Plain English - Organise

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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.

It is easier to start with something genuinely awful, like a Linklaters MTN Programme or something like that. But it would probably work as well if you are starting with a fresh piece of paper.

Organise

Tone

Client-centric: Structure your document to be as persuasive as possible. Persuasive to who? The client. You do not need to persuade your own risk department to sign your own document. You do need to persuade the customer to sign it. Therefore:

• Make the customer feel wanted.
  • Be enthusiastic: Little things: write, “Welcome!” in big, friendly letters at the start. Have a recital recording how thrilled your firm is to be doing business with it. Why not?
  • Be inclusive: Why write in the stiff, formal third person singular, when you can write in engagingly in the first and second person: “we” and “you”, not “Lender” and “Client”.
  • Don’t be confrontational: Avoid writing in a needlessly hostile, legalistic way. Yes, it may fill you with a sort of stentorian delight to say, “Lender shall at any time, without notice and without regard, thought or advertence of any type, kind or variety to the adverse economic consequences of such action on Client, however severe, be entitled to... ”, but it does not convey anything more searching than, “we may...”. Entitled! Why on earth would you say you were entitled if you didn’t have to? Similarly:
    • Instead of, “the Client shall be obligated immediately and without delay...”, say, “you must promptly ...”
    • Instead of, “in the event that Client fails to ...,” say, “if you do not ...”.
    • Instead of, “the client shall forthwith upon written demand indemnify Lender” say, “you must promptly reimburse us if ...”.

Order

• Fun stuff first: Put terms that are most important to the client first. What are you 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, when it sees the draft, “YES!” Tick! Make its second reaction also a TICK! Have the customer thinking happy thoughts about you and this document.
• Nasty stuff last: Put the terms you care most about — your fees, default events, indemnities, what could happen if the customer blows up, etc. — last (or at least, last before the boring boilerplate). Legally, the sequence of the clauses doesn’t matter. Psychologically, it matters a lot. Put the fun stuff first. Have the customer in a maximum, dopamine-flooded haze of benign fondness towards you by the time it gets to the events of default. It won’t last, but the more good will you have, the better you will fare.

Boilerplate: Organise the boilerplate the same way.

• General principles: Where there are general principles that clients might like (“commercial reasonableness” standard of prudent conduct, general application of laws 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: see below.
• Go easy on the boilerplate: Unless you could incur massive financial or criminal liability under the contract (i.e., it is a primary financing, lending or derivative contract) dispense with boilerplate. Avoid finance contract envy. 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? For an NDA?

Logical structure

The logical structure of a legal document is important — like computer code it should be clearly numbered and signposted. The discipline of paying attention to the logical structure helps you to write simply and elegantly. It forces you to organise yourself. it helps a reader navigate, which reduces review time. These are all commercial priorities. Therefore:

• Multilevel list: Number every sub-paragraph using a coherent multilevel list structure (for how, see “formatting” below). There should be no floating paragraphs without a number. This means you will need to structure your sentences so their logic only branches at the end. Have an elegant and intuitive numbering scheme, using digits, letters and romans, upper case and lower case (but not bullets: there must be a logical sequence to the numbers). Having a paragraph level “4.3.4.1.2” is not elegant or intuitive. We prefer:

1 Title
1.1 Sub-clause level 1

(a) Sub-clause level 2

(i) Sub-clause level 3

(A) Sub-clause level 4

(I) Sub-clause level 5

(1) Sub-clause level 6

• Optimise the number of levels: Unless you are writing a monster document, you should not need to get anywhere near 7 sub-clause levels. If you do, this is a fair sign your logic is over-engineered. Don’t just collapse sub-paragraphs to reduce the number of sub-levels: rewrite the logic of the paragraph so you don’t need so many sub-levels.

Create a logical structure

For longer documents, break your document into sections and subsections (not just clauses) and set them out clearly, on separate pages. Make it as easy as possible to navigate. The discipline of putting a superstructure over your agreement will help you uncover redundancies and contradictions.

Separate the boilerplate from the negotiated terms

Don’t mix up the dull stuff that you have to have because — well, everyone knows you have to have it — from the vital economic stuff that makes the contract tick, and over which prolonged jousting is inevitable. Why? Because if you don’t you can be guaranteed some dreary fusspot on the other side will launch into a broadside on your standard form custody terms to no obvious end other than his own parochial victory. Don’t invite him in to do that.

For frequently-negotiated standard forms, consider putting your standard terms in an entirely different document 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 once the document is in live:

• It is simple to see a given customer’s deviations from the standard, because they are listed in the Elections document. There is no ploughing through a 60 page scanned .pdf from 2002 wondering what the standard was, and what bits of it were amended.
• 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. We call this “throat-clearing”.
• 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.

See also

• Purpose — why a legal contract does different things and different times for different constituencies.