Well, well, I think our “Where is the Love?” blog struck a cord with many readers. Below is a tidbit (with permission) from Tom Hanley in DC. If you have any “Love Stories” (i.e., anecdotes of abusive, obnoxious, over-the-top negotiation behavior) you’d like to share, please email me or Larry and we’ll post some of the “Best of…” This could get pretty interesting.
Monthly Archives: September 2004
Where is the Love?
For those of you who’ve yet to hear this outrageous voicemail message that has been whizzing around the internet for the past couple of weeks. The voice message purports to be from opposing counsel over comments made to a draft agreement. Give it a listen but I must warn you to close your door and be prepared for a few choice F-Bombs.
What’s up with this guy? Bad hair day? Last time I checked, ranting, raving, and threats to make the life of other side’s lawyer a “living hell” just isn’t on Dale Carnegie’s list.
For the purposes of this blog, let’s refer to this ranting, condescending, obnoxious, cocky-for-no-apparent-reason jerk, Terminator-Mini-Me as “A-H” (I’ll let you guess what that stands for).
Let’s get past the questions about his lack of civility and ask: Is A-H’s negotiating style effective?
Even assuming that the “ends-justify-the-means” camp is right (and that’s a HUGE assumption that I don’t necessarily agree with), I just don’t think that berating and intimidation is in his client’s best interests. In fact, I think A-H’s tactics virtually guarantee blowback – and even blow up. So my answer is “no.”
If you back someone into a corner, that person will most likely become entrenched in his or her position just to prove he’s right (or to piss you off). Lawyers are generally a competitive lot (as are our clients). We like to win. As such, the prospects for deal-gridlock are very high when egos go unchecked. A-H’s ego needed some checking. (I understand that A-H is a 7-8 year associate, what he really needed was parental supervision.)
In any event, my guess is that the deal maker’s ego has Sickle Cell Anemia qualities as the silent killer of many deals. I’ve been involved in one too many deals where the tipping point rested on keeping a lawyer’s ego in check.
We all have egos, so for the sake of your client’s deal, the $64K question is “how do you keep egos from killing your deal?” Your guess is as good as mine.
I note that a tactical show of anger may sometimes be effective but it’s dangerous in the wrong hands (I’m inclined to say that A-H’s hands are wrong).
On the other hand, did the recipient of message set A-H off by being condescending on the treatment of A-H’s comments. Did the recipient treat A-H like a stepchild by summarily dismissing A-H’s comments as trivial. So how does A-H look to his client when opposing counsel summarily rejects his intellectual work-of-art? Can you feel the onset of deal rigor mortis…?
Lastly, are “gentlemen dealmakers” going the way of the dinosaurs? I don’t think so. In fact, most of us can be (and are) professional and civil while still being strong, assertive advocates for our client’s interests.
So, being an “A-H” doesn’t make you a deal maker – in fact, it makes you a deal killer. As a senior partner told me a long time ago: At the end of the day, all you have is your reputation.
The Whole Truth…
School’s back and so am I with a recent case that will grab your attention (it certainly grabbed mine).
Check out Vega v. Jones Day (2004 WL 1719279 (Cal. App. 2 Dist)). A copy of the opinion has been posted in the “Mergers & Acquisitions” Practice Area.
The facts: Plaintiff was a shareholder of target in an acquisition in which P received shares of buyer’s stock. P claimed that Jones Day, buyer’s counsel, defrauded P by actively concealing the terms of one of those infamous “toxic preferred stock” financings that was done between signing and closing of the acquisition agreement. Instead of providing a previously prepared supplemental disclosure schedule that “clearly described and properly disclosed” the toxic provisions, buyer’s counsel delivered a “sanitized” version that did not include the toxic provisions. JD also made statements to the effect that this financing was “no big deal,” “nothing unusual,”and “standard.” Two weeks before the closing, JD filed the Certificate of Designations with the Delaware Secretary of State.
P sued JD for fraud and negligent misrepresentation. JD’s defense was that, as opposing counsel, it had no duty to disclose to target, P (a target shareholder), or target’s counsel.
The Court didn’t buy JD’s defense and held that, once JD “specifically undertook to disclose the transaction, and having done so, [JD] is not at liberty to conceal a material term. Even where no duty to disclose would otherwise exist, ‘where one does speak he must speak the whole truth to the end that he does not conceal any facts which materially qualify those stated…”
Can you say “Ouch!”?
How many times have you delivered disclosure schedules that contained a one-line reference to a set of closing docs that evidence an otherwise complex transaction? In light of Vega, can you sleep at night knowing that you’ve “properly disclosed.” What happened to caveat emptor and opposing counsel’s obligation to its client to figure out what’s in that stack of documents? Is the Vega court is saying that the Ragu Approach (“it’s in there!”) just isn’t enough and that you must not only put the “material facts” under someone’s nose but you must also wave a your arms and yell “HEY BUDDY, LOOK HERE!”?
The opinion has many more pearls of wisdom that will make you do a double take (e.g., the fact that the Certificate of Designation was publicly available wasn’t good enough). Take a look at it.
On the other hand, maybe I’m just over-reacting because the Court’s just reminding us of what our mommies always told us: “Now sweetie, it’s not nice to tell stories…”