Tips for an effective, ethical negotiation

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The role of business counsel is complex. Counsel is not only responsible for producing a legal and enforceable negotiated agreement, but also to try and get the best deal for clients while conducting the negotiation in a way that reflects positively on them.

The most ethical and effective approach to negotiation is not one that is position-based, but interest-based. In interest-based negotiations, counsel can help clients achieve the best result possible in a way that preserves their integrity and addresses their interests and goals. Methods to achieve that include:

1. Establish credibility

Counsel often overstate or understate the value of the deal to bluff the other side into make greater concessions. Is that ethical or recommended? The model rules recognize the need for zealous advocacy and specifically permit the lawyer to bluff about the value of the subject of a transaction in negotiations

(Comment 2 of Model Rule 4.1). So, is bluffing recommended? Not to the extent that it compromises a clients’ integrity and jeopardizes their ability to close the deal. If so, the conduct could be grounds for legal-malpractice claims or discipline under Model Rule 1.2 (lack of competence in representation).

2. Consider sharing negative information

Every lawyer’s instinct is to protect information that potentially decreases the value of the deal for a client, particularly if there is no law that requires disclosure. As an example, selling a piece of real estate where a violent crime took place without disclosing it is not necessarily unlawful  — although different states have different disclosure requirements — but is it ethical or advisable? Although lawyers generally are not obligated to make affirmative disclosures of fact when dealing with non-clients, such an omission is not necessarily advisable. It could produce an emotional backlash after the sale that results in litigation, regardless of the merit; the cost of which easily could eat up any profit from the sale. The client could benefit in the long run from a more candid negotiation.

3. Determine the client’s interests and goals

The only way to know a client’s interests and goals is to ask questions and actively listen. Active listening is a technique that demonstrates an understanding of what is being said by summarizing what is heard and making sure you have it right. Exploring and understanding a client’s interests can help them creatively think through their alternatives, and it will give them more power to decide whether or how to close a deal.

The client’s interests might change during the negotiation, so take breaks as needed to privately consult with them during the process.

4. Discourage clients from coming to the table with a bottom line
Before entering into a negotiation, help clients determine their bargaining zone, but discourage a firm bottom line. Counsel most likely will learn things about the deal, the other side, or their client during the negotiation that could make them re-think any predetermined bottom line. A better approach would be to come to the table with a commitment to stay open to exploring all options throughout the entire process, which will save the client from the humiliation of having to re-draw a line in the sand.

5. Make as many concessions as possible
Think through what really is important and what is not. Show open-mindedness and generosity. Offer to host the negotiation and to bring in lunch. Or, if they wish, let the other side host. If it’s decided to engage the assistance of a neutral third party, agree to use the person recommended by the other side (unless there are legitimate grounds to reject their choice). The more one side gives, the more the other side is invited to give back.

6. Develop a rapport with the other side
Building trust and developing a rapport with the other side are essential. To start, it fosters a positive, friendly environment, and, simply stated, people are more likely to give things to people they like. Additionally, a rapport with the other side will help your client better understand what the other side needs to reach an agreement. Listening to them increases the chances they will reciprocate and listen as well.

7. Understand the basis for the proposals
The more the basis for each proposal is understood, the more one can explore creative options. Ask the other side questions to determine what is behind their proposal. There is a reason why people get stuck on certain numbers. Is it possible the number is based on another condition that can be tweaked?

8. Be respectful and don’t bully
Even if the going gets tough, show good faith and respect, and do not make threats. It is not ethical to make threats to coerce another side to make a concession. Furthermore, as a practical matter, bullying most likely will derail the negotiation by causing the other side to become defensive and look for ways to fight back.

9. Let clients make the deal they want
One of the most unfortunate mistakes lawyers make in negotiation is getting in the way of their client’s goals by pushing for the deal they think is right. Remember: The deal is not about the lawyer; it is about the client. Understand the client’s real interests and goals and support them in reaching the agreement that they really want; even if it turns out that the one initially envisioned has evolved into something new. Clients might value certain issues differently than their counsel and they might have reasons to want to make certain concessions. Understand their reasons and interests, and help them find ways to accommodate them.

10. Stay optimistic
It rarely is apparent at the start of a negotiation how, when or even whether it will be resolved. It is never over until the parties say they are done and have left. Stay optimistic and do not lose sight of the client’s goals: As long as the parties are at the table, they are willing to continue to work. Exploit that willingness by staying flexible and understanding the interests of both sides. A solution might emerge that previously was not considered, but works for everyone.