Do big-company GCs know how awful their form contracts are?

It’s a question I sincerely wonder about. (If any big-company GCs are reading this — call me!)

I often represent startup clients in negotiations with counsel for large companies, and strangely, while the caliber of their attorneys is generally high, the quality of their contract forms is, on average, awful.

How can this be?

Maybe it has something to do with risk aversion (which is a particularly big problem among lawyers) — maybe no one wants to take the risk (or the time) to review old language, and heaven forbid, to take some of it out. The thinking, perhaps, goes like this: it can’t hurt to leave it in, and I might harm my company (and get in trouble) if I take something out that turns out to be  important.

The main problem in thinking this way is that huge, bloated contracts do have costs — significant ones, I would argue. They delay, and sometimes even derail, business deals. They increase contracting costs considerably. They can render contracts opaque and incomprehensible, which can harm either party, including the one that drafted it.

This should not be allowed to go on; big companies have the resources to do better. They can draft elegant, concise, modular contracts. They can start to take advantage of contract automation. Before the problem can be solved, though, GCs will have to recognize this as a problem.

 


Categorised as: Lawyering