New England Biz Law Update
This is the fifth in a six-part series – Succeeding In-House – explaining why basic legal skills are not enough for long-term success as an in-house attorney.
In this column, I will explore some of the tips to employ and traps to avoid when working with opposing in-house counsel. Interactions with opposing in-house counsel are common, even routine, and take place against a busy backdrop of competing priorities, ringing phones, mounting e-mails, other deals, time pressure and revenue pressure.
It may be tempting to treat them like routine events. But failing to prepare properly, build a buffer of focus and attention around these important and strategic interactions and adhere to some key guidelines is a recipe for disaster.
However, if you take the time to develop your own pre-game ritual and follow a playbook for success, you can transform this bread-and-butter activity into a platform for contributing enormously to your company’s success and for distinguishing yourself as a most-valuable-player on your team.
A few preliminaries
Get negotiation training. This may seem obvious, but it needs to be said: If you are a lawyer, a very important part of what you do for a living is negotiate. If you have not been properly and thoroughly trained in that art, you are compromising your professional effectiveness. It’s that simple. Re-map those continuing education priorities, and get some training. For now, never mind black-letter law discussions and other reference material that can always be researched. Until you have been trained as a negotiator, make that your top CLE priority.
Prepare for your negotiation. Another seemingly self-evident point but one worth exploring because it is so easy to overlook when you are trying to fit a conference call with a customer into a busy day. Lack of preparation is at best inefficient, at worst fatal.
Being prepared has many dimensions:
• The Issues — Deliberately re-review the business goals and their relative priority with your team to ensure you actually understand what it is that you are trying to accomplish and which of those goals is the most important.i If you aren’t getting anywhere, ask the business people what their worst nightmare is as a way of drawing them into a more complete discussion. Make sure you have your fallback positions ready, and know where you cannot go. Canvas all the stakeholders so you can ensure you don’t outstrip your authority to negotiate. When it comes to discussing with the business team what you think can be accomplished on the issues, under-promise and over-deliver. Don’t promise you’ll “take care of it,” “get it done” or “make the other side agree” until you have actually spoken to the other side and come to understand their perspective; it may differ vastly from your own.
• The Document — You are likely negotiating a contract, so go back and carefully re-read the last redline. The devil is in the details; changes you fail to notice and comment on may effectively become waived at key junctures in the process. Be especially alert for changes that are unmarked. When preparing a response redline, don’t edit for style or grammar and don’t make stylistic changes to any document. If your change doesn’t clarify an ambiguity, eliminate an inconsistency, or change an actual term of the deal, leave it alone. Otherwise, you are wasting everyone’s time, reinforcing lawyer stereotypes and possibly hurting your effectiveness by offending your opponent. Don’t be ham-fisted with your changes, especially if it is your opponent’s form. It is often unnecessary; it scares people and causes an emotional, knee-jerk, this-will-be-a-ton-of-work-with-hidden-issues reaction. Don’t take the lazy, obnoxious and provocative path of striking an entire paragraph when simple changes would suffice to address your issues. Don’t make a change if you cannot crisply articulate why you are making it; if you are going to make a change, you had better be ready to explain your position. Don’t ever say, “This is our standard approach.” It’s meaningless to the other side. If you can’t justify your language, then don’t expect to keep it.
• The Players — Assemble the people you need in the room with you, or at least know where you can get a hold of them during the call. Exclude the people you don’t need in the room. It might feel harsh, but recognize that too many people are a distraction that will bog you down and compromise your effectiveness. Figure out as much as you can about the opposing players, and try to develop a perspective on their concerns, interests or motivations. For more significant or strategic opponents, look them up with Google, check their company website description and use networking tools, such as LinkedIn, to understand their background and experience level. Check for people, institutions or activities that you might have in common or on which you can build some rapport.
