ABA Section of Business Law

Picture the following situation: you are working on a transaction involving business personnel on both coasts as well as the intermountain region of the Rockies, plus a gaggle of lawyers in all three regions. Three separate but related transactions need to close virtually simultaneously in coordinated fashion; tens of millions of dollars are at stake, not to mention the livelihoods of several dozen individuals. You are in the Eastern time zone . . .

. . . and the lawyer in the Pacific time zone refuses to return phone calls or e-mail messages in a timely fashion. After several days of trying to get through by various means of communication, you suggest a conference call so that all outstanding issues can be resolved at once. You adjust your schedule to free up time for the call, juggling the dozen other active matters you are then handling. Opposing counsel finally responds and agrees to the call, but can only make it at 6:00 p.m., Pacific time. Given travel schedules, yet another day is lost in the effort to close the set of deals. Nevertheless, you conduct the call, resolve the issues, and turn out another set of the documents that night . . .

. . . only to wait another several days for "final" sign off on the documents, which (perhaps you perceive a pattern here?) does not come, but instead you receive a set of additional comments, including some on issues you thought were long settled. You take a deep breath, address the issues raised, circulate another set of revised documents and signature pages, and celebrate with exhaustion when the transactions close on the day before the long holiday weekend.

Is this some third-year associate's nightmare? Could it simply be a negotiating tactic used to extract every last concession from a counterparty? I don't believe so. Increasingly, the lack of civility that has previously been identified in the litigation context has crept into the realm of corporate transactions. I am not bemoaning the use of hardnosed negotiating, taking and sticking to a tough stand in the aggressive advocacy of a client's position, but I do believe the basic ground rules have changed, making the practice of corporate law less enjoyable and more risky than in the past.

As a law student and summer clerk a quarter-century ago, I was attracted to the practice of business law by the dynamics associated with a common objective being shared by the participants. Unlike litigants, who, in my perception, were often engaged in a battle to "win," were trying to right a wrong, or, too often, were trying to prove a point, corporate transactional participants were engaged in a mutually shared pursuit of a common goal: closing the deal. To be sure, where there is a buyer and a seller (or parties in analogous positions), the seller seeks the highest price it can get while the buyer pursues the opposite objective, but both parties share a mutual understanding that the eventual outcome will fall somewhere in between. Final terms sometimes are a compromise in which neither party is fully satisfied, but the fundamental goal of concluding the transaction is nevertheless fulfilled.

Civility in the legal profession, or the lack thereof, has already been the subject of frequent discussion by lawyers, jurists and observers of the legal scene. But despite the universality of the ethical principles they espouse, the values, over time, have been applied most frequently in a litigation context. The more detailed guidelines that various jurisdictions have promulgated tend also to focus on courtroom decorum and other aspects of litigation. An analysis of the fundamental principles, however, indicates that they are equally applicable to business lawyers; what is needed is wholesale adherence to these standards by lawyers participating in business transactions.

In the mid-1990s, Chief Judge Judith Kaye of the New York Court of Appeals proposed a "Code of Civility" to which lawyers would voluntarily adhere. The resulting "Standards of Civility," building upon the initial work product of the Craco Commission, a blue-ribbon task force appointed by Judge Kaye, offered guidelines to enhance respect for the profession, including principles of behavior to which all who work in the justice system should aspire. For example, it advises lawyers that they can "disagree without being disagreeable," and discourages extreme hardball tactics that prolong litigation or increase legal expenses. The very first standard mentioned is "Lawyers should be courteous and civil in all professional dealings with other persons." The third standard prescribes that "A lawyer should respect the schedule and commitments of opposing counsel . . . ," while the fourth states that "A lawyer should promptly return telephone calls . . ."

