Volume 30 â€¢ Number 3 â€¢ March 2013 The Computer & Internet Lawyer â€¢ 1
Outsourcing Negotiations: Skills and Tactics
By Marcelo Halpern
Outsourcing negotiations are fundamentally diff erent from negotiations for typical buy-sell, supply,
or periodic service agreements. These diff erences have
implications for both the nature of the agreement to
be negotiated and the behavior and tactics that may be
usefully employed by the negotiating team.
What Makes Outsourcing
The diff erences in outsourcing negotiations fall into
three major categories: (1) the relationship between the
parties, (2) the essential nature of the services to the customerâ€™s business, and (3) the level of required technical
Outsourcing Is a Long-Term Relationship
Outsourcing transactions typically create long-term,
mutually dependent relationships between the parties.
During the term of the outsourcing, which typically
stretches for many years, the customer is dependent
on the outsourcer for delivery of a signifi cant business
function. The outsourcer, of course, is dependent on the
customer for payment, but in addition requires cooperation and assistance to integrate the outsourced services
with retained services and with third party vendors.
What all this means is that the post-negotiation
relationship must be protected, built, and preserved
throughout the negotiation process. Therefore, the
people who will be responsible for the post-contract
relationship should be insulated from the inevitable
arguments and harsh positions that may arise during the
negotiations. They can be in the room, but should strive
to be the â€œreasonable voiceâ€ and not take hard positions. Aggressive and provocative negotiating positions
should be left to the lawyers and other negotiators who
typically disappear after signing. When in doubt, take a
break, discuss the issue with the team and, if necessary,
blame the lawyer for taking the unpopular position.
Outsourcing Is Highly Leveragedâ€”
Termination May Not Be an Option
An outsourcing relationship becomes a central part
of the day-to-day operations of the customerâ€™s business. In general, the customer is giving up the ability to perform the outsourced service internally and is
wholly dependent on the vendor to deliver that function. Rapid termination of the relationship may not
be a realistic remedy as it would leave the customer
without the ability to fulfi ll its business needs until a
replacement provider is in place. As a result, an attorney negotiating an outsourcing agreement cannot simply rely on exit or termination rights if the transaction
does not pan out as planned and the timeframes for
disentanglement could become critical elements of the
Instead of relying on termination rights, outsourcing agreements and other long-term relationship
transactions require additional consideration of performance incentives and alternative remedies in the event
the relationship sours. For example, instead of simply
proceeding to termination, an outsourcing agreement
may provide for informal dispute resolution procedures that recognize the fact that the relationship must
be fi xed if at all possible and thus strive to create processes and incentives for the parties to resolve issues
rather than look to each other for damages. Because
the nature of these transactions often imposes a level of
mutual dependency on each of the parties, the negotiators should be mindful of including incentives and
positive remedies in the agreement, rather than relying solely on termination rights that cannot be used
unless the partiesâ€™ relationship has become irretrievably damaged.
Technical Understanding Is an Essential
Part of the Negotiation
Whether a deal involves information technology
outsourcing or business process outsourcing, it does
not make sense without a technical understanding of
how the parties will work together with each otherâ€™s
technology and with other providers. Frequently, the
attorneys negotiating the transaction must rely on the
clientâ€™s technical and business teams for that support.
However, many highly technical people and engineers,
brilliant though they may be in their respective fi elds,
are notoriously poor negotiators. They are a critical part
of the negotiation team and should be represented in
Marcelo Halpern is a Partner at Perkins Coie LLP resident
in the firmâ€™s Chicago Office. He is a member of the firmâ€™s
Technology Transactions and Privacy practice group and focuses
his practice on licensing, outsourcing, and other forms of complex
commercial transactions involving technology and intellectual
property. Mr. Halpern can be reached at [email protected]
or +1.312.324.8535. Â© 2013 Marcelo Halpern, Perkins Coie LLP.
All rights reserved.
2 â€¢ The Computer & Internet Lawyer Volume 30 â€¢ Number 3 â€¢ March 2013
the room, but it is incumbent on the attorneys and professional negotiators to spend time with the technical
and business teams outside of the negotiating room to
understand the outsourced services and their role in the
Bear in mind that the technical team may not fully
understand how management intends to deploy or use
the outsourcer in the context of the transaction and
may not be privy to all of the long range strategic considerations that are guiding the negotiations. To that
end, they may need to be carefully managed both inside
and outside the negotiation room to avoid inadvertent
disclosures that could impact the negotiations or the
nature of the deal.
