By Alan G. Fishel, Partner, Arent Fox LLP
1. The Other Party Demands that You Make No More than Five Proposed Changes to Their Form Agreement
It is not uncommon for some companies to routinely inform the other party at the beginning of a negotiation that "you must use our form agreement as the starting point and we will not consider more than five (or some other fixed number) of proposed changes." Many attorneys on the other side then review the form agreement and after determining that there numerous changes they would like to propose, struggle to limit their proposed changes to a very low number, such as five. The answer is simple: you generally don't have to if you handle the matter in a creative way. When confronted with this request, you should explain that while you could limit your proposed changes to five (or whatever other fixed number they gave you), the only way you can do this is to draft some provisions (which will constitute your "changes") that will create a far less organized agreement, and one that will be more difficult for people reviewing it later to comprehend. That is, you will have to try to deal with multiple concerns in each of your added provisions, and that the better approach is for you to just propose the changes you need, and have the parties discuss them. You should further explain that if you draft just five changes/additions it will take longer to negotiate the agreement because of the complexity of the provisions you will need to draft. Given that most parties that try to limit the number of your proposed changes are doing so because it will limit the amount of time they need to spend negotiating, the foregoing explanation often works. (Of course, the other reason parties seek to limit the number of changes is because they will frequently get a better deal as many parties on the other side will then just self-select numerous issues to concede that they would have otherwise raised). If this approach doesn't work, you then draft your five changes, which will generally be in the form of additional paragraphs or sections. Each of these additions will ordinarily negate multiple concerns raised by other provisions in the form, which will enable you to get what you need, albeit not in the cleanest way. You must carefully draft your five additional provisions in a manner that has like concepts lumped together so that you can make a reasonable argument that there really are only five changes. If you do it right, the other party will then generally negotiate each of your concerns with you (since they are all set forth in the five additions), and more often than not the other party will then request that your changes be organized more properly in the agreement, which will lead to you getting exactly what you wanted in the first place. That is, you will often end up with more than five changes because the other party also wants an organized, easy-to-follow, agreement.
2. The Other Party Insists that His or Her Unclear Language is Fine
In a perfect world, every attorney would be an expert at drafting language for agreements. Unfortunately, this is not a perfect world. Where, however, the other party's lack of drafting skills becomes a hindrance is when the other attorney believes the language he or she has included actually works fine - “ when it clearly does not. What you should do in this situation is on the next negotiation call, reach an agreement with the attorney as to the substance of the resolution of the matter and then tell that attorney that you would like language in the agreement that says exactly that (i.e., exactly what the two of you just agreed to during your discussion). The other attorney will often respond with "but that's what my language (i.e., what I drafted) means." My response to that is generally words to the effect of, "in my view the language in the current draft is not as clear as the language that you and I just agreed to, so let's say in the agreement exactly what we just agreed to and then both sides will be fine." This works virtually every time.
3. The Other Party Repeatedly Changes His or Her Position
Anyone who negotiates agreements on a daily basis, year after year, has experienced the following countless times. The other party's attorney tells you on a call words to the effect of, "Hey, I know we agreed during the prior call [to whatever it is we agreed to] as to Section [whatever section it was], but I thought about it more, or I checked with my client, and we just can't agree to that. We will need to have Section [whatever section it was] say [something very different from what we agreed to on the prior call]." If this happens once during a negotiation over the course of several weeks or months you simply express your disappointment and try to work through the provision again. If this happens more than once, however, you need to nicely, but forcefully, call the other attorney out on it. What I usually say in that situation is words to the effect that, "this is the second time this has happened and this can't continue. We can't keep going backwards and that is exactly what we are doing here. My client and I do not have the time to negotiate with you, reach an agreement on terms, and then have to redo the negotiations each and every time you or your client changes your position on what you previously agreed to during our earlier calls. You will have to go back to your client and tell them we have said "No", an agreement is an agreement on an issue, and we are done with that issue. When you did this before, we renegotiated the issue. We cannot do that again." I have found that this approach gets them to drop the point almost every time, and I have never had an attorney on the other side, after I gave this type of speech, subsequently try to reverse field on a different issue later in the negotiations once we reached an agreement on that issue.
