Plain Language and the LawPlain Language and the Law

presented by

Dr. Deborah S. Bosley

Principal, The Plain Language Group

deborah@theplainlanguagegroup.com

704.641.1334

presented to

ACC America

June 2, 2010

Plain language and Dirty HarryPlain language and Dirty Harry

"I know what you're thinking. Did he fire six shots or only five? Well, to tell you the truth, in all this excitement, I've kind of lost track myself. But being as this is a 44 Magnum, the most powerful handgun in the world, and would blow your head clear off, you've got to ask yourself one question: Do I feel lucky?”

Here’s how the SEC would have written itHere’s how the SEC would have written it

"I imagine that you are harboring significant uncertainty concerning the precise number of times that the hammer of this particular multi-shot firearm was cocked, its cylinder was advanced, the hammer was then released at the rear of its travel, the round in the chamber was fired, and the cylinder was then advanced once again — and specifically whether the exact figure is six, or possibly only five…I myself am experiencing difficulty in quantifying the discharges with exactitude. … a result, it is appropriate that you pursue a specific and directed line of inquiry and self-examination…in view of all the facts and circumstances, and giving due weight to the relevant risk factors, is it your considered judgment that you are more likely than not to be relatively fortunate?”

Here’s the AgendaHere’s the Agenda

1 What is the problem?

2 What is plain language?

3 How do we know it works?

4 Which laws | regulations require plain language?

5 How can the use of plain language help avoid

litigation?

6 How can attorneys benefit from using plain

language?

PrinciplesPrinciples

Disclosure communication

Compliance requires understanding

Legal language often unintentionally obfuscates

Trust is critical

Plain language now required

1. What is the problem?1. What is the problem?

cell phone bills benefits statements financial statements credit card statements insurance policies fee agreements mortgage contracts executive compensation (CD&A) confusion | costly mistakes inability to comply increased litigation

A new environmentA new environment

public is angry lowest level of trust in 30 years intense federal scrutiny consumer skepticism increased litigation

FTC

study

of

mortgage

disclosures

FTC

study

of

mortgage

disclosures

90% couldn’t identify up-front fees

80% couldn’t understand stated

interest rate different from APR

65% did not spot repayment penalty

25% could not identify settlement costs

 2006 Study by the Federal Trade Commission: 819 prime and sub-prime mortgage customers

Before: Provision in fee agreementBefore: Provision in fee agreement

Audience: Prospective Client

Client understands that any estimates provided by the Firm of the magnitude of the expenses that will be required at certain stages of any litigation asserting a cause of action are not precise, and that the kinds and amounts of expenses required are ultimately a function of many conditions over which the Firm has little or no control, particularly the extent to which the opposition files pretrial motions and engages in its own discovery requests, whether in the nature of interrogatories, depositions, requests for production, or requests for admission, or any other type of discovery allowed by the rules of procedures in the forum in which the dispute is pending. (110 words)

After: Provision in fee agreementAfter: Provision in fee agreement

A firm’s estimate are just that: estimates. Conditions

outside the firm’s control, especially the other side’s

pretrial motions and discovery requests, may raise or

lower expenses. (26 words)

AmbiguityAmbiguity

"This policy shall pay the loss of director and officer...”

Two interpretations are possible:

1. The insurer shall pay the loss of a person who is a director, or an officer, or a director and an officer.

2. The insurer shall pay the loss of a person who is both a director and an officer.

If intent is several: "The Insurer shall pay the loss of any Director or any Officer.”

If intent is joint: "The Insurer shall pay the loss of any person who is both a Director and an Officer."

What is plain language?

using evidence-based writing and designing strategies that make it easy for your intended audience to find, understand, and use your information The Plain Language Group

ABA “…promotes understanding of legal obligations by…” organizing information for readers using direct & easily understood language Approved by voice vote by the ABA House of Delegates at the 1999 Annual Meeting in Atlanta

SEC includes analyzing what information investors need designing documents for visual appeal

SEC Handbook on Plain English: http://www.sec.gov/pdf/handbook.pdf

2. What is Plain Language?2. What is Plain Language?

Myths of plain languageMyths of plain language

means dumbing down oversimplifies | changes meaning subverts terms of art doesn’t work as well as traditional legal language

“Too many lawyers believe [that] it is essential to legal English that one write as pompously as possible, using words and phrases that have long since disappeared from normal English discourse.” Hon. Antonin Scalia, U.S. Supreme Court

Before and AfterBefore and After

Before: “NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED OR INCORPORATED BY REFERENCE IN THIS JOINT PROXY STATEMENT/PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR REPRESENTATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED.”

  After: “You should rely only on the information contained in this [document] or that we have referred you to. We have not authorized anyone to provide you with any different information.”

3. How do we know plain language works?3. How do we know plain language works?

Empirical studies in two tests show plain language improved comprehension in legal documents from

test #1: 15% to 36%

test #2: 50.5% to 66%

Michael E.J. Masson & Mary Anne Waldron, Comprehension of Legal Contracts by Non-Experts: Effectiveness of Plain Language Redrafting, 8 Applied Cognitive Psychol. 67, 75, 77 (1994).

Why is plain language important?

TIAA-CREF revised letter to near retirees: increased positive calls and new assets

Fed Ex plain language operations’ manuals saved $400,000 first year

Allen-Bradley computer manuals: support calls dropped from 50 a day to two a month

Hospitals waste $12 billion annually – poor communication

3. How do we know plain language works?3. How do we know plain language works?

3. How do we know plain language works?3. How do we know plain language works?

Corporations that use plain language in shareholders’ communication increase money investors bring into their companies.Tim Loughram and Bill McDonald. “Plain English.” Mendoza School of Business, Notre Dame, 2009.

Firms with high corporate reputations use less varied, shorter, and more concrete words than low reputation firms. John Geppert and Janice Lawrence. “Predicting Firm Reputation Through Content

Analysis of Shareholders’ Letter,” Corporate Reputation Review, Vol. 11, Number 4, 2009.

Before and After Before and After

4. Which laws | regs require plain language?4. Which laws | regs require plain language?

CAARD: Credit Card Accountability Responsibility & Disclosure Act of 2009

PPACA: Patient Protection and Affordable Care Act

RESPA: Real Estate Settlement Procedures Act

ERISA: Employee Retirement Income Security Act

HIPAA: Health Insurance Portability and Accountability Act GLB: Gramm, Leach, Bliley Act

32 states: e.g. contracts less than $50,000

5. How can the use of plain language help avoid litigation?

5. How can the use of plain language help avoid litigation?

Compliance is required

“Clear and conspicuous” too vague

If written appropriately, claim can

be dismissed or not included

May no longer be enough to say

“client signed the contract”

6. How can you benefit by using plain language?

6. How can you benefit by using plain language?

Market your firm Restore public trust Manage risk from new

plain language laws Maintain corporate integrity Increase numbers of clients Affect the bottom line