The funny lawyer-centric cartoon in the picture above was recently posted to the “The New Yorker Cartoons” Instagram account.
This cartoon reminds me of lawyers who overengineer and overcomplicate #contracts for their clients.
Since establishing thoughtful contracts are fundamental to the success of most businesses, creating and negotiating meaningful contracts are a critical skill for many lawyers – especially #inhousecounsel.
Here are some of my best practices when forming contracts with third parties:
📃 Clear is Kind: Driving clarity in contractual wording is of utmost importance so that you and your contracting partner clearly understand your respective obligations. I try to draft contractual wording in a manner that would be easily understood by my 11-year old son.
📃 Use Umbrellas: Avoid having too many standalone contracts with its own complete set of terms and conditions. Instead, look for opportunities to combine arrangements under a master or “umbrella” set of common base contractual terms that applies across individual arrangements.
📃 Bigger is Not Better: Look for opportunities to shorten your contractual arrangements to include only the “must-have” contractual provisions. Embrace contract simplicity and don’t turn your contract into a legal treatise.
📃 Fairness: Develop standard contractual provisions that are mutual, balanced and fair. Avoid “one-sided” contracts that imposes most/all of the risk upon your contracting partner.
📃 Consistency: If your organization uses multiple and different contracts, be sure there is symmetry and consistency between the same contractual provisions that reside across those contracts.
📃 Benchmark & Differentiate: Study the publicly available standard contracts of your competitors to help ensure that your own base contracts are “market” or “industry-standard.” In addition, try to differentiate your organization by including contractual provisions that are more appealing than those offered by your competition.
📃 Contract Annotations & Fallbacks: Develop a bill of materials for your standard contracts to include an internal set of contract annotations to help your team explain/negotiate your contracts and to have alternative contract provisions at your ready when needed. Consider automating such tools in a #ChatGPT type of format for easy internal use within your organization.
📃 Obtain Feedback: Proactively obtain input from your contracting parties (and their legal counsel) about their contract formation experience with your organization. Use such feedback to improve and periodical update your standard contracts and how your organization negotiates with others.
📃 Earn Trust: Be sure to always act professionally and to earn the trust of your contracting partners. In my experience, the best contracts are the ones that we put into a drawer and never have to look at again. They are built upon the foundation of mutual trust and respect of the contracting partners.