Negotiating the Deal
In his recent article in the American Bar Association Business Section’s Business Law Today, “Win the Battle or Build A Relationship? How Japanese Style Could Help American Negotiators”, Darin Bifani contends that American corporate and transactional attorneys can learn some valuable lessons from their Japanese counterparts in how to conduct better business negotiations.
He suggests that while the American attorneys’ approach of representing their clients in business transactions vigorously, i.e. trying to win each and every contract term, may produce short-term client victories, these victories may not produce the long-term desired results the business parties envisioned when beginning the process. Japanese lawyers (when negotiating with each other), on the other hand, do not view business negotiations as an opportunity to gain advantage over the other party, but as a time for the parties to affirm and strengthen their relationship. Both American and Japanese attorneys view their roles in business negotiations as representing and protecting their clients’ best interests. Which approach is truly in the client’s best interest is the question.
Bifani believes that American attorneys should protect their clients but that they can also add value by viewing the negotiation as an opportunity to build the parties’ business relationship. “This perspective will assist lawyers in discussing the relationship between business and legal strategy throughout the course of the negotiation.”
This business negotiating approach has significant merit when beginning negotiations for most types of business arrangements. Parties negotiating commercial leases, employment agreements, buy-sell agreements, license agreements, joint venture agreements, etc. should consider this approach.
I always warn clients when we’re discussing potential business arrangements that no contract can address every potential problem. Additionally, I explain that I’ve seen contracts where many hours were spent hammering out stringent terms that provided significant benefits to my clients which were ignored by the other party before the ink was even dry.
It must be noted however, that this does not mean that you should not have business contracts or have sparse ones that do not clearly address all terms. I have seen more problems arise in my practice where clients have said that they either do not need to have contracts (“it’s among family members” or “we’re all such good friends”) or that important terms really don’t have to be addressed (“we’ll just handle it if we have a problem”).
Since the relationship between business parties often is shaped by the contract negotiation process, frequently, where the attorneys seek to win each and every contract point for their clients, potentially lucrative deals either die or the business relationships created are poisoned even before the contracts are signed. This often results in the parties beginning their business relationships already distrusting each other. Obviously this produces a relationship where the parties may view the business arrangement from a purely legal sense in performing their obligations and not from the desired win-win entrepreneurial perspective as they move forward.
Thus, it’s important that you sit down with your attorney and let her/him know what issues are really important to you as you pursue this business relationship. Your attorney needs to know which elements are crucial to you and must be protected. What is your true objective in this business relationship?
By doing this, your attorney is in a position to negotiate more productively on your behalf. This may reduce the hours of rigorous and draining negotiations. Reams of paper and significant wattage may be saved due to the reduction in electronic and hard drafts of contracts bouncing back and forth between attorneys, if your attorney knows which provisions in the agreements are essential to you. The resulting decrease in time spent in redrafting and the reduction in negative emotional energy created by nasty negotiations when employing this approach will be supplemented by probable savings in legal fees as well.
I believe that Bifani has done an excellent job of showing how American corporate and transactional attorneys can apply Japanese business negotiating perspectives to the Getting to Yes approach of seeking mutually beneficial negotiation results that has already gained wide acceptance in the American business world.