Ever been in a contract negotiation wondering why it’s taking so long? Or you feel like in every negotiation you are arguing the same points you argued last time? Or you just wish you could sign up the deal without a series of discussions?
Is there a way to shorten the negotiation process? Do we need a negotiation at all?
I started Freelance Legal and now Flie to see if there is a better way. I imagine a world where 80% of the contract is pre-agreed – done and dusted – almost a given. And the negotiation revolves around the other 20% where the parties can go for it and negotiate those clauses that are important to one or both of them.
But in this complex world how do we do that? This one will be a journey but over time I hope we can get there – for the sake of everyone!
Here’s 3 things that will help.
Use standard contract templates that are easy to understand. If you use very complex contracts with a lot of detail, long sentences and legalese then the more time you will need to review the contract, the more experts you will need around the table and the more likely you will have a lot more suggested amendments to negotiate. Where the contract is easily understood then the more likely parties will accept them and focus on matters important to them.
Use standard contract templates that are fair and practical. If you use terms and conditions that are heavily in your favour in all circumstances, then this does a couple of things. Firstly, this will result in a lot more proposed amendments by the other side – when in fact if they were fair (eg mutual) the other party wouldn’t even take a second look. Secondly, the other party may start to review every clause more thoroughly with a view (consciously or sub-consciously) that there is something inherently unfair in each clause – there may be a seed sown that there could be a trust issue – “what else are they trying to sneak in? Or what else have we missed? Or what else do we need to cover ourselves for?”
Negotiate with purpose. What I mean by this is: don’t get greedy and try to win everything! Particularly, where you don’t have a standard contract that is fair and practical, don’t try and negotiate the perfect contract for you. Resist the temptation to make changes to every clause to bring it back to what if fair and reasonable. Focus on those clauses that are important to you or could have a material impact on the successful outcome of the contract or you as a party to the contract.
In summary, I think if we have a trusted standard contract template it could really help speed things up – particularly, if there are trusted and known positions on some of the more difficult clauses.
But at the end of the day – we will always need a negotiation … and for good reasons.
Firstly, in a practical sense, there will always be clauses that the parties don’t agree with – and as such will require negotiation. These may differ in each negotiation depending on the circumstances.
Secondly, I argue that to achieve the best outcome both parties need to be given the opportunity to do the best deal possible, to engage in the back and forth of negotiation and to feel like they have done a great deal! People need to dance!
Why do people need to dance?
If a party gives in too quickly without some push back, then the other party may question the deal. I’m no psychologist but have you ever been in a negotiation where the other side says “done” – almost that little bit too quickly. Your mind starts racing… did I give away too much? Have I missed something? Have a done a good deal?
Likewise, if the party is not given the opportunity to push back then there will be some frustration or resentment with having to enter the deal on the other’s terms and conditions. This resentment could carry over into the delivery or ongoing relationship.
So, my recommendation in any contract negotiation, is to be prepared for and allow the other party to dance! Allow some give and take, some quid pro quo, some back and forth…
- help you build the relationship, build rapport and hopefully some trust;
- give you a sense of how the other side works and how hard you can push things – which may help during the delivery of the contract;
- give the other side the opportunity to take some wins and feel good about the negotiation they have just done.
So, before you enter into your next negotiation, and you prepare for a few rounds of discussions, the same old arguments, etc, then hopefully you will look at the negotiation process in a new light – and get dressed up, put on your most comfortable shoes and enjoy the dance!