While negotiation of outsourcing agreements
involves some of the special considerations described
above, it is important to remember that outsourcing
arrangements are still agreements that must be negotiated like any other agreement. As such, while being
mindful of the unique considerations required for an
outsourcing transaction, it is equally important to adhere
to good, basic negotiating techniques when negotiating
Basic Tools of Negotiation
Bargaining, as used in this article, is not the same as
negotiation. Bargaining generally is a single issue or a
one-time interaction, such as purchasing an item when
the â€œnegotiationâ€ is primarily just bargaining over the
price of the item. However, bargaining has a place in
more complex negotiations as a subset of the overall process and a method for resolving a subset of the
issues under negotiation. Although it often is derisively
referred to as â€œhorse tradingâ€â€”â€œyou give me this, and
Iâ€™ll give you thatâ€ or â€œyour number is X and my number
is Y, letâ€™s just split the diff erenceâ€â€”it can be a useful way
to get certain types of issues closed.
Persuasion is focused on convincing the other
party that your position is the correct oneâ€”getting
them to come around to your way of thinking. This
is far more diffi cult and nuanced than bargaining,
but can address much more complex issues. A person who is persuaded by your point of view is more
likely to work with you toward a creative solution
that addresses your problem. The key to persuasion
is understanding the other partyâ€™s psychology and
needs (whether real or perceived), and adjusting your
approach accordingly. This may include appealing to
facts, logic, self-interest, emotion, or a sense of principle. While this may sound like a recipe for giving
in to the other side, that is a very superfi cial view of
the process. Remember that one of the other partyâ€™s
needs is to get a deal done and they should understand that it will not get done if your sideâ€™s needs
are not satisfi ed. That can be a powerful persuasion
tool to get something that is important to you and
less important to them. Many of the best negotiations
and outcomes are achieved when the parties recognize that the other sideâ€™s needs are as important to the
negotiated result as achieving their own goals. The
concept of â€œwin-winâ€ negotiations has become an
overused and often abused clichÃ©, but particularly in
the types of long term relationships that are exemplifi ed by outsourcing transactions, that is exactly what
the parties should be trying to achieve.
It should go without saying that compromise is an
essential part of negotiations. In fact, negotiation essentially is the art and science of achieving compromise.
The trick is not in the compromise itself, but rather in
knowing when notto compromise. Many negotiations
go wrong when one side or the other compromises (or
is forced to compromise) on something that goes to
the heart of the business deal and that partyâ€™s reason for
doing the deal. When that happens in an outsourcing
negotiation, whether or not it is recognized at the time,
both sides have lost.
The trick is not in the compromise
itself, but rather in knowing when not
to compromise .
Suppose, for example, that an outsourcing customer
has exacted a compromise on service levels that put the
vendor in a situation in which the vendor is no longer
able to make money on the transaction. If that compromise stays in the deal (and is not off set by something
else), it is virtually inevitable that the vendor will try
to â€œclaw backâ€ to profi tability later in the relationship
or be faced with the prospect of an â€œeffi cient breachâ€
in which the vendor is better off breaching the agreement and facing the consequences than continuing to
lose money while staying in the relationship. The threat
of an effi cient breach can quickly turn into a mutually
assured destruction scenario that forces the parties to
litigate or to re-negotiate at a point in time when the
negotiating leverage is vastly diff erent from what it was
at the start of the relationship.
Volume 30 â€¢ Number 3 â€¢ March 2013 The Computer & Internet Lawyer â€¢ 3
Core Negotiation Skills
It is something we have been told since we were
children, but it bears repeating in the context of
negotiationâ€”you have to stop talking in order to really
listen. In the heat of negotiations, people have a
tendency to start formulating their response before the
other person has fi nished speaking. As a result, they can
miss important verbal and behavioral cues as to what the
other side wants or needs to accomplish in the negotiation. Sometimes, particularly in a heated exchange,
progress can be made simply by letting the other person know that you have heard and understand the other
personâ€”even if you are not prepared to accept the
personâ€™s position or off er a compromise.
