Sometimes as lawyers we are faced with a dilemma, which goes something like this:
Client: Please review this agreement and make sure that I am protected and will receive the benefit of my bargain. Oh, by the way, although we have had this document for some time, I have been very busy, but we need to sign it today.
Attorney: Absolutely and I will get back to you immediately. There are a number of provisions that run counter to the deal you had originally explained to me. Some of these provisions carry a significant chance of liability exposure and should be stricken or comprehensively re-written.
Client: Thank you. Here is the contact information of their attorney. Please call him to straighten this out.
After the attorney-to-attorney phone call, the client’s attorney reports back that the other company’s attorney is intractable and will not make the desired changes or even entertain a compromise. The attorney suggests that we have a four-way teleconference to talk through each of these points, and highlight the critical ones and our concerns.
Teleconference is set up, and both sides are loaded to do battle. Each client and their respective attorneys discuss the provisions and their reasons why they are written the way they already appear, and the other company’s attorney explains that every one of their customers has signed this agreement without question.
The telephone conversation ends with each party saying to the other to think about these matters and their alternatives, and to reconnect later that day at some designated time.
The dilemma: Following the phone call, your client tells you that he needs this business deal to move forward, but he doesn’t want the exposure that you have outlined to him. Fix it and get back to him to discuss! He needs the business arrangement more than the other company. That’s called “Leverage” and we have all encountered it!
An experienced attorney will attempt to whittle down the list of “Asks” by weighing the probabilities involved in the areas of exposure, but even the most skilled attorneys aren’t magicians.
What to Do? I recommend revisiting each issue thoroughly with your client, explaining your concerns, striving to understanding completely the value to your client, and then asking him or her directly: What is the likelihood of liability arising in the context of the business under these circumstances as the provision is written? I would also attempt to ascertain the consequences to your client’s company if the deal did not proceed. At least in this way, it generally will come down to making a risk decision, which only the client/entrepreneur can make, and since most business owners are prone to making similar decisions throughout the life cycle of their business, will ultimately have to make.
I would follow this conversation with a memo, either to file or to the client, whichever is appropriate, setting out the sum and substance of this conversation. Undoubtedly time will take its toll if not memorialized immediately.
In summary, experienced attorneys know that sometimes we are faced with impossible situations that we will not be capable of changing. Under these circumstances, it is our job to inform the client as to the reasons for our concerns and the changes we recommend, but always to recognize that the client is the captain of his ship and ultimately must be called upon to shoulder that responsibility.