Negotiating a Deal? Be a Mediator, Not a Gladiator

What’s the primary goal of most business negotiations? I don’t mean negotiations in the context of a dispute – I mean in the context of a prospective business deal or relationship. In that setting, the primary goal is to reach agreement. And that generally means emphasizing mutual benefit and necessary compromise to reach the desired outcome for both parties, not just one – after all, if your negotiations are so “successful” that the other party has lost everything, there’s really no reason for that party to proceed at all. In other words, you may “win” the negotiation battle but “lose” the deal.

So, how should a business person (and that business person’s lawyer) approach negotiations? Simply put, I think it’s better to assume the role of mediator than that of gladiator; be a problem-solver not a competitor. That doesn’t mean that you must avoid confrontation and disagreement in all cases. What it does mean is you should pick and choose your “battles” carefully; and where possible, avoid them entirely by finding creative solutions.

Negotiation is not generally possible without some level of disagreement. If that weren’t the case, we’d never need to exchange multiple drafts of an agreement, since all parties would simply agree to the first draft. Disagreement is not the problem. Confrontation, however, often times can be – particularly if it’s not handled with professionalism and diplomacy. If disagreement is necessary, try and explain to the other party why your position is reasonable, and why the issue is important. If it’s a potential “deal-breaker,” explain that too. In the end, I believe it’s most productive to avoid confrontation when you can. Disagree when it’s important, but even then seek compromise where it’s possible and makes business sense. Be creative and seek to find win-win solutions. Remember, the goal is to get the deal done on terms that benefit everyone – not walk away after “fighting a good fight.”

Creativity and Problem-Solving Are NOT Optional For Your Lawyer

How do businesses make money?  Typically, they identify a need that is not being satisfied or a problem that needs to be solved, and they satisfy/solve it.  In other words, challenges create opportunities for businesses – something to be overcome, rather than something that prevents you from achieving your objective.  Your business lawyer needs to think this way as well.  Creativity not only solves problems – it makes money.

Very often clients come to me with a specific opportunity they want to capitalize upon, but some sort of roadblock or hurdle that is making this difficult.  That’s both challenging and exciting.  Rather than focus on the problem, I focus on the solution.  That’s what your business lawyer needs to do too.

At the outset, remember that many challenges are simply risks, rather than obstacles.  Some lawyers can’t tell the difference – those are the ones who went to law school because they “love the law” and enjoy analyzing problems rather than identifying solutions.  Before you alter your business course because of an obstacle or problem – make sure that’s what it is rather than merely a business risk that is better evaluated and addressed by you rather than your lawyer.

Assuming there is a real legal challenge, remember that many problems have simple solutions – and it’s the lawyer’s job to find the simplest solution available.  That way, the client can get (back) to making money in business rather than solving problems and spending money working with lawyers.  However, a lawyer really shows/adds value when he/she solves a particularly complicated problem – the kind of problem that, if not solved, kills the deal.

If your business lawyer has never said things to you like –  “What if we did it this way?”  “How about approaching it differently?”  “I think you’d be better off doing this.” Or “We can’t do that, but we can accomplish your goals another way.” – then it may be time for a change.  In other words, if your lawyer is not a creative problem-solver and a calculated risk-taker, then your lawyer is part of the problem itself, rather than part of the solution.  Problems cost money; solutions make money.

Does Your Business Lawyer Know How to Protect Your IP?

Let me start by saying, I’m not a licensed patent lawyer or an IP lawyer by any definition.  No, that ship had sailed by the time I clerked with a major Midwestern law firm and the head of the Intellectual Property Practice Group laughed out loud at my undergraduate double majors in political science and history.  The true practice of intellectual property as a substantive legal area is largely one involving a deep understanding of the sciences (and I don’t mean political science). 

However, the business side of intellectual property (and of course, the business side is what this blog focuses on) requires the ability to identify valuable intellectual property, conduct a risk-benefit analysis, determine what protections are appropriate and affordable under the specific circumstances, and then (and most importantly) work with you to implement and execute a plan to PROTECT and MONETIZE your IP.

So, does your business lawyer need to be a licensed patent lawyer?  No.  What your business lawyer does need are the following skills/abilities:

• Access to a talented licensed patent lawyer in the same firm (and here’s the critical part) who does more than just process and enforce patents and trademarks – one who regularly works on IP matters and understands how they affect your business activities, relationships and agreements.
• A complete understanding of your business and a specific understanding of the types of IP you have or intend to develop.
• The ability to identify risks and opportunities to and for your IP and to inform you when one may outweigh the other.
• Practical experience in structuring and handling mergers, acquisitions, licensing agreements, joint ventures and other transactions involving valuable intellectual property.
• And finally, an open and creative mind to help you to maximize and realize (i.e., monetize) upon the value of your intellectual property.

Whether you are a technology company, a software developer, a manufacturer, an energy company or any other type of business, you likely have valuable IP – make sure you work closely with capable and experienced legal counsel to protect it.

It’s the Client’s Deal – Make it Happen

One of the most difficult situations a business lawyer encounters is when a client wants to enter into a deal or relationship that the lawyer believes is a bad one for more than purely legal reasons.  After all, the most beneficial and rewarding attorney-client relationships are those where the client views the attorney as not only a legal advisor, but also as a member of the strategic/management team and a trusted confidante.  As such, the lawyer is faced with a dilemma – advise the client of the concerns and the reasons for them (which can be risky for the relationship), or simply go along with the client’s wishes and execute the deal while, of course, protecting the client as much as possible.  This situation is fresh in my mind, as I have dealt with it in the past week.

