Vocab Rehab: Due Diligence

"I did my due diligence," one blogster wrote about her hair cut disaster. She even showed up 10 minutes early. But still she got "the worst haircut known to mankind."

Google the phrase "I did my due diligence," and you'll find all sorts of entries by people who swear they did it and still got taken.

Maybe they wouldn't have if they had known what due diligence means.

As it is, a grammatically incorrect phrase has wormed its way into our language leaving holes in our thinking and slime trails over our assumptions of what other people mean.

The Wikipedia entry for due diligence says the term "first came into common use with the U. S. Securities Act of 1933." The same act that, for almost 75 years, prevented what's happening now in the stock market. Then some of the provisions were rescinded -- but that's another story.

A 1908 textbook, "The Law of Evidence in Civil Cases," by Burr W. Jones, cites Bartley v. Phillips as a case where the phrase due diligence was examined as to whether it was ambiguous (p. 574).

As a side note, other examples cited in the book of cases where language was scrutinized for specificity included:

• Coit v. Commercial Ins. Co.: "that sarsaparilla was not a 'root' within the meaning of a policy of insurance,"
  
• Astor v. Union Ins. Co.: "that by the understanding of the trade, 'furs' were not included in the term 'skins and hides,'" and
  
• Com. v. Pope: "that the phrases 'satisfaction due from man to man' and authorizing a friend to make 'necessary arrangements' contained in a letter meant a challenge to a duel."

A pity Jones didn't enlighten us as to the ambiguity surrounding due diligence in the particular case cited.

Regardless, Rule 203a.2.iii.B of the U. S. Securities Act of 1933 uses the term as a specific legal defense, saying that a broker or dealer would not be liable in certain cases if "due diligence was used to ascertain that" specific circumstances existed in the process of making a sale. The opposite is true, as well. If something is a legal defense, it can also be grounds for charges being brought of failure to use due diligence in ascertaining that something was or was not so.

The question, of course, is what constitutes due (adj.:owed to, appropriate, sufficient) diligence (n.: persevering and painstaking investigative effort or care).

And that is the question we journalists too often fail to ask, mainly because we've allowed the phrase to become jargon, slang, shorthand.

Consider this St. Pete Times article from October, 2007, about the sale of the Tampa Bay Lightning NHL team from one entity to another.

Here's the reporter's lead (lede, if we really want to talk jargon) sentence:

"BOSTON - Commissioner Gary Bettman said Thursday that the league has yet to begin its due diligence into Palace Sports & Entertainment's proposed sale of the Lightning to Absolute Hockey Enterprises."

Granted, the reporter was paraphrasing this direct quote, which appears later in the article:

Asked if the league has concerns about an ownership transfer, Bettman said, "We haven't evaluated it yet. It would be premature for me to speculate, but everything that I'm hearing is that it's on track and there shouldn't be any problems. That's what we're being told. But as I said, we're not yet at the stage where we would start doing our due diligence."

And the commissioner is not the only one using the phrase this way. Here's another quote from the same article, this from the bidder:

That is news to Absolute Hockey's Doug MacLean, who said in a text message, "They're well on their way on due diligence. We are on schedule."

As your mother would say, just because everyone else says it that way doesn't mean it's right. One does not do due diligence. One uses due diligence to do something else.

Here is what the NHL commissioner meant to say: "We're not yet at the stage where we would start following the specified procedures regarding such a sale."

At which point, the reporter would have asked the commissioner, and then told the reader, what those specified procedures were. Does it mean a full audit of the financial health of the bidder? Or does it just mean a cursory glance at bidder-prepared financial statements? Or does it mean something else entirely?

Due diligence is a subjective term, defined by policies, procedures, legislation pertaining to each particular company, case, situation. It is not something we can just assume is the same in every case and that everybody knows what is involved.

Let's strike the phrase due diligence from our own writing, and let's pin other people down as to exactly what they mean when they use the phrase.

Let's use due diligence in finding out what constitutes due diligence. Isn't that our job as journalists?

At the least, maybe people will stop thinking "doing their due diligence" means they'll never get a bad haircut.