Use your lawyers wisely in negotiations

Choose and use your lawyer wisely, or all will turn to dust

Today’s Dilbert cartoon highlights someone being pointlessly argumentative.  The work environment of Dilbert is software development, but the same dig could easily be made against legal advisers in commercial negotiations.

It is, of course, a wild generalisation to say that all lawyers are pointlessly argumentative, or that all commercial managers are gregarious, creative individuals who get deals done through charm, thinking positively and seeing the bigger picture.  Occasionally, people match the stereotype that others have set.

We have recently been involved in several transactions where the role and approach of lawyers has been scrutinised.

A client recently prepared a draft term sheet and sent it to his opposite number in another company.  The term sheet set out high level principles for a commercial transaction that he wished to discuss.  The other party involved their lawyer, who revised the term sheet with extensive legal provisions, covering issues such as IP ownership, licensing, patent filing, and so on.  It even stated details such as that inventorship would be determined in accordance with US law (our client is a European company).  We agreed with our client that it was premature to get into this level of legal detail, and that it would not help the initial commercial discussions.  Here, the lawyer’s involvement was felt to hinder, rather than assist, progress.

On another transaction, we took the lead in shaping some commercial proposals and discussing them with the other party.  On that occasion, we felt that an ability to see the other party’s point of view and a slight distance from the heat of previous discussions was valuable in reaching a mutually satisfactory conclusion.  In this case, our position as external lawyers was used in a very positive way to promote the client’s interests.

Sometimes, clients use their lawyers as “bad cop”; part of the role is to raise the difficult points that need to be raised in negotiations.  The lawyer takes the flak for being negative, leaving the commercial client to focus on the positive, friendly aspects of the discussions.

In other words, the lawyer’s role can vary.  Experienced commercial lawyers are used to adapting to the requirements of the negotiations.  Some clients are used to their lawyer performing a particular role, and don’t recognise that he or she has a wider repertoire that has been learnt when acting for other clients.

Negotiating major commercial transactions is a team sport.  Sometimes, the team manager should play the lawyer out of his usual position.  Who knows, you may have a good attacking midfield player or goal poacher in your midst.

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Filed under Commercial negotiation

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