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Effective Negotiating | Business

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Effective Negotiating
Effective Negotiating

If you have ever negotiated a project or a deal, you know part of the battle isn’t just working with the other side. It’s winning over your own side as well. In every deal I negotiate, I work with my clients so that the legal team is an asset to the deal, the business team and the company in general. In this article, I’ll provide suggestions on how lawyers and their business partners can join forces to get the best deal for the company.

Business partners, these 3 ways of approaching a deal can help you leverage your legal team and close deals faster:

1. Bring in your counsel early. Lawyers cost
Imoney, and the natural inclination is to bring the lawyer in at the last possible moment to reduce legal costs. Frequently, however, when I’m brought in at the last minute, I have the unenviable task of pointing out ambiguities, risks and issues in the contract that haven’t been considered, making everyone feel like I’m being paid to call their baby ugly. In-house lawyers that get brought in at the last minute usually get referred to as the “business prevention department” because of this – which perpetuates the cycle. If I’m brought in early enough in the deal – sometimes as early as during the drafting of an RFP for large deals – not only can the legal fees be included in the business case and the budget (preventing unpleasant surprises later) but I can almost always save a client in legal fees by advising where language, concepts, or risks may be a problem for one side, and how to resolve the issue earlier in the process. I also help the client articulate and refine its going-out position, what it’s willing to give, when to give it, and at what point the deal is no longer feasible.

2. Use counsel that understands the business.
Many lawyers look at contract terms as if they are isolated from the business deal (and many business people think there are “legal” terms and “business” terms – there aren’t – they are ALL business terms, even choice of law and force majeure). A good lawyer will understand the business aspects of deal (see #1 for lawyers below) and strive to have the contract terms complement the business deal between the parties. If your outside counsel isn’t looking at the process holistically, seek new counsel that does. If you’re paired with in-house counsel, help them appreciate why the risks associated with a given deal are good for your business (since, unlike outside counsel, it’s not as easy to change advisors). Include counsel in business meetings, like sales training or other internal gatherings, to help build knowledge about the business itself. Many outside counsel will do this without charging because the investment pays off for both parties.

3. Prepare with your counsel before negotiations.
All members of the negotiating team – both legal and business – should prepare together for a negotiation. With my clients, I assist the team in anticipating the other side’s requests on both deal and contract terms. Rather than having trouble seeing the other side’s perspective, my clients take a seat at the negotiation table confident that they understand the other side’s position (and alternate positions) and are ready to address those issues. Without preparation, the negotiation team looks disjointed and can fail to resolve issues, tabling them for another day and delaying the deal. Good preparation saves money immediately and in the long term by having deals close more quickly.

Lawyers, here are 3 ways to better serve your client:

1. Understand the business underlying the contract.
While I’m not saying anything earth-shattering, the impact on the client can be. I routinely ask clients to include me in business discussions and to have the technology demonstrated for me. It is critical for a lawyer to understand the business – in my case, the technology – that is the subject of the contract. A good contract will be aligned with the economic incentives that drive the parties’ behavior. Without this knowledge, the lawyer cannot understand the subtle aspects of the business deal and allocate risks appropriately. Don’t be afraid to ask your client explain the nuances of its business.

2. Create a win-win outcome for the parties.
Most deals that I structure are long-term ones. To be truly successful, such transactions should be fair to both sides. Many people approach negotiations as a zero-sum game, but a party that feels that it gave up too much to get a deal will not be a happy participant during the contract term and will look for ways to make it up during the term – leading to friction. By employing the win-win approach, especially in long-term deals, the customer and supplier have a chance to collaborate and create a mutually beneficial deal. Lawyers should look at the deal and each party’s desired outcome, and determine how the contract can help each side succeed. When each party feels like it’s succeeded in getting a good deal, the likelihood that the parties work well together during the term increases.

3. Avoid the “death by 1,000 cuts” syndrome.
There is a hypnotic pull to a negotiation process that involves each party bringing up an issue, resolving it, and moving on. In theory, this sounds reasonable and even preferable. However, when a negotiation occurs in stages, a client can find itself “bleeding” because of the multiple “cuts” that occur over time. To avoid this outcome, work with your client early in the process to classify contract issues by importance. By tying issues together and doing a bit of horse-trading (or reserving the right to revisit an issue or two depending on how other issues are resolved), you put your client in the best position for giving and taking – without being bled dry.
When the business team brings in counsel early, uses counsel that appreciates the business aspects of the deal, and prepares with counsel before negotiations, they increase the likelihood of negotiating a deal that closes quickly and meets their corporate objectives while balancing the risks fairly between the parties.
When lawyers truly understand the business, negotiate to create a win-win relationship structure, and don’t give away the farm piece by piece, they help the client achieve a beneficial deal…and the likelihood that they’ll be asked to negotiate the next one.

Although they have the same goal of closing the deal, the business and legal teams often report they feel like opposing forces. If you are mindful of the steps above – whether you play a business or legal role – you keep those teams sitting on the same side of the negotiating table. And when those teams join forces in a productive way, deals get done – better, faster and cheaper.

Legal disclaimer: This article does not constitute, and should not be regarded as a substitute for legal advice.

Colleen Kotyk Vossler, Esq., negotiates technology, outsourcing and other complex commercial transactions, in which she works proactively with business executives to help manage risk and achieve corporate objectives. Her approach of blending legal experience and business strategy complements corporate management. You can reach her through her firm’s website at www.vosslerlaw.com. Colleen Kotyk Vossler