In reality, while I agree this is a challenging situation, the appropriate course of action is relatively clear.  In my opinion, the lawyer should absolutely share his/her concerns with the client and the basis for them.  This should not be done subtly or for the mere purpose of covering the lawyer’s backside in the event the deal or relationship ends badly – rather, it should be done so that the client is fully informed of the attorney’s concerns and can carefully consider them.

Once the attorney has advised the client of his concerns comes the next step – what if the client wants to proceed with the deal anyway?  I’ve found that different lawyers take different positions in this situation, but my position is clear – so long as the client’s position is fully legal and ethical and the client is fully informed, my job is to make the deal happen and protect the client as much as possible.  After all, it’s the client’s ideas, creativity, risk tolerance and ultimately money that have allowed the client to be successful and that are at risk in any business deal – not mine.  Just like the customer is always right, the client is always the one who should make the final decision and bear the final responsibility for a business deal.  My job is to advise, inform, protect and execute.

Finance, Strategic Planning and the Practice of Law

As I spent most of my day today developing our law firm’s budget for the upcoming year – something I’ve now done 13 times – I thought, every business lawyer should go through this process at least once. And as we budgeted for items reflected in our firm’s strategic plan, I thought – every business lawyer should go through that process too. Finally, as we discussed overall firm management issues, I thought – every business lawyer should have the opportunity (and the responsibility) to be involved in and accountable for the management of a business.

Perhaps you’re thinking that I mean preparing a budget, participating in strategic planning and being involved in management would be beneficial to lawyers in better understanding their own firms – and of course they would – but actually, the reason I think all business lawyers should participate in these processes is to better understand their clients and their clients’ businesses.

All of our corporate clients must think strategically, operate on a budget, and confront management issues on a daily basis. Furthermore, those that have the deepest and most valuable relationships with their business lawyers directly involve those lawyers in these matters – treating them not as mere legal consultants, but as trusted business advisors and confidantes. How can a lawyer fulfill that role and justify that trust if he or she has never actually dealt with these issues in a real life situation? – where they not only have to makes these decisions, but also communicate them to their colleagues, persuade others to buy into them, execute them, and ultimately be accountable for the results – including business, financial and human consequences. That’s the experience I want my lawyer to have. That’s the experience I’m glad I have when advising clients.

You, Your Business, and Your People Are Unique – Your Legal Issues Probably Aren’t

The title to this article may surprise people – especially since it’s being written by a lawyer who prides himself on being able to proactively advise clients and assist them with the most complex legal matters.  However, I believe what separates the truly outstanding business lawyer from the rest is not, in most cases, the lawyer’s intellectual capacity or knowledge of the law – after all, most of us are reasonably bright and are experts in the law – rather, it’s the ability (and willingness/desire) to truly understand the client, the business/industry and the deal and to apply the attorney’s judgment and experience to simplify (rather than complicate) and streamline (time is money) the deal and achieve the best outcome with the greatest value/upside to the client.

The bottom line is – most of the transactions we work on are not entirely new or unique, and most of them do not require absolute legal genius or an overly complex structure to achieve the best result.  In fact, often when a lawyer or firm is taking that approach without clearly articulating the reason, it’s because it’s in their best interest (after all, complexity costs money) rather than the client’s.  That should never be the case.  

For the above reasons, I suggest that each party to a deal start by outlining its general interests, the basic purpose(s) of the deal, the party’s specific objectives, and their understanding of the steps necessary to make the deal happen.  This outline should then be discussed with legal counsel to make sure he or she understands the client’s objectives and can explain any legal issues/challenges or reasons that the deal may need to be more complex than the client anticipates.  Then, client and attorney can move forward with a clear and mutual understanding and agreement of the deal structure, timeline and process.

How to Tell if Your Lawyer is “Invested” In Your Business

There’s risk for me in writing this post – after all, I’m a business lawyer, and I’m telling all of the businesses (i.e., clients) out there what to expect from their lawyers in terms of commitment and how to hold them accountable.  Of course, if that’s how I differentiate myself, my team and my firm from other lawyers, I’d better be willing to put it in writing.

I believe a lawyer must be “invested” in his or her clients and their businesses – not in the sense of writing a check in return for stock, but rather, making the commitment to contribute to the clients’ success.  A few ways that I measure a lawyer’s commitment to clients is by asking whether the lawyer is, does or has:

• Fully understand(s) the client’s business and industry and the related challenges and opportunities?
• Takes the time to make sure he/she understands each business/legal transaction and the client’s requirements, goals and expectations?
• Visited the client’s facility or offices and spoken directly with upper level management?
• Proactively reached out to the client with business/legal updates?
• Proactively suggested legal, business, funding or other strategies and programs that the client might consider?
• Connected the client with other people or opportunities that might contribute to the client’s success?
• Designated a client service team or at least another attorney and a staff person who understand the client’s business and can respond when the primary attorney is unavailable?
• Worked with the client to make sure the legal services match the need/opportunity and the legal fees match the value provided?
• Meets timelines?
• Makes him/herself available on weekends, holidays and after hours when necessary?
• Delivers consistent high quality legal advice and work product that is appropriate for the particular deal or context?
• Accepts responsibility for mistakes or missed deadlines in the unfortunate event they occur?
• And most importantly . . . does the lawyer serve as a valuable and trusted advisor and confidante on both business and legal issues, and does he/she contribute to the business’s bottom line and protects its assets?

If you answered yes to each of the above questions, I would suggest that your lawyer is fully invested in your company – if not, you may want to look for another lawyer.