"Famous Last Words"

Lines of Communication in a Deal (August 2007)

Dear Readers:

This month we will consider the relationship and communication lines between all the parties involved in making a game development deal. These are, generally, the developer, developer's counsel, the publisher, and publisher's counsel.

There is a protocol enshrined in legal ethics that has evolved to protect each side. The protocol is not unique to the games business. Fact is, when I took the California Bar Exam, this issue was tested in one of the major ½-day essay problems! It is a protocol generally created to protect the client from browbeating, heavy-handed lawyers and their paralegals.

Briefly, it is simple – if one side knows the other side is represented by counsel, its lawyers and legal staff are prohibited from contacting the client directly (this direct lawyer-to-other-party communication is known as “ex-parte contact”). Unless counsel for the other side gives its permission, all contact from counsel and counsel's staff must go through opposing counsel only.

This rule makes complete sense. Lawyers like to throw their weight around, are often very good at it, and this is knowingly designed to be very intimidating. In the games industry context, a publisher lawyer or paralegal wanting to exert pressure on the other side to close a deal could get on the phone and arm-twist the other side to accept terms. If the developer fails to contact its own lawyer, in this case the lawyer whose only job it is to protect developer's interests, developer's counsel may be cut out of the loop in publisher's attempt to push the deal through.

Of course it is developer's job to notify its lawyer of any such contacts. However, legal ethics do not presume the client is aware of this or thinking about it at the time. The client may fail to do so for any number of reasons. In a confrontation between publisher's lawyer or paralegal (who is involved in these deals every day and is working from a deal point template that is extremely favorable to publisher), and developer (who needs the deal for any number of reasons), publisher has the clear advantage.

So how does developer protect itself from such steamroller tactics?

First – Develop a close working relationship with your own lawyer. Stay in contact during the contracting process. Pass along information concerning any ex-parte contact from publisher's legal department. Another word used to describe a lawyer is “counsel.” Take advantage of your lawyer's counsel or advice in moving the deal forward.

Second – Maintain a written log of all contacts from the publisher. Make particular note of communication from anyone related to the business affairs or legal department. Record the day, time, and subject matter of all calls. Report them to your own lawyer.

Third – If documents or communications from your publisher relating to the deal, not the game, arrive in your inbox, be sure they were also provided to your lawyer.

Fourth -- Advise the other side that these should not be sent to you – only your lawyer. This reinforces the proper lines of communication. Developers have their hands full with the creative and technical aspects of the game. Ask your lawyer to be sure and forward any such materials to you directly.

Fifth – If your publisher continues these inappropriate ex-parte contacts after you request that they stop, let your own lawyer know. There are steps he or she can take to stop it.

Developers want to be “good guys.” They want to build relationships with publishers, show how they can work together, be flexible, economical, creative, innovative, and get the job done. Lawyers who work outside established lines of communication take advantage of these aspects of a developer's personality.