- Developing model clauses with the Drafting Worksheet will noticeably improve your drafting skill, make you more efficient and effective at analyzing the drafting of others, and make you more valuable in the internal marketplace.
Have you ever been charged with preparing the first draft of a significant agreement? Did you worry whether you addressed all the important points in the key clauses you drafted?
Have you ever had to assess the sufficiency and acceptability of opposing counsel’s draft of an important document? Did you wonder whether any of the provisions in that draft varied from the norm, in ways that favored opposing counsel’s client (or hurt your client), with key language added, modified, or missing?
Did you wish you had a model clause with which to compare them?
Have you ever thought about how best to improve your drafting skills when you have so little time available?
Improving your drafting skills while creating your own model clauses―and ultimately your own personal clause bank―isn’t as daunting as it might seem. The key is developing model clauses efficiently and effectively, whether over time or over lunch, and the key to that is the methodology.
My methodology is based on a deceptively simple Word template that I call a Drafting Worksheet.
A blank Drafting Worksheet template that you can use is available for download. As you will see, it is a single-column table with as many rows as are needed.
The type of clause becomes the title of the Drafting Worksheet.
The Drafting Worksheet facilitates a detailed comparison and analysis of multiple clauses in a highly efficient way. It is simple to use, and it doesn’t have to be completed all at once. (Because you decide when to work on this, it needn’t detract from your regular work.)
Is there a clause that interests you? Let’s say something simple like a prepayment clause. Create a Drafting Worksheet from the template, entitle it “Prepayment,” and then copy the interesting clause from the source document and paste it into the Drafting Worksheet. Save your new Drafting Worksheet to your clause bank folder.
Once you have captured one prepayment clause, you will begin to notice other prepayment clauses that are the same but different. While they all essentially say the same thing, each says it differently in language, scope, or structure.
If you come across such a prepayment clause, copy the clause, open your Drafting Worksheet for prepayment clauses, and paste it in. Ideally, for each entry, add a notation that identifies the source document.
Copy, paste, save. The process is painless. Sometime later, when you have enough different prepayment clauses in your Drafting Worksheet (five to ten for a simple clause, more for a complex clause), and you have some time, you distill the model clause.
Or, if you need to develop an important clause in a hurry (e.g., for a work assignment on an active file), you can always turbocharge the process by using a compilation service, like LawInsider.com, which extracts clauses from EDGAR and other public sources and enables you to view hundreds of clauses by type, one after another.
Please note that this is not always non-billable work. Developing a better boilerplate clause will typically be non-billable, ascribed to personal, professional development, whereas using this methodology to develop an essential clause for a billable matter will usually be, for the most part, billable.
The first step of distillation is to compare and analyze the sample clauses in your Drafting Worksheet, looking to identify the critical elements of the clause. This is a kind of who, what, when, where, how analysis—it allows you to separate what is and is not essential.
Once you know the key elements that need to go into the clause, the second step is to select a structure and formulate your first draft of the model clause. In doing so, seek to identify and borrow useful language and clever phrasing from the sample clauses. Don’t be shy to reuse what others have done; equally, don’t hesitate to do something new or different.
Now that you know the content of the draft model clause, even if the language isn’t quite final from a drafting perspective, you’re in a position to identify (and address) any legal issues that merit legal research. Do the research and make any necessary drafting changes. Then revise, polish, and repeat until you’re satisfied to let other people see your work.
Finally, to complete the process, endeavor to identify any related clauses and list them in the Drafting Worksheet, together with any definitions you’ve used in your model clause, under “Definitions and Related Provisions.”
To illustrate the process from beginning to end, I’ve chosen to develop a moderately complex provision, known as a non-disparagement (aka no mudslinging, aka business reputation) clause.
Our example is intended to be suitable for inclusion in an executive employment agreement.
It is common for non-disparagement obligations to be mutual, with parallel obligations of the employee (the executive), on the one hand, not to disparage the employer (the company), and the company, on the other hand, not to disparage the executive.
For our illustrative example, I will deal with what is typically the more onerous set of obligations, namely, the executive’s obligations to the company (in effect, breaking the clause into two).
Second, non-disparagement clauses start by creating prohibitions and then allowing specific limited exceptions to the prohibitions. As a preliminary, I’ve decided to break prohibitions and exceptions into separate subclauses, each with its own Drafting Worksheet.
