Why are contracts so complicated? You know you hate the complicated contract. This is the first in a two-post exploration of some of the reasons why contracts have gotten so complicated.
First, a quick caveat: contract language can be complicated if the deal itself is complicated. The more complicated the deal, by necessity, the more complicated the contract itself. What is not challenged enough, however, is how to fight the stigma of incomprehensible contracts due to their language.
There are several primary drivers behind complex language, but we will start with how lawyers are trained because it has a very significant impact. When law students begin their first year of law school, they take a series of standardized courses, including classes in contracts, torts, real property, civil procedure, and legal writing. Law students learn from the very beginning that legal writing is somehow different than other writing. But while lawyers have a different subject, the actual mechanics of writing should not be different, yet they often are.
The first big problem that law students run into very early in their legal careers and their legal education is the adoption of the adversarial method. From day one of law school, students jump into the case method as a learning technique to learn the principles of law. To break it down: students read cases opinions, dissect the facts, look at the law, and then analyze the law. The case method is the foundation of legal education in America and as a constitutional requirement, for a court to hear a case there must be a live controversy. Fundamentally, to have a controversy, there must be two or more sides along with the court or a panel of judges who must make a decision, that is the court must determine a winner and a loser.
In the adversarial legal system, each party is fighting to be the winner. This adversarial method may be fantastic for determining fact, but it is inherently adversarial. It creates this notion that every interaction with another party is a competition. And, in that level of competition lawyers begin to see each interaction as a zero-sum game.
But, the world of contracts between businesses, there is no zero-sum game. A contract can, and by its nature does, advance the interests of both parties to the contract. But years of learning and working in the adversarial method creates a desire to win in the lawyer’s mind and practice. As a consequence, lawyers tend to think of the contract itself as an opportunity to give their client an advantage, and a possibility to be the winner in the future of the business relationship. Sometimes those “wins” show up as ambiguous language that somehow favors one side or the other.
Because lawyers have been taught in an adversarial manner, and therefore have adopted certain competitive notions, they end up with a situation where the contract and the drafting of the contract becomes an arena where an adversary is “defeated.” The problem with that is that when you get into a situation of adversaries (trying to beat the other side or win something) is that lawyers can often lose sight of the ultimate objective, which is to get a contract that the parties will sign, and to get a contract that the parties will follow.
The adversary process also lends itself to a short-sighted viewpoint of clients’ interests. I look at the practice of law and the advantages of good, clear contracts as not just protecting my clients’ interests, but advancing my clients’ interests, and trying to make their life, their business, and their transactions better in order to help them make more money and manage a business better.
But the adversarial method only explains a mindset that permeates the legal community. Other bad habits get picked up along the way and part of the problem still stems from how lawyers learn to write. Simply put, law students are taught to write for other lawyers. They are taught to write for judges, for academic purposes like law journals, or for memos about the law, all of which will be read by other lawyers. The difficulty with that, of course, is that over time law students begin to adopt some poor writing habits.
The principal bad habit is the Curse of Knowledge: the assumption that everyone reading their writing is in the legal field. That is clearly not the case. Particularly in the contract world, that is not the case at all.
When law students begin to write in their legal careers, either as students or as new lawyers in law firms, they often only write for other lawyers. They research the law, write briefs for the court, write memos for senior partners, research the law or even do some academic writing on topics that appear in law journals (all of which are read by other lawyers). The more lawyers write for other lawyers, the more they become susceptible to the Curse of Knowledge. In doing so they choose a complex legal language that other lawyers might be comfortable with.
Over time, that becomes such the norm that when a lawyer has to write for a non-lawyers, they simply cannot fathom that the other people reading this writing aren’t lawyers, The Curse of Knowledge actually inhibits the communication skills of lawyers. So, when a lawyer has to draft a contract to be used by non-lawyers, the lawyer forgets that most parties don’t have the same background knowledge and frame of reference. As a result, they don’t see the contract as clear or understandable because it uses language, a style of writing, a method of explanation that simply doesn’t make sense because the client themselves have never lived in that world.
Adversarial thinking and the curse of knowledge have contributed to a culture in the legal world that makes it difficult to write clear contracts using language that the average educated person cannot understand. The next post will talk about other factors that have led to complicated contract language.