In her preamble to the Standards of Civility, Chief Judge Kaye expressed the following sentiments, equally applicable today in the business lawyering context as they were when written in the litigation context:

. . . the practice of law has grown tougher and meaner, eroding a core tradition of courtesy and civility. That we have in addition suffered a great loss in public trust and confidence is no secret . . . the need [for a civility code] has been amply established by what we ourselves see on a daily basis, by the dozens of jurisdictions that adopted civility codes, and by the numerous bar association studies, surveys and reports . . . identifying lack of common courtesy as a pervasive problem today.

The concept of civility is in fact already included in many state professional responsibility codes, and thus the absence of civility could trigger sanctions just as any other ethical breach. Ethical Canon EC-1 of the New York Lawyer's Code of Professional Responsibility admonishes all lawyers to be "temperate and dignified," while the Rules of Professional Conduct of the State of Washington require lawyers to maintain "a professional, courteous and civil attitude toward all persons involved in the legal system," even while protecting and pursuing "a client's legitimate interests, within the bounds of the law." Preamble and Scope, Note 9, State of Washington, Rules of Professional Conduct. The codes of other jurisdictions go into more detail. (See page 58.)

In truth, what is needed among business lawyers today is no more than a good dose of commonsense polite behavior. Emily Post reminds us that "etiquette enables people in the social world to move in and out of common situations with ease and comfort; in the business world it does no less . . . we must conform to standards of behavior that make professional encounters pleasant and productive." In addition to a plethora of sound advice proffered by Robert Fulgrum in All I Really Need to Know I Learned in Kindergarten, he suggests another basic rule that all can espouse: "Play fair." (I will leave it to the reader to identify situations in their own legal practices in which to apply other learnings from Mr. Fulgrum such as: "Don't hit people; . . . clean up your own mess; . . . flush.")

The consequences of allowing the current trend toward uncivil behavior in the lawyering of business transactions to continue unabated could add considerable friction to the machinery needed to get complex and time-critical legal work done:

• A lawyer may not be able to rely on a marked version of a draft document provided by the other side, but would have to either generate his or her own marked copy or reread provisions from scratch.
  
  
• A lawyer may not be able to meet the scheduling requirements of his or her client due to the inability to rely on time commitments from the other side regarding turning documents around, resolving outstanding issues, or obtaining required consents.
  
  
• A lawyer may not be able to rely on the rationality of a counterparty in conducting a negotiation. While this has always been a risk in any negotiation, the risk is compounded when the lawyer for a counterparty is personally irrational, or uncivil to the point where rationality cannot be reliably assessed.
  
  
• A lawyer may risk undermining a business deal in contravention of the objectives of the client. There has always been a risk of "emotions" entering into a debate, but analysis of that risk often has been centered on the emotional content of the subject matter or emotions of the business principals. It is a disservice to a client for the emotions of the lawyer to intrude on the process, but that is exactly what is more likely to occur if one or more lawyers fail to conduct a negotiation in a civil manner.
  
  
• The closing of a transaction may become more difficult to orchestrate if one side or the other doesn't want to submit signature pages in advance of the actual closing. In-person closings, and the attendant increase in costs they imply, would become more common.
  
  
• The erosion of the lawyer's place in society would continue. No longer models of decorum or trusted servants of the judicial system, uncivil lawyers would reinforce the public's perception of lawyers as untrustworthy and even corrupt members of a privileged class.

It is not too late to consider steps to be taken to regain the respect of businesspeople and the public at large. In addition to the broad guidelines suggested by the state ethical sources noted above, I offer the following courses of action that every business lawyer can and should follow in the advocacy of his or her client and the furtherance of ethical transactional work:

1. Be courteous. Do unto business counterparties as you would have them do unto you. While axiomatic in the conduct of all aspects of one's personal or professional life, the application of the Golden Rule to business lawyering can grease the skids of any transaction, and establish a foundation of trust and respect from which tough issues can more easily be resolved.

