 Well, my guest today says just about everything is negotiable. So if you're a local government, that may come as a bit of a surprise to you, but bear with us. Hi, I'm Jerry Deschey, and this is The Local Perspective, the League of Wisconsin Municipalities Community Media Show, where we talk about different municipal issues and hopefully pass along some useful information to you. I want to thank our hosts for today's show. This is being distributed by Wisconsin Community Media and their stations all across the state. But I particularly want to call out a WSCS, that's Wisconsin-Shabuagan Community Station. Scott Meehlof and Maddie Pfister are helping us today. But my guest is Shabuagan's Assistant City Attorney, Thomas Cameron. Thomas, good morning. Good morning, Jerry. And so, before I challenge you about what's negotiable and what's not, tell us a little bit about your role, you're the Assistant City Attorney in Shabuagan. That's right. What are you doing on a day-to-day basis? It's a little bit of everything, whether it's representing the city in court, whether it's working with contracts, sort of making sure that the city is as protected as it can be. So does that mean that you're the guy that whenever a department head wants to do something, you're the one that says no? Or is that, well, how involved do you get in new initiatives or in new ordinances that are being kicked around? So I mean, we definitely try to be a department that says yes rather than a department that says no, and save those no's for when there really is no way around it. Let's say that our office tends to get involved on those projects, sometimes earlier than others, but we get brought in and work with the department heads on their initiatives. Okay, great. Great. And you're an Indiana University law grad, as I understand it. I am. Okay. And before that, Wisconsin? Wisconsin Lutheran College, graduate of, with a major in political science and business. Oh, great. Political science, man after my own part. So let's start with the basics. And by the way, we should say, check out Thomas's article in the July issue of the municipality. He focuses on these limitation of liability clauses in contracts. It's a great article. Don't let the title kind of intimidate you if you're not an attorney, because you sign contracts every day. And that's really sort of the nub of it all, right? Is that a contract means a lot more than we think it means. It really does. I mean, one example that we gave in the article is buying a cup of coffee is a contract, but it's not what you think of. You walk up to the barista and say, I'd like a medium latte. They say that'll be $3.50. You give them the $3.50. And then a few minutes later, you get handed a latte. And that may be the end of it, but you've got the components of a contract. They're offering to sell you a latte for $3.50. You've got acceptance. You come in and say, I'd like that medium latte. And you've got performance. They're performing, and you're paying the $3.50. But there's also a whole bunch of terms baked into that coffee transaction that we don't really think about. If you ask for your latte to have no foam, and it comes out with foam, you're going to look at your latte and go, what is this? It's not what you asked for. It's not what you ordered. And presumably, that'll get fixed one way, one way or another. So there's a lot going on that we're not thinking about even in that very basic example. So put this into municipal terms. If I'm a city clerk or a village clerk in a small community and I'm dealing with buying services every week and buying supplies, what's a contract? What's not a contract? Or is all of that a contract at some level? Just about all of it's a contract at some level. I mean, there's a perception sometimes that it's the name at the top of the document that really matters. So, oh, it's not a contract. It's a purchase order. Or it's not a contract. It's an engagement letter. Or it's not a contract. It's a services agreement or a memorandum of understanding. I mean, those are all going back to that coffee example. We have offer. We have acceptance. We've got both sides getting something of value. So, on some level, all of those are contracts. But now, what's the difference in terms of what a clerk or an administrator, at some point, obviously, if you're buying a cup of coffee, you don't need to ask the assistant city attorney. Well, of course, you're buying for him. But if you're just buying or repurchasing or whatever, where's the line between where you really need to scrutinize the written document and it's just, okay, this is that piece of paper again? Well, and sometimes the question is, does there need to be a written document at all? And occasionally there's folks who are doing things with a handshake, which can cause all sorts of problems to not even have the basic understandings written down. Yeah, not to mention no record of what actually is supposed to be happening. It makes it harder to pay and makes it harder to understand whether you've gotten what you were really supposed to get if you haven't written it down on the front end, even in a really informal way. So on the one hand, buying a $6 box of pens, you're probably not gonna scrutinize that all that carefully. Once you start getting into things where for your municipality, if things go sideways or things go not well, there's meaningful exposure. Now I think you really wanna be taking a look at what's in it. And that line for meaningful exposure is gonna be different for everyone. If you're a very small community, a $1,000 contract might be a significant percentage of your annual budget. So making, not that you wanna be willing nearly with any expenditure of public funds, but there does come a point where you go, we're not gonna spend lawyer time on that $6 box of pens. We're gonna spend more money scrutinizing the contract than we are on the pens in the first place. We're, and I can already hear it, some of our listeners are going, okay, well, okay, now I'm