What is negotiation?

Negotiation aims to determine an agreed course of action that at least partially satisfies everyone involved. It involves the parties eliciting information from one another in order to determine the issues or elements that truly matter to each side, then the parties compromising in order to reach a workable and enforceable agreement. 

How is negotiation relevant to commercial lawyers?

Commercial lawyers of all levels of seniority are regularly involved in negotiation. Dispute resolution lawyers may negotiate settlement agreements. Transactional lawyers may negotiate clauses in documents or the scope of a due diligence exercise. Competition lawyers may negotiate with the competition authorities. Employment lawyers may negotiate the terms of employment contracts. Trainees may negotiate non-disclosure agreements or engagement letters. The list goes on…

How to prepare for a negotiation

When preparing to negotiate on a client’s behalf, you must carefully consider the key issues in play and the outcome(s) that your client wants to achieve. If negotiating as part of a team, it is important that you are all clear on what you can or cannot concede. Agree in advance which terms you “must” achieve, which you “expect” to achieve and which you would “like” to achieve (but could ultimately compromise on to secure more important terms).

Failure to plan in this way could result in your team contradicting one another during a live negotiation, which might lead to confusion and potentially result in the other side exploiting your lack of unity to negotiate more favourable terms for their own client.

How to approach a negotiation

Try to understand the other side’s motivations. There will likely be commercial motivations in play, but there may also be personal, economic or emotional factors to consider. Asking open questions can encourage the other side to explain their objectives and priorities, which can help to promote active discussions and clarify motivations. 

In addition, challenging assumptions and claims put forward by the other side may help you to ascertain whether they are basing their position on incorrect information or have a particular concern or motivation of which you were previously unaware. The more information you have to assess the facts and circumstances, the higher the likelihood that you will think of effective ways to compromise, so keep asking questions.

Different people will respond better to different approaches, so try to use your emotional intelligence to gauge which approaches are likely to work most effectively in a given scenario; it really helps if you can empathise with the other side’s perspective. Also remember that there is ample scope for creativity in a negotiation. There may be multiple routes to a good outcome, so thinking creatively and flexibly may help you to devise a solution that satisfies all parties. 

Take a pragmatic and collaborative approach; negotiate “with”, not “against” the other side. Try to engage in co-operative discussions, exploring all possible outcomes and potential solutions. Making concessions where possible can help to deliver points that are more valuable and may increase the likelihood of you reaching an agreement that leaves everybody happy (or at least partially satisfied). However, you may want to avoid conceding too much too early on, as this could subsequently leave you without bargaining power when discussing other terms. 

Focusing on interests rather than positions and identifying areas of commonality and compatibility may help you to reach better compromises and result in the negotiation progressing more amicably and efficiently. This approach is also much more likely to preserve business relationships, which can be conducive to the continuation of commercial activity between the parties in the future. 

How to approach a mock negotiation exercise

If you are participating in a negotiation exercise at an assessment centre or during an internship, avoid acting in a manner that could be construed as aggressive, overbearing or single-minded. These exercises are usually designed to test not only your commercial acumen and communication skills, but also your ability to work in a team. Nobody wants a teammate who shouts, ignores opinions and doesn’t let others contribute.

Take the time to listen attentively to other people, encourage your team members to contribute, take people’s options into account and try to draw together others’ suggestions in order to create solutions that everybody can get behind. 

If there is a time limit, make sure that your team gets through all the important points before the end. You could even kick off the negotiation by suggesting an agenda or process to follow throughout, therefore ensuring there is some form of plan in place. 

Finally, as already mentioned, if you have the opportunity to prepare in advance as a team, make sure you all agree on the points that you absolutely cannot concede, would ideally not concede and can concede if necessary, as well as any thresholds or ranges that you need to stick to (e.g. price ranges).