Effective Contract Negotiation: 12 Tips

There are organizations that teach nothing but negotiation skills. You are urged to take advantage of what they offer. This post should help you better negotiate in some cases, but it should also cause you to consider formal training in negotiation. Such courses will provide much more insight into the kind of role to adopt, reading cues from the other side, etc.

Prepare for the Negotiation

Business Team Signing ContractAn attorney once paid the author what he considered a very high compliment,”he is always prepared for every negotiation.” He was referring to the following effective contract negotiation tips:

  1. Read the contract a number of times until you are very comfortable with it.
  2. Analyze the sections so your are sure of their meanings. Do not forget the definitions.
  3. Look for and understand the relationship between key sections, such as indemnifications and limitations on liability.
  4. Consult with the right people – not just management and other team members, but also subject matter experts that will have to make the contractual relationship work from day-to-day.
  5. Develop a written negotiation plan, usually a mark-up, but with copious marginal notes on:
    • What concessions should be made for what changes to the terms
    • When those concessions should be made in the negotiation

Have the Right Negotiating Team

  1. Effective Agreements advocates a three member team other than the attorneys. The team members should be:
  2. One person who is the main negotiator and the only one who speaks officially for the team. Everyone else should feed information to the negotiator by note, during caucuses, etc;
  3. One person who only takes notes so that, at the end of the day, the team knows the status of
    every issue;
  4. Perhaps the most important member: the one who remains silent and takes no notes, but is free to listen to everything that is said. This is a very powerful technique. This person has time to:
    • Listen to everything that is said by personnel on the other side, even if they are not active in the negotiation;
    • Think through what he or she has heard in relation to the negotiating plan;
    • Call for breaks and fill in the negotiator on what he/she has heard and his/her analysis of the current situation. Remember, the prime negotiator must be thinking about what to say to the other team next; this person does not.

The above structure may not be optimal in every case, depending on such variables as the size of the other team, managements wish to be involved, and items requiring subject matter experts, such as highly technical issues.

Behave

  1. Do not get emotional and raise your voice, unless you have decided in advance to do so (hey, sometimes it works;)
  2. Never, ever correct something one of your team member says in front of the other team with the possible exception of correcting a technological error;
  3. Do not talk if that is not your role.

1. Some portion of the information in this post comes from the Karrass books and other materials. Providing a footnote for every point would be incredibly time consuming, as the author does not remember where every idea came from. Hopefully the Karrass organization will consider this adequate attribution.

Posted in Business Practices