I had one of those OMG moments in a contract negotiation the other week, when the other side sends back a draft with changes that bear no relation to the discussion that you’ve just had. I mean, WTF, right?
On second reading, all of the offending changes were in clauses dealing with employee issues – TUPE and so on. A quick conversation with my opposite number confirmed my suspicions: “Oh, the employment lawyer did those”.
Not a big deal in itself, and easily fixed. But it’s got to the point now where the last words that I want to hear in a contract negotiation are “I’ll get an employment lawyer to look at these clauses”, because I know that the same thing is going to happen every time.
For example, there was the partner from a national firm who insisted that we should be able to meet a contractual obligation to provide dedicated staff while at the same time avoiding the application of TUPE by ensuring that none of them spent more than 50% of their time on the account. Think that’s impossible? “That’s your problem”, he said.
Then there was the associate, also from a national firm, who deleted all of the (agreed) clauses dealing with TUPE on contract commencement because he had only been given instructions about the clauses dealing with termination. And if I had a pound for every time I’ve been told that I can’t have an indemnity for pre-transfer claims because “that’s not how TUPE works” then I’d have, well, at least a tenner.
Not that I’m having a go at employment lawyers (really, I’m not). I know some great ones, and I’ve received some quality support and advice from them over the years.
No, the target that I’m aiming at is the insistence of the large commercial firms that lawyers must stick to their specialism. Which means that, obviously, clauses dealing with employee issues must be looked at by employment lawyers.
In my opinion that’s a category error. Employment clauses in commercial contracts aren’t about employment, they’re about the allocation of commercial and legal risk between the parties. Just like all of the other clauses in commercial contracts, in fact.
So the required specialism for dealing with these clauses is commercial contracts. By all means, a contracts lawyer should take advice from an employment specialist on technical issues like TUPE, as a sense check on the way that the parties intend to deal with the issue. But if the employment lawyer takes over then there’s a risk that the commercial understanding necessary to achieve the right result will be lost.
This isn’t limited to employment issues, of course. I once worked for a GC who tried to get us to refer all data protection issues to a former colleague of his in private practice, even though we had sufficient knowledge and experience to deal with all of the contractual and practical questions that came up.
Now, it’s no great insight to say that in house practice is about generalism and private practice is about specialism. And obviously I know that firms have to have an eye on their professional indemnity premiums, and that there’s risk in asking commercial lawyers to deal with technical issues outside of their specialism.
But my point here is that the insistence on referring all technical issues to specialists can be harmful to contract negotiations. It introduces controversy into areas of commercial agreement, and often substantially increases the amount of time it takes to conclude the process. Because of that, and because of the additional time required for file review, it also increases fees.
And, while I realise that it’s not for me to say as the lawyer on the other end of the transaction, I think that it doesn’t really help clients to achieve the right result. The main objective, after all, is to reach an appropriate commercial agreement in a cost-effective and timely manner.
So this is my plea for a little less specialism and a little more generalism. In fact, maybe private practice should be a little more like in house practice?