One Size Doesn’t Fit All

According to the latest IACCM newsletter, someone at the Faculty of Economics at the University of Groningen has made an amazing discovery: a ‘one size fits all’ approach to standard contract terms will often lead to sub-optimal results in key strategic relationships. That’s what they found when they had a look at high tech alliances and the contracts used to set them up.


When things don’t quite fit…

So why do so many lawyers still pump out one-dimensional standard form contracts when technology clients come to them for help?

The IACCM reckons most lawyers have a narrow view of risk (too narrow), a narrow view of the business they’re supposed to be helping (they may not realize that their cure does more harm than good), and a focus on consequences (ie, imagine all the horrible things that might happen if this deal goes wrong) rather than probability (ie, yes, horrible things might happen… and hell might freeze over).

We can think of at least two other reasons. First, to boost profits, many law firms have adopted a leverage strategy, where partners bring in the work, and a team of (cheaper) junior lawyers do it. So more and more of the document drafting and preparation is being done by less and less experienced people. And the less experience you have, the narrower your understanding of the wider business context.

Second, lawyers use one-size-fits-all standard forms because that’s what they’ve got. And when firms don’t have a culture of sharing, many of the best forms can be hidden from those who might need them.

Add these things together and it’s easier to see why many contracts are sub-optimal. They’re being drafted by people with less and less business experience, and without access to the best forms for the job.

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