Hey Ken Adams: I’m Barking Up This Other Tree Over Here!By http://profile.typepad.com/1237764140s22740 // February 28, 2012 in Legal Docs
It's ironic that Ken Adams should cast me in the role of defender of the quality of Big Law legal templates.
Ironic, because I have never worked at a big law firm.
Of course, in my chosen areas of practice, parties on the other side of my clients are often represented by big firms. In fact, they usually are.
During a stint in house at a fast-growing enhanced telecommunications service provider, I hired excellent lawyers who happened to work at big law firms.
So I know big firm lawyers and I know their form files. I’m even friends with some of them and I even help myself to some of their forms.
But here's the thing: I don't really care about the quality of the startup docs Big Law generates. Not in the first instance.
In the startup space, clients don't want to spend much on basic documents. They want to leverage what everyone else uses. And, most often, they want the confidence that what they are using is “standard.”
There is a large set of exceptions to everything I just said in the prior paragraph. But bear with me.
The point about getting Gunderson, and DLA Piper, and Cooley, and Wilson Sonsini, and everyone else, to publish their startup forms on Docracy, or another open forum, is not to thereby improve, qualitatively, the forms that startupers are using. The goal is much simpler and much less ambitious than that.
It’s to surface what it is that 90% of the industry is using, day to day.
Once that’s done, we can move to standardization – which is still not about quality (sorry, Ken).
With all the templates “outed” and circling like goldfish in the proverbial barrel, a clever person like Kingsley Martin, equipped with software, could take aim and declare, categorically, what the de facto standard provisions are, contract by contract, and even what the de facto variants are within each template.
Ultimately, you might have a single, industry standard template for each subject. If a critical mass of law firms abandoned their own templates in favor of the open-sourced standard, the benefits would be similar to those derived from having the NVCA model legal documents for preferred stock financings.
But I can be more concrete about the benefits of reducing each document to a single, industry standard. These benefits include:
- Virtually zero cost to startupers for preparing basic forms that everyone (startupers, investors, acquirers) will have baseline confidence in.
- Consistent frameworks for discussion (on blogs, at conferences, over kitchen tables) about what discrete provisions mean, and how they should be interpreted, resulting in a greater understanding of, and ownership over, what the documents mean.
- Increasing the stakes for varying the templates. Because to vary from the accepted standard involves costs – time to draft, time to socialize internally, time to advocate to other parties – customization will happen only when appropriate (deliberately, not by happenstance).
- Moving more of the focus of legal counseling, at the startup stage, to inculcating an understanding of what it is people are being asked to sign.
There are times to be original, and that’s when you sit down to write (or walk to dictate) your blog post, your screenplay, or a clever contract the legal community hasn’t seen before.
But the typical startup assignment of inventions, the typical startup charter, the typical developer agreement, those should be boilerplate, quality be damned. You can pay for “quality” when you’re otherwise already paying to customize your deal.