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Contract Drafting Tips – Part 1

Over the years I’ve learned a few contract drafting tips that others might find useful.   These are “high-level” concepts, not necessarily specific “how-tos”, but rather a few tips that I’ve found helpful when working on contracts.

1. Start with the Problem Not the Precedent: Don’t Let The Tail Wag The Dog.
Having a huge library of work precedent can be a great thing at drafting time. It can be a terrific convenience and an incredibly useful tool for the lawyer, and a big advantage to the client in several ways.

That said, a wise corporate mentor once taught me to always start the drafting process with two things: a big set of ears and a blank piece of paper (today, a blank screen). That is to say: don’t start with the work precedent and work “custom” details back into it. Instead, start with the client’s specific needs first, take the time to listen carefully and completely understand the business rationale and the client’s goals underlying the document at issue, and then figure out how your existing work precedent may facilitate accomplishment of those goals.

The distinction is subtle, but important. By starting each drafting project with a focus squarely on the fundamental business goals at play, those business goals will always remain central. The key business terms never get overlooked or (unintentionally) prioritized on an equal level with all the other “standard” terms that can apply to a similar transaction.

Spending the majority of my career on the “client” side of the attorney/client relationship, I can confidently say that there are few things more professionally annoying than getting a draft document from counsel that doesn’t get the basic business terms right. The 3-page single-spaced indemnity clause is perfect in every (marginally) relevant way – completely bulletproof! – yet the payment terms are wrong, or the key reps are missing, or a critical unique post-closing covenant has been omitted.

2. Use “First Drafts” As Precedent, Not Final Signed Documents.
This is a trick first taught to me by Professor George Zimmerman, a legendary business attorney in WNY whose “Counseling Small Business” seminar was absolute gold for every aspiring business lawyer at SUNY-Buffalo Law School.

Why look to first drafts? Because final versions tend to reflect all sorts of custom, deal-specific “11th hour” concessions that are made at or immediately prior to signing. In addition, execution copies tend to omit provisions that got dropped during negotiations, or they contain dramatically edited versions of provisions that started off far more comprehensive or generalized. In sum, the earliest version of a contract will provide you with the most complete unbiased guidance upon which to craft your current deal.

3. Don’t Get Boxed In.   Ask Yourself: What’s Missing?
When you’re the recipient of someone else’s first draft, it’s easy to immediately knee-jerk and start picking away at the language presented.  The trouble with that?  By doing so, it’s as though you’ve already confirmed that everything that needs to be covered has been covered, and we’re just negotiating over language. Don’t automatically assume that what has been provided is a complete document.

Instead, before you start editing, start clean and ask: what must be in this document? First, make sure the key points that need to be there are there, whether those points have been drafted to your satisfaction or not – then start editing. These “errors of omission” are easy to make, and unfortunately can have big adverse consequences.

Don’t get “boxed in” by what’s currently on the page.

The final 2 tips to come…in the meantime, what are some of the best contract drafting go-tos that you’ve picked-up over the years?