Plain Language Drafting and Arbitration Clauses Justin Hosie Chambliss, Bahner & Stophel, P.C. (423) 756-3000 Twitter: @ConsumerFinance [email protected]

Plain Language Drafting and

Arbitration Clauses

Justin Hosie Chambliss, Bahner & Stophel, P.C.

(423) 756-3000 Twitter: @ConsumerFinance

[email protected]

November 7, 2011

© 2011 Chambliss, Bahner & Stophel, P.C.All Rights Reserved

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Overview Plain Language and Readability

• What is this?

• Where did it come from?

• How to measure readability?

• Who Cares?

• How to make plain language revisions?

• What about typical criticisms?

• Is a “readable” arbitration provision possible?


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What is this?

• General Goal: Communication your audience can understand the first time they read it

• Parameters:

– Logical organization with the reader in mind

– "You" and other pronouns

– Active voice

– Short sentences

– Common, everyday words

– Easy-to-read design features


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Where did it come from?

• Ancient History: Greek and Roman Philosophy

– “The chief virtue that language can have is clearness, and nothing detracts from it so much as the use of unfamiliar words.” Hippocrates

– “When you wish to instruct, be brief; that men's minds take in quickly what you say, learn its lesson, and retain it faithfully. Every word that is unnecessary only pours over the side of a brimming mind.” Cicero

• Modern History– 1930s readability studies; 1970s Rudolf Flesch and J. Peter Kincaid develop

readability scoring systems for the military

– Presidents Nixon, Carter, Reagan, Clinton took actions to make federal regulations easier to understand

– 1975 – First National City Bank launches plain language loan agreements, to make collection easier. Plain Language for Lawyers, Michèle M. Asprey, Federation Press, 3rd Revised edition (July 2003), p. 33.

• State Plain Language Statute Examples: California Insurance Code Section 10291.5(b)(1); Connecticut General Statutes Section 42-152(a); Florida Statutes Section 627.4145; Others exist too, primarily insurance related


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How to measure readability?

• Various Formulas: Flesch Kincaid Reading Ease, Flesch Kincaid Grade Level, Gunning Fog index, Other Scores

• Key to Improved Readability: Less syllables per word, less words per sentence

• MS Word: Shows readability score after running spell check: Tools Options Spelling & Grammar Tab Show readability statistics


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Who Cares? Plaintiffs

• Woods v. QC Fin. Services, Inc., 280 S.W.3d 90, 96 (Mo. App. E. Dist. 2008). A plaintiff’s readability expert stated:

– Line spacing was so close “an optical scanner was unable to make out the characters.”

– The provision included “more than 1,300 words made to fit onto one page. When presented in a double-spaced, 12 point Times New Roman font … the clause is six pages long.”

• Advance Pay v. Colonius Acey, Court of Common Pleas, Cuyahoga County, OH (May 13, 2011). A plaintiff’s readability expert, Mark Hochauser, stated an arbitration provision was “incomprehensible to all but students in their 3rd year of graduate school.”

• Other examples exist as well.


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Who Cares? Agencies

• 2007 Affiliate Marketing Rule, 2007 WL 3147148– Proposal indicated the agencies tested the proposed model forms using

“the Flesch reading ease test and the Flesch-Kincaid grade level test.”

– According to the agencies, “consumer groups and NAAG commended the Agencies for reporting the Flesch reading ease score and Flesch-Kincaid grade-level score for each of the model forms.”

– Agencies explicitly indicated that they “encourage the use of these tests as well as other types of consumer testing”

• Other Notable Examples:– Additional emphasis placed on simplified terms, and using formatting

techniques including: boxes, shading, increased margins, large typeface and font, and ample spacing/kerning

– Recent overhaul of the GLBA model privacy notice

– Recent HUD / mortgage model revisions


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Who Cares? CFPB

• CFPA Section 1028 requires the new Bureau to study and “provide a report to Congress concerning the use of agreements providing for arbitration of any future dispute between covered persons and consumers in connection with the offering or providing of consumer financial products or services.”

