Contract negotiation can be like a delicate dance or a dramatic crash, depending on your approach. Learn a few strategies for ensuring smooth contract negotiations and getting the results you need in business.
Start with Strategy
Before starting contract negotiations, it’s important team members who prepare the draft contract, as well as those negotiating with the other parties, are involved in preparation and planning.
Know your bottom line. Before you enter negotiations, define what terms are absolutely non-negotiable. What core pieces cannot be overlooked? As authors Roger Fisher and William Ury of bestselling Getting to Yes: Negotiating Without Giving In describe it, parties in negotiations must understand the Best Alternative To a Negotiated Agreement (BATNA) for each negotiation scenario. Simply put, at what point will you walk away from the negotiation? The BATNA is next best alternative beyond the negotiation. The incentive to work together must be greater than alternatives away from the negotiation.
Building Relationships as a Contract Negotiation Strategy
Adopt a collaborative approach. Many hard-ball negotiation tactics attempt to deceive or scare the other party, creating a competitive, not collaborative, environment that can feel hostile.
Understand the driving factors behind each party. Contract negotiations begin when you understand the motivating factors and interests of each party — especially beyond the price. What does the other party need? When you understand your own goals, or your BATNA, and you spend time asking questions to understand the other party’s motivations and values, it will be easier to make offers and concessions that most closely align with your desired outcome — and the desired outcome of the other party.
Build trust. Optimal contract negotiation happens with mutual understanding. No one party wants to concede their needs and wishes to the other party. But building empathy, or understanding someone else’s needs and interests, within relationships can establish grounds for a positive negotiation. Tune in to your emotional intelligence and empathy. When you attempt to understand the other party’s pain points, you’ll move away from the position of authority, which incites resistance, and move toward a position of influence.
Look for creative solutions. If you find yourself in disagreement, set emotions aside. Ask questions that get to the core underlying issue. This will lead back to the why of a contract negotiation and uncover a need from either you or the other party. How can you better create value, and not just price negotiations, for the other party? What areas or preferences are you willing to concede as a tradeoff?
Contract Negotiation Made Easy
Contract management software from Ironclad streamlines the contract negotiation process with real-time collaboration in one secure location. Help your contract teams work smarter.
More about Ironclad
Ironclad is the leading digital contracting platform for legal teams. By streamlining contract workflows, from creation and approvals to compliance and insights, Ironclad frees legal to be the strategic advisors they’re meant to be. Ironclad is used by modern General Counsels and their teams at companies like Dropbox, AppDynamics and Fitbit to unlock the power of their contracts data. Ironclad was named one of the 20 Rising Stars as part of the Forbes 2019 Cloud 100 list, the definitive list of the top 100 private cloud companies in the world. The company is backed by investors like Accel, Sequoia, Y Combinator and Emergence Capital. To learn more, visit our homepage.
More stories from our team.