The Importance of Contract Negotiation
Contract negotiation is an integral part of most legal agreements. It is the point at which the parties can put all the offer, counter offer, and acceptance specifics to paper (or digital format). It is at this point that the details of the arrangement are laid out, specific terms are set , and both sides come to a legal understanding.
Seeking the help of a legal professional for contract negotiation may be the difference between agreeing to terms that may seem acceptable during initial talks but that may eventually come back to haunt you. One of the most common reasons clients seek the services of a contract negotiation lawyer is because they have previously entered into contracts only to find out later that the terms were not what they had hoped for or suited their specific situation. These legal professionals have extensive experience developing and dissecting complex contacts for various agreement types and are trained to view important aspects of the deal that those who are too close to the negotiation may not see. Even when clients do not seek legal assistance, it is important to ensure the processes are documented through negotiation records so there is no confusion later on.
Common pitfalls in contract negotiation may include:
The Function of a Contract Negotiation Lawyer
Contracts can be complicated and individually tailored to the needs of the parties involved, but at a basic level, there are two aspects of the contract negotiation process that you will need the help of an experienced contract negotiation lawyer for. The first is an understanding of the legal terminology used, and the second is familiarity with the type of contract you are negotiating.
A contract negotiation lawyer will help you to draft, review and negotiate contracts to benefit your personal interests and to help you avoid potential legal issues. They will advise you on the legal implications of any issues that may arise throughout your deal, helping you make informed business decisions at every step along the way. Your contract negotiation lawyer will work to ensure that all of your goals and interests are intact throughout the process, hashing out any points of contention before presenting the terms to the other party.
In addition to helping you to structure your agreement, your contract negotiation lawyer will also assist in ensuring that your deal is legally binding, as well as helping you review and revise contracts that you are presented with.
The Advantages of Securing the Services of a Contract Negotiation Lawyer
One of the primary benefits of a specialized contract negotiation lawyer is reduced risk associated with parties who may not be working in your best interest. Even large legal teams may overlook smaller wins and losses throughout a contract negotiation. A skilled contract negotiation attorney dedicates their attention to every detail of every part of a contract. They are also able to assess the potential value of many elements in a contract, including those that are not monetarily tied to the deal. They are experienced in weeding out flaws, pitfalls, and ambiguities in a proposed contract, and are able to fairly evaluate whether or not a proposed negotiation option is actually valuable to their client.
Effective negotiations take time and careful consideration. This is often in contrast with the need for expediency that most deals involve, and can lead to sub-optimal conditions for at least one involved party. A lawyer specialized in contract negotiation has an extensive knowledge of the basic elements that comprise most deals. This allows them to quickly identify simple solutions that have a major impact on the speed and quality of an agreement.
Lacking experience in contract negotiation, an in-house legal team may be more likely to view the entire contract as a single unit. Yet, separate pieces in a contract hold different values to various parties, so an advantage may disappear altogether if it must be forced into the whole. As such, it benefits the negotiating team to evaluate each element that makes up the deal separately. An attorney with contract negotiation experience is highly efficient in this type of work, quickly producing a stack of options for the best possible end results.
How to Select a Contract Negotiation Lawyer
A competent and experienced contract negotiation lawyer plays an important role in any successful deal. When choosing a contract negotiation lawyer, there are several criteria to consider. First, they should have experience and expertise in the specific area of law affecting the deal. For instance, if the deal is an asset purchase agreement, find a lawyer with the right background who knows the issues commonly seen in such agreements. That way, they can proactively deal with issues that may otherwise get overlooked.
Second, the lawyer should be responsive and communicate effectively with you during the negotiation process. In some cases , you could be dealing with a lawyer who is less concerned about getting you favorable terms and more concerned about billing you by the hour. If you suspect that your deal is not their priority, keep searching for the right lawyer. Having someone if your corner who cares about whether or not you get a good deal can not only help you save money today but also help ensure you do not have problems down the line.
Finally, the contract negotiation lawyer should have a proven track record of getting results for their clients. Someone who does not have the track records to back up what they say should not be representing you, regardless of how confident they are about your case. Spend some time doing research online and reading reviews before making a selection.
Industries Most Likely to Require a Contract Negotiation Lawyer
While nearly any business deal can benefit from the guidance of a contract negotiation lawyer, there are some industries in which such attorneys are more common than not. Construction is one such industry, where complex contracts involving multiple parties and sub-contractors are needed. Another area in which contract negotiation lawyers are increasingly popular is in the technology sector, where agreements for everything from new software programs to content delivery systems requires a high level of diligence and experience for such contracts.
Another field that often requires the assistance of a contract negotiation lawyer is the entertainment industry. The number of agreements between studios, production companies, performers and related third parties can be overwhelming, even for those with a higher degree of knowledge of contract law than most average people. Often, a deal will hinge on a detail that can be easily overlooked by someone without experience in the specific area of concern, but which a contract negotiation lawyer can easily spot due to his or her familiarity with industry standards.
Examples of Successful Contract Negotiations
Consider a case where a small startup engaged a contract negotiation lawyer to negotiate a very large distribution agreement with a Fortune 200 corporation. Due to the lost sales opportunities (we later learned of more than $100MM in sales over 10 years), the startup was willing to accept a termination provision in the contract which entitled the Fortune 200 corporation to terminate without cause on 30 days’ notice. However, the startup was unwilling to accept an indemnity provision that would have resulted in lost sales if the Fortune 200 corporation sued its own customer for patent infringement and sought indemnification (and the contract gave that Fortune 200 corporation full rights to testify and admit the patent infringement). The Fortune 200 corporation backed down and agreed to a require a third-party customer to establish that it is not infringing the startup’s patent (and consulting with the startup before making a statement that a third-party is infringing). In another case, a healthcare information technology company was brought into a negotiation with an enterprise customer. The contract included many clauses that imposed significant liability on the company, including an uncapped indemnification clause . After many weeks of negotiating the renewals, we were getting nowhere. The customer was insistent that our client should indemnify and hold harmless the customer for any and all losses incurred related to any negligent act by the company or its employees, for example during an implementation of the software, loss of data, etc. A liability cap, termination for convenience, and limits of indemnity were strongly resisted. After speaking to the customer about their real issues, we learned the following: We agreed that the customer should have some protections. We explained that the liabilities that a software company like our client would have to its customers are capped at a level appropriate for the size of our client’s business. Our case studies were relevant in negotiating a commercially practicable liability cap. In return, we agreed to a limited indemnification provision to protect the customer for intellectual property infringement. Amidst much angst and pain (and weeks of discussion at the executive level), we were eventually able to reach a deal that worked for both sides. These are just two examples of many, many cases of where effective legal contract negotiation counsel can quickly pay for themselves many times over.