The Worst Business Lawyer Habit: "Punchbowling"

Written by Mike Moore

Aug 19, 2013

peinlichIn 5 Bad Habits of Business Lawyers we listed some ways that business lawyers can actually destroy value in business transactions. One of those ways – a personal favorite – was what we colloquially labeled as “putting a turd in the punch bowl”; that is, inventing difficult issues or giving (likely) trivial issues the same weight as key business terms.

Last night I was treated to an example that confirms “punchbowling” is, sadly, still alive and well.

A close friend of mine, someone who provides consulting services to entrepreneurs (read: a terrific business development contact for a lawyer), called me in a mild panic. He was pitching a new prospective client, a larger client than usual – big enough to employ in-house counsel – and was floored when his basic client engagement letter was returned to him almost unrecognizable. What started as a simple, fair, customary 2-page engagement letter was turned into an 8 page single-spaced monstrosity. Visually it was as though a living corporate formbook had too many words to drink, got sick, and barfed all over this document. Complex, 20+ line indemnity clauses, sneaky technical terms that we business lawyers know can be very tricky (“best efforts”, “time is of the essence”, “reasonably likely to impair”, etc.). It was the kind of stuff which might be appropriate if my friend were in, say, the business of juggling chainsaws at corporate family picnics instead of consulting.

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By the way, the few terms I might’ve expected some reasonable push back on (key, operational business terms – the stuff that is likely to actually matter) passed by without much comment at all. Sure, it’s possible the in-house lawyer was told to lay off the business terms, but in my experience that’s not how it probably went down. To the contrary, I’ve found that the business lawyers who tend to obsess over the minutiae are usually the same lawyers who miss the things that ultimately matter most. 15 absurd edits to a boilerplate “counterparts” clause while payment triggers and substantive deliverables pass by without comment.

In the end, this in-house lawyer managed to introduce so many potential complicated (and likely irrelevant) issues that it was virtually impossible to even think them all through. As I write this, this deal – which 24 hours earlier had the makings of a win-win – is DOA.

My friend is left wondering: does his business contact simply not know how to properly manage in-house legal? Is this truly an accurate overall indication of how this company works? And that in-house lawyer whose name appeared next to all those absurd, overlawyered, blacklined comments: that’s a name that won’t easily be forgotten among my friend and his network of (literally) hundreds of entrepreneurs.

Need a better way to manage your practice?

The best business lawyers understand the primary objectives of a deal, communicate and assess the relative risks and benefits, and advise in a practical, deal-friendly way. They add value by bringing perspective, balance and clarity. They prioritize helping the parties get the deal done over showing off their intellectual superiority in constructing verbose, disproportionately lengthy linguistic prophylactics against remote, convoluted, hypotheticals. (Irony intended.)

When I was practicing business law, one of my mentors drilled: “any hack can kill a deal, a good lawyer offers up ways that it can work.” And that little ditty has a cousin: “when you just need to make a quick run to the corner 7-11, a Yugo® will get you there as well as a BMW®.” Sure, some deals need a lawyer to come in and quash them, gosh knows the kind of ridiculous stuff that some clients can dream up, but most of the time the parties just need some good, practical advice to help make things happen. Sometimes the Yugo gets you there just as well; not every deal needs a hundred grand worth of precision German engineering.

So, when your client brings you a simple deal and asks you to review it, or draft it up, remember: punchbowlers ruin the party and don’t get invited back to many more. Don’t be a punchbowler.