Ever since his firm’s negotiation training in February, IP Draughts has been reflecting on what Rob Marshall, our course leader, taught us. A topic that particularly resonated with IP Draughts was how different negotiators have a different mix of priorities, in the following categories, and how these priorities sometimes change when you are under stress. The categories are:
IP Draughts has been re-assessing clients and others through the lens of these categories – are you a “people” person, or mainly focused on outcomes, or obsessed with process? Or do you have these qualities in balance?
This has helped him to understand better some situations where he found a negotiation frustrating, and where one or more of these qualities was neglected. The same thought process has been helpful in explaining internal conflict within an organisation, between someone who is people and outcomes focussed, and someone who is more interested in process.
While he can think of examples, over the last few decades, where the issue was a lack of focus on people or outcomes, with his commercial clients the biggest problems have arisen from a lack of focus on process. There seems to be a particular type of business development manager who engages at a personal level with his opposite number, and is focused on getting the deal done, but seems to have no interest in process. The lack of focus on process can sometimes jeopardise the deal, or result in an organisation taking on inappropriate risk.
This can operate at different stages of the deal, including:
- Bad term sheet. Where the parties negotiated a term sheet but didn’t involve their lawyers, causing downstream problems in the negotiation of the final agreement. Or perhaps others in the organisation vetoed the deal altogether once they heard about it, as being not consistent with company policy or risk appetite.
- No term sheet. Where the parties didn’t have any discussion of key terms (and certainly no term sheet) before starting the negotiation of a detailed agreement. Signficant commercial differences emerge during the page-turning exercise, which can be an extremely inefficient way to negotiate the key principles of a deal. Sometimes, it becomes apparent only during the detailed negotiations that the draft agreement being used is an inappropriate starting point, e.g. because the deal is really a licence agreement rather than a research collaboration, or a joint venture rather than a distribution agreement.
- Too much spontaneity. Where one party thinks it is fine to “jump on a plane” to see the other party, or to call them on the phone unannounced, without prior scheduling and preparation, much to the frustration of the legal team that has to review the draft carefully. Or a draft is sent through hours or minutes before a planned negotiation call, leaving insufficient time to review it properly.
- Careless mark-ups. Where one party sends through a draft that is only partly marked-up, or marked up oddly, or in an uneditable format, or some other malarkey, that gets in the way of smooth, trusting negotiations. Often this can be avoided by better control over process, including the editing process.
- Assuming the deal is done. Where one party thought the deal was done and had gone for signature, only to find that it was being reviewed at another level, eg by a legal department or a higher level of management, and that substantial changes would be required. Prior discussion of the exact process and timetable would have avoided this last-minute surprise.
- Different expectations on signing. Where the parties made assumptions about the signature process, failing to schedule time for a Board meeting to be held to approve the transactions. Or they failed to agree on the exact signature process and one party thought Docusign would be used, whereas the other party wanted to see wet-ink signatures. Or the agreement is signed but not dated, or a party has just signed without taking the trouble to fill in the lines that state their name and role, and the signature is illegible.
Often, these and other problems can be avoided by careful discussion and implementation of an agreed process, including allowing a reasonable period of time for each stage in the process. But that approach is sometimes not favoured by the impatient commercial manager who is leading the deal. Or they may fear that a focus on process will be perceived as indicating a lack of trust. The lawyers assisting in the negotiations (on both sides) may be more focussed on the benefits of a good process, but they aren’t in control.
Good negotiations are a team effort, where all members of the team are full participants.