CROSS-CULTURAL NEGOTIATIONS

A very common challenge that we face is how to avoid projecting our own values, fears and concerns onto others, such as our clients or negotiating counterparts. A lawyer for example might go to battle on behalf of a client for the maximum restitution that he perceives possible when the client really wants to settle amicably and move on. A doctor might prescribe an entire arsenal of pain medication when the patient might prefer to live with some moderate pain rather than to intoxicate himself with all those chemicals. A financial advi­sor with a high risk tolerance may talk his client into a high risk/high return investment when his client is far more risk averse.

This becomes a problem when we negotiate across borders and attempt to impose our own values, beliefs and systems onto the other side. What then might be a more effective way to successfully negotiate with those from different cultures to our own?

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FROM BLAME TO PRODUCTIVE DIALOGUE AND RESOLUTION

A major contract was awarded to two large defense contractors who were to work jointly on the project. Each contractor was to design and build different components of the specified system. These components ultimately had to achieve perfect compatibility and work as an orchestrated whole. This required intensive collaboration and communication between the two contractors to ensure an operational and functional system.

Identifying the Challenge

The project appeared to be going well until the final stages when testing began. It soon became dismally clear that there was a flaw in the compatibility design that would require significant redesign and engineering. This would set the project back months if not years and at significant cost. A bitter dispute broke out between the two corporations as to who was at fault. Each asserted blame on the other with equally believable arguments while at the same time neither would accept responsibility.

It was decided that rather than to go to arbitration, the parties would first attempt to negotiate a resolution to the problem. After a frustrating day of negotiations during which the parties were engaged in a barrage of blame and counter-blame, we were retained to mediate the dispute.

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HOW TO ENGAGE A RELUCTANT NEGOTIATING PARTNER

BACKGROUND

A large corporate client was trying, unsuccessfully, to negotiate a long term supplier agreement with a small US electronic components manufacturer with a global reach.

Negotiations had been on and off for several months and was at an impasse. They were not making much progress in terms of pricing, type of contract (sole, dual or multi-source) or mutually acceptable warranties, assurances and other terms and conditions.

Our client had very specific needs to meet their newly instituted just-in-time, lean manufacturing processes, and customer made-to-order products. Although there were alternative suppliers to contract with, they felt that they would get better pricing, high service levels, responsiveness, flexibility and attention from the smaller company that was anxious to prove itself.

Our client was surprised at the cavalier attitude and recalcitrant tenor of the smaller company and would have expected them to jump hoops to get this business. They approached us for negotiation advice and strategy, challenging us to put talks back on track, to repair the strained relationships and to salvage deal.

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MULTI-ISSUE NEGOTIATION Easy or Hard Issues First? (The answer might surprise you!)

BACKGROUND

A U.S based Fortune 500 company that manufactures high-end bio-technological devices was negotiating a joint-venture with a Southeast Asian family-run business that specializes in sales and distribution of lower end medical products in that region.

The U.S company stood to gain access to key distribution channels in that region while the SE Asian company looked forward to greater profit margins in the high end products and equity in the US company.

There were several issues to be negotiated including: capitalization; terms and agreements; profit and equity distribution; staffing; decision-making; and conflict resolution systems (some of which were exacerbated by deep cultural values and differences).

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TIPS FOR GUIDING YOUR CLIENT THROUGH THE MEDIATION PROCESS

INTRODUCTION

With all the tangible and intangible costs associated with litigation today, mediation is becoming more common as a means of resolving disputes. Judges are ordering or at least recommending them, and contracts are stipulating them as part of their alternative dispute resolution clauses. As a result, good law schools around the country are including mediation and mediation advocacy courses in their curriculum, and many retired judges and lawyers are hanging out their shingles as they build their mediation practices.

Having mediated many disputes across a range of practice areas, I have noticed that attorneys trained and experienced in litigation, do not have the skills to guide their clients through a mediation process. Toward this end, I present some ideas and guidelines to help attorneys counsel and navigate their clients through a successful mediation.

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"PROCEDURAL INTEGRITY – Building Relationships As We Negotiate"

INTRODUCTION

Many of us are very cognizant about what we need to negotiate, but few of us are as aware about how we negotiate. The process that we implement in the negotiation will impact the relationship and ultimately the outcome (or impasse).