2. Return calls and e-mails promptly and as promised, or communicate any delay. Many lawyers try to return calls the same day. While that is admirable as an aspiration, it is often difficult to fulfill. However, there should be no excuse for not at least sending a message that the lawyer is unavailable but will try to follow up the next day (or even the next week—the point being that managing the expectations of the other side can go a long way toward enhancing respect and politeness).

3. Be considerate of other's schedules. Every lawyer handles multiple clients and matters (even in-house lawyers), and while many strive to make each client and matter be "number one" on the list, civility can be enhanced by recognizing that a counterparty's time may be taken up by other equally pressing matters. Asking for unreasonable return times for documents, or scheduling of conferences, only adds to the stress of the transaction. Of course, there is nothing wrong with attempting to expedite matters and "keep the ball moving," but such efforts should be framed as requests to, not demands of, the other side.

4. Meet deadlines; inform others of any necessity to break the agreed-upon schedule. Relating directly to the previous points, once you commit to a schedule, you should make every effort to adhere to it. Of course, unforeseen circumstances, personal and professional, may arise that make it impossible to meet a deadline. In such cases, a simple call or message to the other parties informing them of the situation will result in the proper management of the situation.

5. Use temperate language. Not only cursing, but also inflammatory language can elevate the actual blood pressure of the participants and the figurative blood pressure of the transaction. Poor decorum ultimately acts to the detriment of the actors. Likewise, the use of disparaging remarks about any party or counsel should be avoided.

6. Honor promises and agreements, whether on procedural or substantive matters. Once an issue has been agreed upon, it should not be revisited at a later date. There is no more wasteful practice than to negotiate an issue repeatedly. Doing so subverts the efficient handling of the transaction and undermines trust between sides and between their lawyers. Similarly, agreement on a procedural matter, whether scheduling of conferences or determining how an aspect of a deal is to be addressed, must be honored to avoid the same sort of inefficiencies and detriment to reputation.

7. Avoid making promises and commitments that cannot be kept. The flip side of the previous guideline requires that a lawyer not enter into agreements, again whether procedural or substantive, that cannot be met. Transactional lawyers are used to the practice of sending out draft documents to all parties while reserving the right of their own client to comment. Such practice puts all parties on notice that a draft is just a draft, is subject to revision, and is not to be taken as a formal "proposal." It behooves the lawyer not to make any commitments that cannot be kept. If this entails added delay to check with the client, that is the necessary price to assure civil behavior on the lawyer's part, and the individual's continued meriting trust.

8. Avoid deceptive or misleading practices. It is a fundamental element of ethical practice that fraudulent practices and statements must not be used in the negotiation of a business transaction. This concept is already incorporated into most ethical codes. For example, Rule 8.4(c) of the Model Rules of Professional Conduct says it is professional misconduct for a lawyer to "engage in conduct involving dishonesty, fraud, deceit or misrepresentation." Standard IX of the New York Standards of Civility states, "Lawyers should not mislead other persons . . ." This ethical requirement need not be interpreted in such a way as to mandate a lesser degree of advocacy of a client's position, but that does not relieve a lawyer from living up to the ethical standard as stated. In his best-selling book, Smart Negotiating: How to Make Good Deals in the Real World, James C. Freund comments on the ethical bounds of negotiating as follows:

"Misrepresentations of fact that relate directly to what's being [negotiated] are clearly off limits . . . [Deception involves causing] some unfairness in the bargaining situation. Put another way, does the nature of what's said make it likely that the speaker will succeed in deceiving the listener?"

9. Communicate clearly. Clear communication is both a skill and a talent. The best lawyers are superior communicators, whether orally or in writing. Such skills are not always taught in school, but honed over years of practical experience. Lawyers should redouble their efforts in this area. Doing so will avoid confusion and controversy, aid in the management of expectations on the part of clients and counterparties, and enhance the efficient handling of matters.

By applying even a subset of these commonsense principles, business lawyers can elevate their own reputations, enhance their service to their clients, and help the profession as a whole regain a degree of the respect and honor it once attracted, and is still due, from business clients as well as the general public.