How To Gain A Competitive Advantage In Contract NegotiationsPatience in contract negotiations --- is your competitive advantageWritten by Gregory L. Phillips, Founding Partner Written by Gregory L. Phillips, Founding Partner Written by Gregory L. Phillips, Founding Partner One of the most common pitfalls in contract negotiations is impatience with anything that impedes or delays a contract getting finally approved. The decision to charge ahead before an agreement is completely in place usually comes after a round or two (or more) of complicated issues have been hammered out and only an item or two is left to resolve. The feeling is that those items can be addressed later since the most significant issues have already been tackled. "Patience in contract negotiations --- is your competitive advantage." --- GREGORY L. PHILLIPS, HOUSTON BUSINESS ATTORNEY The relationship between both parties may be good. You may know each other better now, and decide to let some time go by and address those final issues later. The reality is this may bring about the relationship's undoing. Putting off tough issues does not make them easier to resolve later or magically make them go away. Once the relationship has started the other party may now have less incentive to compromise, especially if you've already done your part in the deal. Prevent the undoing of what you've already accomplished. Embrace the fact that it is very common for both parties to exchange multiple drafts of important documents as they resolve compromises and close in on their differences. Patience in contract negotiations --- is your competitive advantage. Cut Your Legal Expenses By As Much As 75% !LEARN MORE 16 Tips To Tackle In Contract Negotiations 1. An effective contract should always be clear, specific, and focused. 2. Share the business motivations behind the deal with your lawyer. When a lawyer understands the purpose of your contract, he/she adds more value and mistakes are less likely. 3. During contract negotiation, wise negotiators recognize and prepare for the possibility of a contract breach. Consider steps that can reduce the risk of a full blow up and breach, like including a structure for the parties to meet regularly to review progress and performance during the life of the contract. 4. Consider whether a dispute-resolution clause in your contract might head off costly litigation by requiring parties to engage in mediation or arbitration before filing any lawsuits. 5. Transparency in everything is not required, but honesty is. Do not mislead in any way; that creates a lack of trust, either immediately or after the truth is found out by your business partner. 6. Take time to read the completed contract yourself. Encourage your counterpart to read it carefully as well and then discuss any areas of confusion with your lawyers. 7. Ask your lawyer to write the contract in “plain English.” Ask follow-up “What if?” questions that probe the boundaries of deal conditions to make sure you’ve covered all the bases. 8. Think of negotiating a contract like eating an elephant. You should do it one bite at a time. Start by tackling some of the easier aspects first. Focus on gaining some momentum. 9. Apply the wisdom of Sun Tzu — “Every battle is won or lost before it is fought.” Know your party's motivations and pain points before the negotiations begin. 10. HEAR what the other party is really saying — the pearls they provide are the keys to really understanding what they want/desire/NEED in order to get the deal done. 11. Keep the goal in mind— to do business together. Focus on the end game and the benefits to all when the deal is done. 12. Try to keep the discussion orderly when meeting with the other party. Make a checklist of topics that should be reached during the negotiation. 13. Pages should be numbered. Avoid the appearance that pages could have been added after the agreement was signed. 14. Sentences should be short to avoid unnecessary complexity and ambiguity. 15. A contract should be consistent in its tone, grammar, word usage, and abbreviations. 16. Know the difference between what you need and what you want. Review your priorities frequently throughout the contract negotiations planning process and one final time at the end. Be sure to ask the hard questions: "Is this really a priority for our company, or is it a 'nice to have'?" "Was this priority a result of some internal political jockeying, or is it for real?" "Soliciting people's ideas and listening to their concerns is critical at the early stages. Look for feedback through asking questions." --- CRAIG KAISER, HOUSTON BUSINESS ATTORNEY Craig Kaiser, Founding Partner, AttorneyThe Definitive Guide to Mergers and AcquisitionsWe made it easy to get a basic understanding of mergers and acquisitions. 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