Archive for October, 2009

Licensing in Plain English; or How (and When) to Write Contracts People can Understand

October 22nd, 2009

Most of my work is with medium and large companies negotiating software licenses between one another.  The documents tend to be long and assume deep knowledge of license terms, indemnification, warranties, damages and other key concepts.  I recently had a very different assignment, though, that turned into a fascinating exercise in minimalist licensing terms.

A high profile company needed to obtain rights to use photographs of some extremely unsophisticated members of the general public (i.e. people who don’t read legal contracts very often, if ever).  We needed to obtain a license to use people’s likenesses in a way that made clear the people understood the rights they were providing, and of course we wanted the language to be legally defensible.  The assignment turned into a great opportunity to go back to the most basic licensing principles.  As a bonus I got to poke around at how other people handle the same problems.

Licensing Concepts
The first thing I did was to strip down a license into is most basic components.  At a minimum, a license needs to identify (i) the material being licensed, (ii) the fields in which the material may be used (or the areas from which material may be excluded), (iii) the geographic scope, if any, and (iv) the price being paid for the license.

A typical license agreement has loads of other terms that are important in various circumstances.  I certainly would not recommend that companies omit these provisions- they are important in those types of transactions.

At the same time, most people don’t do these types of transactions and don’t have the benefit of experience in looking at license terms.  Sometimes it can be appropriate to use a very basic set of provisions that focus more on clarity and covering the basics than on detail.  It is very possible to write plain English that covers items (i)-(iv) above simply and completely.

What Other People Do
Creative Commons
is my favorite example of complex license terms described simply.  CC helps laypeople people select license terms that are appropriate for specific situations and they have developed a friendly set of mix-and-match logos to indicate what rights are imparted by the various choices.  The logos are backed by human-readable descriptions of the terms as well as traditional legalese.

STADSchromosomen, Creative Commons license
Image by spinster via Flickr

This a nice approach since it offers multiple ways to understand the essential provisions.

When to Use What Language
The real question is- when is it appropriate to use full-blown legalese and when can we make do with less?  For me it comes down to three basic considerations:

1)  The people giving up rights need to understand what they are agreeing to.  This is Creative Commons’ basic principle, and also the one I follow with my clients.  In that case we came up with a very stripped-down, nonlegalistic license provision so that we could clearly communicate what we were asking of people and have a decent expectation that they understood it the same way we do.

2)  What is the downside of leaving things out?  In many cases companies expect to see license terms written in a certain way.  Sticking with the tried-and-true format can actually move the deal along faster.

3)  Leaving out big items like warranties, post-termination obligations and indemnification language can create risk for one side or the other, so I consider litigation risk as well before I start cutting things out of agreements.  Does the other side have the means to sue?  Would we cause undue exposure for ourselves by omitting certain terms?

In the end, I put all these items together and try to find the right spot on the plain English-legalese continuum for any given agreement.  I like this process because it means I don’t hew blindly to certain forms, but instead think about purpose and how to meet everyone’s needs as efficiently as possible.

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Reading a Negotiation: Who Wants to Do the Deal and Who Wants to Argue?

October 15th, 2009

My normal strategy in a negotiation is to be frank about my client’s needs and try to find a collaborative solution for both sides.  Here is an example of when that worked really well, another one where it didn’t and what I could have done to improve the outcome.

Negotiation as Collaboration
In one recent transaction my client and its business partner had reached agreement on about 90% of the issues in the deal.  The last few were somewhat sticky because they were less about business terms than allocation of risk.  I explained our situation to the other side, then listened carefully to the other side’s points.  When we started going through the draft agreement I realized that the first two points were much more important to them, while some later ones were bigger points for us.  After hearing them out we agreed we could concede the first two items. The mood on the call immediately improved, the other side agreed to concede the items we explained were important to us and we breezed through the rest of the call.

Negotiation as My Way or the Highway
This strategy worked so well that I tried it again in another deal and it blew up.  The difference was that the attorney in the second deal had no interest in collaborating- she simply wanted to “win” every point.  That call was so adversarial, in fact, that everyone started shouting and stopped listening.  My client ended up getting everything it needed, but only by going around the attorney after the call and convincing the business principal that his attorney was standing in the way of the deal.

How I Avoid Making the Same Mistake Twice
The lesson I took away from negotiation #2 is to read the tone of the discussion as quickly as possible.  The people on the first call started out wary, then quickly warmed up through a candid discussion of the issues.  The attorney on the second call was belligerent from the outset and had no interest in talking through the business points.

Fundamentally I believe in my approach- I know my clients’ products cold, have business reasons to justify almost every point and a strong sense of which purely legal items we can give up in order to do the deal.  In my second deal, I should have avoided letting emotion take over, stuck to the business points and gotten off the call as quickly as possible so that both sides could work through the facts without having the attorneys showing off for their clients. The call might still have been unsuccessful but we could have avoided polarizing everyone.

My clients and I work as a team.  My job is not to win every point in a negotiation but to put the business terms into language both sides can benefit from.  I love this job because even though I have spent 11 years practicing my approach I still learn new things every time.

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Sad, Sad Week; Saying Goodbye to Craig Johnson

October 5th, 2009

Last week Craig Johnson, co-founder of my law firm, Virtual Law Partners, suffered a massive stroke.  He died Saturday evening surrounded by his family members.

VLP was formed when co-founders RoseAnn Rotandaro and Andrea Chavez approached Craig for advice on how to grow their small firm practices.  Craig immediately saw an opportunity to do something larger and more interesting.  VLP launched in May 2008 with a mission to provide personalized, efficient legal services to clients with minimal overhead.

A mere 14 months later one can not read legal news outlets without finding a slew of articles on client demands for higher efficiency, closer contact with partner-level attorneys and predictable legal expenses.  I mention this in order to point out that Craig was ahead of the curve throughout his career- from his start at the brand-new Wilson Sonsini in the 1970s, to Venture Law Group in the 1990s where he rode the Internet boom, to VLP Craig’s vision was prescient and many of us in the legal community and elsewhere have been well served by his guidance.

I had not met Craig before I joined VLP. He was impressively smart, confident and creative. He was a role model for me in my legal career; like me, he was also an avid cyclist and I will miss talking to him about his cycling trips as well as his career advice.

All of us at VLP consider ourselves part of Craig’s extended family and will miss him greatly.

(image courtesy ABA Journal)

(image courtesy ABA Journal)

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