To begin, I create two Drafting Worksheets from the template: non-disparagement—prohibitions (the “prohibitions” clause) and non-disparagement—exceptions (the “exceptions” clause).
In each Drafting Worksheet, I compile several sample clauses or subclauses, each selected for saying the same thing differently, pasting them in as-found order, under source material and examples.
The prohibitions clause will be employer-friendly (given that the company’s lawyers invariably produce the initial draft of the agreement in which the clause will appear) and fairly comprehensive (bearing in mind, of course, that this is intended as a first draft from the company, i.e., there has not yet been negotiation or pushback from the executive’s lawyers).
The next step is to identify the critical elements of a prohibitions clause. My list is as follows:
With that list in hand, and a structure in mind, here is what I came up with as a model prohibitions clause.
(1) Except as expressly permitted by subsection (2) below, Executive shall not, whether alone, or with or through other(s),
It’s critical to make the prohibitions clause subject to exceptions. This also addresses executives involving others in accomplishing the prohibited acts.
at any time during the term of this Agreement and for [***] years thereafter,
This addresses duration, including a fixed period post-termination (when the relationship between the executive and the company may be at its most adversarial).
make, repeat, endorse, publish, post, distribute, display, disclose, or otherwise communicate, orally, visually, or in writing,
A drafter should always eliminate any words that are wholly encompassed within another word used. Each of these verbs adds a separate (and not insignificant) dimension to the scope of the clause. Similarly, for adding “visually” to the more customary “orally or in writing” (think TikTok).
to any person or entity, or in any forum or medium of communication, whether public or private,
The phrase “any forum or medium of communication” is intentionally broad and is intended to cover, among many other things, future as well as current social media. Extending coverage to “private” as well as “public” reflects the fact that a “private” group may be quite large (a private club, for example, or a private group on Facebook or Instagram).
any statement or information, whether or not true,
The truth may be a defense to defamation but not to disparagement. True statements can be disparaging.
or take any other action whatsoever,
This is intended to cover any “hostile creativity” on the part of the executive.
that disparages, discredits, defames, or is otherwise detrimental or damaging to
While they overlap, disparagement and defamation are not the same, so both are included.
the Company, its products, services, financial condition, business prospects, goodwill, reputation or integrity, or the reputation or integrity of any of its directors, officers, or other personnel,
I felt this language covered the waterfront without duplication, but feel free to expand upon it if you wish.
or that undermines or interferes with the Company’s relationship with its customers, suppliers, employees, stockholders, investors, bankers, or regulators.
Depending on the nature of the company’s business, other possibilities are relationships with ratings agencies and licensing bodies.
I’ve decided to make the exceptions clause employee-friendly, as that will likely be its most valuable use if the executive cannot soften the prohibitions clause.
Bearing in mind the extensive catchment of the prohibitions clause, if the exceptions clause is to be employee-friendly, I think there will need to be a lot of exceptions.
Can executives freely and voluntarily make statements or reveal information as long as it is factual? Absent the specific exceptions, no, not if it makes the company look bad.
With those elements in mind, and using a parallel structure to the prohibitions clause, my take on a model exceptions clause follows, together with some commentary on drafting points:
(2) Notwithstanding the foregoing subsection (1), nothing in this Agreement precludes or limits Executive from making truthful statements or disclosing factual information, whether orally, visually, or in writing,
This is really about the executive knowing when her right to speak the truth and provide factual information, having been so severely limited by the company, can nevertheless be exercised without fear of litigation or penalty.
(a) in the ordinary course of the good faith performance of Executive’s job responsibilities [or in taking any action Executive in good faith believes to be necessary or appropriate in fulfilling Executive’s fiduciary responsibilities to the Company];
Perhaps the performance of job responsibilities is an obvious exception (but if it’s not listed here, there’s no exception). As for fiduciary responsibilities, it would certainly apply if the executive sits on the board of directors (and would otherwise likely depend on how senior the executive is).
(b) to any authority within the Company designated to receive complaints or concerns from employees or to the Company’s board of directors (or a committee thereof) or to the Company’s independent auditors;
Depending on various factors, the company may be reluctant to allow the executive to go to the outside auditors.
(c) to the extent necessary to directly rebut any public statement about Executive by the Company or any of its directors, officers, or managers that is untrue or misleading;
This is important to keep the playing field level. Consider whether this should extend to untrue or misleading statements by anyone.
