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Guerilla tactics in the mist - Bad actors and economic efficiency

  Boat Lagoon

Those who work, or have worked, will be familiar with the creatures of inefficiency in their most basic form – the slacker colleague or employee, the overly bureaucratic administrator in a bank or government department or the taxi driver that refuses a fare when legally obligated to accept it.

However, aside from the annoyance that such inefficiency can cause, there is a wider economic effect and impact that many members of the population are unaware impacts on their economic and general wellbeing. This also applies to legal interactions between private-private and public-private parties.

In legal negotiations, for the purchase of a new property, the re-sale of an existing property, the arrangement between a hotel operator and hotel owner or in a commercial contract or corporate buy-out scenario, the quality of the actors involved can seriously impact not only the principals instructing the lawyers, but also the third party stakeholders in the transaction, as well as the wider economy.

I have found in practice that many of the actors involved in a process can adopt ‘Guerilla Tactics’ which may hypocritically contravene or contradict their purported support of ‘Collectivism’ over ‘Individualism’ in social-political ideology and, in the case of nationalists, may actually damage ‘their’ countries’ economies and those with interests in it – well beyond the boundaries of the small transaction in which the tactics are adopted.

Here is a short snapshot sample of the wide ranging worst economic efficiency burning tactics and behaviour that I see regularly, and some methods for combatting and mitigating their impact:

1. Deliberately over-elaborating and prevaricating non-binding contractual negotiations
If two parties have struck a deal, then unless the deal is unviable, or there is fundamental misunderstanding in the key commercial terms, the encapsulation of that deal into a memorandum of understanding or letter of intent should be straightforward.

However, some actors in the transactional process, including lawyers, will have complete disregard for the wishes of the parties, and instead adopt the ‘smartest person in the room’ validation technique to attempt to ‘win’ points that do not need to be won in the context of a non-binding agreement.

Mitigation strategies: Ask the parties to draft the commercial terms for lawyers to frame into a contract. Avoid ‘termination’ clauses for non-binding arrangements. Make any key terms that will definitely be required in a full contract, clearly referenced in the non-binding arrangement.

 

2. Polluting the air of the transaction with irrelevant vague legal references and abrasiveness
In the same way that some people start a sentence “with all due respect”, before asserting something disrespectful, and others send rude, short messages via communication apps but add emojis to ‘soften’ the unacceptability, lawyers are also often guilty of trading professional insults and indulging in egotistical one-upmanship, at the expense of their clients, the transaction and wider economic stakeholders.

Similarly, laziness and inward closed mindedness can lead lawyers to indulge in almost meaningless exchanges on their interpretation of law, when in fact the transaction they are negotiating is not in the courtroom, isn’t the subject of a dispute and if it were to be, a different opinion on the law would highly like be of primary significance.

Examples of ‘giveaway’ sentences begin with “In accordance with law”, “you are not a lawyer”, “I am a very experienced lawyer”, “I am in court almost every day”. If these sentences have become necessary, then something isn’t right and may indicate the party indulging in this behaviour feels defensive for lack of competence or credibility.

Mitigation strategies: Avoid overly academic or overly pragmatic/shoot-from-the-hip style counsel. Discuss, without directing, the counterparties’ choice of legal counsel and how that might fit into the proposed transaction. If you see either your counsel or other counsel indulging in abrasiveness or rudeness, call them out and direct them to stop. Lawyers need the support of their clients, especially when other parties’ counsel is being unreasonable or obstructive.

3. Bad Communicators
Many professionals and workers, not just lawyers, are now subject to new challenges and distractions including, of course, their smartphones, too many emails and messages, and a hunger in the business community for instant replies, even at the sacrifice of quality and innovation.

 

Those that are unable to cope with the new business environment are normally, in my experience, the same persons who attend an all-expenses-paid conference, but sit with their laptop in a swamp of inefficiency, ignoring the very speakers and debates their company has paid for them to attend, to develop their skills and networks. The same bad communicators can be seen in meeting rooms, tapping away at their emails, when the subject of the meeting includes them and is something they ought to focus on. This creates a reactive business personality and the overused descriptions of “I am so busy these days” and “I receive ‘too many’ emails” etc.

Mitigation strategies: Analyse the communication tendencies of your potential counsel. Adopt a coherent protocol for dealing with a transaction – use WhatsApp for setting up a meeting, email for actually discussing a serious issue and the phone (yes, the old fashioned voice-to-voice protocol!) for clearing up misunderstandings and aligning processes. There is no one-size-fits-all for human interaction, but there are clear efficient preferences. I also recommend that courtesy, which can be achieved in nanoseconds with such as ‘thank you’, ‘please kindly’ and ‘best regards’, is not dispensed with in the false pretense of efficiency or as an excuse to be rude and abrupt. Better results are achieved with courtesy and diplomacy, as evidenced in international relations.

4. Playing Games with Your Life Interests
Economically, game theory is a fascinating subject with whole bodies of law, such as insolvency and restructuring, seemingly resting on the mathematical possibilities of the behaviour of parties, such as the ‘Prisoner’s Dilemna’ and the ‘Nash Equilibrium’. Although understanding these concepts can assist lawyers advise their clients when they face difficult negotiations and guerilla tactics, I sincerely believe in the ‘humanist’ element of a transaction, in addition to its economic relevance. This, unfortunately for some, is not a widely-shared or practiced approach. Wealth maximisation ‘at any cost’ is a sickness in its purest form without checks and balances.

Bad actors will use underhand tactics to ‘win’ in negotiations and transaction management. The most common provocation of this is when a party knows they will not do business with the other party again so it’s ‘hit and run’. Lawyers often adopt this approach too.

Disregard for the human element of transactions can be seen when: parties deliberately delay a property transaction, causing another party to incur rental costs and family disruption; an incoming party deals with the matter of labour rights of employees callously on a ‘numbers’ basis only; lawyers play games with other lawyers such as the ‘18.00 Friday email’; “I only just read the contract” and “reserve my client’s right to comment” inserted as a pretext for reneging on terms at will.

Mitigation: Where appropriate and if possible, try to deal within a framework where the parties actually care about the effects and outcome of a transaction on others. This isn’t always possible in business, but it can help eliminate negativity and inefficiencies as a benefit of the policy of doing ‘good business, nicely’.

Overall, the less tolerant of inefficient and abusive practices we are collectively, the better the economy, the trade of goods and services and the wellbeing of the large majority of the world participating in that system will be. It is well worth remembering these high-minded principles, even when conducting fairly small transactions as part of the daily grind of business and life.


By Desmond Hughes, Senior Partner of Hughes Krupica.
Hughes Krupica is a law firm which specialises in Real Estate; Construction; Hospitality; Corporate; Commercial; Personal Injury; Dispute Resolution; and Litigation, operating in Bangkok and Phuket, servicing clients in relation to their business activities in Thailand and in other regions of Asia.

 Contact info:

Hughes Krupica Consulting (Bangkok) Co. Ltd

Phuket Office:
23/123-5 Moo 2, Kohkaew Plaza, 
The Phuket Boat Lagoon, Tambon Kohkaew, Amphoe Muang, Phuket 83000
Tel:+66 76 608 468 

Bangkok Office:
179 Bangkok City Tower, Fifth Floor,
South Sathorn Rd, Sathorn, Bangkok 10120
Tel: +66 2 872 173

enquiries@hugheskrupica.com
www.hugheskrupica.com

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