By Alan G. Fishel, Partner, Arent Fox LLP
There are many actions that the other party may take during a negotiation that, whether inadvertent or intentional, can serve to delay or derail the process if you don't respond properly. Here are ten such scenarios, followed by some brief summary comments regarding how you may wish to respond in each instance. Of course, much more can be said on each of these matters, and I am happy to elaborate further on any of these scenarios in greater detail.
1. The Other Party Misstates in Subsequent Calls what the Parties Agreed to in Prior Negotiation Calls
You are very pleased. You just got off a delicate call with the other party's attorney where you reached compromises on several issues that you thought may be roadblocks. Then, on the next call, to your complete surprise, the other party's attorney claims that several of those compromises were not reached and that either you agreed to different resolutions (which you know did not occur) or the matters are still outstanding. Your frustration is high and your respect for the other attorney has fallen, but what you really need to focus on is what you can do to prevent this from occurring again. As an initial matter, where you and the other party's attorney agree to a complex or unusual resolution to an outstanding issue, if the other party does not immediately re-state the compromise on the call to ensure there is a meeting of the minds on the issue, you should. It is also very helpful if whichever party has agreed to send out the next draft does so shortly after the call is completed. By taking these steps, there will be far less inadvertent misstatements by the other party in subsequent negotiation calls as to what has been agreed upon during prior calls. Unfortunately, from time to time, a small percentage of attorneys will intentionally misstate what the parties have previously agreed to on a call in an effort to gain an advantage or because the other attorney has subsequently learned that his or her client is upset with what the attorney agreed to, and the attorney, upon learning that fact, changes his or her recollection of what the resolution had been. Where you see this occur, you have two options. For each call going forward, either you should agree with the other party on the exact language during the call (i.e., jointly draft the changes during the call so that each attorney can review the changes before the call ends and agree upon them) or you should send an e-mail that same day summarizing the changes agreed upon on the call, while informing the other party that unless you hear otherwise by the next day, you will assume that he or she has confirmed your summary accurately reflects what the parties agreed upon. You ordinarily will not need to do this for every change, but only for the most important modifications and the ones where it is most likely that the other party may try to deny what you had agreed upon. Of course, if you have time to provide a revised draft later that same day, that is even better than an e-mail summary. Once again, this approach is usually only necessary where the other party has previously misstated what has been agreed upon on prior calls. While you can also directly raise your concern about the misstatements with the other party's attorney (or ask your client to raise it with his or her counterpart), this can easily turn into a "he said, she said" situation, where the other attorney then accuses you of misstating what was agreed upon. The better approach going forward is generally to make it far more difficult for the other party to deny that you reached the compromises that the two of you agreed upon.
2. The Other Party Acts Rudely or Sarcastically When You Don't Agree with the Other Party on an Issue
Some attorneys frequently act rudely or sarcastically if they cannot quickly convince you to agree with them on an issue. Many of these same attorneys treat you very well as long as you agree with all of their requests. It is human nature to want to be treated well, and therefore many attorneys have a tendency to subconsciously give in on a position to avoid being treated poorly. It is not uncommon at all to hear an attorney later tell his or her friends words to the effect that "I was so sick and tired of dealing with the [you fill in the blank], that I gave in on some issues that I may not otherwise have in order to close the deal and not deal with that [you fill in the blank again] any longer. But that is not the right approach. While it is not pleasant to deal with attorneys who act rudely or sarcastically, if you keep your cool and stick to your positions, they often change their tone, realizing that their methods aren't working. If they continue to try such antics, you should in a calm manner and choosing your words very carefully call them out on it, using examples of what the other attorney has said during prior calls or the current call. Such an approach usually will get them to realize that their antics aren't going to work. With some attorneys, I have had to call them out on this in a calm manner choosing my words carefully several times, but eventually they got the message. In the rare instance where they don't, you should insist that the clients join the attorneys for a call or two. If the other attorney still uses the same antics, your client can then talk to their client offline, and make sure the message gets back to the attorney. If the attorney doesn't use the antics when the clients are on, but only when it is just the two of you, you should call him or her out on that. I have only had to do that a couple of times over the years and it has worked each time. I have found that the more years I practice, the number of times per year that I am dealing with attorneys who try to use those tactics has dwindled considerably. Many attorneys try to take advantage of the less experienced or younger negotiators. Having said that, if you utilize the above approaches, and consistently act in a manner that should gain you the other attorney's respect, any attorney regardless of age can get most parties on the other side to greatly reduce, if not eliminate, such antics.
