By Client Legal Director, Ina Gallo
We’re all familiar with the image of a bulldog lawyer – tenacious, aggressive and combative. It’s become a popular shorthand for what good legal representation looks like. However, I am here to debunk that myth. Approaching discussions with an adversarial mindset often leads to stalemate and mutual distrust. Drawn out and antagonistic contract negotiations are unnecessary and rarely fruitful.
Far more successful in my experience is an approach that puts common objectives at the heart of contract formation and seeks to find an agreement that both parties accept, one that balances risk and reward in equal measure. So, in this blog, I am setting out the benefits of using mediation techniques in contract negotiation and how this is achieved in practical terms. If you would like to know more, or would like my assistance in your contract negotiations, please contact me via email.
Win-Win
A contract sets out the terms of a business relationship. If one party has been compelled to accept excessively punitive conditions, or been forced to agree to unrealistic terms, there is a risk that the contract will ultimately be unsuccessful. This outcome is a victory for neither party.
Parties are more likely to respect and honour an agreement when they know that risk and reward are equally distributed, when the other party has skin in the game and when neither party takes advantage of the other. An investment at the outset to create a mutually beneficial contract is likely to pay off in the long run.
So, how is this achieved?
Using a principled negotiation approach over a positional approach sets the tone for measured, meaningful discussions and minimises the risk of escalation or gridlock:
- Concentrate on the interests and needs of the parties rather than the rights.
- Identify the mutual gains. This serves as a good reminder of why the contract is being created and helps to establish positive goals.
- Find common ground rather than seeking concessions. The latter approach can seem antagonistic and lead to both sides adopting a more guarded stance which may hinder negotiations.
- Create value for the parties rather than just claiming one-sided asks.
- Instead of pursuing aggressive tactics, try separating the people from the problem. It is easy to lose sight of the end goals if matters turn personal.
- To the same ends, adopt objective criteria when determining terms. Not only will this minimise the risk of misinterpretation, but it will also keep negotiations on a calm footing.
Alongside this principled negotiation approach, look for ways to enlarge the pie. Be imaginative and add elements to the agreement that are of value to the parties outside of the initial scope and consideration. These can include additions that are outside of the core of the agreement but nevertheless are of mutual benefit to the parties.
What is the process?
When taking a mediatory approach to contract negotiations, you must:
- Start with the cornerstones of the contract – the scope and consideration.
- Adopt the principle of quid pro quo when possible.
- Define the parties’ needs. Be specific: detail the quality, speed of delivery and payment.
- Identify and evaluate the risks of each party. Are they actual risks or perceived risks? What is the foundation of any perceived risks and how can actual risks be mitigated?
- Prioritise the asks. Contract negotiation necessitates a degree of pragmatism, and you may have to compromise on some points. Identifying the terms that are most important to you is a valuable exercise in learning what is a deal breaker for you.
- Similarly, define the parties’ boundaries and red lines. Knowing these from the outset helps keep the discussions on positive lines.
- Explore which asks are driven by emotion, what the emotions are and their origin. Work to mitigate the issues that are based on emotion without invalidating the person.
How can The Legal Director help?
Our lawyers are senior lawyers who all have a wealth of experience in businesses of all sizes and have developed many strategies and techniques to help bring about the best result for you. They are not motivated by ego but aim to bring about workable, practicable and long-standing agreements that support businesses to achieve their goals. If you would like more information, or to discuss your legal requirements, please ring us on 020 3056 8538 or send us an email. Or, if you would specifically like my support in your business, you can email me here.