4. The Other Party Refuses to Include a Person with Decision-Making Authority on Negotiation Calls
When you are negotiating with the other party's attorney, that attorney often does not have decision-making authority over business issues for which its clients will have the final authority to decide (the "First Scenario"). It is also possible that the attorney will not have decision-making authority with respect to some or all legal issues either, if he or she reports to a more senior attorney that has final decision-making authority over such issues (the "Second Scenario"). With respect to the First Scenario, do not waste any time negotiating matters for which it is clear the other party's attorney needs approval from his or her client to agree upon. Instead, the parties should simply flag those issues and agree to address them all on a call that includes not only the other party's attorney, but also his or her client. Occasionally, the other attorney will tell you that his or her client will not be available to get on a call, but you should press them hard on this (and if you do it will generally work) because otherwise you will be beating your head against a wall trying to convince a person who doesn't have the authority to be convinced. You want your logic, your analysis, your persuasiveness to be heard directly by the decision-making authority, rather than translated through their attorney to them. The phrase "Lost in Translation" will not just apply to a movie starring Bill Murray, it will also apply to your very negotiations if you allow the other attorney to present your arguments to their decision-makers rather than you do it directly. For the same reasons, if you are confronting the Second Scenario, you will need to ensure that you get the more senior attorney on the other side on a call with respect to any issues for which the attorney with whom you are dealing does not have decision-making authority. Over many years of negotiating agreements, I can tell you from experience that there are no real upsides to negotiating against someone who doesn't have decision-making authority as to the issues you are discussing. It is a recipe for frustration and time-wasting. And not only shouldn't you do it, you generally won't need to do it, if you nicely, firmly and persuasively explain to the other party why it is in both parties' interest to get all of the decision-makers on a call as to the pertinent issues.
5. The Other Party Raises Irrelevant Topics
A small percentage of attorneys will repeatedly raise topics that have nothing to do with issues you are negotiating, and then wish to discuss them at great length. They may want to spend an inordinate amount of time telling you about their frustrations at work, their past jobs, other agreements they are working on, other counsel they are dealing with, and so on and so forth. This doesn't happen in most negotiations, but when it does happen it can cause significant delays if you don't handle it properly. The best way to deal with this is to be very pleasant, respond briefly to what they are saying, but firmly put the focus back on the agreement if they do this too often. In these instances, I will usually give a short and friendly response to what they are saying, and then immediately switch gears by saying something like, "oh by the way, turning back to the agreement, the reason we can't agree to your edits in Section 6 is …" If they continue to raise irrelevant topics, I will generally say something like, "I'd really like to get through all of your edits before our call is over at 11, so we're going to need to move fast from here on today." That usually works. I don't mean by these comments that you shouldn't get to know the other side and have some conversations with them that don't relate to the agreement. There are plenty of good reasons to do exactly that. But there are some procrastinators out there on the other side, that if you fall into their trap, you will find yourself trying to explain to your client why the deal still isn't done – and you won't have a good reason.
6. The Other Party Insists on Including Similar Concepts in Different Sections of the Agreement
Some attorneys draft agreements that include in separate sections like concepts that should clearly be in the same section. Often, the language in these sections is somewhat overlapping, while also, at least arguably, somewhat inconsistent. When I ask to have these provisions all placed in the same section and made consistent so there is no confusion, most attorneys will quickly agree, but a small percentage will not. Those who don't say they like the current structure, and they believe by having separate sections address the concept it either reflects the importance of it or is otherwise necessary for any one of a host of reasons, none of which tend to be valid. If you are confronted with this situation, what you should do is place all of the language back-to-back and send it to the other attorney, so he or she can review it all in one location. Then point out to that attorney the arguable inconsistencies and repetitiveness in the provisions, which will be easier for him or her to see once they are set forth back to back. This will usually get the recalcitrant attorneys to agree to clarify the language and place it one location. If that doesn't work, you should also mention to that "when people other than us review the agreement and see the first location where this concept is addressed, they may assume such is the only location (since that would be logical) and not even review the remainder of the agreement. Such confusion doesn't serve either party well." This almost always works.
