What About Alternative Universes
October 29, 2009
I came across this article in the Wall Street Journal yesterday. And, as the official legal geek in this convocation of ours, it led me to think about contracts generally. The world of business revolves around contract language. Millions of dollars are spent by lawyers sitting in windowless conference rooms gloomily crafting arcane legalese to cover every contingency. Now, with an uncanny prescience (or is it more of a Nostradomus or Amazing Kreskin-like prediction), lawyers are eagerly anticipating intergalactic communications. This just seems silly, and one wonders how many billable hours were expended making sure that Bulgarian folk singers had their rights tied up in the event that satellite broadcasts of America’s Got Talent make their way to Jupiter. (We know the Germans love David Hasselhoff, but will he play on Neptune?)
In all seriousness, someone probably thought this was covering the bases, and ensuring that someone didn’t try to use some satellite transmission of data or the next internet to illicitly transmit programming. But, in all honesty, contracts never cover any contingency. Companies dissatisfied with the result of a contract will always find alternative interpretations that serve their own interests, and will go to court to fight it out. I had a case like this recently. A clause in the contract said if the selling company got sued for conduct pre-closing, they were on the hook for it. The selling company got sued for antitrust violations, and voluntarily settled. They seized on another provision of the contract, and argued that was the applicable one. After 3 years of depositions, briefs, and appeals, my side (the purchasing company) won. The cost was close to $5M, for a relatively small case (less than $40M on the hook). My point is that attempts to bullet-proof contracts don’t work within our legal system, and companies are stuck defending frivolous lawsuits based on attempts to endrun the meaning and language of agreements. I have no solution.
In the meantime, I will think about whether the Bulgarian throat-singers are bound in an imaginary world of my own creation. I think I have an argument either way.
From a lawyer on the web:
“The first thing we do,” said the character in Shakespeare’s Henry VI, is “kill all the lawyers.” Contrary to popular belief, the proposal was not designed to restore sanity to commercial life. Rather, it was intended to eliminate those who might stand in the way of a contemplated revolution — thus underscoring the important role that lawyers can play in society.