Contract Language and the Contract Process: An Interview with Ken Adams

Ken Adams first came to my attention in 2001, shortly after his first book was published. His focus was the same as it is now—how to draft contracts clearly. We worked on a project together, then we fell out of touch.

Over the years, Ken has single-mindedly continued to develop his expertise in contract language, through his books, articles, blog posts, seminars, webcasts, and his law-school teaching. (Go here for his bio.) And what he has to say has become increasingly in tune with the wishes of many contract managers, to improve the clarity and precision of contract language.

That’s why we’ve arranged with Ken for IACCM members to receive a discount to Ken’s upcoming seminars in Melbourne and Sydney, Australia (go here for information), and in Geneva, Switzerland (go here for information).  And that’s why I thought it time to interview Ken on this blog.

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Tim: What keeps you relentlessly plugging away at your subject, the building blocks of contract language?

Ken: For one thing, it’s been exciting—well, a specialized sort of excitement! Contracts set the rules that govern business transactions, and English is the lingua franca of international transactions, so the world of English-language contract drafting is vast. Yet no one had thought it worthwhile to devote serious scrutiny to the components of contract language. That gives me a lot of room to play in.

Yet that wouldn’t mean much unless something were at stake. By using contracts riddled with archaisms, redundancy, misconceived usages, and other inefficiencies that characterize traditional contract drafting, most companies waste time and money, hurt their competitiveness, and unnecessarily expose themselves to risk.

Tim: Your comments reflect IACCM’s position on making contracts effective as business tools – which means greater focus on the users, rather than the drafters. So can you expand your thoughts on this?

Ken: Most template commercial contracts—even those of companies with the resources to do better—are overlong and nowhere near as clear as they might be. (The “before” and “after” examples I link to in this blog post will give you a sense of what I mean.) The result is delay and confusion at each step of the contract process. And my writings are full of examples of contract parties finding themselves in court fighting over some ostensibly minor drafting glitch.

Furthermore, defective contract language subverts grander schemes. It’s tough to bring to bear on the contract process notions of trust, collaboration, innovation, and the like when your contract are full of sludge.

Tim: Are the problems with traditional contract language a function of the idiosyncrasies of common law and associated custom and use? Won’t we start to swing more towards the principles of civil codes, where intent matters more than specific words and where relationships typically matter more than transactions?

Ken: In this 2006 blog post I discuss the differences between common-law and civil-law drafting, and they’re broadly as you describe them. The thing is, the Anglo-American style of drafting has become increasingly prevalent, perhaps simply as a by-product of use of English as the common language, and I don’t see the tide turning any time soon. But more to the point, there’s no reason why the Anglo-American system has to be so painfully inefficient.

Tim: So what should companies do?

Ken: First, you analyze thoroughly the costs and benefits of overhauling your contract process. If you decide that the benefits of change outweigh the costs, you take the following steps: You adopt a style guide for your contract language, to get away from regurgitation and improvisation. You train your lawyers and your contract-management personnel so they know how to draft and review contracts consistent with the style guide. You redraft your templates so they’re consistent with the style guide. And if you have sufficient contract volume, you automate your templates using document-assembly software, so that drafting a contract becomes a matter of completing an online questionnaire. Taking these steps would make the process so much more efficient for all involved.

Tim: That sounds simple — so what are the obstacles?

Ken: In my experience, the resources required to take those steps isn’t the problem—it’s not that difficult a process. Instead, the issues are cultural.

For one thing, you can’t expect those who oversee a suboptimal set of templates to welcome scrutiny. Don’t be surprised if you encounter defensiveness and bluster—“I’ve been doing this for fifteen years!” Any decision to overhaul your contract process would likely have to come from higher up the food chain.

Even if your company decides to review its contract process, your personnel probably won’t be equipped to retool your templates if all they know is traditional contract language. They may regard themselves as expert drafters, but it’s easy to think you’re something special when you haven’t been required to comply with rigorous drafting standards and your drafting hasn’t been subjected to any real scrutiny.

And drafting by committee can be deadly, with those taking part championing their pet usages. It drags on, and often the result is a mushy compromise. It’s far better to put in charge of the drafting process someone with a legitimate claim to drafting expertise.

Tim: What role might contract-management personnel play in any overhaul?

Ken: I suspect that at many companies, lawyers act as gatekeepers of the templates, with contract-management personnel having little or no say. There’s no reason why that should be the case—as I noted in this blog post, when it comes to doing deals, there’s relatively little that’s best left to lawyers as opposed to reasonably well-informed nonlawyers.

And lawyers are adept at blowing smoke. They’ll routinely trot out misguided conventional wisdom, deflecting questions by saying that a given approach is standard, or is required by law. Or they might say—this is the clincher—“That’s the way we’ve always done it.” Reading my stuff would help you to call them on it.

More generally, I encourage your members to recognize that in contract drafting, usually there’s one most efficient way to accomplish a given goal and a bunch of less-efficient ways, and that life would be simpler if everyone were to stick with the most efficient way. Only through rigorous research, analysis, and writing can you figure out and disseminate what’s most efficient, and that’s what I’m trying to do. Less conducive to enlightenment is trading information, and disinformation, around the online water-cooler, as I noted in this blog post.

Tim: But aren’t you letting lawyers off the hook? Shouldn’t they be responsible mitigating risk, including the risk that arises when you create contracts that are clear as mud? “Legalese” is a source of risk; if I hire a lawyer, I expect them to reduce my risks, not to increase them.

Ken: I share your indignation, but you’re not going to get clear contracts just by asking for them. You have to engage in relentless quality control and make sure that those who are responsible for your contracts, whether they be lawyers or contract-management personnel, aren’t engaged in regurgitating dysfunctional contract language and misconceived conventional wisdom simply because it’s all they know.

And by the way, outside counsel get blamed for clogging up the works and being resistant to change, but I’ve found that in-house personnel can cling to the status quo just as tenaciously.

Tim: How rapidly do you think we can make progress?

Ken: I’ve learned to be realistic. I like to think that I’m helping to change people’s expectations regarding contract language, that we’re moving from chaos to acceptance of a set of standards. Many individuals have already made that leap, and I’m hopeful that institutions will follow suit in due course. After all, what’s great about contract drafting is that the drafter can call the shots. If you think a given approach will offer better results, you can go with it rather than following the herd.