I compare the process of a negotiation to the foundation of a building: Just as the foundation protects the structural integrity of a building, so too, the effective process in any negotiation protects the integrity of the negotiation structure. A constructive strategy that has procedural integrity, will build sustaining and enduring relationships as we negotiate, while at the same time, produce optimal and value-generating outcomes.

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"THE LETTER OF INTENT - A USEFUL TOOL TO HELP ADVANCE PRODUCTIVE NEGOTIATIONS"

THE FUNDAMENTAL PURPOSE OF THE LETTER OF INTENT

At the beginning of any complex negotiations, for example mergers or acquisitions, it is common for parties to sign a letter of intent (LOI). Typically, a letter of intent is used as a mechanism to protect parties to a transactional negotiation, during the negotiation and in the event that the negotiation fails.I have also used them in dispute related negotiations. (See my column "Avoiding Litigation in a Litigious Culture.")

They may contain non-solicitation provisions restricting the potential buyers ability to hire employees from the seller's business should the parties be unable to reach agreement. It will include other common clauses such as due diligence warranties and indemnification language to protect buyer from prior liabilities of seller.

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"UNDERSTANDING THE MAGIC OF MEDIATION"

INTRODUCTION
When negotiations stall, a good mediator can help both sides move forward.

When disputes escalate into bitter confrontation or litigation, and parties to the dispute are unable to reach any resolution, it is not uncommon for a neutral mediator to be brought in and within a very short time, the issues are magically resolved to the satisfaction of all parties.

Consider the following case: The research and development department of a pharmaceutical company had spent two years developing a highly potent topical cream that would deliver hormones to hormone-deficient patients without the common side effects of alternative oral supplements. They then sold a license to a large distribution company to re-brand and package it for resale. A few months after the distribution company went to market, it was discovered and reported that the cream had lost its efficacy due to a chemical breakdown upon packaging.

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"THE IMPORTANCE OF TIMING WHEN PRESENTING A PROPOSAL IN NEGOTIATION"

THE PREMATURE PROPOSAL TRAP

Many negotiators decide what they will offer to the other side before negotiations even begin. They become so committed to their proposal that often any new information that they may learn from the other side during the negotiations, will do little to move them away from their initial position.

Negotiation is not two individual parallel paths but a joint and collaborative process in which negotiators exchange information, define and agree on the problem, and jointly search for a mutually acceptable solution.

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"MAINTAINING AN OPEN MIND IN NEGOTIATIONS: A LESSON FROM RUSSIAN FOREIGN MINISTER, SERGEY LAVROV"

A COMMON NEGOTIATION BLUNDER

Many negotiators decide the outcome of a negotiation before negotiations begin They formulate a solution from which they won't budge, even before the dialogue and information development phase occurs. They are so committed to their own prematurely devised solution, that any new and valuable knowledge that they may learn during the negotiation falls upon their self-inflicted deaf ears. They are then bewildered as to why their counterpart does not find their beloved proposal quite as dazzling as they see it!

A poignant example of this kind of blunder from current affairs, are the proximity talks in Geneva, Switzerland, between the Syrian rebels and the Assad Regime.

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"PERSUASION AND INFLUENCE: AN AUTHENTIC FOUR-STEP PROCESS"

INTRODUCTION

A common and familiar complaint: "How can I make sure my ideas are being heard? Just last week I was in a meeting during which I suggested a solution to a problem. They totally ignored me. Twenty minutes later, someone else suggested exactly the same idea almost verbatim and, low and behold, the entire group embraced it enthusiastically and gave him the credit. It is so frustrating - what can I do?"

I have been asked this question or some variation of it numerous times and thought it would be of value to address it in my column.

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"NEGOTIATION: THE ART OF DIPLOMACY IN BUSINESS"

INTRODUCTION

In the international relations and statesmanship arena, everyone understands the difference between diplomacy and war. Furthermore, we recognize the cost of war and we only pursue it as a last resort after all efforts at diplomacy have failed. In the business arena however, the line between diplomacy and war is not quite so clear and we often confuse the two.

For example, we frequently approach negotiations (a diplomatic process to be sure), as a war of wills and an attempt of one party to dominate and "conquer" the other. We deploy tricky tactics and intimidation rather than sophisticated and authentic technique.

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