In this post we will reflect on the following topics that help building the ideal contract negotiation team:
- What team composition is beneficial for your negotiation?
- How to provide adequate roles to each member of your contract negotiation team?
- What behavior to expect from the team?
A balanced composition of your contract negotiation team
Bring a lawyer, or not?
Let us start with a controversial topic: to bring a lawyer, or not, on your contract negotiation team; that’s the question!
I’ve met a lot of people saying you should first reach a principle agreement with your counterparts and then call in the lawyers to spell out the deal.
I’ve also seen the opposite on many occasions: people that were afraid to take initiative and left everything up to their lawyers. They didn’t even open their mouth during the negotiation except for whispering in the ear of their lawyer. A very minimalist and stressed approach to negotiations, rarely leading to mutually beneficial deals.
My personal experience is as follows: On very few deals, I went to negotiate without a lawyer in my team. Through experience, I’ve learned most of what is needed to provide arguments and find solutions on contracts for complex projects (EPC, design-build, construction contracts, electromechanical turn-key agreements etc.) My many lawyer colleagues, the majority I can now call friends, can confirm this. Through circumstances (unavailability of lawyer or underestimation of the depth of the negotiation), I twice led a several-day negotiation without lawyers on our side. And, the other side did have their lawyers, several. On both occasions, things went sour, for multiple, interlinked reasons. Not because I didn’t find the arguments but rather due to overexposure, getting tired and worn out, lacking rapport etc. I will be very careful not to make the same mistakes again. For a balanced team, better to get a lawyer supporting you.
Size of the team?
Some managers want to cut costs on everything. Even for the negotiation team, they always wonder if you cannot leave some people out. Sometimes, they ask if you can’t do a complex deal over the phone and through email! Negotiation is “money time”. I can assure you that an insufficient team will destroy more value than their travel and availability costs.
Still, your team should not be too big. From experience, I believe the adequate size is between 4 and 6 persons per team. Of course, this depends on the complexity of the negotiation. That’s a compact team for a 10 to 500 million dollar negotiation; good value for money.
Take too many people and you lose control over the situation. I remember a price negotiation where, when we were about to a lower price, some persons of our counterpart were whispering to each other “is it starting with a 4?”. We were a bit above 500. So we understood, we had to land at 499 million and not lower…
Aim for a diversified team: women & men, different cultural backgrounds etc. It gives a good impression and there are more opportunities to create rapport with your counterpart.
Characteristics of the team members?
The typical team for complex construction or electromechanical D&B contract negotiations is as follows:
- The team leader who is normally the one specialized in commercial subjects: price, payment terms, performance and delay LDs, etc. This person should be sufficiently versatile to also talk about insurance, tax, bank guarantees etc. If needed, occasionally, you can call in more specialized persons on these subjects.
- The lawyer (as mentioned above), handling the tougher legal issues: indemnities, limits of liability, warranties, everything that has to do with the governing law, dispute resolution etc… the nasty subjects.
- The technical person with a broad spectrum. For very specific technical issues, she/he can call in additional resources. But this person should best remain on board for virtually the whole process.
- For international projects, the local business developer. Someone who is meeting the counterpart on a regular basis over months or years, also outside these tough negotiation sessions. She will have a good long term relationship with the counterpart. She doesn’t have to say much during the formal negotiations but should remain informed and ready for the parallel diplomacy, especially when the going gets tough. One thing is important though, this persons should be trustworthy and capable of handling confidential information. Sometimes this type of person suffers from a “Stockholm syndrome” and can’t avoid passing everything on to the counterpart. In that case, they should be kept “at arm’s length” without knowing the ultimate details of your preparation. This person will then automatically become much less effective.
- A really good observer, almost a “profiler” that can also handle some real subjects. This can very well be a more junior person with whom the team leader is very comfortable to exchange observations about the situation as it evolves. Even better would be to bring a negotiation coach on board; he can support with the negotiation tactics, do some part of the negotiation and especially give advice to all the members of the contract negotiation team.
Roles and behaviors of the contract negotiation team members
You should establish the following rules with your contract negotiation team:
- The team members should concentrate 100% of the available time on the negotiation, even if it is not their subject. It is very counterproductive to put 20 persons in a meeting room and have only 3 or 4 actively participating. The rest is typing frantically on their keyboards or surfing the web. Not very polite for the counterpart and not very motivating for your own side. Active listening or better to leave the meeting room!
- Balance out the subjects so that no person of your team should only handle difficult topics. Typically, the technical matters are less controversial. It is elegant from the technical person in your team to leave some easy technical subject for the team leader to resolve. The lead negotiator can then be seen to be solving issues. He is not only a blocker on the “deal breakers”.
- The team members should be aware of their behavior (body language, tone of voice) and language (avoiding negative words, accusations, hesitation, sarcasm). Unless in very special occasions, everyone should talk with a calm voice, be relaxed and pleasant. If you are not a natural talent at this, you should train on it. Personally, it took me years and still improving.
- Observation is so important in negotiation. Therefore, while one of your team is talking through a subject, the others should actively listen and especially watch. So much can be derived from body language. And not only at the center of the table. After the meetings, share within the team what has been observed. See also the following article: “Contract negotiation: after a long day of negotiation… 6 essential things to do“
- Brainstorm with the team about potential win-win solutions that can be proposed. More heads think better!
- During lunch and coffee breaks don’t stay within your team but talk to and build rapport with your counterparts.
- Go for a not-too-big team that can concentrate on the negotiation. Most of the time 4 to 6 persons.
- Give balanced roles to the different team members in order to partially discharge the team leader.
- Everyone to be self-conscious and to listen actively and observe.