Guest article by Nick Gould, Partner with Aria Grace Law, London
A client who was an in–house lawyer at a FTSE 100 company once told me “There are only ever three key issues in a legal agreement –our joint objective is to work out what they are.”
What does that mean we need to do as commercially minded transactional lawyers? Ignoring the fact that a well drafted contract will never correct a commercially bad deal, I suggest that perhaps it means a few things.
Work with a client and make sensible (whatever that might mean) suggestions, rather than just slavishly following their views;
Don’t just follow the last precedent you used / offered to you, without thinking about the current deal in hand.
Try and remember it’s about the client, not about ego.
One of the main issues for me – is persuading clients that although they have agreed a deal with their ……….. brother, sister, best friend, friendly advisor or just a third party who wants a cut of the deal, they do need to properly document it. For me, that doesn’t necessarily mean putting together a 100-page agreement, much of which will invariably be irrelevant to that deal. It does mean looking at the deal from both a legal and (in some circumstances) commercial point of view and documenting agreed key points.
The same FTSE 100 lawyer told me “It is your job to get me 90% of the way there I will worry about the risk of not documenting the other 10%”. That was a sophisticated client, who understood who does what. Lawyers, I think, can’t protect a client 100%. The only way to do so would be to suggest they don’t do the deal.
For example, the client who wanted to buy a ship management company but only with guaranteed zero actual risk or even, more oddly, potential risk, was just wasting his and his advisors’ time. Any good corporate lawyer and team can negotiate and draft all the relevant papers for a deal valued at $100,000 or $100 million. A commercially aware corporate lawyer knows when to tell his client, “I think this as good a deal as you will get—do you want to do it? [ or shall we all go home]” A good transactional lawyer knows when and how to close a deal—it’s a skill in itself.
