Negotiation
When Should an Attorney Be Involved?by Bernard Zick
Now that we have agreed on this deal, if you'll just let me have my attorney review it, I'm ready to sign the papers. How often have you heard that conditional acceptance? And how often did the deal fall through? Knowing how and when to work with legal counsel is a challenge for many managers.
Billion-dollar companies usually have a distribution path that agreements must follow so all concerned persons, including the legal staff, can review the terms and conditions before the company commits itself. Small, entrepreneurial operations, attempting to minimize overhead, frequently use the opposite approach-sign the deal and then call an attorney if problems arise. Regardless of their company policies, almost all decision-makers encounter the "let my attorney look at it" demand from their customers.
Say NO?
Do you dare say "no"? Refusing to let your customer's legal counsel see your contract would, at the least, make the customer suspicious. Most likely your response would end negotiations. Managers and sales people from the real estate business to capital equipment sales to consulting services have heard "deal killer" attorneys may keep them from their commission or bonus by nixing their contract or proposal. So, typically, they cringe, say "OK" to the request for legal review and hold their breath. They view the process as a roll of the dice, knowing their number may not be showing after the attorney finishes with his or her recommendations.
Another Perspective
There is a better way. So we can understand the process and identify a better solution, let's first look at it from the attorney's perspective. Having sat on both sides of the bargaining table-dealmaker and legal counsel-I'll share common concerns. Clients hire attorneys to protect them. Although, protection means different things to different people, generally, attorneys attempt to minimize exposure to potential financial loss.
Naturally, if you want zero risk, don't buy or sell anything. This approach would be like lowering the speed limit to five miles per hour to lower the highway death toll: you could walk away from any collision. However, you wouldn't get anywhere, except at a snail's pace. Your business doesn't go anywhere either if you reject all risk.
When you give an attorney vague, general instructions, such as "protect me," he may be strongly inclined to advise you to make major revisions to a deal or suggest you decline the opportunity. Looking at it from a purely statistical point of view, if your attorney said every deal was OK as is, it may appear that he or she is not protecting you sufficiently. You may think, "Why do I need him; he approves every deal?" So, there is some intangible incentive for the attorney with indefinite instructions to find something that should be changed in every agreement, to prove their worth to you. Maximizing the effective use of attorneys really means understanding their role in any transaction. Attorneys, like accountants, financial planners, or other professionals, provide information and advice. They base the information and advice on what you tell them. As a principal, owner or manager, you are the primary decision maker, and they are your staff.
People often want attorneys or doctors or CPAs to make decisions for them. If you pass complete responsibility for the decision to the attorneys, they may be liable for thousands or millions of dollars if the deal sours. (Of course, they lose nothing, and it looks more like they earned their fee, if they say "no.") Knowing only what you have told them and not being an expert in your business, it's no wonder they are likely to kill the deal. Put in the same position, you probably would, too.
The Better Way
Recognizing the advisory function of professionals, your best approach is to define clearly what you want your attorney to do. You may want to ask, "Please tell me all that I am obligated to do or pay under this agreement and what alternatives are there that will still provide the same benefits to my customer?" Avoid the vague: "Is this a good deal?" or "Should I sign this?" When you ask these yes-or-no questions, expect a "no."
Now that you have guidelines for your counsel, how do you handle the "run it by my attorney" request from your customer? The best way is for you to take the initiative to define or, more accurately, limit the role of your customer's counsel. (We have already agreed it is untenable to deny them a chance for their attorney to review the agreement.) Simply agree to the request, but limit the attorney's review to "make sure the agreement is legal." You can even add that the reviewing attorney will identify any provision that is not legally enforceable and cite the statute or case which makes it unlawful.
What you have done is take away the yes-or-no decision power of the attorney. Although provisions in agreements may be financially risky or imprudent, very few are illegal or unenforceable. (If there are any, it would be good to know them, anyway.)
Your Attorney as Negotiator
Should you hire your attorney to negotiate agreements for you? It depends on the type of agreement. Most attorneys, particularly litigation attorneys, get a lot of practice negotiating. Some are better than others. Generally, attorneys are not formally trained in negotiation. Consequently, if you are a sales executive or in a similar position where you frequently negotiate agreements, you usually can satisfactorily negotiate most agreements yourself-especially if you have had training in negotiation. You know your products or services and you know the marketplace. Your attorney would have to prepare extensively. Since he or she would have to charge you for the preparation, it is usually not cost effective.
Some situations, however, deserve the professional skills of an attorney. For example, use an attorney if:
1) You are in the middle of a dispute that hinges on the interpretation of the fine print in an agreement signed a long time ago;
2) The other side has initiated litigation or it is imminent;
3) The negotiation is over a personal issue-divorce or business split-up;
4) You are unable to get along with the other side without major disagreements.
Do It Yourself?
Don't confuse using or not using your attorney as a negotiator with getting proper legal advice. There may be many situations where you can better negotiate solutions yourself, but be sure to seek legal advise for matters requiring a professional legal opinion. You probably can save money by attempting to skimp on professional services. But, like trying to save money by taking out your appendix by yourself, the savings may be, at least, short-sighted. So, don't try to cut back where it doesn't make sense.
Following these simple rules will defuse the "let my attorney see it" diversion and keep you protected.
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"Deal-Maker" Bernard Zick, a top Business Growth Expert, has spoken to over 250,000 top leaders in America. His expertise is widely recognized, and he is considered a master negotiator. You can contact "Deal-Maker" Zick at www.zick.com. His best-selling b
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