Posted: Thursday 26 January 2012
Don’t hide behind e-mails; good, old-fashioned meetings are really helpful
By Austin Flynn
I advised recently on a company purchase where we just managed to sign the deal an hour before the completion deadline, which was a bit of a close shave.
On the one hand it was great to get the deal done but on the other, it would have completed earlier, with less hassle and with less expenditure of time (and therefore expense) if the other side’s lawyer had been prepared to meet for a final negotiation (involving both sets of clients and their lawyers) followed by twenty minutes of final word processing and printing, followed by a signing meeting. However, the other lawyer wanted a ‘signing ceremony’ and by that I mean one of those rare meetings where both sets of clients walk into the room and meet properly for the first time, all the signing papers are laid out on the desk, fountain pens are unleashed for fifteen minutes and then the champagne is cracked open.
In the last twenty years I’ve run literally dozens of completion meetings and anyone who is regularly involved in large corporate transactions will know that they are usually preceded at some point either by an all-parties negotiation meeting involving a few tense moments, much scribbling, shuffling of papers and consumption of coffee and biscuits; alternatively there may have been a teleconference, but at some point the clients invariably need to be brought together to thrash out the commercial (as opposed to legal) points. The idea of getting to a nice neat signing ceremony without the clients having resolved some commercial points between themselves is a laudable ambition, but likely to leave you disappointed.
We’ve all seen the scene in Pretty Woman where Edward Lewis (Richard Gere’s character) shakes hands with Ralph Bellamy’s character, they make an announcement about building ships, and the odious blood-sucking lawyer, Philip Stuckey, is told to wrap up the deal. Just like that. We don’t see what happens next but we’re left to imagine that the lawyers draft a long document covering all kinds of commercial detail and the clients just walk in and sign it.
Believe me, it doesn’t happen like that, and what made last week’s company purchase more fraught than necessary was the fact that the seller’s lawyer thought that e-mailing me a draft agreement with his desired amendments on it was a negotiation. It wasn’t. I then had to call my client and ask his view on the amendment and then I had to call the other lawyer back with my counterproposal; he than had to call his client and take instructions and then the other lawyer e-mailed a new desired amendment to me. I could go on but you’ll get the picture. I suggested early on that we simply make a note of the few remaining commercial points and deal with them at the start of the completion meeting when the clients were present. The other lawyer refused, continued to e-mail me with his ‘desired amendments’ and insisted on having a signing ceremony where no commercial points would be discussed.
In practice there were still three commercial points to be resolved when the clients arrived in my office at 3pm, by 3.10pm they were resolved, and by 3.45pm the final documents had been printed off, signed and we were home and dry. We could have had it done by 11am if the clients had met at 10am; instead we had two hours of ‘shuttle diplomacy’ which ultimately achieved very little other than risking the parties becoming entrenched over relatively minor points that were resolved in ten minutes face to face.
E-mail is a great means of shifting large blocks of information (including legal documents) very quickly over large distances. However, it’s much more akin to a fax than to a negotiation meeting. Twenty years ago when the fax became omnipresent it replaced the post; it didn’t replace meetings and they still took place. The world of commerce was better for it and I can remember in 1997 flying from Edinburgh to Birmingham for a one hour preliminary meeting with the other side on a company purchase, just so that we could build a rapport rather than being faceless names at the end of an e-mail for the rest of the transaction. It worked a treat.
So when you’re choosing a lawyer to run your corporate transaction, ask whether the lawyer ‘does meetings’ or prefers e-mail to the bitter end. The answer should tell you much of what you need to know about the lawyer.
1 Comment
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John replied on 27 Jan 2012 at 15:15
well said Austin! nothing beats a bit of face time to get the deal done.
