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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