Kill your darlings, before they kill you
- Subtitle: The Accidental Mentor
So it is, too, in law.
Most of your work falls into two categories: foreseeing problems in human relations and providing remedies after the problems occur. When you pick up a new file, you can be the parent of a “baby” in one of three ways:
Natural birth: You develop a legal theory of the case, if you’re a barrister, or a legal solution to a problem or deal, if you’re a solicitor.
Adoption: A senior lawyer hands you the file with a memo. You embrace your occupational superior’s theory, or learn to love it by finding justification for it in law books.
Foundling: Neither you nor the referring lawyer can fully understand what the file is about. You’re both afraid to display your ignorance to the client, so you muddle along the best you can.
Whether you give birth to the idea or you adopt it, beware. Unconditional love kills objectivity. You’ll be no good to anyone (as a lawyer). The third permutation, which occurs more often than we care to admit, is an avoidance response from lack of engagement with the file, instead of too much. It’s your client’s baby you can’t quite figure out. In such instances, it is your pride you must throw out. Admit to ignorance and get the client to explain the problem in a way both of you can comprehend.
I offer the following two case studies to illustrate how a lawyer or a client being too close to an idea can lead to big problems.
Commercial case study: The manufacturing agreement that got carried away
Many years ago, I witnessed the demise of a great business deal in the pages of a manufacturing agreement that was too clever by half.
My client, the owner of a set of extrusion moulds, needed a plastic factory to use the moulds and sell the finished product to markets in North America and abroad. His business partner had the big facility and an ego to go with it. He never read the contract, because he never intended to follow it. When the deal didn’t work for the factory owner, he stopped production. Both sides headed back to their respective lawyers.
The unflattering lens of litigation often shows the imperfections in the best solicitor’s work. It took no microscope to see the lawyers had let the parties down. They ought to have prepared a contract that would permit both sides to prosper and beware of the business consequences of failing to live up to their ends of the bargain. Instead, they had attempted to preserve their clients’ idea of the deal by painting over it in legalese.
The owner of the moulds, a career wheeler and dealer, understood all of commerce as being one form of arbitrage or another. So instead of entering into a standard manufacturing agreement, a licensing agreement, or a joint venture, he insisted on instructing his lawyers to negotiate a contract that fixed one nominal price for each finished product, required him to buy them in Canadian dollars, and required the factory owner to buy them back in U.S. dollars. The factory owner would then sell the units on the open market. The mould owner’s royalty was the difference in currency values.
The lawyers for the factory owner assumed responsibility for drafting the contract, with the mould owner referring the document to his lawyer for independent advice. Never having seen such a transaction before, the factory’s lawyers cobbled together an impressive-looking multi-page agreement from various precedent clauses in their word processors. Many of the paragraphs contradicted each other, but neither side was the wiser.
It had never occurred to either of the lawyers that the mechanism of compensation could result in the mould owner paying the factory in the event of the Canadian dollar becoming more valuable than the American. In days when most folks considered that unthinkable, perhaps it was a reasonable risk.
What was more subtle but more serious was the failure to see that the agreement set up a constant source of tension between the parties, instead of giving them both a stake in adjustments in the market value of the units. If the Canadian dollar soared, the factory would make and sell more while my client would earn less. If the Canadian dollar fell, the factory’s royalty obligations increased at the same time that the value of each domestic sale also fell. This would lead the factory to seek new markets in the United States at the same time as neglecting existing Canadian ones. This is precisely what happened. The contract put the parties at odds with each other from the outset.
We don’t really teach law students about the two hallmarks of any well-drafted long-term business agreement: (1) its ability to work legally, and (2) its likelihood of advancing mutual interest from a business sense. The agreement was a shambles; the parties were destined for the courtroom. In hindsight, the root problem was the lawyers’ failure to challenge their clients on the money-making end of their venture:
both the clients and lawyers thought the role of the lawyers was merely to put into words the parties’ deal, i.e. to be “scriveners”;
the mould owner’s lawyer failed to advise his client the “bright idea” of making money from the currency fluctuation was stupid;
the factory owner’s lawyer did not fully understand the deal, so he tried to make the document appear impressive by inserting a large number of legal clauses.
