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Performing a Litigation Audit on Your Lease Agreements

BY Michael Eidel
August 27, 2009

Standard forms and specially negotiated agreements both have “boilerplate” provisions that are largely ignored at the time of the transaction, but almost always play a significant role when a dispute arises. These provisions are usually placed in the “fine print” in form contracts, such as in “standard provisions” on the reverse side of documents that may have not been reviewed and reconsidered for years. Because such a small percentage of transactions result in litigation, there is little motivation to re-examine provisions that have worked well enough before.

Leasing counsel who specially negotiate agreements also often fail to reconsider boilerplate provisions, instead choosing the expediency of copying seemingly innocuous provisions from a prior agreement sitting in the attorney's “form file.” If leasing counsel does review the boilerplate provisions, he or she may not have the litigation background and current knowledge of case law to determine how best to revise the provisions for his or her particular transaction or company ' or how these provisions will play out in the litigation process. Yet, in the rare event litigation occurs, the previously ignored boilerplate provisions may well determine who maintains leverage throughout the case and, ultimately, who prevails.

Counsel would be well-served by engaging an experienced commercial litigator to perform a “litigation audit” of their agreements, whether they be standard form agreements or highly complex agreements in the drafting stage. This article discusses the applicable general principles and drafting considerations for some of the most frequently litigated boilerplate provisions: choice-of-law, forum selection, venue, jury trial waiver and attorney's fees.

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