Contract negotiation is a skill that can be improved. There are a few simple tips and tricks that you can learn to make you better at contract negotiations. Preparation and planning are the real key. These, along with the other rules set out below, will help ensure that in your next legal contract negotiation you do more ‘jaw jaw’ and less ‘war war’.
Contract negotiation equals preparation
Some experts claim that a successful contract negotiation is up to 90% preparation. Accordingly, start planning well before you turn up to negotiate. Broadly, there are two styles or approaches to negotiating – advantage seeking or joint gain finding. Know your style and what works for you. Think strategically, about your goals and how you can your tactics can complement them. For example, what influence do you have over the other side, what are the important legal and commercial issues for the other party and what are likely to be their ‘non-negotiables’. Remember to consider alternative positions and have them pre-approved by the stakeholders on your side so that you can readily propose them if the opportunity arises.
Make sure you have the correct decision makers in the room
In my experience it is vitally important that both you and the other party have access to people from your organisation who can approve decisions then and then at the negotiating table, whether in person or by telephone. This avoids the parties having to take potential positions away for approval and needing turn up to negotiate them another day.
Prioritise the commercial elements
Don’t let the lawyers lead the contract negotiations by stepping through the contract clause-by-clause. A better approach is to extract the problem down to its core commercial elements and negotiate on that basis. It is considerably more efficient for lawyers to draft if both parties have agreed the core commercial issues in principle first.
Try to establish a rapport
Remember that each party is trying to negotiate successfully for their side and maximise their results. It will greatly help the other side agree with you if you can establish some sort of rapport with them. Be friendly and don’t loose your cool. Generally, it is better not to take an adversarial approach as if one side gets upset this can derail any progress that has been made to date.
Don’t say ‘no’ without thinking
Before immediately dismissing a position consider if there is an alternative commercial solution that you haven’t thought about. Be pragmatic and and flexible. I have often found that thinking ‘outside of the box’ can help the parties resolve a difficult issue.
Avoid getting bogged down on one issue
Agree to ‘park’ a particularly difficult issue to enable both sides to make progress on the rest of the contract. The parties can return to the problematic issue later in the contract negotiation. Alternatively, ask the other side for a break to enable you to speak with your team about the matter in another room. This will give your side the opportunity to formulate a solution that you can propose to the other side when you return to the negotiating table.
For more information you may wish to read:
- Getting to YES: Negotiating Agreement Without Giving In by Roger Fisher and William L. Ury
- Crucial Conversations: Tools for Talking When Stakes Are High by Kerry Patterson
- Bargaining for Advantage: Negotiation Strategies for Reasonable People by G. Richard Shell
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