When you listen to the other partyâ€™s position, it is
(i) Pay attention and not interrupt (another thing
we have been told since we were children). Also
remember that starting to plan your response is a
form of interrupting;
(ii) Pay attention to â€œhowâ€ the position is being presented. The speaker may provide important verbal
and/or non-verbal cues that can help you understand
more deeply and precisely the position being stated;
(iii) Listen for what is notsaid. Sometimes what is
not expressed is more important than what is
(iv) Repeat back and ask questions (without interrupting). This serves two purposes: first, it allows you
to make sure you understand the speakerâ€™s position, and second, and perhaps more importantly,
it demonstrates to the speaker that you have been
Questioning can be as important as listening.
Questions can be open-ended or exploratory, which are
intended to simply acquire information that may (or may
not) be relevant to closing an issue. Closed or rhetorical
questions may be used to make a point, while leading
or pressurized questions may be aimed at boxing in
the other partyâ€™s position or persuading them to accept
yours. Be careful about asking â€œloadedâ€ questions that
the other party may feel are aimed at making them look
foolish. You rarely benefi t in a negotiation from making
the other party look bad or feel bad, and it can just as
often backfi re.
Questions also can take the form of stories and
scenarios that explore the consequences of pursuing
diff erent paths to closure of an issue. This can be very
valuable in helping to uncover the hidden consequences
(intended or not) of the other partyâ€™s position. Those
questions may take the form of â€œso, just to explore this
a bit further, if we were to accept your position, what
would happen if â€¦â€.
Emotion and Humor
Emotion is more often eff ective in its absence than
in its expression. In other words, the party that is better at controlling its emotions at the table is more often
in control of the negotiation. While a well-timed and
carefully controlled emotional outburst (generally an
angry outburst) occasionally can be eff ective to make a
point, it can completely backfi re and cost you credibility, and, ultimately, negotiation leverage. It is a dangerous
card to be played and should not be used unless you are
very confi dent as to how it will be received. Anger also
loses its potency as a tool when used too often. This
author has been involved in negotiations in which one
of the negotiators had an angry outburst approximately
once each day; we all learned to just wait it out, ignore
it, and move on with the negotiation as if nothing had
happened. So, vent and fume all you want with your
team outside of the negotiation room or over drinks
at the local pub, but check your emotions at the door
when you walk into the negotiation.
The party that is better at controlling
its emotions at the table is more often
in control of the negotiation.
Humor likewise is a dangerous tool for negotiations,
but less dangerous and often more eff ective than anger.
Well-timed humorous comments can help defuse tension in the room, put things into perspective and build
camaraderie and trust between the parties. However,
poorly timed attempts at humor when people are being
very serious or are having trouble controlling their
emotions can backfi re. It is best to stay away from sensitive personal comments, no matter how humorous
you think they may be, unless the subject of the remark
already has opened the door and indicated that he or
she has a sense of humor about it. Even self-deprecating
humor, while most often harmless, can be dangerous as
it can undermine your own authority.
Always remember that the other people around the
negotiation table, no matter how professional or emotionally removed they may appear to be, are still people
with their own histories and sensitivities. Treat them,
4 â€¢ The Computer & Internet Lawyer Volume 30 â€¢ Number 3 â€¢ March 2013
and their emotions, with respect and it will go a long
way toward making the negotiations run more smoothly.
Preparation is key to a successful negotiation.
Unfortunately, in a world of deadlines and commitments, not to mention a desire to keep legal fees in
check, preparation time often gives way to the desire
to get together and â€œstart hammering out the issuesâ€
with the other side. After all, you cannot report any
progress on the deal if you are just sitting in a room
with your own team preparing rather than negotiating,
Nothing could be further from the truth. Inadequate
preparation leads to delays, disconnects, and missed
opportunities. If the negotiating team is not in sync on
the issues, facts, needs, and strategies, the negotiation
will take far longer and the probability of achieving the
best possible result for all parties diminishes. Preparation
starts at the top with the business leaders setting the
tone and leadership for the team and all of the members
of the teamâ€”those people who will be at the table and
those who will be supporting them from outside the
roomâ€”working together to brainstorm, research, strategize, and structure the negotiations. More often than
not, the party that better prepares achieves the upper
hand in the negotiation and in the results (remember a
win-win situation still leaves a lot of room for disparity
Know the Facts
They say that knowledge is power and that is certainly true in negotiations. Take the time to do the
research. What is â€œmarketâ€ for transactions of this
sortâ€”not just in terms of price, but also in structure,
length of the agreement, legal terms, and industry
culture? What has the other party done in prior deals?
