Who is your client?

When you are asked to draft an agreement, you should first understand about your client as much you can.

When client is an organization, and you are an in-house counsel.

If your client is an organization and if you are part of such organization, you may already know a lot about your client’s needs. You are expected to understand the organization structure and may know the actual decision making authorities. When you are starting your career as an in-house counsel, you may only be reporting to your immediate boss, who may or may not have a legal background. In both cases, however, you will be asked to draft the contract within pre-defined boundaries. It is best if you can think about and ask as many questions related to the scope, the parties involved, the commercial terms, etc. However, you may get special instructions relating to clauses on indemnity, limitation of liability, warranties, etc. If your immediate boss is a business person, he will expect a carefully drafted language which should not upset the other party.

As a thumb of rule, if the counter-party is a client you are expected to focus more on the rights that your organization needs to protect. But, if the counter-party is a supplier/ service provider, you are expected to focus more on the obligations that they must fulfil.

As an example, if counter-party is a client, they may demand that your organization – if it is a supplier of goods – to deliver the goods on time and of certain specifications, and that the warranties related to goods are in their favour. And, if your organization is a service provider, they will ask your organization to meet certain service level guarantees.

Here you will have to do a balancing exercise, and may have to heavily negotiate indemnity and warranty clauses. In such cases, the important clauses that you must focus on will include the payment terms, scope of supply/service, disclaimers of warranties, force majeure, liquidated damages, etc.

When the tables turn, i.e., when your organization is a client, you will have to change your approach in the opposite direction, and will be expected to put onerous obligations on the supplier/ service provider.

When client is an organization, and you are an outside counsel.

If you are not a part of your client’s organization, i.e., when you are working as an independent lawyer or as a part of law firm, your task will become more challenging. Here, you are expected to work within strict mandate of your client’s requirements, and may have difficulty explaining legal clauses in detail. You should be very careful while dealing with such clients, as they expect to extract as much they can from you for each penny they spend on the fees they pay to you or your firm. Your first focus should be to understand the client’s requirements, and then to know in details about the underlying transaction. You should expect that your client will have comments from their in-house counsels and business heads. You should strongly focus on building a strong one on one relation with them and avoid any kind of friction. Ultimately, they are the decision makers not only for the immediate transaction but also for any future work they will give or refer to you.

When client is an individual, and you are an outside counsel.

If your client is an individual, you may be in the tightest shoes that a legal drafter can wear. An individual client may have many biases and may not be comfortable giving true or complete picture. Such clients may have unusual demands like heavy use of verbose and legally archaic language, inclusion of unfair contract terms, etc. If you face such a situation you will have difficulty in making them understand that such clauses may not stand legal test, and may end up losing your client. So, be very careful in your choice of words in dealing with such clients.