Can Legalese Tank Business Deals?

In response to my May 1, 2013 column Simple Legal Writing Isn’t Baby-Talk, I received a comment on LinkedIn from Lyn Boxall, a management consultant who works in Singapore. Before doing consulting work, she was an in-house lawyer for Visa International and GE Capital Australia.

Ms. Boxall recounts her experience with the plain-language movement in Asia and Australia. She points out that, compared to some other countries, the plain-language movement in the United States is fairly new. She also has lessons for those people who still believe that plain language is a strictly academic pursuit. In her experience,

• Plain-language consumer agreements can result in fewer consumer disputes.
• In Asia, if a party drafts a contract containing dense legalese, the other party will consider it a sign of distrust.

With her permission, I’ve reproduced her comment below (with minor editing and formatting to conform it to house style). If you do business in the Asia Pacific region, or are asked by a client to negotiate and draft contracts with another party located there, it would behoove you to read her entire comment:

I find it interesting that plain English documents haven’t been adopted in the U.S. to any great extent visible to me. Perhaps it’s because of the overly litigious culture.

The plain English “movement'”was adopted by Australian lawyers around 20 years ago. Drafting in plain English is difficult at first. It takes practice. It also requires a thorough understanding of the law in order to avoid mis-steps such as replacing a technical word that has been interpreted thoroughly by the courts with a word that doesn’t have the benefit of detailed consideration by the courts.

One of my early projects was redrafting all the lending security documents for a major Australian bank. It was prompted to have its documents redrafted after a court criticised an opening sentence in a guarantee. The sentence consisted of 1879 words. It had probably started off sensibly, but over a century or more words had been added here and there to deal with particular situations or court decisions. When I took the sentence apart, it was very clear that even apart from lengthiness it could not be understood because it had several internal inconsistencies.

In those early days, I found that “translating” legal documents from legalese into plain English took two or three iterations typically.

• Step 1: Start with the legalistic document and redraft it in plain English.
• Step 2: Look at the redraft a couple of weeks later and find, with the benefit of some time having elapsed, that the redraft is much better than the original but still not very plain.
• Step 3: Redraft the plain English version into plainer English. Etc.
• Final step: Ask one of the non-legally trained staff in the office to read the document and tell me if they can understand it or not.

I redrafted a motor vehicle operating lease and a guarantee into plain English for a finance company. Their initial feedback [from the original version] was that it was causing too many problems because some potential clients were reading the documents before signing them and asking questions as well as complaining about some clauses.

Longer term feedback [for the revised version] was that the finance company was having fewer disputes with its customers. There were two reasons.

• First, customers who read the documents before they signed them knew what they were signing up to and didn’t complain about it later.
• Second, customers who didn’t read the documents upfront would read them when they were unhappy and ready to dispute something and find then that the position was clearly stated and that either there was no point in arguing about it or that they could point to the relevant clause to prevail in any dispute with the company.

Working in Asia with many colleagues who do not have English as their first language, I find plain English to be exceedingly important. I draft according to client instructions and then insist on the client reading the document and telling me if there is any place where what it says is different from what the client wants in the deal. There is no element of “trust me to know that I’ve drafted what you want.” There is ownership of the document by the client, rather than by the lawyer. There is a sold business understanding of the document between my client and the business person on the “other side.”

I’ve drafted documents in Asia that have been reviewed by U.S. lawyers whose first response has been a polite equivalent to “are you mad and this isn’t a proper legal document.” (I am, by the way, qualified in several jurisdictions, including New York.) Several days later, I’ve received a further response where they’ve rather reluctantly said something like “actually this does cover everything after all.”

. . . .

The additional thing that I find with U.S. style legal documents is that they can mar a good business relationship almost before it has started in China and elsewhere in Asia. This happens where there has been a business deal agreed to and perhaps even a Letter of Intent or Memorandum of Understanding signed. The arrival of many, many pages of dense legalese to document the deal, particularly where the counterparty can’t begin to understand it, is interpreted as lack of trust. (Ed. emphasis added). Of course the deal needs to be properly documented, but use of plain English and/or preparation ahead of time to flag that there will be a very detailed definitive agreement to be signed would assist in achieving a good outcome.

In Face It—Bad Legal Writing Wastes Money, I discussed the many studies collected by Joe Kimble in Writing for Dollars, Writing to Please that have found how plain language can save lawyers and businesses time and money.

Now, I suppose, we can add the risk of failed business deals to the wages of legalese.

(photo: http://www.flickr.com/photos/c-j-b/4365234078/)