How Litigation Experience Helps Contract Drafting
My father stopped going to court in 1988. Save for moving or attending calls or giving evidence at trial, he avoided the courts. He became a ’corporate lawyer’. A corporate lawyer is a lawyer that prefers the boardrooms to the courts because they do not enjoy the latter. Their practice is focused entirely on contractual and corporate advisory matters. Corporate lawyers prowl boardrooms, general meetings and hotel conference rooms. Litigators prowl the courts, tribunals and police stations. I know a corporate lawyer so averse to courts he could not even attend his pupil’s call purportedly because he was so traumatized by the experience during his pupillage. When I was in his firm, my father had a rule: if you wanted to be a corporate lawyer at the firm you would first have to spend three to five years in litigation. He felt those initial litigation years would inculcate good habits and provide for a well-rounded education for a corporate lawyer. First, as a litigator, we always have to be on top of the law. We need to know the latest decisions as well as how it fits with the other previous court decisions. Knowing the latest cases and law gives us a competitive advantage over those lackadaisical about their reading, and their numbers are legion. A good litigator makes it a point to know and understand the latest legal developments. A corporate lawyer with litigation grounding is likely or likelier to form a habit of regularly reading decided cases. It was a regular complaint of my father that corporate lawyers he dealt with didn’t know and didn’t bother to know the latest decided cases. If the latest Federal Court decision had an impact on a contract we were drafting for a client and we didn’t know about it, our ignorance leaves us open to a claim for negligence. Second, and related to reading cases, a corporate lawyer should be aware of how a contract can go wrong and think about suitable clauses or wordings to avoid such a situation. Often, corporate lawyers draft contracts and go on their merry way after. They are usually not around, if not long gone, when there is a dispute or things go wrong. That’s when the litigators come in. In the early 2000s, I handled claims for a nursing college against nurses and their guarantor parents or relatives for breach of scholarship contracts. Depending on where they went to study nursing the scholarships varied from RM 30,000 – RM 40,000 in value. In exchange, after graduation, they would be bonded to the nursing college for at least five years. They could be posted to any hospital that the nursing college had a tie-up with. I was busy with such cases because it was the time when there was a huge demand for nurses in Dubai. Nurses could earn anything between ten to fifteen times more than they would in Malaysia. As a result, many breached their scholarships and flew over to Dubai. It made sense. They would have earned more than enough to pay off the scholarship after half a year’s worth of salary. Now you would think the claims were a sure-fire winner, no-look slam-dunk win, and you would be right. Except that, if you were the other side’s lawyer and diligently read the scholarship agreement, you should have come across an arbitration clause tucked away close to the end of the contract. And if you were sharp enough, you would have filed an application to refer the claim for arbitration pursuant to the then-in-force section 6 of the Arbitration Act 1952 and jam my claim in the courts. That happened. But thankfully, it wasn’t a regular objection. Even though I could and would defeat the application, it slowed the progress of the claim and added cost to it. In any event, it was silly to have an arbitration clause for a low-value scholarship claim. We usually refer matters to arbitration when they have a high degree of technical expertise involved, or where the parties want privacy, or the claims are of great value and immense complexity; not a RM 40,000 claim for a breach of a scholarship agreement. I called up the group legal manager to ask her why there was an arbitration clause in the scholarship agreement. She thought an arbitration clause was part of the ‘usual boilerplate clauses at the back of the contract. That’s why.’ I advised them to immediately revise their contracts to excise the arbitration clause. If she understood the litigation dimension to the presence of such a clause, she would not have allowed it to be in their standard scholarship terms. Exposing contractual terms to litigation will test a contract’s mettle. It is in litigation that we discover the many ways a contract is deficient and realize the clauses which had more than a significant influence on the course of litigation. Learning from those experiences will inform our clause selection and clause drafting better. Third, by actually handling contractual dispute claims, we get the experience of what goes into such a dispute. We engage with it at a working level. It is from our first-hand working experience that we gain a deeper insight into how to better craft terms that improve the operational aspects of litigation for effectiveness and success. An example. Order 10 r 3 of the Rules of Court 2012 (RC2012) recognizes that if there is a term in a contract that specifies how the service of a document is to be carried out, that term will regulate the service of documents between the parties. That means we can include a term in the contract to specify how or where the service is to take place. So if we were a corporate lawyer drafting a contract and had some litigation experience, we would craft a service of documents clause to serve the Writ of Summons or Originating Summons by way of say, e-mail or Whatsapp, in the event legal proceedings had to be