Measure your tone. While you are still on the learning curve, you may experience excitement, anxiety and adrenaline when negotiating with outside counsel. Often your negotiation will force you into the starring role of an important drama. Regardless of how pumped that might make you feel, it is important to measure your tone and keep it under control. Slow it down; remember the listening and other communication tips from Part 3 of this series; keep your voice from getting high or excited; and stay in control of yourself and your situation. Nothing emboldens an opponent like the smell of inexperience or fear. Remind yourself that you know your stuff, that you have every right to be here and that your client has entrusted you with an important job. Proceed in a slow, calm, thoughtful, professional and dignified manner.
Now, for the negotiation itself
As noted above, this is not intended to be a primer on negotiation; get some proper training on that. This is intended to be a series of tips for dealing with the situations these negotiations pull you into.
Build a little rapport. You are a busy in-house generalist, and so are opposing in-house counsel. It’s likely that you both do a great deal of this kind of negotiating. One of you is probably trying to get some much-needed revenue from this (and several other simultaneous deals just like it), and the other one is trying to get a vendor contract done to move onto something more important (such as revenue). This reality often imbues in-house negotiations with low-key, work-a-day atmospherics. The more you can do to culture this sense of “we are both professionals who just want to get a fair deal done so we can go home,” the better. Avoiding the drama, the high-priced-mouthpiece attitude, the playing-for-the-crowd antics is key to keeping it crisp, professional, constructive and efficient. Taking a brief moment at the beginning to develop a little rapport and establish a “we are slightly weathered, low-key professionals” mood is an investment of time and energy that will pay big dividends in effectiveness and avoid unnecessary unpleasantness. Make it a habit.
Set the table. Start every call by asking about time constraints, both for current call and for getting the deal done. If you have previously received a commitment on a drop-dead date for the deal, take a moment to reaffirm that the commitment is still in place. It’s obviously a red flag if they cannot recommit.
Next, outline and agree on the purpose, goals and approach for the call. Build teamwork, rapport and comfort with a friendly and efficient “how would you like to tackle this?” approach. If your opponent feels included in the process, he will be more comfortable and less likely to feel defensive about having an agenda rammed down his throat.
Beware the speakerphone. Find out who else is in the room, and recognize the potential for altered dynamics. Pay attention to the introduction process, and note the dynamics: Is there an obvious hierarchy? In those situations, some lawyers like to play to the crowd. Is there a ton of rustling, but only one or two people introduced? This is often a very telling sign of mistrust, anxiety or even disingenuousness.
Ask if they understand your technology or product, your licensing model, your pricing or equivalent core technology and economic issues. This process can be an incredible source of “tells,” to borrow a poker concept, and it can be a platform for building further rapport, re-selling the value and underscoring the buyer’s need if you are on the sell side, clarifying misconceptions and laying the groundwork for the economic and license grant sections of the agreement.
Keep yourself in check. Once under way, the approach you have agreed on for the call (combined with your extensive negotiation training) will dictate much of the rhythm of the call. But there are a few high-level concepts worth keeping in mind:
• Don’t be afraid of silence. Listen actively to what your opponents are saying, let them finish their point before you cut across them, and don’t be afraid to let a comment hang out there in silence for a little while even if you feel they have just scored a point. Think through your answer. What feels like stunned silence and a loss of face to you will feel more enigmatic to your opponents. Better to let them wonder where the punch landed than to make a spontaneous admission that it hurt. There is time to counter, and the more of it you take, the better your counter is likely to be. No need to impress the peanut gallery by blurting out the fastest quip you can. Form the answer, and consider the likely response before spilling it.
• Don’t make things up. If you are unsure know to answer, how to proceed or whether you have the authority, don’t try to be a hero and make up some nonsense. Instead, calmly and crisply table the issue for later in the call, or say this issue is one where you’ll need to confer with colleagues. Practice this speech, and have it at the tip of your tongue. If you do it quickly, confidently and smoothly, it will not telegraph much unintended meaning.
• Go on mute. It is true that, in some circumstances, telling the other side you need to go on mute for a sidebar can signal uncertainty, weakness, indecision or a lack of authority. But in many situations, failing to go on mute can be a disaster. As with so many things in a negotiation, how you do it is often the determinant of your success. Do it in a very confident, matter-of-fact way, and give some kind of a reason.