What legal constraints may impact the transaction?
What are the cost and savings drivers? What external
infl uences could impact the relationship in the future
( e.g., disruptive technologies or market conditions)?
What is the sensitivity of the business case for changes
in the business deal? What is each partyâ€™s history of
success or failure in connection with transactions of
the sort being contemplated? What makes this transaction unique so as to justify deviations from â€œmarketâ€
In the fact-fi nding phase, it is important to look for
objective information from industry experts or other
sources and not rely on anecdotal evidence. Also, be
ready to share information with the other side. Facts
that may be damaging to your sideâ€™s position can be
especially important to uncover. You should assume that
the other side will fi nd that information in the course
of their own preparations and you should be prepared
to counter it.
It is easy for people caught up in
negotiations to forget the distinction
between what they truly â€œneedâ€ and
what they simply â€œwant.â€
Document these facts as a team and be prepared to
question them, defend them, or attack them as may be
necessary in the course of the negotiations. Additional
fact-fi nding also may be necessary during the course of
Know Your Client and Its Interests
It seems self-evident that you need to understand the
business drivers, context, preferences and limitations of
your client. However, particularly in the role of attorney, consultant, or professional negotiator, you may not
be brought into the transaction until the client â€œthinksâ€
it already has gotten a handle on these issuesâ€”though
often the client has not clearly articulated or understood
what those interests are.
Articulating and documenting the business needs of
the organization is not easy. It is important to explore
the hidden interests of the company that might infl uence positions. Is the company anticipating or planning
for future growth or shrinkage? Are there cultural issues
within the company that would infl uence the structure of the transaction one way or the other? Is there
general â€œbuy-inâ€ within the company for doing this
transaction or will it need to be â€œsoldâ€ internally as the
negotiations progress? Are there political pressures on
certain decisionmakers to behave in certain ways or to
â€œsave faceâ€ with this transaction?
Once the clientâ€™s interests have been articulated and
documented, it is important to take the time to test those
positions. Whenever possible, quantify the value of each
position. Often people will hold onto an issue, whether
instinctively or emotionally, without recognizing that the
actual value of the issue in the overall scope of the transaction is negligible. Which of these positions are truly â€œmust
havesâ€ versus â€œnice to havesâ€? It is easy for people caught
up in negotiations to forget the distinction between what
they truly â€œneedâ€ and what they simply â€œwant.â€ The
â€œwantsâ€ may have to be traded or compromised during
the negotiations, while the â€œneedsâ€ should not be.
Anticipate the Other Sideâ€™s Interests
Preparation does not end with understanding the
facts, needs, and wants of your own side. Examine what
Volume 30 â€¢ Number 3 â€¢ March 2013 The Computer & Internet Lawyer â€¢ 5
the other partyâ€™s wants, needs and interests are in doing
this transaction. Avoid simplistic responses such as â€œthey
want to make moneyâ€ based on the fees paid by your
client. While that may certainly be true, in outsourcing
transactions there usually is more to the story than that.
For example, just in the category of price, many questions can be asked. How much money does it need to
make for this to be a worthwhile transaction? Is the
other party fi nancially stressed right now so that short
term revenues are more important than long term revenues? Is it fl ush with cash now so that it would be more
open to delayed revenues? Is the party culturally risk
averse so that it would prefer a lower, but more certain,
revenue stream over a higher, but riskier, arrangement?
Does the other party perceive this as a risky transaction
or that your client is a risky company with which to do
business? (All of these questions, of course, should be
asked of your own client if you are on the outsourcer
side of the transaction.) And those are just some of the
fi nancially oriented questions!