3. The Other Party Inaccurately Represents that the Only Changes Made to the Contract are Non-Substantive
You should never rely on the other party's conclusory statement that their changes are all non-substantive. I can't tell you how many times I have found such claims to be inaccurate. Attorneys are often worried that their changes won't be accepted and some of them will go to great lengths to say whatever it takes to get the changes adopted. One of the typical ploys that many attorneys use in these instances is to say words to the effect that, "I made a few changes to the last draft, but, don't worry, they are all non-substantive." Sometimes the attorney actually believes this, and sometimes he or she is just saying it in hopes that you will read their changes less carefully (if at all). But regardless of why an attorney tells you this, the bottom line is the following: you must make the determination for yourself. Moreover, do not review the document with a predisposition towards believing the revisions are non-substantive simply because the other party told you they were. Always conduct your analysis with a completely open-mind, and don't allow the other party's conclusions to impact your views. Many attorneys let down their guard in these instances and particularly where they have a good relationship with the other attorney. You should never do so.
4. The Other Party Requests Reciprocity for All of the Provisions that are Not Reciprocal
You've probably heard opposing parties ask you numerous times words to the effect of "please make Section X reciprocal." Unless there is a substantive concern (such as relating to your company's risk tolerance) or where a company has most or all of the leverage, many attorneys have a tendency to reflexively approve the other party's request for reciprocity with respect to any provision. At times, however, that can be a significant mistake, including where by making the clause reciprocal it creates an ambiguity as to who has what obligations and what rights under the agreement. You must ensure that agreeing to reciprocity under a provision does not have an unintended impact on the meaning of the rest of the agreement, and you'd be surprised at how often it does.
5. The Other Party Repeatedly Cancels Negotiation Calls or Ends them Early
As everyone knows, to successfully negotiate an agreement, it is often necessary to have at least several negotiation calls. However, if the other party's attorney frequently cancels these calls or ends them early, the negotiations take much longer and there is a greater risk that they won't be completed. Momentum is important to negotiations and can be gained through a series of calls over a relatively brief period of time or through having longer calls during which many issues get ironed out. Therefore, where a party repeatedly cancels calls or cuts them short, such action undercuts the momentum that is often important to concluding a deal, or at least to concluding a deal within a reasonable period of time. Accordingly, where this occurs you need to get to the root cause. It may be that the other company is not that motivated to do a deal quickly. Or it may be that while the other company is very interested in completing the agreement promptly, its attorney is too busy, too lazy, or too disorganized to keep to his or her commitments. That is, the reason for the delays may be the lack of the other company's interest in doing the deal promptly or it may simply be a function of who the other party's attorney is, and it is your job to find out which it is. Therefore, when the other party's attorney repeatedly cancels calls you should ordinarily reach out to your client (who often wants the deal to move quickly, and ask your client to contact his or her counterpart to let that person know what is occurring). Because the clients ordinarily want the deal to move quickly, there is a very good chance that the other party's client will speak with his or her attorney and make it clear that they should get this deal done sooner rather than later. If that doesn't occur, then it may that the other party isn't highly motivated to do the deal. If that approach doesn't work, you should tell the other party's attorney your concern during your next negotiation call. If that also doesn't work, you should send an e-mail to the other party expressing your desire to move these negotiations along, and setting forth in a friendly tone the times and situations in which the other party has cancelled calls (or cut them significantly short) and mention during your e-mail how you spoke with the other attorney on a call about this as well. Your e-mail should also offer times that you are available to continue the negotiations and ask the other attorney to choose the times that work best for him or her (by including this as well in your e-mail it will make it less likely the other attorney will respond defensively and more likely that he or she will just pick some times to continue the negotiations). Often when an attorney receives an e-mail such as this, it can put that attorney in a negative light if he or she continues to engage in such action so the attorney becomes more motivated to move things along. That attorney knows full well that if he or she continues to act in such a manner, the e-mail you sent to just that attorney can be forwarded to your client who can then forward it to key personnel at the other company, and that is something few attorneys want. Finally, one other approach you may wish to take is to schedule more calls than are necessary (so even if the other attorney cancels some it should work out fine) and schedule longer calls than necessary.
6. The Other Party Misstates the Business Terms
Never rely on the other party to accurately characterize the business terms of the deal. You should receive the business terms directly from your clients, and you should ask them any questions necessary to ensure the terms are clear. Sometimes portions of the business terms agreed to by non-lawyers for the parties are themselves ambiguous, and where that occurs it is up to you to speak with your clients to clarify the parties' intent. If the other party repeatedly misstates business terms to you, you should, however, point that out to them in a friendly manner. While you should never rely on what they tell you in this area, you should still ensure that they understand that it is not acceptable for them to repeatedly provide you with inaccurate information. Permitting that to occur without nicely calling them on it can lead to them trying to misstate other matters to you during the negotiations.
