Negotiation is an art form, not a
science, and countless books have been written on the subject.
But for lawyers, the overarching
rules are simple. We have a duty to do
the best job for our client. It is a key principle of our professional code. So we must
negotiate with this objective in mind.
What does doing the best job for
our clients mean in non-professional conduct speak? I think it means, in deal or commercial
agreement terms anyway, getting the deal done, within a reasonable timescale, on
terms that are broadly favourable for our client and which do not expose our
client to material or uncustomary risks they are not fully aware of and willing
to accept. (Apologies for the length of
that last sentence, my next post will focus on top tips for succinct drafting.)
Terms that are reasonable for our
client do not generally mean terms that ringfence all risk for our client. Nor do they mean terms that leave our client
exposed to the point of butt nakedness.
In most commercial negotiatons reasonable terms will be a mid-point
between these two extremes.
Occasionally (for the purposes of
this blog post "Occasionally" means "All too frequently") and
unfortunately lawyers can mistakenly think that doing the best job for their
client actually does mean ringfencing all risk for their client. It's almost like the starting point for the
negotiation is "Don't Be Negligent" instead of "Be
Pragmatic". Such a negotiation
position can come across as either overly-aggressive or unduly cautious. Worst of all, it is uncommercial. And it is a behaviour that will influence the
other party to the negotiation to behave in the same way, because they fear
that taking a pragmatic approach in such a negotiation will lead to concessions
being offered that are not returned. So
the lawyers dig in and it all gets a bit yawningly counter-productive.
Lawyers are good at digging
in. We're good at coming up with
arguments as to why a point should not be conceded. We can talk for a long time too. And whilst a negotiation like this unfolds we
can even tell ourselves that we're doing a good job for our clients by
protecting their position. But what can
be forgotten, is that we're not protecting our client's position by making it very
difficult for them to do the deal, certainly within a reasonable timescale. Legal hot air can extinguish the oxygen in
the negotiation room with near fatal consequences for the transaction. When this happens, lawyers have forgotten their
clients' instructions and arguably our professional duties - to help our client
get the deal done.
Deals and commercial agreements
are about risk allocation. Of course,
there are risks lawyers will always want to (and should) avoid for their client
and to an extent risk allocation will depend on negotiation positions. But negotiation is a rare example of a
situation where it is not embarrassing to be caught in a compromising position. Indeed, in a negotiation it is more embarrassing
to be caught in a non-compromising position than in a compromising one. If lawyers
try to over-allocate risk to the other party to a negotiation then we actually
fail to do the best job for our clients for the reasons articulated above - and
that is embarrassing.
To sum up, good lawyers breathe
oxygen into a negotiation, less good ones exhale hot air. Any similarities between the behaviours
referred to in this post and real life lawyers are, of course, purely
co-incidental. And if you ever catch me
negotiating in a manner that is inconsistent with this post then, naturally, I
assure you that will be the justified exception that proves the rule.
Part of the problem is that many lawyers are not well equipped with a good collection of dance moves so they have no options between conceding and holding firm. Throwing out possibilities is the only way of moving forward. Often original positions seem more tolerable after a few alternatives have been considered.
ReplyDeleteOdd to run into an old teacher of mine in this manner (hi Barbara!) but I completely agree with both the sentiment of the post and Barbara's comment.
ReplyDeleteMerry Christmas by the way.