Approach

In project management, one must therefore skilfully operate within the magic triangle defined by the goal of effectivity and the efficiency-related goals of time and costs constraints. Often, quality has to be sacrificed to a certain degree so that the time and cost targets can also be met. (For more information, see point 5 “Safest way”).

4. Diagnosis and solution of the relevant problem in co-operation with the client

Every business law mandate revolves around problem-solving. The fundamental principle of problem-solving is that a solution to any problem can only be found after a thorough diagnosis of the issue (diagnosing the problem precedes taking action to solve it). In our practice, when carefully diagnosing a specific problem, it is crucial to determine whether it primarily pertains to business or legal aspects. Many of the challenges our clients face are hybrid in nature, involving both legal and business elements.

The diagnosis of a business/legal problem should always be a collaborative effort with the client. After all, the client possesses the best understanding of the business side and holds overall responsibility for management and supervision.

In the case of a hybrid problem, the solution must also be reflected upon and crafted  from both a business and a legal perspective. Often (but not always), hybrid problems require hybrid solutions. In any event, crafting a proper solution necessitates very close coordination between client and lawyers, sometimes with the involvement of other experts.

5. Don’t guess

One of the most important foundations of careful work is the rule of don’t guess. In renowned London and New York law firms, don’t guess is the most important principle.

For example, it is wrong to say: “The draft contract looks good and is in line with standard drafting. It should be okay.”

Such an approach is a form of guessing.

Based on the diagnosis of the problem (see point 4 above), the only correct approach is to work out if and how the individual clauses of the contract contribute to the solution of the relevant problem and/or sub-problems.

Only once a detailed analysis of the problem and solution has been carried out, one can say whether the contract is “fit for purpose” or not.

6. The safest way

Closely related to the rule of don’t guess is the rule of the safest way. The latter rule was developed by the Federal Court of Justice (Bundesgerichtshof) in cases concerning the professional liability of lawyers. The rule of the safest ways says: When advising and representing their clients, lawyers must chart and select the path that leads to the desired goal in the saftest possible way. In the context of the magic triangle (see point 3 above), this means that lawyers (different from their clients) may consider aspects of time and cost, but (safe for emergency situations or other justifying factors) they must not compromise on quality.

7. Integrated thinking

As stated in point 4 above, most of the problems we deal with come with commercial and legal components. Therefore, business-related thinking, on the one hand, and legal thinking, on the other hand, must be integrated and aligned. The alignment works best if both client and lawyer are experienced in dealing with the respective other profession and are familiar with their way of thinking. What does not work: Thinking and working in silos! Hence, it is very important for lawyers to have a solid commercial grounding in the business areas in which they operate. As a rule of thumb: A business lawyer should be able to perform mid-level management jobs in the areas he or she gives legal advice. If a lawyer is interested in the client’s day to day work and educates himself or herself accordingly, client and lawyer will ultimately speak “the same language”.

8. The Pentagon of issues

In our experience, practitioners of business law have to think through, and deal with, five different groups of issues when working towards effective solutions.

The five groups of issue are:

1. Practical and commercial issues
2. Compliance: Are there any mandatory rules set out in criminal or public law one must comply with?
3. Accounting and tax issues
4. ‘Bad weather issues’: civil procedure, insolvency, and enforcement law
5. Private law and contract drafting.

NB: The thought-process can be started by reflecting upon any of the five different groups of issues. The ideal starting point though is on top (“12 h”) suggesting to address the practical and commercial issues of the envisaged deal first and then move clockwise. You can also skip one or more groups of issues. When doing so, make sure to consider and integrate the skipped issues later. (You may skip it but don’t ditch it.) By reiterating the whole thought-process, you improve and refine the solution you are crafting.

9. Language as clear as possible, structure of documents as clear as possible

Any text written in the context of commercial law (be it a writ or brief for litigation purposes or a commercial contract) must be a prime example of clear written communication. The individual sentences must be built on the grounds of simple syntax that is understandable and manageable by the average reader. Short sentences are better than longer ones. The individual words of the sentence must be as clear and explicit as possible. In case of any doubt, drafters should consult dictionaries or specialist encyclopaedia.

As to contract drafting: The German canons of contract interpretation must be observed. Because the genesis of the contract and the circumstances in which it is negotiated are highly relevant for German law governed contract interpretation, it is important that the language of the contract does not contradict the key elements of the genesis and circumstances without providing further explicit clarification. Where the parties wish to break away from the meaning of the genesis/circumstances, they should say so explicitly in the contract. (The first place to state this would be the introduction or background part of the contract and the second would be an “entire agreement clause”.)

Contracts, especially longer contracts, must be structured logically and systematically.

When it comes to structuring contracts, we apply the modular system that is common both domestically and internationally: Part 1.) Name of contract, parties to the contract and date of the contract as well as background information (whereas-es); Part 2.) definitions; Part 3.) Main commercial clauses, Part 4.) Secondary commercial clauses and boilerplates; Part 5.) Signatures and Part 6.) Annexes and Schedules.

10. Teamwork

Teamwork is a must when working on projects that require a wide range of expertise and assurance. As set out in points 4 and 7 above, in the area of business law, almost all problems are hybrid in nature, i.e. commercially and legally intertwined. Hence, usually hybrid solutions must be found.

It follows from the explanations contained in point 8 that at least four areas of law can become relevant, so that – depending on the situation – various legal experts must be brought “to the table”. A standard division of labour is the one between lawyers focusing on private law matters and tax experts. But even within the same field of law – particularly when working under time constraints – it may be necessary to divide the work between several co-workers. Finally, for reasons of care and precision, it is advisable to apply checks & balances.

When drafting contracts, it is usual to engage in teamwork across party-lines. After all, the contracting parties do not only pursue their own objectives (conflicting with the objectives of their counterparts) but they do also share common goals, e.g.: The best possible text of the contract in terms of language and structure (see point 9) and keeping the use of time and financial resources in check (see point 3).