You have made a relationship, negotiated a deal, and you are ready to put it in writing. The drafting drags on and on. It seems like it will never end. The draft numbers are counted by tens instead of ones. Why does the drafting process of contract negotiation take so long?
Because You Forget You Are Working Together
Contract negotiation is about working together for the benefit of both parties. Contract negotiations drag out because:
1. Lawyers Don’t Understand the Deal
Most of the time, lawyers are only brought in to review a negotiated contract. The problem with this method is that the lawyer does not know exactly what is going on. The lawyer will read a contract and negotiate for it to be completely in your favor. Without any other information, that is about all they can do. If you want to save a little money, tell the lawyer everything up front. Maybe even bring your lawyer in earlier. This can help make sure your lawyer is up to speed when it comes to “looking over the contract”. That can save you a lot of time, headache, and even money. Most of the legal expense in contract negotiation is the back and forth on drafts. A lot of the back and forth could be eliminated if you simply brought your lawyer in sooner, or made sure he knew everything about the deal before you ask him to “just look over it”.
2. You Are too Focused on Protecting Yourself
This is also one of the reasons you bring your lawyer in. You want to make sure you have a “bullet proof” contract. You want to make sure you are completely protected. But, sometimes, you have to give a little to make sure the deal will actually work. If the other side is very adamant about a certain point in the contract that doesn’t matter to you, let it go. Give it to them. In the give and take, you will not have given up anything you didn’t want to, but you will have given something they wanted. Along those same lines, if there is a way for you to deal with a particular provision that you do not like and still leave it in, leave it in. By way of example, if the other side wants the contract to automatically renew unless you give notice, leave it in. Just make sure you calendar the date when you have to give notice. That way, you have solved your problem and “given in” to their request.
To be successful in negotiation, move your focus from you to the agreement. From you to the deal.
3. The Deal Doesn’t Need to Happen
Sometimes, if you cannot work it out in the written contract, it means it is not meant to be. If both sides cannot trust one another enough, or work with one another enough, maybe the deal just doesn’t need to happen. It is hard to walk away from a deal when you are that far into it, but it will save time and money to walk away before the deal is done than to deal with a business relationship that just doesn’t work.
Negotiating contracts is a difficult task. You must balance protecting your business with making concessions to make the deal work. Business deals are like any other relationship: it takes give and take to make it work. You cannot always focus on the protection of your own business to make a business deal work. That is what sets the successful businesses apart from the ones that never quite make it: taking risks. Sometimes, you need to risk something in a business deal for it to pay off. Sometimes, you just need to give up on a provision you like because the deal is that important.
If you are an entrepreneur, and you know that. Tell your lawyer. Do not let a risk averse lawyer stop you from making an important deal. It is the lawyer’s task to tell you what effect your decision may have, not how to make the decision.
Have you ever taken a risk in a business deal? How did it pay off?