terrified, what do I do? Where is the first place they should go to kind of get a basic understanding of what these elements could or could not be? So I mean that the league is an awesome resource for all sorts of trainings. I know they've got the local government 101 and they've got other training opportunities. I would say that's a really great starting point. The second point is talking with your particular attorney about big picture, what should we be looking for? What are those tension points? Google isn't always perfect, but at getting a basic understanding for what an indemnification clause is, that can help make you a more informed consumer. Yeah, and we're gonna dive into not indemnification clauses, limitation of liability clauses, because a lot of cities, just as consumers, frankly, you're being handed some standard form contracts that you ought not be signed if I understand just of your article correctly. That's right, there's a lot that is presented as sort of standard or as boilerplate that really isn't or that is really tailored at a different audience than a municipality. So, as a consumer, I may not be able to dictate terms with the cable company or with my cell phone provider. As a municipality, you might be able to and you might be able to do more than you think if you ask. Okay, and we're gonna open that up just a little bit more, but before we do that, again, I wanna go back and kinda cover the basics. What are the nuts and bolts of a contract between you and I? And what should a municipal official really put her primary attention on first and foremost? So, in terms of the basic terms that we're expecting, we're expecting a price term, we're expecting what I would call sort of the what. What are you contracting for? Is that goods? Is it services? Is it goods and services? And as a corollary to that, specifying what it is that you want. So, not just saying I want you to paint these four walls, but I want you to paint four walls of the conference room in room 200 of City Hall that meets certain criteria. And by being specific in your what, that can also avoid some problems later on where you can avoid the dispute before it even happens by having very clear expectations while everyone's still friends. A schedule term is also gonna be key and important. How long is this gonna take? And if those three things aren't being met or aren't to the municipality satisfaction, then some of the other more legalistic terms, they don't matter because you're never gonna get to that point. If you want all four walls of the conference room painted and they're only willing to do three, well, that doesn't do you a whole lot of good. So, does a contract always also spell out how do we fix this if something goes wrong? Call it a warranty, call it whatever? I mean, it won't always, but a contract that's doing some thinking on the front end, one of the questions that I'm always thinking about when I'm reviewing a contract or when I'm drafting a contract is when something goes wrong, what's gonna happen? What are the next steps? And I tell my clients all the time, if I knew in advance which one contract a year or which two contracts a year would go sideways, those would be the only one or two that I'd really worry about. But I don't know, so I've gotta be just as rigorous with everything that hits my desk because I don't know which one's gonna go sideways. Can you say with any certainty that, oh, construction contracts, those are the worst or new vehicle agreements, those are the most challenging? I'd say a lot of it depends on who the other party is. There are parties and I'm sure every municipality has them where they're more difficult to negotiate with or they're more difficult to work with and that might be a local developer. It might be a local, if you've got one construction company in town or one construction company that's kind of local, they're gonna have more leverage than if you've got five or six to choose from. Okay, we're talking with Thomas Cameron. Thomas is the assistant city attorney for the city of Oshkosh. Excuse me, why is my mind on Oshkosh? On the wrong side of the lake today or the wrong lake, I guess. Or the big lake. Thomas Cameron, assistant city attorney for the city of Sheboygan, which is on the big lake. Talking about contracts, which you'd be inclined to say, oh boy, this is a snooze, but this is where a city can find itself pretty tangled up in a pretty big hurry. What are, we talked about the more obvious things that you want in an agreement. What are some of the less obvious things? So I would say, not just a termination clause, but what does that termination clause say? Who's allowed to terminate and for what? And is there a cure provision? So if you default on a contract with me, do I have to give you 30 days to fix it? Do I have to give you 30 days to fix any default or just some defaults? We alluded a little bit earlier to indemnification and limitation of liability. Those will go sort of hand in hand. I would say, look at what responsibilities a municipality has. So if it's a services contract, is the municipality agreeing to give certain information to the contractor? And does someone in your municipality know that you've taken on that responsibility? Not always the case. When your city attorney, the force sort of affects him and all of a sudden he starts to get, someone just agreed to something that he shouldn't have. And what did we just take on? Who can perform for the other party? So a lot of times with services contracts, you care very much who's performing for them. So if you're hiring an architect, presumably you picked that architect on purpose and you want that architect to be performing the services for you. So is there a provision that prevents them from subcontracting it out to someone that you didn't pick? Thinking about that on the front end, insurance. A lot of times insurance gets sort of glazed over as, oh, this is just the standard provision. But what are you having done and what is the actual risk to your municipality