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Negotiating with purpose

April 20, 2017

Back in 2011 I published a blog, ‘The Purpose of Negotiation‘. I had cause to re-read it today because it has had a sudden flurry of viewers – quite why, I don’t know.

The blog set out some perspectives on both what and how we negotiate, drawing a distinction between ‘transactions’ and ‘relationships’. It also highlighted the dilemma of when and where to focus, especially when it comes to the terms typically under the purview of lawyers.

Six years on, the issues have not changed, but there are signs of improved approaches. First, we encounter more and more lawyers who are frustrated by the repetitive nature of their engagement and appreciate this is of low value to the business. Not only in-house lawyers, but also external law firms, are interested in new contract models and ways to introduce ‘balanced standards’ that speed time to signature. IACCM has been at the heart of such initiatives and recently started to publish ‘standard principles’ that deal with some of the most frequently negotiated terms (liabilities, indemnities, service levels etc.).

The new models are being introduced to support alternative commercial approaches, based on outcomes, performance, payment by results and relational agreements. These require far more focus on governance principles – areas that fill some lawyers with horror (‘Are we really suggesting that the contract should detail what meetings need to be held?’). Others recognise that these principles are fundamental to success and seek to enhance them with imaginative approaches to dispute avoidance, appreciating that litigation (especially in a world where interdependent services are becoing more common) is not an efficient or attractive mechanism.

Perhaps to a degree these changes also anticipate the growing role that technology will play in contract negotiation. As IACCM’s imminent report on automation will reveal, there is momentum towards global standard terms that will take key areas of today’s negotiation out of the realm of agreeing words and focus entirely on the discussion of values – for example, amounts of money, periods of time, quantity of resources. Focus will move towards more definitive agreement on areas such as scope, definition of responsibilities, alignment of procedures for change, communication protocols, problem-solving and claim resolution.

‘Negotiating with purpose’ requires alignment within and between organizations regarding their ¬†goals for establishing a contract. It means stepping outside functional positions and ensuring overall business benefit is understood and achieved. While such unity may seem obvious, it is often the exception, rather than the norm. The continued absence of disciplined negotiation planning is a major factor, but inappropriate contract templates and unimaginative use of software also contribute to the underperformance of many agreements.


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