Bowers_CorporateDrafting_Fall_2013
Drafting – what the parties are supposed to do and what happens when they do or do not do what they are supposed to
· Maybe whole deal can be undone if someone does something they aren’t supposed to
· Want document to be clear & unambiguous
· Want the document to reflect what both parties want, parties are trying to come together & create a contract that meets both of their needs
· Consider a document’s lifespan
o Draft thinking forward to the future if something could change (name of the Fed Rate)
o Draft thinking that your document may end up in a courtroom. You want it to be really clear and what did each provision mean. Don’t want to have any question of what was meant by every provision
· Must know what your client wants
· Plan, design & organize a document
· Choose the best words to express the concepts – draft precise & clear sentences
· 5 Characteristics of Excellent Drafting (there is no final draft)
o 1. Accuracy – reflect what the parties intend (both parties)
§ Correctly express the terms of the deal – PROOF it!!
o 2. Clarity – the reader has to be able to understand the text
§ Not necessary to use legalese
§ Choose words carefully, make sure document is internally consistent
o 3. Brevity – not skimping, but if it can be shorter, make it shorter
§ Make document exactly how long they have to be
§ No repeating things, ancillary words, etc.
§ Every word should have a purpose, you don’t have to repeat it (just cross-reference back to it)
o 4. Simplicity – not dumbing it down, just that it should be easy to read & comprehend
o 5. Tone
§ Professional, proper grammar, no legalese
Transactional Drafting – implementing client’s business objectives & goals
· Much more than legal documents, a lot of business stuff that goes into them (salary, perks in an employment contract, etc.)
Ambiguity – types
· 2 separate provisions that conflict with eachother
· Words could have multiple meanings (bar – where you drink, the things you push on a door to get out in a fire, what lawyers practice before)
· Want to use defined terms – every time you use it, you want it to have the same exact meaning
Grammar
· Active versus passive – writing is stronger & more clear when using active voice
· Passive: the appeal was dismissed by the court (you want the subject doing the action: The court dismissed the appeal)
· Is, was, were, followed by something ending in “ed”
· Words that end in “ion” – mitigation can change to mitigate to make more clear & concise
· Sentence length – 20 words or less is optimal. If too long, put into bullet points or separate into 2 sentences
· Keep subject verb & object together
· Don’t use “:however,” or “however”
· Parallel Phrasing – carefully, wisely, etc.
· Avoid double negatives
· Avoid legalese – herein (use “in this), thereby, thereafter (after, later), such
· Avoid doublets & triplets (putting due & payable – don’t need both!)
· Type face & font size (12 point font, can play around with fonts – Cambria, Calibria, Sans serif fonts easier to read). Left justify
· White space – single space paragraphs but double space in between paragraphs
· Watch out for automatic numbering, make sure it’s right. Headings/subheadings – keep format consistent
· Cross-references?? Numbering?
Before starting to draft
· Understand facts & background
· Know some of the applicable laws
· Contact list of everyone working on the deal and a schedule of everything that needs to be done & who is doing it
· Keep different versions of your document and stay away from tracked changes. Always do a comparison of versions when working with other parties
· Don’t use parenthesis (parentheticals?) – except ok to put defining terms in parenthesis)
Ambiguity
· Intentional Vague ok, ambiguous not ok (vague = reasonable, best efforts, etc.)
· Sometimes you want vagueness (grey boundaries & borders)
· Easiest fix is to define the term (then use the term with a capitalized letter for the rest of the document)
· Use “that” and “which” correctly
· Types
o Semantic – specific word is ambiguous because it has mult
rd, fairly easy transaction)
· Stock owned by shareholders, the company as a whole goes to the buyer. Seller doesn’t look any different, the company just continues to run & operate as it always did. Don’t have to go out & get all the 3rd party consents – still the same company, operating the same
· The money goes to the shareholders
· Seller often prefers a stock purchase because they can just wipe the slate clean and not worry about any further obligations
Merger – involves a purchase of the stock & merging it
· Buy enough of that company’s stock to bring that company under your umbrella
· Most common way
o Buyer creates a subsidiary
o subsidiary buys stock of seller
o seller becomes the company’s subsidiary
Negotiation
· Don’t get wedded to your position – too concerned about winning or losing. No emotion, look at bigger picture
· Focus on the issues, not the people/positions
· Communication – clear, two-way, must listen & hear
· Making negotiation go smoother – be in the same room, create repore, understand the other side’s point of view
· Have multiple options when you come into a negotiation
· Brainstorm with clients on ways to get what your client needs
o Then select the most promising & rational ideas
· For big points/issues, come up with some supporting evidence/knowledge to support your position, makes it harder for the other side to challenge you
· BATNA – Best Alternative to Negotiated Agreement
o If the deal doesn’t go through, what are their best alternatives (get money from private investors, have executives invest in company, etc.)
o Then less likely to walk into a bad deal, you know better when to walk away