November 2, 2003

Lost in Translation: Musings on

After a mind-numbing viewing of Charlie’s Angels, I thought I’d spend the next few hours on the plane back from Japan to muse abit about cross-border dealmaking. This will be the first in a series of blogs on this subject.

It’s the Relationship, Stupid! As American lawyers, we’re taught to believe in the written contract as king and as such we must provide for every little contingency under the sun. Voila, the famous 100 page kitchen-sink American acquisition agreement! We also believe that once the contract is inked, the negotiation stops.

In my experience, deal docs from other countries (particularly the civil law jurisdictions) tend to be very skinny. Aside from the fact that lawyers in civil law jurisdictions always tell us that “eet’s all in zee Code,” how can you explain the difference in approach to contracts?

As I’ve learned (the hard way), it all comes down to that fact that in the US, we think the contract is “the deal.” Outside the US, the relationship is “the deal.” The non-US agreements tend to be more framework in nature with the principals comfortable in their ability to work things out as needed. To the distress of American lawyers, once the contract is signed, the real negotiations begin!

So if your client is planning to do a deal outside the US (or a US deal with a non-US company), tell them this: A good agreement cannot fix a bad relationship, but a good relationship can fix a bad agreement.

So relax and do what Asian and European dealmakers have been doing for centuries: wine, dine, and (then) sign…then wine and dine some more.