The subtleties of human nature
Be a student of human nature. As you have learned, or will learn, in your negotiation training, the art of negotiation often boils down to basic people skills. But in the in-house world of the employed lawyer, there are some special subtleties worth noting.
Find the decision maker. If your opponents say they don’t have the authority to agree to a point or make a change, try two things: feel out the limits of their authority, and find out who has the authority to make the decision. In the in-house-to-in-house negotiation, the layout of your opponents’ organization can be very important. Your colleagues in sales can be helpful in this quest as it is often part and parcel with the greater issue of who is authorized to sign the agreement or approve the purchase order. But pay attention to the currents of power on the other end, particularly if it feels like a cross-functional issue. Insight into their hierarchy is invaluable.
Don’t overreact. As has been noted in the past, one should never attribute to malice that which can easily be explained by stupidity. Not every seemingly inflammatory comment is actually intentional. Don’t take the bait and let them get a rise out of you because you can often lose control of your mouth in those situations. Regardless of how good it feels, an angry retort is almost never justified, and it is never constructive.
Don’t be naive. Dishonest and unethical people are thankfully rather rare, but they are out there. Be alert for signs: unmarked changes in what was supposed to be a redlined draft, retractions of previously granted concessions, obvious manipulation of the process, end-runs around you to your client … the list is long. As a general matter, the old rule of “trust but verify” is your friend, but when someone is truly dishonest, you should pull out and find another way. Make sure your client understands what has happened and why this precludes working effectively with that client, but don’t back down. Attempting to negotiate in good faith with a bad actor will blow up in your face. Whether to pursue the dishonesty formally is a more personal decision. There is a clear moral argument in favor of pursuing it, but some very practical arguments against particularly if they work for a customer of yours. Let your own conscience be your guide.
Broaden your perspective. Think about every deal issue from different points of view. What is key for your business person? What is key for each person on the other side? Where are the mutual interests? Where are the real conflicts? What are the realistic risks of the deal terms, and how can you address them?
Explain your reasoning. When asking for a concession or when suggesting a change, use common sense. Think about the way you introduce your request, and explain it in terms necessary for your opponent to understand where you are coming from. When trading drafts, don’t just send a heavy redline. Include a cover note with a brief explanation of the major points in work you’ve done. Highlight the many ways you have anticipated and addressed the other side’s concerns and, if appropriate, other drafting notes and process points. Try to condition your opponents to view the redline positively by demystifying it in advance. Tell them what to expect; project an air of cooperation, forward progress and flexibility in reaching a common goal.
In closing, ask for the order. One of the most important parts of a multi-round negotiation is the closing of the call. Done right, it can propel the process forward in a very meaningful way. Done inartfully or not at all, its omission can cause backsliding, confusion and repeated work. When wrapping up the call, go down a checklist to ensure you consolidate your gains. Don’t allow your opponents off the phone without getting another call scheduled even if it is only a place-holder for a call that might or might not be needed. Then lock in your progress, and ring-fence the remaining issues.
Agree on the next steps, who has the pen on the document, what the open issues are and what the major points of agreement were. And it is often a very good idea to make notes during your close so you can e-mail all the parties with a summary of what was agreed. It might seem a little pedantic, but good preparation, organized execution and this type of crisp close are the keys to successful in-house negotiation.
Taking the time to become a comfortable and confident negotiator not only improves the quality of your life, it improves the quality of your professional work product. Don’t allow the chaos of in-house practice to prevent you from doing the work necessary to gain, and practice, your mastery of this absolutely core skill. Get trained, organized and systematized, and you can spend more time in the inspiration quadrant and less time in the perspiration quadrant.
Christopher Mirabile is the former general counsel and chief financial officer at IONA Technologies, an integration software company based in Waltham, Mass., and Dublin, Ireland (recently acquired by Progress Software of Bedford, Mass.). He is president-elect of the board of directors of the Northeast chapter of the Association of Corporate Counsel.
In the May issue of New England In-House, the sixth and final installment of Succeeding In-House will focus on dealing with outside counsel from the perspective of the in-house lawyer as a client.