based on what you're having done? I'll give you an example. The previous life, professionally, we were working on re-roofing a large building and putting solar panels on it. And we were a little nervous about the solar panels and the weight to go with it. So we did a lot of work on the front end to understand that and get comfortable with that. But we were still nervous that things wouldn't be done right or that we'd be left with the two contractors, the roofer and the solar company, pointing fingers at each other. Right, and nobody really knowing who's doing it. No one really knowing. So we wanted to make sure that both providers had enough insurance that no matter what happened, we could rebuild the building if we had to. Everything goes wrong and there's enough there. So we were insisting on a lot more than sometimes a million dollars per occurrence for commercial general liability gets thrown around as sort of a standard. We asked for a lot more than that on that particular contract because we had very specific concerns. Quite often, and this starts to get to the heart of your limitation of liability clauses and indemnifications. But in this day and age where everything is a franchise, united rentals, I mean, that was just the first name that came to me. There are lots of them. People are handed sort of the company's standard contract every day, saying here's our standard agreement, use it all across the country, sign right down there at the bottom in the way we go. Should they sign right down there at the bottom? Probably not. Why not? The first thing I would say is, especially when you're dealing with those standardized contracts, they're probably not considering some of the unique restrictions that are placed on municipalities. And I'll point to open records as the most obvious example. As governmental entities, we've got very specific requirements to disclose things when we're asked. And a lot of times those contracts say, you're gonna keep everything confidential or this is deemed a trade secret. Is that contract a trade secret? It might be, but if I can find it in 30 seconds on the internet, it's probably not. Making sure that we have our antenna up and we're thinking about those concerns that are unique to municipalities. Now what about the big one, the limitations on liability? First of all, is there a difference between a limitation of liability clause and an indemnity clause? Yes. Can you take them one at a time and explain? So an indemnification clause is dealing with the risk. It's dealing with who's going to pay if a certain type of issue happens. If the solar panels come crashing through the roof. If the solar panels come crashing through the roof, who's on the hook for that? The limitation of liability clause says, I don't care who's on the hook, we're not paying you more than X, whatever X is. So it's sort of as a layer on top of that indemnification clause. And when coupled together can really undercut the meaning of that indemnification clause. So you can have an indemnification clause where the contractor says, I'll take on everything. No matter what happens, we will indemnify, defend, and hold you harmless for everything. But if they say, if they layer a limitation of liability clause on top of that that says, but we're only willing to pay out the dollar amount of the contract and it's a $10,000 contract, then the value of that indemnification clause to your municipality looks a whole lot like $10,000, which is not what you thought you were getting almost certainly when you were dealing with that indemnification clause. So it really can cloud and can really cloud all of those other provisions. So what should a municipal official do? Because they're facing across the table a guy who owns the franchise, he's given these forms, he's told by his attorney get these forms signed. It feels like the municipality has no bargaining room at all. Is that an accurate feeling? It's an accurate feeling. I don't think it's an accurate representation of reality. I have been amazed at what someone can negotiate largely by starting by asking. And sometimes I'll read a contract and I'll go, I don't understand what this means. Not even that I'm opposed to what it says or not, but it's presented as a form contract and I'll either call the other side or send the other side a letter or an email, normally emails rather than letters and say like, hey, can we clarify this? What are you trying to accomplish here? And sometimes they don't know or sometimes you can say, I read this as potentially meaning X. I don't think that's what you mean. So how can we clarify this? How can we make it so that we do have an understanding of what's being agreed to? And that's an informed contract? Even informed contracts. See, I would assume that there was a team of lawyers somewhere back in a room that got all of this done. And there may have been a team of lawyers, but five years later, 10 years later, does that contract still make sense? Was it written for the purpose that it's being used? Sometimes we see form contracts and someone's picking the closest form that they have and it may not accurately describe what's going on. I mean, I gave the example earlier of the open records responsibilities and all sorts of vendors who should know better include language that seems to imply that cities can't actually maintain their open records responsibilities and comply with the contract. So in that case, does the contract trump the open records law? No, but it doesn't prevent a mess from happening. So if you've covenanted that says, we're gonna treat this as a trade secret, whether it's a trade secret or not, you know, it's the city that's gonna have the challenge. So it doesn't authorize the city to not comply with the open records request, but it might also mean that you're dealing with the backlash from that vendor for distributing information that they believe is a trade secret. Or trying to explain to the public why you're refusing to release a document that they can find on