ...”.
Boilerplate: Organise the boilerplate the same way.
- General principles: Where there are general principles that clients might like (“commercial reasonableness” standards, applicable rules and so on) put these first.
- Interpretation: Always put definitions last, in a clearly marked out section starting on a new page. But be sparing with definitions.
- Go easy on the boilerplate: Unless UBS could incur massive liability or exposure under the contract (i.e., under a primary financing, lending or derivative contract) dispense with boilerplate. Do you need all those reps? Entire agreement? Counterparts clause? No assignment? Severability? Rights cumulative? Third Party Rights Limitations? Do you really need all that?
Formatting
Microsoft Word: Learn how to use paragraph-formatting, character-formatting, multilevel lists, auto-numbering and style formatting in MS Word. It is hard, somewhat counter-intuitive, but if you learn it, it makes formatting and organising paragraphs so much easier.
- Multilevel lists are the key to your document. Every paragraph - even un-numbered ones - should be part of a single unified multilevel list. You can control indents, numbering, and number formatting from the "Define Multilevel List" function.
- Styles are very powerful.
- Paragraph styles: A paragraph style can be associated with an multilevel list level, and can control page-breaks, paragraph spacing before and after, and following paragraph styles.
- Character styles: A character style can specify not just formatting, but language and proofing etc. Useful if you have lots of German words in your document (eg in a German law insolvency provision)
- Outline view: If you set up nested multilevel styles, learn to organise in outline view - you can quickly move around whole sections of documents by dragging and dropping.
Typography: Think about margins, line spacing, font and font size. Making the document easy to read, and to follow its logic not only helps the reader but enforces a logical structure on you as the writer.
- White space: White space is good. Unbroken tracts of unpunctuated text are bad. Unless you are using columns, ensure the margins are generous.
- Font: choose an easy-to-read font. Fortunately, UBS house font Frutiger 45 light is excellent, so use it.
- Paragraphs:
- General format: Format your paragraphs to have extra space at the end. 6pt is usually enough.
- Break into nested sub-paragraphs. Breaking a long paragraph into a shorter one exposes its logic to a skim-reader, and makes it far easier to navigate. Consider:
| Following an enforcement of the Security, the Noteholders rights to be paid amounts due under the Notes will be subordinated to (i) the Issuer’s share of all taxes owing by the Issuer, (ii) the Trustee’s fees, costs, charges, expenses and liabilities; (iii) certain amounts owing to the Agents and the Corporate Service Provider; (iv) fees of the Disposal Agent, Calculation Agent and/or Collateral Manager, any amounts owing to the Hedge Counterparty under the Hedging Agreement and any amounts owing to the Vendor under the Collateral Sale Agreement and (v) any other claims as specified in the Conditions as may be amended by the Issue Deed relating to the relevant Series of Notes, that rank in priority to the Notes. Such subordination could significantly reduce the amount of available proceeds receivable by the Noteholders following the liquidation of the Collateral or on an enforcement of the Security. |
- Compared with:
Following an enforcement of the Security, the Noteholders rights to be paid amounts due under the Notes will be subordinated to:
Such subordination could significantly reduce the amount of available proceeds receivable by the Noteholders following the liquidation of the Collateral or on an enforcement of the Security. |
- Client-centricNotice in particular that as you break it up you notice that Hedge Counterparty Amounts and Vendor amounts weren’t broken out properly in the original drafting.
- Consider columns: Yes, that requires being a ninja at MS Word, but shorter lines of text are easier to read. Especially for “standard terms” documents. It also forces you to keep paragraphs shorter.
Layout
For longer documents, break your document into sections and subsections (not just clauses) and set them out clearly, on separate pages. (For a good example, see the GFS Terms). Make it as easy as possible to navigate. The discipline of putting a superstructure over your agreement will help you uncover redundancies and contradictions.
General Terms + Elections structure: For frequently-negotiated standard forms, consider separating the standard terms from the frequently-negotiated economic and legal terms, and having the customer agreement as a termsheet style “Elections” document. This has a number of practical advantages when the document is in use:
- It is very easy to see a given customer’s deviations from the standard, because they are listed in the Elections document
- It discourages deviations from the standard form, since it is a hassle to transcribe them, whereas it is easy and (de rigueur amongst a certain breed of lawyer) to make minor and formalistic comments inline in an integrated long-form agreement.
- It enables systemic/automated monitoring of bespoke terms because they are set out in a “database” format in a separate document. Where data suggests the same amendment is being made regularly, this enables periodic updates to the underlying standard form to incorporate the amendment, thus again standardising the document and further discouraging deviations.
Note that it is KEY to the success of this strategy that you vigorously — and regularly — simplify, mark-to-market the standard terms. If they are not reasonable, and not very close to your walkaway points, you are asking for a lot of pointless negotiation that will pollute the quality of your client document portfolio. It is like going to the gym: YOU HAVE TO WORK AT IT.
OK — we haven’t even started changing the text yet. That comes next.
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