http://twitter.com/legalbrat/status/33239425731272705
The Bizzle is occasionally allowed out to conferences where he mingles with other in house counsel (under an assumed identity of course). These must of course be free events, or at least offer gratis stationery and other miscellaneous marketing tat to at least the value of the entry fee.
It is a truism that at least one of the topics at such an event is “How to maximise the resources of the in house legal team”. Someone always offers in answer to this perennial conundrum the proposition that the legal team should provide to its sales force a suite of standard contractual documents for use in the most common transactions.
The obvious objection to this proposal is that the sales team will invariably be idiots who can’t be trusted to tie their own shoelaces, let alone ensure that appropriate legal documentation is used on a consistent basis. But that doesn’t stop our intrepid resource maximisers, and thus we have the PDF contract.
PDF stands for Portable Document Format, and is an open format created originally by Adobe Systems (other document formats are available). Its key benefit to the resource maximising legal team is that, unless you are prepared to pay for a proprietary PDF writer (and let’s face it, we’re not), you can’t amend the text.
In this scenario, therefore, the sales team is intended to understand PDF as standing for Please Don’t Fiddle. And serendipitously, the other party to the transaction also receives this message loud and clear, as the tweet from Tim Bratton that appears at the top of this post demonstrates.
Well I can’t speak for Tim, but there’s nothing more likely to make me want to undertake major surgery on a supplier’s terms and condition than a statement that no changes are allowed. It makes me Pretty Damn Furious, frankly.
In fact, just writing about it is making me angry. Surely no business can afford to put cost savings ahead of customer satisfaction, but that appears to be what’s happening here – they’re Putting Demselves First (sorry).
It has been suggested to me that this practice has the more legitimate aim of mitigating the risk of (presumably more favourable) terms agreed with other customers being discoverable through the versions functionality of newer iterations of Word. But this just emphasises the basic laziness of the approach, given that the danger is easily averted by starting each new contract from a blank source document. Precedents Diminish Fear, in other words.
The lawyer on the receiving end of such practices must fight back, of course. One’s natural impulse to pragmatism must be set aside, and a raft of niggling changes should be demanded. For the truly devious, the document may be exported to a .txt file for changes to be made in plain text (Playing Dirty? Fine).
And thus we can see that the original intention is easily subverted, so that the legal team that hopes to save money by outsourcing risk and effort to its customers finds that the use of PDFs actually creates more work. Pretty Dumb Fecks, eh?
The Bizzle 
Petulance Diminishes Fees.
Bizzle, yet again another Pretty Damn Fine blog post. I just think its totally arrogant for a lawyer to send PDF documents of yet to be marked up contracts.
To say no changes can be made suggests that they are Possibly Demonstrating Future actions… it makes them seem like an uncooperative supplier.
I confess to having the exact same reaction – anyone who sends me a pdf contract is FAR likelier to get the full markup treatment than those polite word-doc-senders.
In fact, I’ve even sprung for a full version of Acrobat so I can send their markups back in the nice, neat pdf format in which they were sent.
You are so right – it’s just so arrogant. PDF = makes blood boil (sorry – can’t think of suitable three word description using PDF riff)
Plasma Does Farenheit
This puts the case for one side of the coin very well. A word for the other side, perhaps? If you are selling a standard product many times a day, it makes sense to have standard terms which save time and keep administration costs to a minimum. No standard document is perfect, but it is usually good enough. If there are any points which really need clarification or amendment, a side letter should suffice. (If the same point crops up repeatedly, you should amend the standard document.) Personally (and speaking as a seller) I find the desire to tinker in Word quaint if not inefficient – but only if you are dealing with a standard document. A one-off contract is a different matter. So too is the discussion on economic power. I tend to give in to investment banks who insist on standard terms of purchase even though they are largely inappropriate for buying what I am selling. So in the end my plea would be for all of us to have a thought for the combined cost/benefit. What will achieve the recording of a commercial deal in the least inefficient manner for both sides? We can do it by exchange of e-mail now – http://bit.ly/i0GMhD – hat tip to The Bright Spark.
Thanks for your comment, Stuart. I think that you’re right to focus on the combined cost/benefit of a particular approach.
But I wonder if you’ve slightly mistaken my target? I’m not against the use of standard documentation per se, only the arrogance of sending it in a format that can’t be amended.
I’m a pragmatic lawyer, and I only raise issues that I absolutely need to. I’m also very busy, so I’m pretty happy when I see a contract that I can wave through. But sometimes I need to make changes, because there are issues that I can’t just take a view on – where my own customers’ interests are engaged for example, or where there are regulatory issues.
Using a PDF means that I can’t do that. So whatever the intention, the message that it actually sends is “we don’t care about what our customers think”. It seems to me that that’s not a message that any seller wants to give to its customers.
Sorry, about side letters – that takes longer to do than amending the original contract, and it means that you don’t have all your terms in the same place.
Talking about one-off contracts rather than standard form contracts, I first came across the practice of sending drafts in PDF about 15 years ago, when lawyers still thought in terms of hard copy or fax. I think it was caution rather than a ploy and the expectation that any amendment would be done in hand. But now that we all have WP software that reads any other and we are thoroughly used to the conventions of red-lining, I would say that insisting on PDFs is laughable and we all have many ways to overcome the petty-minded who believe they can help their cause by making life difficult on a technical level. (Such behaviour tends to hide a weakness in what really matters.)
Turning to standard form contracts, I have always preferred a side letter to record variations, even when I am buying, because it is very flexible. And by putting it in front of the standard form contract, not only do you keep everything together, but you highlight the changes. I admit this is a personal preference and there’s not much in it either way. But as most of my work is as seller, it is easier to identify the few contracts which are not on standard terms by using the side letter method. I’m willing to be convinced there’s a better way…
Ahhhh! I have to admit to having done this when acting inhouse (on secondment) to bully little suppliers (my bosses idea, m’lud…), but I know it’s not nice.
When I am on the receiving end I relish the opportunity to send a heavy manuscript markup back, including lengthy handwritten riders…
As for sideletters: I learned valuable lessons on those when trying to enforce or renegotiate long terms contracts which had been subject to a host of side letters. Now I strongly counsel against them – if it’s part of the agreement, put it in, period.
If you’ve made friends with your IT department (or have placed signing off on the IT security policy low down your priority list so that they haven’t locked things down too much) you could download Open Office which allows PDF creation and amendment for free.
Alternatively, you could make a business case for getting the official PDF editing software even though it is ruinously expensive by explaining the risks of external people seeing the metadata on your Word documents if you regularly get internal mark-ups and comments on your contracts. Then you can start irritating everyone else by sending all communications out in PDF form yourself.
Your blog made me laugh. No doubt that kind of approach really irritates us lawyers but my guess is that it works – plenty of businesses don’t read the detail of the contracts they sign up to, a suprising number are under the mistaken belief that it isn’t possible to negotiate standard terms and nearly all of them are unwilling to pay a lawyer to help them negotiate a supply or purchase contract.
We are on a bit of a mission to try and persuade our clients to fight back against the PDF approach you describe. Yes, because we’re money grabbing lawyers who want to generate some work for us, but mostly because it makes sense (isn’t a £100k supply contract worth at least a quick review by someone who spends their life drafting and negotiating the detail?).
Anyway you prompted my colleague Ian to post some of the choice excuses and brush offs he’s had recently when he’s made the outrageous suggestion that the standard terms he’s been served up with aren’t reasonable or fair – http://blog.roxburghmilkins.com/
Cheers