What Should You Do To Draft Better Contracts?

Did you know when 3 geeks and a law blog invited readers to point out 3 basic processes that law firms are really bad at, bad template contracts was the highest rated issue with law firms?

Do you know the amount of money MNCs shell out to outsource contract drafting?

Did you know that most of the in-house counsels spend a significant amount of time negotiating deals, drafting and reviewing contracts?

Contract drafting is the bread and butter of commercial lawyers. It does not matter whether you are planning to join a law firm or a company. You will have to deal with contracts at some point or the other in your career.

If you are like me, you would assume that you are going to be involved in a very pragmatic process. You will be taught, inducted, given access to tools to deal with contracts. You would think that you will be given an opportunity to explore and apply what you have learnt in law school and during internships to the deals you would be working on.

Let me tell you at the very outset that it does not work like that. The contract formats that you will be given access to would definitely have something or the other missing. During one of my internships, I was given an engagement contract as a guideline to draft a contract for an Application Developer who was aiming to partner with vendors supplying a product. After hours of trying to mold that “sample contract” and browsing the web, I couldn’t draft an effective contract.

The judges are prone to breaking down these contracts by endorsing the difference in use of terms. Consequently, the entire process of drafting and vetting a contract is rendered useless. This very lacuna is beneficial for advocates as they tend to earn because of terribly drafted contracts. Imagine.

If lawyers knew how to draft effective contracts they would save their clients from incurring any litigation costs. Vague or open-ended clauses in contracts are a major cause of litigation.

The characteristic of drafting ineffective and unclear clauses continue to remain the root cause of the problem. As a matter of fact, no one tends to draft a contract from the scratch.

Usually, young lawyers tend to think that a transaction is closely related to some other transaction that they have worked on in the past. They blindly copy-paste clauses from a pre-existing contract with minor changes to the draft. As an obvious result, when one doesn’t apply their brain while drafting a contract and solely rely on a pre-existing contract, there are bound to be mistakes.

Let us take a simple instance. You were asked to draft an employment contract. Since employment contracts are standard contracts, you mindlessly copy-pasted from a similar contract you had drafted previously. As a matter of fact, you changed the name and address of the party but forgot to change the terms of remuneration as discussed while negotiating the contract. Would this lead you into trouble? How can you avoid such mistakes?

Across the globe, most business contracts use language which is archaic, verbose and confusing. I realized this when I took a course on contract drafting. Better contracts are those which can be easily understood and comprehended.

This lack of effective contract drafting has some catastrophic results:

1. Performance Complex

A bad contract drafting exercise can potentially harm the law firm or company and the associate in two folds. Most of the law firms charge the client on an hourly basis. A copy-pasting exercise relatively takes a lesser amount of time. In case the firm projects the actual time it would be reflective of low credibility and involvement of the firm.

If the client figures out that the contract is not as effective as projected, the firm tends to lose out on their credibility. The associates working on the contract may undergo performance complex if they take more time than required to draft contracts. An effective contract drafting course is needed to ensure that contract is drafted with details and in lesser time so that the associate can effectively draft a new contract in less time.

2. Lack of Expertise

This entire rigmarole of copying clauses of a contract has also led to lawyers losing out expertise on something as crucial as contract drafting. A contract which forms the basis of any commercial transaction needs to be handled with extreme care and attention-to-detail. This lack of expertise has resulted in numerous lawsuits and arbitration.

Imagine. If you could master the skill of contract drafting. You wouldn’t have to rely on formats. You would know how to cater to the law firms as well as the clients’ needs. Would you prefer to start working and learn through the grind? Or would you prefer to be prepared before you enter the commercial world?

If I were you, and I had the opportunity to learn the art of contract drafting before I joined an MNC, I would take it up. Here is a course that has practical insights from the who’s who of the industry.

The Current Scenario!

The law firms and companies have identified all of these issues and are coming up with ways to minimize the risks involved in ineffective contract drafting. Firms have aggressively started recruiting contract experts. However, in an article by Ken Adam, a renowned contracts expert, I read about how there is a dearth of contract experts. He claims to not know anyone who is a contract drafting expert and that situation is worrisome.

If you search job portals like Naukri.com, contract drafting job gets 432 hits. Portals like indeed.com have as many as 6100 job openings for individuals who can draft good contracts.

How do you become better at contract drafting?

In a post, Ramanuj Mukherjee, CEO of iPleaders, talks about the crucial importance of contract drafting for any commercial lawyer. He emphasises the importance of contract writing to an extent that he had to start an online course on it.

After reading his article online, I decided to take that course. Currently, I can draft any kind of contract in record time. One of the main reasons I can do that is because my fundamentals are clear. I am going to quote few steps I’ve learnt in the duration of the course to simplify it further for you:

1. Be Thorough With The Basics

Understand the very basics of contracts so that while dealing with any clause or while reviewing a contract you know what benefits the client and how. Just like you cannot start dancing without understanding the music, drafting without understanding the basics of the law may be difficult.

2. Know The Different Types Of Contracts

In the same article, Ramanuj mentions 10 kinds of basic contracts everyone should know about.  He has also included them the course. He gives brilliant insights on each one of them and suggests that one should download the samples and understand the classification in each of the clauses and how they can be molded to suit the situation.

3. Practice

To implement any knowledge – practice it. Once you have understood the very basics of contracts, the types, and the clauses, you can start drafting and creating samples for yourself. I think that is the most important part. Even during the course, drafting what we learnt was the most crucial aspect. It not only gave us tremendous insights on the knitty gritty of contract drafting but trained us to ensure that we are ready to efficiently deal with any kind of contract.

Keep learning and trying your best to be a world-class drafter, who knows you could start drafting contracts right from college and become the expert that Ken Adam said was missing!

Wishing you all the luck!

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