By Jeff Lippman

Lippman is a Senior Associate based out of Tysons, Virginia at Dunlap, Bennett & Ludwig

[12.13.2019 Tysons]  I often tell clients “I am a simple man” and I often counsel clients to follow some simple concepts that apply to legal relationships. One of these is “good fences make good neighbors”. This is my metaphor for good foundations in business relationships that will lead to a more successful endeavor; or at least a more civil breakup. However, believing in these simple precepts does not mean I believe simple documents are a good thing. That is not to say I support overly complicated documents nor unduly wordy language. Allow me to elaborate below.

Before I do, I’d like to briefly address some contract concepts which may seem to contradict this article. They do not.

  1. Ambiguity is Construed Against the Drafting Party   This is increasingly being written out of contracts. It is also usually true when the sophistication and/or bargaining power of the parties is disparate.
  1. Plain Language is Superior to Legalese   I’d say that it is a mixed bag. There’s a place for plain language. But there are also legal terms and expressions that have been used for a long time and have well established Court interpretations. Your documents should be ones that a Judge understands and can predictably rule upon. So, simple and simplistic are not synonyms. Sometimes a simple approach is to utilize tried and true best practices. Legalese is not always fine print or mumbo jumbo; it’s often time tested essential elements of a sound contract or legal document.

With those items addressed, we can move onto the crux of this article. I often speak to clients with plans to create rather complicated legal relationships, yet they have been provided primitive legal documents. Oftentimes, this is from relative strangers where there is no course of conduct or business history. This could be real estate transactions, business ventures, investments disguised as loans, loans disguised as investments, unclever attempts to avoid securities or franchise laws, unartful efforts to call a partnership anything but, or to call an employee anything but, etc. Complex relationships cannot successfully be defined nor enforced by overly simplistic documents. The goal is not to prevail in litigation. The goal is to avoid litigation and have a successful venture while mitigating the costs and unpredictability of a severing of ties.

Primitive documents are a serious yellow flag to me. Really, a bright, red flag. It shows a lack of sophistication and a lack of investment. Even if they are the drafting party or the more sophisticated/wealthy party, I’d prefer not to have to argue that in Court rather than have a better chance of a successful legal relationship. And, at worst, an easily identifiable roadmap to legal separation.

Thus, I do not believe simple documents mean a simple relationship. I strongly believe, and my almost 30 years of legal experience supports this, that better documents usually mean a more serious, invested, and steady partner than the partner selling a complex relationship that presents primitive or simple documents, while saying “trust me”.

Some investment in legal counsel can avoid or mitigate enormous losses on the separation front. More importantly, good fences make good neighbors, and good documents make for a better business relationship. Our team at Dunlap, Bennett & Ludwig, PLLC, has attorneys well versed in many areas of law and we can bring those resources to work for you. Our multi-state and international team can often be your one-stop legal destination for all your complex legal needs; the simple ones too.

Posted in: Business Law, Corporate Transactions