Monday, September 17, 2012

Overlawyering - Avoid at all Costs!

The fear of all business people working with counsel is overlawyering.  It's frustrating when you're paying someone by the hour to help you complete the paper so you can close the big deal or advise you on the risk of that new product.  It's crippling when it comes from your in house counsel who is supposed to be on "your side".  For in house counsel, overlawyering will get you quickly and permanently removed from the conversation and will force you into a much more reactionary role.

For those of you thinking I just made up the word, overlawyering is when the lawyer aggressively attempts to eradicate all risk in a transaction, document or product.  It's when the 3 page contract you send to them comes back with 10 more pages, or when the disclaimers they insist go with your new marketing campaign take up half the page.  From the business perspective, it's when the lawyers are showing that they just don't get it.

The worst part about it is that all lawyers do it at some point.  There at least one issue that you've had bad experience with in the past that you want to protect your client from in the future.  On this one issue your mind overrides your common sense and tells you that they don't understand that the risk is real and its your job to make everything as risk free as possible.  Only that's not your job.  Your job is to facilitate the business purpose while managing the risk in a business-centric way.

Yes, the indemnity clause could be better.  Yes the limits of liability are way too low if a catastrophe happens.  The proposed marketing plan will always walk the line on what's technically allowable under current regulations.  The new product will have unknown risk associated with it that can't be completely planned for.  The thing is, that business people know there is risk involved.  They want you to minimize it, but know you can't eliminate it.  And they don't want you to.  If it was completely risk free, everyone would do it and there wouldn't be any money in it.  

If you've been accused of overlawyering or know there is a particular issue to which you are sensitive, take more time before answering the question or returning the redline.  After your initial review, take a few minutes to think about the business side of the matter and then re-review.  Put the risk into perspective: how much is to be made on the deal?  What's the real likelihood of the risk becoming reality?  If it does, what's it likely to cost?  Then revise your answer to be more business friendly.  Highlight the risks that you didn't attack in a cover-email or in conversation and ask if the client would like you to be more aggressive.  Nine times out of ten, the answer will be no but you will have shown your business partners that you understand the value of good lawyering and the detriment of overlawyering.

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