Negotiating Empathy through Transparency

Negotiating beneficial contracts is a crucial component to any business. Whether it is sales, employment, M&A, or leases, a business needs effective contracts to function. The tricky part for in-house counsel is balancing the needs of the business with legal risks in order to pursue the best terms. One of the biggest challenges that arises when pursing that balance is a difficult opposing counsel or party. When dealing with a difficult counterparty to contract negotiations, the ability to obtain favorable or balanced terms becomes perilous.

I have dealt with highly emotional individuals that rotated between disgust, anger, and disinterest rapidly that caused me to constantly shift how I approach the needs of the business within the contract at issue. I think an individual's negative emotional response (anger, disgust, aggressiveness, etc.) is mainly due to the default mindset to contract negotiations. That is, every contract negotiated is a win-lose scenario and overt aggressiveness or deceit will yield the best results. While there is always going to be some gamesmanship within any negotiation, I think the default framework of what contract negotiations are cloud good business dealings.

In my experience, I have rarely come across a contract between a company and a third-party where the relationship between both sides ceases after an agreement is reached. So, there is a relationship that hangs in the balance amidst the battle to see who will cave on a given term. This is where I have found the true opportunity lies in contract negotiations.

For context, I negotiate a lot of lease agreements and amendments in my day-to-day and in each one of those leases there is a relationship that continues long after the deal is executed. A landlord and I may quibble over rental terms or other tenant-friendly provisions within a negotiation but in the back of my mind, I know that our company's relationship with a given landlord will continue beyond this negotiation. This ongoing relationship may inherently make the negotiations more difficult to manage; however, this relationship can be leveraged to reach a mutually beneficial outcome through transparency.

If I have a difficult landlord stonewalling a negotiation, I have found that transparency breaks through that barrier and helps shift the conversation to a solution-focused one. This has included discussing industry insight, describing typical day-day operational challenges, and sharing certain financial data. This could be considered "weak" in a negotiation sense but in practice it helps the opposing side move from their original position in the negotiation. Ultimately, it has created a more empathetic landlord. Instead of the negotiation turning into a game of chest-puffing and manipulation, it creates an open dialogue. Landlords have even shared with me their own honest concerns. From this point on, the lease agreement that is negotiated can be one that is beneficial to both parties and forges a symbiotic relationship going forward.

I am not saying this tactic should be deployed in all situations because every situation is unique. It can; however, be used in contract negotiations involving a difficult counterparty where the relationship between parties is still developing. Creating empathy through transparency can be a great tool in those more difficult negotiations that seem to be going nowhere.