Articles > Litigation

The Art of Negotiation

November 24, 2021   Kathleen DunphyPhilip Evangelou

Negotiation is an artform. A very important artform for people running a business, as well as for the lawyers who work with them. Negotiation skills are a key factor in resolving conflict, building value in contracts, and moving ahead with your outcomes generally.

For lawyers it is a key skill to ensure client success and reach a mutually agreeable outcomes with other stakeholders – ideally without incurring unnecessary expense from overly litigious behaviours and undue time corresponding. Negotiation also provides an alternative to litigation, which has the ability to save much time, expense, and aggravation. 

Approaches to negotiation: 

Negotiation style

This depends on the circumstances of the negotiation. Gauging from the outset which party has more power and which may be more desperate, may enable you to establish which party may accept more or less in a negotiation.  This can guide the negotiation style to be employed.

Big points vs small points

In a transaction or dealing, identify what are the big points and which are the small points. By negotiating the big points first, you will be able to gain clarity on what’s important and where to place emphasis, you will also be able to reduce the likelihood of the small stylistic points that have the potential to derail negotiations. 

Initial draft and how to position

In the event you are producing the first draft it is advised that you draft it in a manner that balances – to the degree realistic – the itnerest of both parties. Doing so may lead to minimal negotiations in a short period of time, as opposed to heavy back and forth. 

Rules of thumb to keep in mind when negotiating: 
  • Listen 

By listening and acknowledging what the other party wants, it will be more effective in the negotiation, as it may be something your client has no issue with. 

  • Keep calm 

If tensions begin to run high, it is advised you adopt a circuit breaker and acknowledge that you’ve heard the other party’s point and you’ll return to the point once both have cooled down. 

  • Stay pleasant 

Remain pleasant as it will lead to a less effective outcome if you embarrass the other party. 

  • You don’t need to be right 

In circumstances where you may be taking issue with a stylistic point or disputing an issue to be right rather than it being something your client needs, be aware that this style of negotiation will hinder your client’s outcome and do more harm than good.  

  • Mix up your approach 

Be authentic but also adaptable depending on where you’re at in the negotiation. It is also important to ensure that you do not become predictable in your decision making and negotiation style to the other party. 

What generally works: 
  • Clear communication

By ensuring clear communication, you’ll be able to gauge and understand what the other party wants, so you can achieve a successful outcome for your client. 

  • Maintaining pleasantries and remaining respectful 
  • Sorting out the big commercial points first before detailed draft exchanges

Sorting out the big commercial points not only saves time, but also means the parties are each focused on what the big issues are before you begin negotiating the small points. The benefit of knocking off 

  • Prioritising the “ask” to what really matters 
What doesn’t: 
  • Poor communication 

This creates confusion around what both parties are asking for and delays the successful execution of documents or achieving a successful outcome for both parties. Moreover, parties are likely to get increasingly frustrated when they are unable to clearly ascertain what you are asking for in respect of your client and the why behind the request. 

  • Stylistic points

Each party will have different negotiation styles, when proposing changes to a document or during the process of negotiation, before making any proposals consider if they’re actually necessary or if you may be pursuing a stylistic issue rather than a substantial issue. 

  • Reopening agreed points

This approach is ineffective and causes delay. Once points are agreed you want to ensure that you move forward with the negotiation process rather than reopening agreed points. Moreover, in the event that you don’t have the due diligence required to agree on a point, ensure that you highlight this during the negotiation process i.e. agreed, subject to due diligence, to prevent it appearing like a reopened point. 

  • Bullying and badgering the other party

As expected, this type of negotiating does more harm then it does help. People don’t like to feel like they’re being pushed into a corner or bullied into something and the same goes for your counterpart. Even in circumstances where you may have leverage, this style won’t get you what you’re after. 

  • Negotiating commercial points through detailed mark ups 

Ensure that the correct decision makers are in the room for the points that require negotiating, this ensures that there is less back and forth, and allows the parties to seek clarification in a timely manner. 

About Kathleen Dunphy

Kathleen DunphyKathleen is a commercial lawyer with OpenLegal. Her focus is with commercial contracts, litigation, franchising and finance related matters.

About Philip Evangelou

phillipPhil is a director at OpenLegal. He has over 16 years experience working in private practice and in-house counsel in Sydney and London, giving him expertise in employment law, IP, finance, leases, dispute resolution, insurance and contracts.