As with the self-examination of the client, it is
important to try to uncover the intangible interests
that may be driving the other partyâ€™s behavior in this
transaction. Is this a landmark transaction for it or is it
routine? Is there a public relations component to getting this transaction or in being associated with your
client? Are there political pressures within its organization that may impact the transaction? What is the history of the relationship between the two companies
or between each company and the competitors of the
Throughout this process, pay particular attention to
those areas in which the interests of the parties align.
Where is there common ground that can be leveraged to make the deal more interesting to both sides?
Outsourcing provides such enormous fl exibility for
structuring that it is possible to improve the positions of
both parties in those areas of common interest, and thus,
increase â€œthe size of the pieâ€ to share.
Some Useful Pre-Negotiation Questions
to Help with Preparation
1. How badly does each side want and need the deal?
2. What are the leverage points in this negotiation and
who has which ones?
3. How important are the smaller points of the deal?
4. What are the key â€œmust-haveâ€ points for my side?
5. What is my clientâ€™s BATNA (Best Alternative To a
(a) Is my client prepared to walk away if it does not
get what it wants?
(b) What is my clientâ€™s WATNA (Worst Alternative
To a Negotiated Agreement)?
(c) What is the other partyâ€™s BATNA and WATNA?
6. Is success defi ned here in terms of speed?
7. What is each partyâ€™s risk tolerance?
8. Where do the partiesâ€™ interests overlap and where do
Structuring the Negotiations
Consider carefully the structure of the negotiations
before beginning. Remember that process is a negotiation as well and it could give either party helpful information about how the other party will behave when it
comes to the substantive negotiations. Are the parties
fl exible or rigid? Are they committed to a long process
or are they looking for shortcuts? Are they focused on
important issues or will they nitpick the small stuff ?
Are the parties willing to meet each other half-way or
will the burdens of negotiation ( e.g., travel and other
inconveniences) be born disproportionately by one side
or the other?
In complex transactions, negotiations often take place
in a variety of forms with some negotiations taking
place by telephone, while others are conducted face-toface. Understanding the advantages and disadvantages
of each approach is important in setting the stage for a
productive and successful negotiation.
The advantages of face-to-face negotiations are
pretty easy to spot. They make communication easier
with access to visual aids (whiteboards, fl ip charts, computer projectors, etc.) and access to body language and
other non-verbal cues from the other party as well as
your own team. It also is easier for the sides to communicate within their own teamsâ€”stepping outside the
room for a caucus, handing off questions within the
team, and identifying the speakers are all easier in faceto-face meetings. People also tend to be more focused
and less distracted when meeting in person, even
though the multi-tasking smartphone and laptop user
has certainly undermined that perceived advantage.
In-person meetings also make it easier to establish
trust and rapport with the other party. The relationship
6 â€¢ The Computer & Internet Lawyer Volume 30 â€¢ Number 3 â€¢ March 2013
teams that ultimately will run the deal after signing can
begin to â€œbondâ€ and get a feel for how the relationship will function over time. During breaks in the negotiations, people will chat and get to know each other
on a personal level that often allows the discussions to
fl ow more naturally when you ultimately turn back to
the deal issues. Small-talk can be extremely valuable in
building trust between the parties. Taking extreme or
unreasonable positions is more diffi cult when you have
to do it to the face of someone that you have gotten to
Disadvantages and Dangers
In-person meetings also carry inherent disadvantages.
For starters, if there is travel involved for one or both
parties, there are costs to consider and the fact that people will be in unfamiliar surroundings and managing the
inherent stresses of travel and absence from home. While
these are certainly manageable, they should not be taken
lightly as they aff ect the dynamics of working with people who may be distressed over missing a childâ€™s soccer
game or doctorâ€™s appointment, are worried about missing a fl ight, or are simply tired due to travel delays or
long stretches of time on the road. Traveling also may
separate the negotiating team from technical or business
specialists that may be needed to fully understand and
negotiate the transaction.
In-person meetings generally tend to increase time
pressure on the negotiators by creating the expectation
that they will â€œmake good use of the timeâ€ while the
teams are together. However, as was discussed in the
preparation section above, it often is good for the teams
to spend time apart so that they can better prepare for
the negotiation sessions. Cutting off the internal caucus because the other side is waiting in an adjacent
conference room actually may slow down the negotiation because the parties are inadequately prepared to
understand the ramifi cations of the positions on the
Meeting in-person also can increase the opportunities for leaks of strategy and position. Side conversations
can be valuable sources of information (or disinformation) that may come back in the negotiation. People
have to remember that when they are in the room with
people from the other side, they are always in negotiations, even during breaks and meals.
