Earning Trust in Contract Negotiations

IN-HOUSE COUNSEL

By Dennis Garcia

Dennis Garcia is an Assistant General Counsel for Microsoft Corp. based in Chicago. He practices at the intersection of law and technology and provides a wide range of legal support to Microsoft’s Sales, Marketing and Operations teams across the U.S. Dennis received his B.A. in Political Science from Binghamton University and his J.D. from Columbia Law School. He is admitted to practice in New York, Connecticut, and Illinois (House Counsel).

In our rapidly changing and highly competitive legal and business environments, earning trust is more important than ever—especially during contract negotiations as that may be the first opportunity for parties to work with each other. Recently I was actively engaged in the negotiation of a very large, complex and high-profile Digital Transformation agreement with a strategic customer. Throughout the contracting process our negotiating team worked very hard to build and maintain our customer’s trust so that we could close a deal that was highly beneficial for both parties.

Here is a collection of best practices that all lawyers can embrace to help earn trust during the contract lifecycle.

Actively Learn About the Other Party

Invest the necessary time to really understand and get to know your contracting partner, its marketplace and its negotiating team. For instance, whenever I become involved in a contract negotiation I always connect with a contracting party’s legal counsel via LinkedIn and spend time reviewing her/his LinkedIn profile (and the profiles of other negotiation participants).

Be Empathetic

Gaining a better understanding of your contracting partner (and its representatives) enables you to demonstrate more empathy towards your partner’s positions on challenging issues that arise during contract discussions. Being willing to “step in the shoes” of others is key to earning their trust.

Provide Thoughtful Rationales on Contract Issues

Throughout my career I have repeatedly heard statements like the following regarding objectionable contract terms: “We can’t agree to that provision since we never have done so before,” “Agreeing to this provision is contrary to our company’s practice or policy” or “You are the only company that is reluctant to agree to this provision with us as everyone else has agreed to it.” Instead of offering rationales for contract terms that lack depth, provide credible, clear, and principled reasons that are well-grounded in meaningful business and/or legal positions.

Meet Face-to-Face

There is wonderful technology available which we all use to connect virtually so that we can be more productive and efficient. However, during critical junctures in a contract negotiation there is no substitute for meeting in-person with your contracting partner so that you can engage in more focused active listening, work collaboratively in real-time to problem solve open issues, and develop an even closer business relationship.

Embrace Smart Risk-Taking

Trust can be built during contract negotiations when both parties demonstrate a willingness to have “skin in the game” by taking on smart risks. My earlier article located here provides some tips on engaging in the art of smart risk-taking: https://biglawbusiness.com/10-things-lawyers-should-consider-when-taking-risk-perspective/

Don’t Over-Lawyer

Lawyers have a reputation for over-engineering issues—especially contract wording. Many deal lawyers have probably heard familiar statements like the following: “I thought we had an `agreement,’ but then I read the wording they provided to us.” Be sure to draft contract wording that is clear, concise, and reflects the true business understandings between the parties.

Little Things Mean a Lot

UCLA legendary college basketball coach John Wooden once said: “It’s the little details that are vital. Little things make big things happen.” Likewise doing the little things during contract negotiations such as being on time for all conference calls/meetings, turning around contract redrafts on or before you committed to providing them, responding to emails from your contracting partners ASAP, etc. … all go a long way to establishing trust.

Small and Empowered Negotiating Teams

Be sure to establish the core team of professionals that can properly represent your company and be agile during a contract negotiation. That team should be no more than a handful of professionals (including key business leaders) who are empowered to make key decisions and are your company’s “ambassadors” during a negotiation.

Always Keep Your Cool

Contract negotiations—especially those involving mission-critical areas and/or high dollar amounts—can be very stressful. However, lawyers always need to act with the utmost respect, courtesy, and professionalism. This line from Michael Corleone to his brother Sonny during the epic movie “The Godfather” always keeps me grounded during tough contract negotiations: “It’s not personal Sonny. It’s strictly business.”

Post-Contract Signing

The work to build trust does not end once a deal is closed with your contracting partner—instead, that is where the real work begins. After your deal is finalized be sure to reach out to your contracting partner’s lawyers to thank them for their help and to seek feedback on the contract negotiation experience with your organization. Also make yourself available as needed to your clients and to your contracting partner to help navigate through any issues that arise with contract management or performance.

Lawyers play a vital role in earning trust during the contracting process. Please be sure to seize that opportunity!

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