For some of my co-members of the www.smealliance .org , who have little time for lawyers …..a further short  set of short comments on ideas of problem solving and common sense.

Don’t necessarily assume that a document which is 60 pages long, is any “better /more correct” than a shorter one. I try to use “letter agreements” on a much more regular basis, rather than more formal and formulaic agreements– why? I started, because a  client wanted to split his business from his co-owner and each would take a part of the whole. Having received a draft from the other law firm of about 30 pages, my client said he would only sign a document if it was less than 10 pages long . So we did it, it took some thought and an understanding of the core issues — what was important to the client and  what wasn’t. There are as many simple ways to make a document shorter– and not just changing the size of the font  and/or narrowing the margins.

Next I bought a set of contracts, assets and employees for a travel group in much the same way. Now I am working on a small asset acquisition for an international trading group, and they accepted (maybe because this is only a £1m deal– small for them ), that a letter agreement is the best way to document it. Seems to me the key here is to think about the draft and what the parties want to achieve first and then work out how to get there, rather than start with the draft document.

As I said in my last blog , commercially aware transactional lawyers are here to facilitate the deal— make it happen. There are law firms and lawyers in London who used to be known for killing deals. One client told me years ago that if  Mr zzzzzz,  ever acted for the other party in another deal where my client was involved, he would rather walk away than negotiate. After an 18 month period when we negotiated and signed a deal every two months , the lawyer on this one wanted to show he was tough– he certainly was, but it cost his client the deal and about £5 million. That was more than 20 years ago and it left , as you can see , a lasting impression.

In London and particularly on the larger deals, lawyers are normally just  ……….lawyers … they aren’t, nor are they usually meant to be, business advisors – for numerous reasons, one being that  their insurance policy won’t cover them. And I guess it’s an experience thing too– the older you get the more you realise what you don’t know, so you go back and ask people (auditors, bankers,especially  clients) for clarity.

Realise also that the lawyer is not meant to be the ultimate arbiter of the risks in a deal—most of us don’t have the skill sets, to do so. That has to be for the client. After all if we wanted to take those decisions, we should be on the other side of the table. What that probably means is not to say to a client “you shouldn’t” or you can’t do this” …. But rather “if you do this, then some of the risks might be as follows” or “ there is another way to get to more or less the same result”.  As the song says ” It ain’t what you say , it’s the way that you say it”.

Of course that doesn’t mean lawyers shouldn’t have views. One longstanding client says the reason he instructs me and refers me to others is that I will give him an answer. I may be right or I may be wrong– but I’ll say something. As he says to me ,” I am not right all the time, so I don’t expect you to be.”

Common sense ideas don’t always work and are sometimes genuinely dangerous , but are often worth a thought.

This is another piece which sets out some of the areas I have written and lectured about in the past and which want to blog about when I get some time.There are, I reckon some good discussion subjects below — anyone have a view ?

As many know,several years ago I wrote a short paper about four core inter-linked phrases, which can be summarised as:- too much law; too much complex law; law which is unenforceable; and law which is unenforced.. These are now known ( by me at least ) as gould’s mantra. To me,these phrases suggested among other things an absence of common sense in the corporate and commercial legal processes.They could apply to many areas of law; I am concentrating on business law.

In 2011 I gave a lecture at UCL Centre for Commercial Law, entitled “Common Sense – the Dark Matter of Business Law”. Research for that paper included a survey of several owner /managers of SMEs who produced comments such as:-

…a director of a small company is far too busy keeping his head above water to worry too much about regulations. I would say that the attitude towards all this is to ignore it, fear it, hope it goes away and hope you won’t be caught doing something you didn’t know was wrong in the first place. I would also say that most directors of small companies run their businesses using common sense and by hard work and a desire to make money, grow the business, employ the people and so on. Regulation is a barrier to this”.

My paper looked at the “disconnect” between (i) those who decide on the framework of rules and those who draft them, and (ii) the “users” of those rules. I wondered whether common sense could have any part to play in drafting legislation, because if people can’t or don’t (for whatever reason) understand the law, they might ignore it; they might also do the same if it makes no “sense”. I also wondered about issues of legislation being micro-managed, resulting in an enormous piece of domestic legislation of particular concern to me (Companies Act 2006 and its dozens of accompanying statutory instruments).

I summarised some of  my ideas as follows:-

In respect of SMEs, as well as many other groups, there are far too many rules, most of which are too complex for their constituents to understand without costly assistance;

If laws are going to be passed there should be an acceptance that they will, whenever possible, be clear for their core constituents;

One size generally does not fit all companies/constituents and we should stop trying to draft laws as if it does;

Too often the wrong people appear to have been consulted during the discussion stages of the legislative process, when that process applies to smaller businesses;

Legislators should not try to micro-manage the regulations of every sort of business – some need it more than others;

If those who wish to encourage SMEs, and economic growth through that part of the private sector are serious about doing so, then not only do we need less complex legislation, we need appropriate legislation; and

If a halt to legislation is not possible, appropriate rules need to be introduced; in the case of some SMEs, a Smaller Companies (Companies) Act.

It seems to me that there is a strong case for those teaching company law in its widest sense to become involved in this debate, to shape future regulation by broadening the views of practitioners.

I appreciate that not all of these issues may not be within the direct scope of undergraduate law courses, but I believe that those teaching company law would greatly benefit their students by finding a way to introduce some at least.

Good law Initiative

The Good Law Initiative (GLI) has come out of the vision of the Office of the Parliamentary Counsel (OPC). It would like people who use the law to experience so called good law (wouldn’t we all). We need law that is:-

  • Necessary
  • Clear
  • Coherent
  • Effective
  • Accessible

My Involvement

OPC asked people in government, in parliament, as well as people in the world of business to think about good law. I am a corporate lawyer who has been writing and lecturing on these issues for some time.

As part of my involvement in this project I was asked to say something to a group from the Cabinet Office about the problem of volume and complexity of law (and resulting issues of lack of compliance and enforcement) from the perspective of real life users.

My Approach

My basic mantra is as follows, and it applies to just about every part of the legal system. I believe we have:-

  • Too much law
  • Too much bad/complex law
  • Laws which are unenforceable
  • Laws which are unenforced

The Target

This initiative has small and medium sized companies in mind.

In my opinion, what often tends to be missing from these discussions is feedback from the 99 per cent of these businesses.

There are over 4 million SMEs, employing up to 249 people, and make up about 48 per cent of private sector turnover and employ over 13 million people. They are an extremely important part of the economy, and as such should be rewarded with a voice on matters which affect them.

Further Information

In my next post I will offer a couple of examples from clients which go to the heart of issues raised by this initiative.