Dentists, like other highly educated, intelligent professionals, often believe they can negotiate important legal documents, such as office leases, without any assistance from an attorney. The reasoning, I think, is that legal documents are written in English, so any smart, well-educated person who reads that document carefully can understand it. Unfortunately, there are many traps for the unwary in this approach. The purpose of this article is not to tell you this, in general terms (since I am sure you have heard it, many times, before), but, instead, to give you a few, real-life examples, to show you just how risky, and costly, this approach can be.
There are many flaws in the “I can read, so I don’t need a lawyer” reasoning, but I will focus on just three of them. First, many terms, when used in a legal document, have different meanings than those same terms have in everyday speech. Consequently, even a non-lawyer who is a native English speaker with an excellent vocabulary will not know what those terms mean, when used in a legal context. For example, the term “Rentable Area,” does not mean the area that can be rented, as many tenants believe. It is, in fact, a term of art with a specialized, technical meaning, and tenants who negotiate leases without knowing the legal meaning of this, and other legal terms, do so at their peril. (See, for example: “Why Your Office Space May Be More Expensive Than You Think.”)
Second, words and phrases used in legal documents are interpreted by courts over many decades, so the meaning of a word or phrase used in a legal document is not just the plain English meaning, but the plain English meaning, as interpreted by a long line of court cases. For example, you may, at some point, have seen the phrase “time is of the essence” in a legal document, but do you really know what that phrase means? It does not, as you may think, simply mean time is really important. As interpreted by the courts, this phrase has a very particular, legal meaning.
When the phrase “time is of the essence” is used in a real estate document, for example, most courts will strictly apply a deadline, such as a deadline for exercising an option to extend a lease. For example, imagine a lease that requires the tenant to give notice on or before November 15, 2012, in order to exercise an option to extend. If this lease also says that “time is of the essence,” and the tenant accidentally sends its notice on November 16, 2012, the tenant will not be able to exercise its option. If, on the other hand, a lease does not include the phrase “time is of the essence,” most courts will give a tenant a reasonable time after the applicable deadline to exercise such an option. In our example, this means that, if that same tenant sent its notice on November 16, 2012, and the lease did not say “time is of the essence,” most courts would find that the notice was effective and the lease was extended, in spite of the fact that the tenant delivered its notice a day after it was due.
Third, many of the business terms in legal documents are customary, rather than intuitive. Why, for example, is the “Rentable Area,” rather than the “Usable Area,” the standard measure of space in office leases? Answer: Because it is customary. Why is rent usually abated during the build-out period of a lease? Answer: Because it is customary. Since custom determines the boundaries of so many legal responsibilities, anyone who attempts to negotiate a legal document without knowing those boundaries risks suffering a significant financial loss. For example, I once represented a very intelligent, highly capable businesswoman, who came to me to negotiate a business lease for which she had negotiated the letter of intent. In that letter of intent, she had agreed to begin paying rent as soon as the lease was signed, in spite of the fact that she expected to spend 120 days building out the premises. What she did not know, and could not have known (because she had never negotiated a lease before) was that tenants do not usually pay rent during the build-out period. The landlord had tried to take advantage of this tenant because this was her first lease negotiation, and she did not know what was customary in these circumstances. Fortunately, the letter of intent was non-binding, and I changed this term, during the lease negotiations, saving the tenant thousands of dollars that would otherwise have been lost.
The most important point to take from this story is that this tenant would have suffered a five figure loss, not because she was not intelligent (she actually had a Ph.D.) or because she was not a good businesswoman (she ran a very successful business). She would have suffered this loss solely because she did not know, and could not have known, that she had agreed to begin paying rent long before most tenants do.
To be fair, I have to admit that attorneys, perhaps even more than other people, make the mistake of thinking they do not need to hire other professionals. Attorneys know a lot about the law, and, too often, they assume they know a lot about everything else, too. For my part, however, I have learned that one of the most important secrets of success is knowing what you do not know. In this complex world we live in, no one can know everything, and there is no shame in that. I know that I will never pilot a plane, and I have not a lost a minute’s sleep over it. What I do know is that, if I let an experienced pilot fly the plane, instead of forcing my way into the cockpit and trying to fly it myself, I am much more likely to reach my destination safely. In fact, sometimes, I even enjoy the trip.
This article was written by Janice L. Gauthier, Esq. Ms. Gauthier has an A.B. from Harvard University and a J.D. from Harvard Law School. She is the owner of The Gauthier Law Group, LLC, a boutique law firm that represents dentists, physicians, health care providers, professional service practices and other businesses and business owners in Wisconsin and Illinois. You can contact Ms. Gauthier at 414-270-3857 or by email. To learn more about Ms. Gauthier’s background and experience, visit her Google or LinkedIn profiles.
© 2012 The Gauthier Law Group, LLC