Be a Good Host and a Good Guest
If the parties decide to conduct in-person negotiations, it is important to make people comfortable so
that they are able to focus on the negotiations rather
than fi ghting with technology or other inconveniences.
Comfortable people are happier people and happier
people are more inclined to listen and be creative in
negotiations. That means making sure there is enough
space in the main negotiating room for people to spread
out and not be on top of one another, as well as providing appropriate break-out space for caucusing and
working apart. Power for laptops and Internet access are
a must. If you are not in a position to off er reasonable
refreshments (coff ee and soft drinks at least), make sure
that there are adequate opportunities for people to get
out of the room to obtain food and drink. (Sometimes
the tone of a negotiation turns from bad to good just
because somebody unexpectedly brought bagels for
breakfast or bought everyone pizza for lunch!)
Telephonic negotiations often are more convenient, but also can be more diffi cult. This is particularly true when members of a negotiating team are
themselves separated. If one team is together and the
other is dispersed, the team that is together has a tremendous advantage in being able to mute the phone
and talk among themselves. In telephonic negotiations,
it is much harder to read signals, both from your team
and the other side. If the issues are relatively narrow
and straightforward, this may not be an issue. However,
negotiation of more complex issues tends to favor
During telephone negotiations if your entire team
is not together, it is imperative that you have a secondary line of communication, such as a second phone
number for caucusing and/or instant messaging applications, to allow your team to communicate outside
the earshot of the other side. Do not hesitate to use
this back-channel as often as necessary to make sure
your entire team stays on the same page throughout
Comfortable people are happier
people and happier people are more
inclined to listen and be creative in
Telephonic discussions often can benefi t from the use
of Internet-based document sharing technologies. If the
negotiations are about specifi c contract language, having
the ability for both parties to see the language at issue and
agree on changes in real time can be an enormous timesaver over exchanging drafts after the call. However, both
parties should reserve the right to request adjustments to
language that was done on the fl y if some unintended
consequences of the language is discovered later.
Volume 30 â€¢ Number 3 â€¢ March 2013 The Computer & Internet Lawyer â€¢ 7
Video Conference Negotiations
Video conferences are somewhere in between inperson and telephonic meetings and, in some cases, are
the best, and the worst, of both worlds. As the technology has improved ( e.g., virtual presence systems that feel
much like being in a room together) it has come closer
to the look and feel of a face-to-face meeting. However,
if the team is separated, the diffi culties of implementing
and working with back-channel communications with
other team members is still a signifi cant handicap to the
team that is dispersed. Still, it can be a viable alternative to travel and will undoubtedly continue to improve
In most negotiations, control of the pen is an advantage. Working from your documents puts you in a better
position to clean-up language, frame the partiesâ€™ respective positions, and set the agenda for discussion of the
issues. It also may allow you to spin lesser issues in your
clientâ€™s favor, and the other party may simply choose to
concede those issues in favor of engaging on the more
important issues in the negotiation.
That said, it is virtually impossible to keep absolute control over the drafting of the documents and it
often is impractical to even try. In complex negotiations
involving a large collection of related documents, timing
considerations alone may require that the parties divide
responsibility for drafting or editing the documents.
Regardless of who wins the battle for control of the
pen, documents will be provided back and forth in electronic form and the other party will have the opportunity to edit whatever it wants, which makes control
of the pen less of an advantage than it was before electronic document transfer became commonplace. When
presented with the other partyâ€™s draft of a document, or
their changes to your draft of a document, the question
of how much to change and how much to let slide is a
strategic negotiating decision that needs to be considered in the context of the overall negotiation environment. Too many changes (particularly non-substantive
changes) can be perceived to be petty and set a tone
for the negotiations that you are more focused on the
trees than the forest. On the other hand, letting drafting
concerns slide can shift the balance of the document
to unreasonably favor the other side. Whichever strategic decision you make, however, be prepared to justify
whatever changes you do make.
