Legal Anatomy – an Act on the dissecting table

Have you ever wondered whether there was something like a legal anatomy of an Act allowing us to study its structure, position and interrelation of its various parts? A detailed and empirical analysis similar to a human body’s dissection for the purpose of judging functionality, expedience and performance quality?

In their latest book “G&A Methodology to Business Rescue and Compromises” South Africans Karl Gribnitz, former senior business rescue practitioner, and Robert Appelbaum, partner at law firm Webber Wentzel, have developed a ground-breaking methodology and dissected Chapter 6 of the Companies Act 2008 with an exclusive focus on business rescue proceedings and compromise offers (http://www.gnacompass.co.za/ga-methodology-business-rescue-and-compromises-1st-edition). 

The “burning platform”

The exemplary features of Chapter 6 listed below serve to illustrate the “burning platform” that drove Gribnitz and Appelbaum’s innovation:

• The skeleton of Chapter 6 consists of 28 sections, which have 127 subsections and 131 sentences, which are made up of 10,383 words. The longest sentence is 154 words and the shortest sentence is 45 words. The average is 79 words.
• For Business Rescue, within 25 days, 354 obligations have to be addressed including 323 related to the Company, directors and practitioners.
• 163 rights exist.
• The affected parties have collectively 895 implied rights and 28 obligations. Out of those, 99 are direct and common rights, which means that those rights are described in the Act. The remaining 796 rights arise from the 353 conditions and the 326 obligations, which must be met by other parties. If a condition is not met, even in case of all obligations being fulfilled, the affected party can still approach to have the business rescue set aside.
• The Act contained 289 cross references (of all descriptions), of which 278 related to Business Rescue and 11 related to Compromise offers.

What does really matter to readers of the Act?

Bearing that enormous complexity in mind, at the beginning of the methodology development process Gribnitz and Appelbaum asked themselves common sense questions in the light of the perceived complexity of this particular Chapter, such as

• How do you find the specific answer in the Act without reading many irrelevant pages, searching and not finding these answers given the short period of time provided to conclude the proceedings?
• How do you avoid losing oversight when reading sentences of 79 words?
• How do you quickly find answers but at the same time are being made aware of any other issues, which you should be considering?
• How does one easily identify and differentiate between what should be done (obligations), what can be done (rights) and what should be adhered to before it is done (conditions) after reading seemingly endless obligations, rights and conditions variously applicable per sub-section after sub-section?

In response to those questions, The G&A Compass methodology groups and structures information using colours, shapes and patterns to enable the reader’s mind to make sense of what seems to be an endless stream of words. Gribnitz and Appelbaum created an empirical approach analysing the Chapter word by word, which gave them an un-biased view of what can be done and what should be done in the context of business rescue and compromise offers.

Identifying “Rosetta” words and extracting patterns

Firstly, the authors had to decipher word chains to meaningful instructions in order to determine how many obligations, rights and conditions existed. Since the meaning of words, such as “may” as opposed to “has to”, is well defined and language possesses structure, Gribnitz and Appelbaum defined rules and identified “rosetta” words which could be used to develop a process for providing clarity on the underlying intent and the sequence of actions. The use of these defined words served and assisted as an indicator of what the creators of the Act had initially intended.

Converting findings into multi-dimensional tables

They then proceeded to create a set of 13 rules which are then converted into the unique set of 8 basic components to enable the reader to find the answers that they seek, including a Party Compendium indicates where one would find specific information about a defined party in the Act, a Deliverable Compendium lists the deliverables and their references in the Act, a Case Law Compendium relates to cases to the specific subsections of the Act,  Responsibility Charts which provide guides for all obligations, conditions and rights, a Cross-Reference Atlas which maps out all cross-references for the various sub-sections of the Act, a Reference Chapter highlights legislation which does not form part of the Act, a Regulations Chapter describes the relevant regulation and form applicable to each section of the Act, and a Findings and Summary Table finally lists all considerations of the Act and their compliance requirements.

Taking the methodology further

The result of this complex process is their latest book, which as the authors put it “is the way to interpret complex instructions, which means that we all can drive cars and understand the law, without being senior (legal) counsel.“ What is hiding behind this almost trivial statement is the ambition to “democratise” law and make it accessible to broader groups in our society – strengthening the understanding and acceptance of the Rule of Law. But it doesn’t have to stop there. The options going forward are obviously manifold. For this, a couple of practical ideas:

1)    Pre-drafting design for better legislative processes - The obvious first choice is clearly the application of Gribnitz and Appelbaum’s structured approach to the pre-drafting phase of the Act. Accordingly, any pertinent conditions, obligations, cross-references, etc. are defined ahead of the actual drafting process and in conjunction with a thorough socio-economic impact assessment and a feasibility check – something that is widely ignored by policy makers, at least in Africa. As a result, Chapter 6 in its current form with its incredible 354 obligations in a period as short as 25 days would have never seen the daylight.

2)    Harmonising regional laws quicker - Having one holistic methodology at one’s disposal should expedite the exercise of comparing and harmonising regional laws. It allows practitioners to quickly illustrate gaps and commonalities side by side. Perhaps an idea for the upcoming draft of an investment protection framework for all Southern African Development Community states?

3)    A step towards Artificial Intelligence - Given the comprehensive identification of rule-based patters and dependencies by the authors, taking the next step towards an IT-enabled workflow is not a daring one, but how about concatenating empirical data and combinations of actions? In analogy to the examples of a “predictive model of case outcomes” or a “probability model for increased offers” as described by Michael Cross’ article “The Role of Artificial Intelligence in Law” (http://raconteur.net/business/time-for-technology-to-take-over), business rescue teams could benefit from a table of success probabilities for certain sequences of executing rights and obligations. 

I will leave it to the valued reader of this article to think of additional ways to leverage the methodology and highly recommend the study of the book.