7. The Other Party Seeks a Concession for Every Concession the Other Party Makes
Some attorneys seek a concession for every concession they make (and I've even had a few attorneys on the other side tell me they keep score of the concessions made by each party). If the other attorney tries this approach on you, you should tell the attorney that you don't view negotiations in that manner. You should remind him or her generally of the fairness of the compromises the two of you have reached, and that what is important is that the parties enter into a deal that is reasonable and works for both sides. If the other attorney repeatedly tries to use this tactic, you should tell him or her that viewing the negotiations through such a lens is distorted because, among other things, it ignores the following fact: if you had begun the negotiations by providing him or her with a very strong form agreement in your favor, the other attorney would have received, rather than made, the majority of the concessions. If the attorney keeps pressing the point, you should tell that attorney some of the provisions or language you would have begun with in what would have been your initial proposed draft, and that you have, therefore, already conceded a number of matters when you didn't insist on such language as to those particular items when you provided your first responses to the other party's initial draft. Over the years I rarely have had to make this point, but when I have it has worked well.
8. The Other Party Takes Forever to Get to the Point or Repeatedly Makes the Same Statements
There are some attorneys that frequently take what seems like forever to get to the point or repeatedly say the same thing. While in a perfect world you would listen to them until they have concluded their thoughts on each and every occasion, no matter how long that took, many of us don't always have an unlimited amount of time to negotiate with the other party (given everything else we have to accomplish). In these instances, you should not do anything at all until you are certain you are dealing with the type of attorney who will greatly slow down negotiations unless you take action. Once you ascertain that is the case, you should try to have far fewer negotiation calls with that attorney, and do more of the work through the exchange of drafts. Moreover, on calls where the attorney is taking forever to get to the point, you should interject with direct leading questions to the attorney (for which the answer favors your client), and ask as many as necessary, to try to get him or her to quickly get to the point. If the attorney constantly repeats the same statement, you should, in a friendly manner, tell him or her you have heard that point and completely understand it and then repeat it back to the attorney, which will greatly increase the likelihood that you won't hear it again.
9. The Other Party Requests Structural, or Numerous Other, Changes that While Not Harmful are Unnecessary
Some attorneys request changes that are, with respect to the substance, innocuous, but very time consuming to incorporate. It has been my experience that most of these attorneys are not terribly strong and are simply out of their element. In these instances, you should explain to the other attorney in great detail if necessary why the change is unnecessary. If the other attorney nevertheless insists on the changes, with limited exceptions (such as where your client does not want changes to the structure of the agreement because it will cause confusion within your organization), you should tell the other attorney that is fine as long as (i) he or she makes the changes to the document, and (ii) you confirm that all of his or her changes work for your client. You should also tell the other attorney that this approach may slow down the process of completing the agreement. Frequently, after hearing all of this, the other attorney will decide the changes are not really necessary.
10. The Other Party Requests Material Changes After the Agreement is Finalized, But Before Execution
You've just completed the deal. It is finally done. Everyone has agreed to everything. Then the call comes in, and it is the other party telling you that his or her client needs one or two more changes. This happens so often there is even a term for it -- nibbling. By the time the agreement is finalized both parties have often invested considerable time and effort in the process and do not want to see anything go awry. Therefore, when the other party requests one or two more significant concessions at this stage, some companies have a tendency to agree because they have already counted this as a done deal and are worried that they might lose it at the last minute. I have found that nibbling is most often used (i) as an intentional tactic by the other party to receive a concession that they didn't believe they could get earlier, or (ii) because the other party either forgot to raise the issue earlier or hadn't cleared the provision with someone of higher authority within their company, who has now raised it. Your immediate response to nibbling should be to tell the other party that we are already done and it is too late to negotiate further and see if they quickly back off. If they don't, your follow-up response should depend on whether their request is something that you might be able to agree upon, or whether it is a complete non-starter. If it is a complete non-starter, you should tell them that and if necessary get your client to talk to his or her counterpart at the other party as well. You can also ask them how they would feel if you came in at this same time and asked for X (which you know for a fact is a complete non-starter with them). That will generally help them realize that their request is not going to reap dividends. On the other hand, if their request is something that you might be able to accept, but you don't want to allow the other party to benefit from nibbling, the best response is to say that if they want to re-open issues, there are three or four other very significant items that you would like to raise again and if they are willing to agree to your requests, you may consider theirs. That tends to result in a quick call back and words to the effect of "forget about the request and let's just sign the agreement as is.
Read ten more scenarios from Alan Fishel at Arent Fox here.
Published on September 17, 2013