the internet using Google. Some, I know you're an advocate for ask. I mean, everything is negotiable, ask. Is it better to do that during say the, is there a way to limit the mess during the RFP stage? I think there is. I think, you know, with services, you don't have to go out to bid. You know, you can solicit responses and that's great and that's legally permissible. But using something like an RFP or an RFQ can be really useful for a municipality to affirmatively set expectations. To say, we don't want limitation of liability. We don't want that provision to be included here. Or here's our standard contract. You know, we'll attach that. And if there's anything in here that you won't agree to, tell us now. And let's put all of our cards on the table. So, you know, a lot of times in negotiation, there's this idea of you don't wanna be the person to move first. There can be some advantage to moving first and saying, here's our form. And then if you wanna talk about our form, we'll talk about our form. But, you know, we're starting from our form, not your form. What, can you sort of put in hierarchical priority order for me? What's the most important? What are the top five or top six things that you wanna look at first in an agreement? I would say that the first thing, and we were sort of joking about it earlier, is are you getting what you actually want? Does the scope, do the specifications, do those match what you're expecting? You ordered a fire truck, you get a UGO. Something's wrong with that contract. Something's wrong with that contract. But I've seen a lot of times where something gets mistranslated. And you thought you were gonna get a fire truck that could do X, Y, and Z, and it actually can do X and Y. Or X, Y, Z, and A, B, and C. Which is great if you're not paying extra for A, B, and C. Are you paying for things you don't need or don't want? So I would say first and foremost, are you getting what you want? I would say second, is it on the schedule that works? Because if we're not getting those basic terms correct, then the rest of it doesn't really matter. The third thing is, are we compliant with all the laws we need to be compliant with? So one easy example, if we're using federal money, do we have all the language that needs to be in there to use that federal money? So if we're using community development block grant to fund this, do we have wage monitoring? Or is someone taking care of wage monitoring? Have we ensured that the appropriate wages are gonna be paid so that we actually qualify to use the community development block grant money in the first place? And don't have to go back and repay it in five years. That's gonna be really unpleasant if, and then I would say that the third really big category is ensuring the municipality is protected in the event of an issue. And that takes a whole bunch of forms. Part of that is that indemnification and that limitation of liability. Part of it, you might reach a point in the contractor, you go, it's just, it's not working for us. It's not you, it's me. So can we terminate if you were represented to be all that and you turn out to be less than all that? And you're not getting it done. You're not performing as promised. Do we have a way to get out? If we've got a multi-year contract, what happens if the council decides not to appropriate funds for this contract? Do we have non-appropriation language in there that lets us out? Because if there's no money, there's no money. Is there insurance to protect us? What kind of insurance? What is that risk going to look like? You might have something that is a relatively low dollar contract but very, very high risk should something go wrong. Thomas, what's an example of a clause that people sweat over, but it's really not worth the trouble? Sometimes venue can be something that people get worked up about. Venue the court where we would go to resolve? Where are we gonna go to fight about things? And part of that is very few of these contract disputes are actually gonna end up in court. And sort of as a second matter, and especially if we're dealing with sort of a Wisconsin-based vendor, we're gonna be in Wisconsin. Wisconsin law is gonna apply. So if I'm in Sheboygan County and I've got to drive to Ozaki County, is that the end of the world? Probably not. If I end up in the Western District in federal court instead of the Eastern District, it's a little bit more driving but it's not the end of the world. I would say that's one. You know, payment terms, as long as everyone understands what the rules are, you know, people can get worked up over getting paid in 30 days versus 45 versus is it due immediately and after 30 days, interest is owed. That might be, I could see that being a bigger issue for a small contractor than typically for a municipality. We're running low on time. My guest is Thomas Cameron with the city of Sheboygan. Got the lake right this time, or got the city right this time. He's the assistant city attorney. And I think the moral of the day is ask. Talk to your vendor, wouldn't you agree? Absolutely. That all contracts start with a good conversation, good back and forth, making sure you know what you want, they know what they're delivering. Any closing thoughts, Thomas? Yeah, I mean, to reiterate, asking and it's maybe a cliche to say, walk a mile in someone else's shoes. At the beginning of the contract, presumably you both wanna do business with each other. So I mean, this is the time to make sure that all of those issues or all of those questions have been resolved because you're never gonna get friendlier than you are right now. And if you can resolve those questions on the front end, then hopefully you don't end up in a dispute later because you've clearly spelled out what everyone's expectations are. Good advice. My guest is Thomas Cameron, city of Sheboygan assistant city attorney. This is the local perspective. I wanna thank the folks at Sheboygan Community Media Center for their help, also Wisconsin Community Media. Have a good day.