• Section 1028(b) authorizes the Bureau to impose regulations limiting or prohibiting arbitration agreements to arbitrate, based on the study

• The prohibitions and limitations are authorized “in the public interest,” and “for the protection of consumers.”

• Conversation with CFPB Policy Analyst on the arbitration study focused almost entirely on consumer understanding and readability

• Industry efforts at transparency should include efforts to include “readable” clauses in the study


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How to make plain language revisions?

• Bryan Garner – Editor of Black’s Law Dictionary; Author: The Redbook: A Manual on Legal Style; Garner on Language and Writing; Legal Writing in Plain English.

– Keep the average sentence length to about 20 words

– Use the simplest, most straightforward words you can

– Omit needless words

– Keep the subject, verb, and object close together

– Prefer the active voice over the passive

– Learn to detest “simplifiable” jargon

– Minimize is, are, was, and were

– Simplify wordy phrases, watch out for of


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How to make plain language revisions?

• Bryan Garner – continued…– Avoid doublets and triplets

– Don’t habitually use parenthetical shorthand names

– Shun newfangled acronyms

– Make everything you write "speakable"

– Draft for an ordinary reader, not for a mythical judge

– Minimize definitions

– Delete every shall

– Replace and/or wherever it appears


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General Guidance

• Ken Adams – A Manual of Style on Contract Drafting

– Don’t make sentences too long (20-25 word average)

– Keep subject, verb, and object close together

– Don’t bury verbs

– Avoid redundant synonyms (doublets and triplets)

– Avoid "lawyerisms" and wordy phrases

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What about typical criticisms?

• Common Misconception #1: Writing for the judge, not the consumer, and judges prefer dense legal prose

– 1991 survey found that 80% of judges in Texas prefer plain language

• Common Misconception #2: Cutting and simplifying terminology means less legal arguments we can benefit from later

– Less verbiage and clearer verbiage reduces ambiguities and contradictions that plaintiffs exploit

• Common Misconception #3: Ample spacing and adding more short sentences will increase paper costs

– Formatting improvements can in fact take more paper, but readability score improvements do not


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Is a “readable” arbitration provision possible?

• Yes

• Grammatical, numerical and formatting changes to the standard arbitration provision have resulted in the following improvements:

– Arbitration Clause:• Score was 26.4, now 64.4.

• Grade Level: 16.5 (post-graduate), now 6.2 grade level (sixth grade)

– Federal affiliate marketing model form:• Scores: 53.7, 57.5, and 69.9.

• Grade Level: 9.9, 9.6, and 6.7


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• Grammatical Changes:

– Reduce percentage of passive sentences from 25% to 3%

– Reduced use of doublets and triplets, etc.:

• “Final and binding” to “final”

• “acknowledge and agree” to “agree”


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• Numerical Changes:

– Choosing synonyms with less words/syllables:

• Arbitration Provision = 7 syllables, 2 words; Clause = 1 word, 1 syllable; appeared 23 times

• Loan Agreement = 4 syllables, 2 words; Contract = 1 word, 2 syllables; appeared 12 times

• Arbitrator = 4 syllables; Arbiter = 3 syllables; appeared 25 times

– Splitting long sentences into multiple shorter sentences

• Words per sentence was 34.4, now 8.2


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• Formatting Changes:

– Question and Brief Answer for each section heading

– 3 Column box shaded formatting


Questions?

Ron [email protected]

Blake [email protected]

Justin [email protected]


This presentation is provided with the understanding that the presenters are not rendering legal advice or services. Laws are constantly changing, and each federal law, state law, and regulation should be checked by legal counsel for the most current version. We make no claims, promises, or guarantees about the accuracy, completeness, or adequacy of the information contained in this presentation. Do not act upon this information without seeking the advice of an attorney. This outline is intended to be informational. It does not provide legal advice. Neither your attendance nor the presenters answering a specific audience member question creates an attorney-client relationship.


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Plain Language Drafting and Arbitration Clauses Justin Hosie Chambliss, Bahner & Stophel, P.C. (423) 756-3000 Twitter: @ConsumerFinance [email protected]