Documents grow. They never shrink. The process starts with the templates we use again and again for deals. Every time we do that, smart lawyers think hard, sometimes too hard, about how to negotiate or just improve the document. They can always offer different and sometimes better ways to say the same thing. Ask any number of lawyers to comment and the commenting would never end.
Some changes reflect idiosyncratic concerns based on experiences, good or bad. Others reflect circumstances of a particular deal, sometimes causing over-negotiation. Others arise because clients ask how a document will work in the real world.
For example, in a purchase and sale agreement with a due diligence period, seller might suggest that if buyer terminates, buyer should not get the deposit back until buyer gives seller copies of whatever due diligence materials buyer obtained. A seller doesn’t need to have that, but it can be nice to have. Every document we negotiate is full of issues like that.
Issues that arise in one transaction may very well arise again in another transaction. It isn’t efficient to reinvent the wheel. So, we want our templates to benefit from past improvements, negotiations, and insights. Deal-specific idiosyncrasies often turn out not to be so deal-specific or idiosyncratic. We want the next deal to benefit from work on earlier deals. Maybe future negotiations will go faster.
If we update template documents based on experience, as we should, then the templates grow. If we start every new transaction from the template, we will know we probably won’t miss something we should have covered. We just need to take out whatever doesn’t apply.
But if the template has become encrusted with too many options and other complexities, then using it becomes arduous. Many provisions in the template ripple into other provisions. You can’t just chop out paragraphs without considering the entire document. You have to excise everything you don’t need with a light hand and a discerning eye. This labor-intensive process defeats the template’s purpose. The template offers too much and requires too much work.
There is a better way!
In updating my ground-lease template for my upcoming book on ground leases, I blew up the template and started over. Rather than try to make it cover everything that might arise, I kept a minimalist “base case” ground-lease template that has only the basic terms, the provisions you always expect to see in any ground lease. It’s thorough enough that no one can say it has a glaring deficiency. It says what it needs to say. It won’t embarrass anyone.
Then I collected everything else—all the historical encrusted bloatification from past deals—in a separate document, which I call my ground lease “bells and whistles.” These provisions might sometimes apply, perhaps because of special circumstances, concerns, or a desire for extra protection on an issue that the base case handles more simply.
My bells and whistles preserve the thought process that went into negotiating them in past deals, but they don’t distract from the base case. They’re just available for reference and use.
This all sounds very straightforward. But it’s not as easy as it sounds. Each time I decide some paragraph is a bell and whistle, not part of the base case, I run the risk that someone else will later think otherwise.
I’ve endured those discussions, too. It’s always the same story: The parties signed a pared-down document to meet the unusually urgent timing of a particular transaction and minimize negotiations and costs. Everyone decisively wanted to keep the lawyers under control.
Three years later, when someone tries to sell or refinance, a new player decides a document needs a few provisions it doesn’t have. Those might have qualified as bells and whistles under my nomenclature. In the case of a ground lease, a future buyer or mortgagee of the leasehold generally figures how to live with that concern, but sometimes not. Then the parties have a problem. Maybe a bell and whistle should have become part of the base case.
It’s not so easy to slim down a bloated document template. Each provision—whether old hat or some brilliant new thing—requires a judgment call. Some provisions are good and might help. Some seem benign, even if unusual. Why not just leave them all in? Answer: If you want to shorten and simplify the template, then you need to shorten and simplify the template.
To trim down the base case, you must dig through and recategorize, or at least vastly simplify, accumulated verbiage that is unnecessary or very unlikely to apply.
Of course, each bell and whistle must track the terminology and internal logic of the base case, or be self-contained, to minimize any ripple effect. Some bells and whistles will be inconsistent or even mutually exclusive. Over time, though, the base case should evolve slowly, and only as changing law or market conditions require. One can then confine the ever-burgeoning bloat to the bells and whistles, optional language for use when needed rather than excess verbiage to be excised.