Contract Drafting: More Art than Science

I’ve been practicing law for more than 13-years.  By some measurements, I’m still in the adolescent phase of my career.  Nevertheless, in that time, I have reviewed and drafted thousands of contracts, ranging from the commonplace – NDAs, LOIs, Purchase and Sale Agreements, Consulting Services Agreements, Contractor Agreements – to the more complex – cooperative bylaws, term sheets, complex corporate charters, private placement memoranda, licensing agreements.  I now find myself in the role of a supervising and mentoring attorney for our firm’s associates and of counsel.  Teaching is the ultimate test of integrated and functional knowledge.  Here are a few of the frames I use when training new lawyers and when talking to clients about the process of our contract drafting.  I have also written about our internal practice to align drafting style.

  • The science of contract drafting is an assumed skill. It is the predicate upon which the practice of art is layered.  The science requires knowledge of the basic elements of a contract (offer, acceptance, consideration, etc.), how to identify parties to a contract, define obligations and rights, draft appropriate boilerplate, and integrate necessary factual detail.
  • There are various levels to the pyramid of contract drafting:
    • Form and format;
    • The critical selection of a starting form or template;
    • The formatting and presentation of the agreement;
    • Internal consistency – use of defined terms, consistent formatting and style;
    • Voice and style;
    • Content and framing;
    • Drafting the contract for the real-world circumstance in which the client’s desired transaction will operate, and an understanding of who will most often refer to and interpret the contract.
  • To elevate one’s drafting, an attorney needs to critically consider:
    • The role of each party;
    • The client’s unique concerns, interests and bargaining position;
    • The client’s ultimate objective;
    • The appropriate drafting style and “voice”;
    • The client’s desire for clarity, predictability and a rigid structure, versus a flexible and open-ended arrangement;
    • The relative duration of reciprocal performance obligations and liability;
    • The nature and scope of warranties;
    • The manner in which liability may impose or be limited by an indemnification and limitation of liability provision;
    • The appropriate use of defined terms;
    • The occasional use of examples to better illustrate a complex linguistical maze;
    • When to include provisions relating to, unripe, remote or future contingencies or conditions;
    • When to include certain provisions in the body of the agreement, versus in an annex;
    • When and how to use master agreements and project-level addenda;
  • #Newlaw and #teallawyering movements are pushing attorneys well beyond the teachings of a 1L contracts class or even the conventional teachings of legal practice.  We are now more than ever expected to:
    • Use plain language, rather than legalistic terms of art;
    • Keep contracts as short and sweet as possible, instead of weighting them down with unnecessary boilerplate and provisions addressing remote risks;
    • While representing one side to a transaction, draft agreements that are fair, humane and that reinforce the trust and evolving relationships of parties;
    • Apply a voice that reflects the client’s values, not the attorneys worst fears;
    • Draft appropriately precise or vague language, as a particular provision may warrant;
    • Use block-chain and smart contract technology to create transparency and independence in the course of contract interpretation and enforcement;
    • Err on the side of equitable and fair dispute resolution process, instead of drafting the oft-maligned private arbitration provisions that limit a party’s right to a public trial.

I enjoy the challenge of drafting dynamic and accessible contracts that will be applied within real-world constraints.  It’s rewarding to help shape a relationship and structure a contract that can grow and evolve with the needs of the parties.  The practice of this art was not available to me when I was in law school.  Those attorneys that treat contract drafting as an art-form prepare very different contracts than those who rely on wrought more than intuition.