7. The Other Party Forgets to Tell You About A Necessary Document Until the End of the Negotiations
Have you ever gotten near the end of negotiations with the other party, and out of the blue they say, "Oh, by the way, there is this other document that also needs to be incorporated into the agreement by reference." And then when you look at that other document, you realize you are nowhere near done with the negotiations as that other document itself has numerous problematic provisions, and you may not even have agreed to some of the matters that you did in the base agreement if you knew about the other document on Day 1. If this happens to you, you should make it clear to the other side that they should have provided you this other document at the beginning of the negotiations and that while you will review it, this other document must be consistent with what the parties have already agreed upon. You should also tell the other party that you don't intend to allow the negotiations to drag on because of this eleventh hour document. The more firm you are with the other party on this matter, the less likely you will have to agree, on behalf of your client, to a variety of new risks, or take on additional obligations, because of this other document. Having said all this, you should never let yourself get into this position. In the first negotiation call, you should point blank ask the other attorney whether there are any other documents that will be incorporated into the agreement, and, if so, you need to see them right away.
8. The Other Party Reads the Current Draft During Your Negotiation Call
Some attorneys will begin to read for the first time your revisions during their negotiation call with you. If your revisions are few in number and small in size, this may work. But if you have a number of substantial revisions, this approach will cause you to waste a lot of valuable time. In these instances you should generally ask the other attorney to reschedule the call so that he or she can read the document now, determine what the remaining issues are, and then reschedule the call to discuss only those issues.
9. The Other Party Gets Extremely Emotional During the Negotiations
A small percentage of attorneys sometimes get extremely emotional during negotiation calls. Of course, sometimes the clients for either your company or the other side can also get very emotional during a call. Your role is to keep your emotions in check and make sure that everyone keeps their eye on the ball -“ i.e., completing the agreement. When it is simply me and the other attorney, it is very easy to make sure that things don't get out of hand when he or she gets extremely emotional. In those instances, I just stay very calm and that often makes them realize that they need to do the same. If that doesn't work, I tell them that we just need to focus on the issue at hand and see if we can work through it and reach an agreement. The more you get the other person to focus on the language itself, and the calmer you stay, the more likely they will become less emotional. On the other hand, when there are several people on the call, and for example your client and the other party's attorney begin getting very angry with each other, your job is harder. In that instance, you need to trust your instincts and carefully say the right thing (which will depend on the circumstances), in the right tone (calm and firm) to make sure that they both realize it is time to tone things down and get back to determining a way to reach the necessary compromises to conclude the deal. It is almost never the right strategy to allow multiple parties to begin yelling at each other on the call, and you will generally need to interject your calmness and reasonableness to diffuse the situation where such occurs.
10. The Other Party Tries to Use Negotiating Lines to Convince You to Concede Issues
There are so many negotiating lines that attorneys try to use to get you to concede an issue. These will be discussed in other material, but it is incumbent upon you to learn what they are and not to fall for any of them. For example, if the opposing attorney tells you that you don't need certain language that you believe is necessary to protect your client because the circumstance you are seeking to protect against will, according to the other attorney, "never happen," you have an excellent and easy response. You should generally reply with words to the effect that "you certainly shouldn't have any problem with me including the language I want to protect against the circumstance that I am concerned about since it causes your client no risk whatsoever. After all, according to you, it will never happen, and therefore there is nothing for you to worry about."
Read the Alan Fishel's first set of scenarios here.
Published on September 17, 2013
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