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Deal or No Deal?

The United Kingdom is about to embark on one of the most complex negotiations in history. On the triggering of Article 50 vast teams of negotiators will be deployed to Brussels. The stakes are extraordinarily high. The results, and how they were reached, will be scrutinised and debated for years to come.

But if you think about it, negotiation – a discussion aimed at reaching an agreement – is something that we all do almost every day, from concluding high value contracts and dealing with customer disputes to arguing over who's turn it is to do the dishes and negotiating a surly teenager's curfew time. Or, as the late, great soul man Marvin Gaye put it: "Negotiation means getting the best of your opponent."

Let's look at some useful tips and secret weapons to arm yourself with to help you get the best possible deal. Let’s get it on…

 

1. Failing to prepare is preparing to fail

Before you negotiate and even before you schedule a meeting, ensure that you clearly identify your purpose: what is it that you want to achieve at the end of the negotiation process?

Prepare the questions that you need to raise; prepare answers to likely questions and practice. Those waffling in the meeting or obviously not fully prepared, will not be taken seriously and won't get the best deal.

Make sure that you are clear on what you want going in, instead of settling for what you end up with.  

 

2. Make the first move

President John F Kennedy said, "Let us never negotiate out of fear, but let us never fear to negotiate." If you don’t set the agenda and take control early, your counterparty will. Email your agenda in advance and print copies for your meeting so that you own the process from the outset.

Making the first move also hands you the psychological advantage. Studies suggest that negotiators who make their offer first will more often than not come out on top; the battle will be fought on ground of your choosing, increasing the chances that the results will be in your favour. Don't underestimate the leverage of the home advantage.

 

3. Be like Sherlock

This is where you get to play detective! Just as Sherlock Holmes says, you should make it your business to know what other people don’t know. Doing your homework is vital to a successful negotiation.

Gather as much pertinent information on your counterparty as you can prior to your negotiation. The more information you have about the people with whom you are negotiating, the stronger your position will be. What are their needs? What is their financial situation? What options do they have? Why is this deal good for them?

Perhaps the most important question, however, is "What are the pressures on the other side in this negotiation?" It's your job as a detective to investigate the specific worries and issues facing the other side and to uncover the reasons for them to give in. Once you have identified these you can look for ways to exploit that pressure in order to achieve a better result and divert attention away from your own pressures.

Knowledge is power at the negotiation table. It`s elementary!

 

4. Learn to listen

Drawing again on the Sherlock analogy, good negotiators are like good detectives: they ask probing questions and then they shut up. It is all too easy to forget to listen when we are busy making sure that people hear what we have to say.

We have two ears and one mouth so that we can listen twice as much as we speak. Use them in this ratio in the negotiation to encourage your counterparty to talk. Ask lots of open-ended questions – questions that can't be answered with a simple "yes" or "no" answer. The other person will tell you everything you need to know. All you have to do is listen.

 

5. Fortune favours the brave

Mark Zuckerberg, multi-billionaire co-founder of Facebook said "The biggest risk is not taking any risk… In a world that changing really quickly, the only strategy that is guaranteed to fail is not taking risks."

The most successful negotiators are those that, having done their homework, are willing to take calculated risks. A common mistake in the heat of a negotiation is to lose sight of the big picture and forget the overall value of the contract, which will inevitably include risks.

Us lawyers can greatly minimise the adverse effects of risks through careful drafting of the contract itself. Performance levels; due diligence exercises; penalty clauses for delays and minimum quality levels are just some of the contractual ways in which we can manage and limit the detrimental outcomes of risk-taking.

Often the perception of risk is a greater barrier in negotiation than the actual risk itself.

 

6. The sky's the limit

There's an old sales tactic called the "door in the face" technique which we have all succumbed to. It works as follows: the salesman starts off quoting a high price which the would-be customer inevitably turns down, much like a metaphorical slamming of a door in the salesman's face. This kick starts the negotiations, the price comes down, the salesman secures a sale and the customer goes away thinking that they have got a bargain.

It sounds hackneyed but the research shows that this actually works. People tend to view a second offer as more reasonable when it’s preceded by an extreme offer.  Indeed, our entire housing market is based on this simple psychological trick: sellers ask for more than they expect to receive and buyers offer less than they are prepared to pay.

The message is: be bold and aim high. If your opening offer is accepted, that’s a win. If you have to negotiate down slightly to your second offer, you've still got a deal that works for you. In other words, aim above the target to hit the target.

 

7. Build a relationship

All too often negotiations sour and become an arduous process because one or both parties let their emotions get the better of them. 

Fixating on the other person's personality or issues that aren't relevant to the deal are a distraction that can jeopardise the negotiation and make it far more painful that it need be. Never lose sight of the bigger question: how do we best reach a deal that works for both parties?

Tempting as it may be, don't leave your counterparty feeling that you have "won" the negotiation. As you negotiate, always think about how what you say and do can help establish a long-term business relationship. If the counterparty feels satisfied they will be far more willing to help you satisfy your needs. This doesn’t mean conceding to all their points; satisfaction means that their basic requirements have been fulfilled, not that all their demands have been met.

Building a long-term relationship not only makes negotiating easier the next time, it also makes your business world a better place. Now that is something that I'm sure we can all agree on.

 

Christian is a partner in the Corporate/Commercial team at Acuity Legal. He spends most of his working day negotiating high-value contracts and most of his spare time negotiating with his two-year-old son.

If you would like Christian on your negotiating team, please contact him at cfarrow@acuitylegal.co.uk or on 02920 482288. 

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