Clients who are too grand to read legal documents

Always listen to your consiglieri, and don’t let anyone outside the family know what you are thinking

Question: what happens if your client’s Chairman is too grand to read the documents you send them, is openly contemptuous of “legalese”, and tries to avoid any direct dealing with the company’s legal advisers?

Answer: when it all goes pear-shaped, they sue you.  And lose (you hope).

The recently-published judgment in the case of Newcastle International Airport Limited v Eversheds LLP is the judicial equivalent of a racy thriller.  Buried within its pages are all the elements of a gripping read: the big shot with charisma who doesn’t bother to read papers and makes major decisions based on instinct; the executives who are accused of acting in their own self-interests (one of whom dies at a very young age, half-way through the story); the elected local Government representatives who are out of their depth; the overseas, minority shareholders who keep quiet because it suits them; the brilliant backroom-boys who ask all the right questions and brief their bosses well, but are ignored; the solicitors who have to defend themselves from charges of treason professional negligence when it all goes wrong; and the righteous judge who sees through the fog and vindicates the solicitors’ conduct.

How many of us have experienced a Chairman who, in the words of the judge in this case, is:

a capable, experienced, worldly and intelligent person. She has a long and impressive track record of work in the field of corporate finance. Other witnesses attested to her abilities in glowing terms.

And yet who:

did not bother with minutiae; she concerned herself only with the broader picture. In the course of her oral evidence she used the expression “legalese” in a contemptuous and dismissive manner on countless occasions.

never read definitions in contracts and did not appreciate that phrases with capital letters were defined terms. She did not acknowledge that she would or should want to ensure that notes of meetings were accurate in relation to important points. She seemed to think it was not her job to read any documents which could be categorised as legal documents.

had a special distaste for documents produced by lawyers. Her evidence was that she regarded these as necessary formalities, ‘legalese’, not something she was required to read. Even when she opened such documents she only skim-read them. However she consistently misread, missed or misunderstood contents which were inconsistent with her preconceived understanding of their meaning and effect.

This is not the first time that IP Draughts has come across someone in a senior position who looks only at the “big picture”, cannot bring themself to focus on the details or engage with the detail-merchants, and makes important decisions based on thin air.  Fortunately they are in a minority, but there are enough of them to make IP Draughts wonder.  This problem is particularly serious when the subject under discussion is technically complex, such as IP protection or commercialisation.

This may not matter if there are layers of management beneath the top person who manage the details in an effective way.  But in some smaller organisations, there are no such layers.  In the Eversheds case, the details in question were the terms of employment contracts with senior management, and there were no layers between them and the bigshot.

How should those of us who manage the details (whether as lawyers or business managers) deal with this type of senior person?  Do readers have any suggestions?

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