Artigos e Alertas


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GO, DOG. GO! THE LIGHT IS GREEN AHEAD

13/08/2018

Recently, my eldest son and I were reading Dr. Seuss’s brilliant books, when my son unexpectedly asked me what I did as a lawyer. In an instant, a movie passed through my mind since my time at University, my first employment as a corporate lawyer in mergers and acquisition until the present date, and I realized that what I did before as a lawyer has changed dramatically compared to what I do today, particularly in the manner of dealing with clients.

I could have answered in a straight-forward manner, but what would be the fun of that? I am passionate at what I do and any response to my 6-year old son would need to be passionate, creative and appealing! With that in mind, three sentences from Dr. Seuss’s books sprung to my mind that reflect exactly the kind of work I do today as a lawyer and what I teach the lawyers at the law firm on how to work with our clients. This is how I explained it to my son (I guarantee that personally this is a lot more fun!).

The first sentence I told him was the same I used for the title of this article: “Go, Dog. Go! The light is green ahead.” This phrase reflects the change in the clients’ portrayal of lawyers as a whole. The work of a lawyer in mergers and acquisition transactions involves much more the assistance to the clients in evaluating the risks of the business than using a boiler-plate contract. The client wants the lawyer to help him make decisions and not simply assess the applicable legal rules. As in Dr. Seuss’s book, the client needs the lawyer to tell him if he should stop at the red light or if he should go ahead with the green light and not just inform that he must stop at red and go at green. This does not mean that the client wants the lawyer to assume any risks, but simply that he/she gets in the car with the client and goes ahead with the green light towards the “dog party” (final destination of the dogs in the book).

The second sentence that caught my eye describes precisely the day-to-day of a mergers and acquisition lawyer: “It is better to know how to learn than to know.” In explaining the above sentence to my son (who continues in the “why this” and “why that” phase), I recalled the difficulties I face every day in the drafting and negotiation of merger and acquisition (or M&A) contracts. But what is the connection of a phrase extracted from a child’s book with M&A contracts? Simple: there is a current trend towards the commoditization of mergers and acquisitions, particularly when it comes to contracts related to such operations. The use of boiler-plate contracts without the comprehension of clauses related to representations and warranties, indemnification, price adjustment, general provisions, etc. is, unfortunately, the rule. Many lawyers use these boiler-plate clauses in contracts without understanding the clients’ needs and motivations, the context of the negotiation, and especially their enforceability. Also, its worth mentioning that the increase of judicial and arbitration disputes in merger and acquisition transactions have required a greater care in the drafting of contracts. The lawyer often takes the boiler-plate clause as final and invariably fails to understand the meaning of the clause or how it fits in the context of the transaction. In this respect, Dr. Seuss teaches us that it is better to know how to learn, than, in fact, to know. The lawyer should not assume that a boiler-plate contract is enough for the client without understanding and learning the meaning and implication of each clause as well as to what extent a particular clause is aligned with the transaction and especially the motivation and interest of the client. All of this involves listening to the client and learning.

The third sentence is the most amusing and which I had a little more difficulty in explaining to my son, to whom all questions start with “why”! “Sometimes the questions are complicated and the answers are simple.” Lawyers like to complicate matters (what an understatement). The client needs a quick and objective response. Often many questions are complex and complicated due to the negotiation and also commercial issues. Other times the questions are complex and complicated due to the issue involved. It is up to the lawyer to understand the request and respond in a quick and simple manner, always with substance. However, what I realize is that lawyers have a tendency to complicate responses rather than simplify matters to the client.

M&A transactions cannot be considered a commodity and the choice of the lawyer must be made with great care as he/she will be essential in conducting the whole process of the transaction for its success and will also continue to accompany the client after its completion.

Having concluded my detailed explanation to my son, he turns to me and asks, “So, Dad, you do the same thing as Grandpa. You take care of all of your clients’ needs.” To which I answered “Yes son. Exactly that”.

My father-in-law is a doctor (cardiologist) and an idol to my son.

Dr. Seuss, thank you for encouraging my son and also his dad”

Henrique Martins, founding partner of Candido Martins Advogados