Regardless of who has primary control of the drafting, it is critical that the parties maintain some method
of version control over the documents. This may be
accomplished through use of a common document
management system or portal, a date or numbering
scheme, or some other method. Maintaining a document
log with version numbers and an indication of which
party currently has the pen also can help keep control
over document versions so that all parties are clear on
which version is currently in play in the negotiation.
You Do Not Need to (and Should Not)
Win Every Point
Some negotiators try to win every point and every
argument. Particularly in outsourcing and other negotiations involving long-term relationships, this approach
is a mistake and can lead to protracted negotiations that
do not serve the interests of the client or the other party.
Rather, you should go back to your preparations and
focus on what is important to you and understand what
is important to the other party.
If the other party does not win on their important
points, there will be no deal. This is particularly true if
the issue is important to the other side and unimportant
to you. Remember that individual issues are not zerosum negotiations: You do not necessarily need to â€œget
something in returnâ€ for each point that you give to the
other side. The contract needs to be balanced overall,
but individual issues on each side of that balance need
not map to one another.
Focus also on those points where the interests of the
parties are aligned. Sharing the benefi ts of those issues
rather than trying to claim a disproportionate share of
those benefi ts can build trust and take the sting out of
other demands on issues that are more important to
You Never Know Unless You Ask
Many lawyers are afraid to ask for something that
seems outwardly outrageous or unreasonable. But if you
ask nicely and present a reasonable basis for the request,
you may be pleasantly surprised by what you can get. If
the issue is unimportant to the other side, they may be
willing to give it to you as a goodwill gesture. Often,
you can get one or two additional points, especially if
you have been reasonable everywhere else. However,
use this technique sparingly and with care; the other
side might ask for something equally outrageous in
Do Not Ask for What the Other
Party Cannot Give You
In every negotiation, there will be certain things
that you know (or discover) that the other party just
cannot off er. If the issue is important to your side, it
may be necessary to escalate the issue to a higher level
8 â€¢ The Computer & Internet Lawyer Volume 30 â€¢ Number 3 â€¢ March 2013
within both companies to see if there is a deal that
can be made. However, if it is clear that the other side
simply cannot move on the point and it is not a deal
breaker issue for your side (if it is a deal breaker, it may
be time for both parties to walk away from the deal),
it may be better to drop the point and focus on those
things that are still negotiable. Continually harping on
issues on which you know you cannot win, will be
a waste of everyoneâ€™s time, at best, and, at worst, will
cause you to lose credibility in other areas of the negotiation. If you are certain you cannot win the point
and there is no room for the other side to move on
it, consider whether you can do without it and then
Build Trust with Every Interaction
Building trust in the negotiation process is as important as building trust between the parties for the ongoing relationship that will come after signing. In this
case, trust is predicated on the negotiatorâ€™s personal integrity in how he or she approaches the negotiation.
One of the greatest compliments that may be bestowed
on a negotiator is that he or she is â€œtough, but fair.â€
Fairness in this context has little to do with the issues
and more to do with the personal interactions in the
course of the negotiation. Fairness involves treating
your opponent with professional respect. Be consistent
in your interactions and approach to the negotiation
and drafting and handling of documents. Do not try
to slip something in and hope the other side does not
notice. When you present a draft document, it should
represent a good faith attempt to capture the position
that was discussed and/or agreed on. If the other party
raises a reasonable point, acknowledge and address it
directly. The negotiation will go more smoothly and
reach a more amicable end if both parties are able to
trust that their legitimate concerns will be heard. That
does not mean that you will agree with them or accept
their every position, but acknowledging the concern
demonstrates a level of intellectual honesty that builds
Similarly, strive to be reliable and predictable. Set
and agree to realistic deadlines (even if the deadline is
aggressive, it needs to be achievable) and strive to meet
those deadlines. That applies to turning comments or
responding to positions, as well as scheduling meetings
and negotiations. If you are not going to make the deadline for whatever reason, let the other party know so that
it can adjust its expectations. Similarly, when scheduling
meetings, particularly if travel is required, be attentive
to the schedule and strive to start on time and respect
the time commitment that everyone has made to this
Building trust and a reputation for fairness will pave
the way for smoother negotiations and, ultimately, a
better result for both parties.
Reproduced with permission of the copyright owner. Further reproduction prohibited without
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