Legal Skills: Contract drafting and avoiding Messi situations
In this series, we will be discussing key legal skills that modern lawyers must grasp to respond to the growing demands of commercial clients, using contemporary examples from the news to highlight the importance of each skill.
Contract drafting was a staple of a lawyer’s work in the past, but the opportunities for lawyers to employ their contract drafting skills have been on the wane for a long time. The use of templates and automation have made contract drafting easier and simpler, with most lawyers only making minor amendments to pre-prepared or quickly drafted documents.
Nevertheless, this once vital function of lawyers retains its importance in the modern world, as evidenced by the dispute regarding the contract of one of the best football players in the world. Lionel Messi’s contract with FC Barcelona has been widely reported on due to a special clause in it.
Messi, having been a loyal servant to the club for almost 20 years, was rewarded in 2017 for his accomplishments with the club with the insertion of a clause in his contract allowing him to leave the club for free under certain conditions. This is in contrast to most football players’ contracts which contain a release clause, meaning that if a player wants to leave a club without that club’s consent, the player has to pay a sum stipulated for in the player’s contract. For Messi, the release clause was set at €700 million, an astonishing figure which, if paid, would represent a tripling of the world record transfer fee.
The importance of contract drafting, though, arose when Messi tried to trigger this clause. Reportedly the clause was only valid until the 10th of June 2020. This limitation was drafted in the contract to protect the club, which would want to know of Messi’s wish to leave before the end of the season, traditionally considered to be the 30th of June.
Of course, the Covid Pandemic did not show any respect for the traditional football calendar. With Spanish league games taking place until the 19th of July and the Champions league knockout phase being played between the 12th and 23rd August, the 2019-2020 season did not have the traditional end-date.
Messi and his lawyers argue that since the purpose of this clause was to give sufficient warning to the club before the start of the next season, the clause should be interpreted as being valid until at least mid-August. Such an argument seems weak. The clause stated a clear date, which passed long before Messi made his wish to leave known to the club. The Spanish Football Federation has already come in support of the club. Whilst this decision may be fuelled partly by commercial reasons, it’s unlikely that the interpretation favoured by Messi would be accepted by a court.
For the clause to operate as Messi’s legal team contends, it should have been drafted differently and it should not have specified a date. It would be unreasonable to expect Messi’s legal team to have predicted the impact of a pandemic when negotiating the clause back in 2017, but this situation is illustrative of the importance of drafting contracts in a way which truly accords to the parties’ agreement and their expectations. The expiration of the clause means interested clubs had to offer up to €700 million for Messi. Whilst a court might have been sympathetic to Messi’s assertion in light of the pandemic’s impact, Messi announced he would stay at Barcelona, citing his unwillingness to instigate a legal battle with his boyhood club as the main reason for his decision to stay.
Barcelona was, reportedly, on the opposite site of a drafting mishap when FC Bayern Munich won the Champions League with Coutinho in the team, a Barcelona player on loan at the German club. Coutinho was signed by Barcelona from Liverpool FC in a blockbuster £105 million deal plus add-ons. One of those add-ons was a £5 million bonus payment to Liverpool if Coutinho won the Champions League. The relevant clause failed to specify that the player had to win the Champions League with Barcelona for the payment obligation to arise.
In a comic twist of fate, Coutinho’s Bayern Munich played against and defeated Barcelona on their road to Champions League glory, with Coutinho scoring two goals against his parent club. This meant that, if news reports are to be believed, Barcelona had to pay £5 million to Liverpool for an accomplishment that the player achieved at the expense of Barcelona.
Even though Messi’s messy situation has reached a resolution, both of the issues mentioned in this article are illustrative of the importance of the legal skill of contract drafting, with millions often being at stake. Whilst templates and contract automation software may take care of the bulk of the contract drafting workload, lawyers must remain vigilant and ensure that contracts are truly reflective of what has been agreed.