The one wise piece of advice was for my client’s lawyer to recommend the client see another firm to handle the litigation. At the risk of having the flaws in the deal exposed, the lawyer foresaw the benefit of having a fresh and impartial set of eyes handle the next stage. The factory owner’s lawyer, however, referred it in-house, and the litigation lawyer spent as much time in the remainder of the suit defending his colleague’s work as his client’s interests in the court proceedings.
If the parent would not “kill his darling,” one would not expect the babysitter to do it, either. In the result, the factory owner’s lawyer turned the litigation into a defence of his partner’s skill and reputation. It got personal, really fast.
Litigation case study: The failure to defend the case against you
ABC Manufacturing Corp. builds an appliance found in many homes. One of these units has just set Joe Homeowner’s house on fire. Fifteen years ago, the device left ABC’s factory, complying with all industry standards. The fire is a mystery because ABC cannot figure out how it started in its product. Nor could it understand how it started fires in several other homes. ABC has been investigating similar prior events for years. At some point, ABC obtained the advice of a lawyer that it had no positive obligation to warn the public until it identified the defect in the product.
ABC defended the product liability action, saying there was no breach of the standard of care. Homeowner started the action saying ABC must have breached the standard of care and failed to provide warning of the connection between the product and prior house fires. In the litigation, ABC produced all documentation prior to manufacture, showing how it obtained requisite product safety approvals. However, it refused to provide any information from the prior investigation, on the ground that it was privileged.
Information from the post-manufacture investigations, if it showed ABC incapable of determining how the product was causing fires, would have been favourable to its defence. Instead, by refusing to divulge the information, its lawyer foreclosed any defence it could have waged against the allegation that it did nothing to get to the bottom of the mysterious house fires and failed to take adequate steps to notify potential victims of future fires, like Homeowner. Thus, even down to the rationale for discovery disclosures, ABC and its lawyer maintained that the only relevant information related to the manufacture of the product.
Even in arguing causation, ABC’s lawyer stated that the failure to warn was not enough if Homeowner’s lawyer did not establish a product defect. This was simply wrong. ABC’s product was the origin of the fires and the mechanism of fire remained unexplained. Exoneration is always the ultimate defence, but without it there is risk. Unless it could prove there was no risk, its duty to end-users was to take steps to warn homeowners of that risk.
Even as the nature of the case shifted from negligent manufacture to failure to warn, ABC’s lawyer clung to his original defence. Perhaps the defence strategy originated as a conscious straw-man argument. In refusing to let it go of it, ABC’s lawyer was simply defending the wrong case. The lawyer thought a court or any objective bystander would see the company had done everything it had to do in manufacturing the product. Until it or others could explain how the fires were occurring, he argued it was unfair to require the company to recall the appliance. Furthermore, the number of house fires was very small compared to the total number of appliances sold.
Both the clients and the lawyers were both too close to the pet idea and too close to the product to see that anyone hearing the rationale for the defence from a public safety perspective would shudder, and worry about the hazards still out there. In the pursuit of their theory, ABC and its lawyer saw the court as a mere arbiter of a private dispute, and did not consider the public role of the judiciary.
At some point, ABC’s lawyer ought to have told his client to come clean, try its best to contact every user of the product, and invest in a communications strategy to ensure it looked like it was doing everything possible to protect public safety. Any outside observer could have told ABC and its counsel that fairly early on. However, by failing to let go of a defence of which it and its lawyer were convinced, ABC attracted lawsuits and plaintiffs used ABC’s defence strategy as evidence of liability.
Failure to see how a judge or jury would construe the facts is the litigator’s Achilles’ heel. Remember, too, that the famous heel belonged to a baby, and his mother refused to let go of it.
Lee Akazaki is a bilingual civil litigator and a partner at Gilbertson Davis Emerson LLP, with a focus on commercial litigation, insurance and professional liability. A past-president of the Ontario Bar Association, he advocates for a fearless and independent bar and the advancement of women and equity-seeking groups. His blog, leeakazaki.com, is devoted to mentoring new lawyers. He can be reached at email@example.com and on Twitter @LeeAkazaki.
Column: The Accidental Mentor