Approach

Overview

It is true, in a way, that when it comes to problem solving the right approach (leading toward a satisfactory solution) can only be determined based on the specific problem at hand. However, where business management and legal management overlap, it is also true that there are several ‘golden rules’ that should be followed when engaging in legal advice or conducting structuring work.

The ten most important of our ‘golden rules’ are outlined below:

1. Use tried and tested working techniques

As a starting point, in any kind of legal work, it is essential to use tried and tested methods (also known as ‘working techniques’).

At a preliminary basis, it is also important to understand that the practice of private and commercial (business) law is divided into two parts:

  • One, representing clients in legal disputes (out of court negotiation, arbitration, and litigation).
  • Two, assisting with the structuring, negotiation and drafting of legal documents in connection with new deals.

As to part One: Skills in “Relationstechnik” are intensively taught and practised in mandatory legal trainings making lawyers fit for civil and commercial litigation and for arbitration. Accordingly, Barber Odenbach’s lawyers are guided by “Relationstechnik” in these disputes.

As to part Two: Methodological skills geared towards deal-making are rarely taught in Germany’s mandatory legal training. The acquisition of the relevant skills is primarily a matter of additional training and of hands-on working expertise.

Some lawyers have had the privilege of acquiring the respective skills, for example, in major law firms and from assisting experienced deal lawyers.

Barber Odenbach’s team includes lawyers of the latter category. They have acquired and improved their deal-related capabilities while working for many years for large law firms and/or in-house departments of large companies. They are authors of the blog Situation Law run by Barber Odenbach (currently the blog provides German language content only).

2. Distinguish between project and task

With each new mandate, clients and their lawyers need to be clear about whether they need to complete a task or realize a project.

“Tasks”, on the one hand, are jobs in relation to which, due to past work experience, one has, from the outset, precise ideas about the quality of the outcome and about the human resources as well as time and financial resources necessary for completion in a professional manner. The performance of tasks constitutes basically the recycling of existing knowledge or know-how. Tasks require input that is in essence routine work.

A “project”, on the other hand, is a completely new endeavour for those involved. In the words used in DIN 69901 (German industrial norm), a project is essentially characterised by the uniqueness of the conditions in their entirety. For example, the objectives in terms of time, budget, (wo)manpower or other conditions may be unique.

Usually, the lawyers of Barber Odenbach are involved in the realisation of projects or of hybrid “task-projects”.

For this reason, our “golden rules” are mainly geared towards project topics.

3. Magic triangle

In the case of projects and “task-projects”, one faces a typical conflict of objectives: On the one hand, the project outcome should be of the highest possible quality. On the other hand, time and cost budgets must also be respected (efficiency).

In project management, one must therefore skillfully move within the magic triangle defined by the goal of effectivity and the efficiency-related goals of time and costs. Often, quality has to be sacrificed to a certain degree in order 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 cooperation with the client

Every mandate involving (business) law is about problem-solving. As a general rule of problem-solving, a solution of the relevant problem can only be found once the relevant problem has been properly diagnosed (diagnosis of the problem precedes the actual problem-solving action). In our practice, when careful diagnosing a specific problem, one must determine to what extent it is business-related or legal in nature. Most of the problems and challenges our clients deal with possess both legal and business elements as they are hybrid in nature. A diagnosis of a business/legal problem must always be conducted in co-operation with the client. After all, the client is the one who understands the business side best and who is responsible for overall management and supervision.

In the case of a hybrid problem, the solution must also be considered, crafted, and designed from 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 lawyer, 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, if so, 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, in the practice of business law, there are usually five groups of issues one must think through and deal with when working towards effective solutions:

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: General private law, commercial law, corporate law, etc.

Of course, it is also important that clients inform their lawyers about their issues, ideas and planning and share their knowledge.

 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 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, dictionaries or specialist encyclopedia should be consulted.

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 override 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 six-legged 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; 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 can be seen from what is set out in points 4 and 7, in the area of business law, almost all problems are hybrid in nature, i.e. commercially and legally intertwined; hence 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 work with 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).

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