Why a complex legal contract can be too clever by half
levels and indemnities. The contract is signed and all is well.
Until it becomes apparent that the cleverly drafted contract is so complex as to be unworkable or mired in legalistic jargon that would challenge even the loftiest of academics. The result? The contract is placed in a drawer and forgotten until such time as it is needed for that inevitable dispute.
All too often we are contacted by clients seeking simplification of contracts. Once an outsourcing agreement (undeniably a clever piece of legal drafting) incorporated a charging mechanism so convoluted that the business was unsure how to implement it. Consequently, contractual charges had become driven by factors entirely unconnected to the central transformation plan.
This is not an isolated incident but just one of many examples of ‘innovative’ contractual drafting failing to address a client’s commercial needs and being so clouded in complexity that it creates the very uncertainty it was drafted to avoid!
Commercial lawyers must appreciate that contracts are real-world tools. Rather than starting with the law, they should work with their clients to understand the commercial drivers behind a deal and reverse engineer contracts to create a practical blueprint for achieving desired goals.
Commercials must be tested with real-world worked examples and lawyers (if they fully understand what they have drafted in the first place) should be able to produce spreadsheets and models to achieve this.
Clients must seek out practitioners with specialist sector experience who can provide this insight, who know what does and does not work in practice and can produce contracts that deliver results in the real world.
A legal treatise is all well and good, but in business, clear guid- ance is essential. If lawyers can only embrace this commercial focus, it should result in more contracts spending their life at the centre of major deals rather than simply gathering dust. Daniel Cowley is an Associate in DLA Piper’s Intellectual Property & Technology team Daniel.cowley@dlapiper.com Sponsored column