Negotiation is a fundamental part of business. One legal expert offers three pieces of advice when it comes to negotiating professionally.
By Charlotte Lewis Jones (Attorney & Contributing Writer, Women 2.0)
If there’s one thing I’ve learned in my time as an attorney, it’s the art of negotiation. Here are three things to consider when you’re negotiating in business.
1. Think Long Term
Understand and preserve the business relationship.
When drafting a commercial or deal agreement for a client, I often ask myself, “How would I feel if I had to relay these terms to the other side?”
If I would be embarrassed because my terms seem to “bully” the other side, I, as counsel, may rethink my position(s), particularly if my client is a startup or entrepreneur looking to build a long term relationship.
It is professionally lazy to craft the terms of a deal without thinking of the long term consequences of both the (a) balance of the terms and (b) negotiation process. If not managed correctly and with adequate EQ, the negotiations process can create resentment and an ongoing negative business relationship.
Even worse, you can create a population of professionals who look forward to a time when they have the stronger bargaining position. For entrepreneurs, who are guaranteed to have highs and lows in their careers, this can be extremely detrimental to your success.
Entrepreneurs and their attorneys, assuming they have the resources to hire one, should be very cognizant of the tone of their comments and “soften the blow” when possible. Use “please” when giving instructions to insert or delete a phrase. Explain a material change; it removes the implied “because I said so” message that often comes with a revised contract with no corresponding comment.
Goodwill and fairness will pay dividends throughout the relationship.
2. Be Strategic
Know your counterpart and how your negotiation style interacts with others and adapt.
Once I learn of the person with whom I will be negotiating, the first thing I do is try to get an understanding of his or her style, interests and everything else that lies beneath.
There is no science to this process; I try to learn as much as I can about this person’s position on the deal and within the company and ascertain potential unspoken motives, insecurities and agendas.
Viewing your counterpart as a human with flaws, emotions and other very human traits allows you to better exploit their “humanness,” particularly if they’re ill-prepared, emotional or self-important.
If you are dealing with someone who likes to “scream” or try to intimidate you, view it as a sign of insecurity and respond with calm logic and silent pauses to deflate their “space” in the room and remain focused on the issues. If your counterpart is frustrated about their position and spends more time complaining than discussing terms, let them vent, then demonstrate understanding, reminding them of the value of an executed deal, before continuing through the terms.
If a counterpart threatens the conversation with “deal breaker” remarks, quickly call their bluff to determine if you have, in fact, come upon a deal breaker – if that is the case, you don’t want to waste more time. If it is not, now you may have learned something about their style, the internal approval process within the organization and hopefully more insight into their real interests and priorities.
In short, respond strategically, not defensively. Understand, but move past, the tactics and emotions, and always come back to the actual interests of the parties.
3. Set a Roadmap
Set a pace for negotiations that accommodates ups and downs within the process.
As I prepare for and move through a negotiation, I am acutely aware of the more controversial issues and those items that I think we will breeze past. As we work through the lighter issues, I attempt to build a rapport with my counterpart and emphasize all of the points I am conceding.
If you can control the order of topics, it’s best to alternate between tougher and less controversial issues, rewarding both parties for working through a difficult issue and creating goodwill as you both give on easier issues.
Reward business people for combing through warranty, liability and indemnity clauses. Keep “back-up gives” for goodwill. If I ultimately win on a point that was hard for the other side to swallow, I may give on something that I have on my list of “back-up gives” or take some other action that may allow the other side to “save face” and not feel humiliated about a concession.
Focusing on interests, not positions, is another important strategy to work through tougher terms. Often times, certain language sounds more draconian than it is intended. Explaining your position behind such language allows the other party to understand your interests and potentially offer alternative language that serves both of you. Explanations also take the sting out of a hard rule that is a result of company policy or third party contractual obligations.
All in all, contract negotiation is an art, not a science. When starting a company or working diligently in the growth phase, relationships are king and some of your first important relationships will be with your vendors and major customers. Give when it costs very little to do so. Make concessions now for a larger relationship pay-off later. Pace yourself, and understand where the land mines are in the agreement and in your counterparts.