(d) to a professional adviser, in confidence, for the purpose of securing professional advice;
This presumably is a noncontroversial exception (but it still needs to be listed).
(e) when testifying (including at deposition, hearing, or trial), or making productions of documents, as compelled by validly issued subpoena or other mandatory legal process or otherwise required by law;
This should also be noncontroversial.
(f) when testifying (including at deposition, hearing or trial), or making productions of documents, or in filing any pleadings or court papers, in any proceeding to defend or enforce Executive’s rights under this Agreement [or any other agreement between Executive and the Company];
There may or may not be any other agreement(s) between the executive and the company, but if there are, a reference to them in this subclause is critical. As for pleadings and court papers, there is at least one case where the employer asserted its non-disparagement rights in connection with statements made in the employee’s pleadings.
(g) to any federal or state governmental, regulatory, or law enforcement agency or legislative body (including any committee thereof) in connection with any inquiry, investigation, or proceeding within their jurisdiction; and
This covers House and Senate hearings, among other things. I intentionally omitted any subpoena requirement.
(h) in any notification to any federal or state governmental, regulatory, or law enforcement agency, whether such notification is made as victim, witness, or whistleblower, reporting that a likely violation of federal or state law, regulations, orders, or standards administered or enforced by such agency, by or involving the Company, has taken place, is ongoing, or is about to take place (including but not limited to financial impropriety, act(s) of violence, sexual or other harassment, discrimination, or harmful actions pertaining to the environment).
This covers instances of law-breaking by or involving the company, past, present, or future, and allows voluntary action by the executive.
Now that we have both the prohibitions clause and the exceptions clause in close-to-final form from a drafting perspective, we’re in a better position to identify (and address) any legal issues that merit research. This is an ideal time to flag any related clauses for inclusion in the agreement.
One legal issue is whether the executive has any protected employment rights, such as Section 7 rights under the National Labor Relations Act. If they attach, I believe that Section 7 rights cannot be waived by agreement, and so, if I am right, an exception would arguably be unnecessary. I suspect, however, that the short answer is that Section 7 does not apply to the executive because of her rank in the company (i.e., not eligible to join the union).
Another issue is, what kind of whistleblower protections does the executive already have by statute, federal or state? Might she rely on those?
Another question is whether the extension of the prohibition for non-disparagement beyond the termination of employment needs to be a fixed term. As to how long of a fixed term is reasonable, given the rank of the executive and possibly other factors, the decided cases may shed some light.
As for related clauses, one that immediately comes to mind is a third-party beneficiary clause for the benefit of the company’s “directors, officers, or other personnel” whose “reputation or integrity” may be impugned by the executive.
A survival clause is probably unnecessary, as the non-disparagement clause expressly extends beyond the termination. Still, you can include it, out of an abundance of caution, if you wish.
The company may also choose to include a liquidated damages clause to create a sufficient penalty for violations by the executive while avoiding the difficult task of establishing the actual quantum of damages.
If there is more than one agreement between the executive and the company, then be careful with the wording of the entire agreement clause so as not to supersede the other agreement, in whole or in part.
Finally, always consider whether the clause should be reviewed internally by domain experts before being considered ready for use in client documents. For simple clauses (like prepayment), it’s usually unnecessary. For a more complex clause like non-disparagement, touching as it does on specific areas of expertise, I would typically seek internal review by an experienced employment lawyer and an experienced litigator.
Please remember, a model clause—and therefore your clause bank—is never done. There are always new clauses to add, but, more importantly, the clauses you have previously done continue to evolve (especially if there is some relevant new case law or legislation).
That is yet another reason why the Drafting Worksheet is so valuable. Your model clause can evolve with the times if you continue to add new and interesting examples to the Drafting Worksheet whenever you encounter them and periodically review your model clause, updating as necessary.
Perhaps most importantly, developing model clauses with the Drafting Worksheet will noticeably improve your drafting skill (perhaps the ultimate compliment to your drafting skill is when you see one of your clauses come back to you in opposing counsel’s document), make you more efficient and effective at analyzing the drafting of others, and make you more valuable in the internal marketplace, all with a very manageable impact on your time.
Do yourself a favor . . . download that Drafting Worksheet template and start capturing those clauses!