Mismanaging counsel

Here's a frustrating thing that all dealmaker's have dealt with at one time or another: A potential business partner that is not managing their legal counsel well.

This can happen at companies big and small, but the common symptom is that the business person who is the face of the negotiations has NO deal skills.  By that, I mean they either (a) don't know how to make intelligent language suggestions in a contract OR (b) have not been empowered by the organization to do anything language-related on a contract.  In these organizations, ALL comments on contracts are done by the legal function and the contact in business development is merely a conduit who filters comments back and forth.

Not real productive, huh?

As the negotiator for the university, you have zero clue about whether your verbal comments are being accurately relayed to company counsel, because you keep getting redlined drafts that don't take anything you said into account.  Have they considered your position and just don't agree for reasons that your business development partner can't elucidate?  Or was your position never explained to the attorney, so they just crossed out your language and reinserted their preferred wording?   Did the attorney have any context about why this deal is important to the company?  The frustration is that you simply don't know what is going on.

Now, it is worth pointing out that this annoying practice can be effective.  Nothing causes "deal fatigue" faster than seeing your fourth attempt to nuance the wording of a particular section to meet the needs of both parties get deleted and the company's "preferred language" get reinserted.  Much like the brain will protect you from experiencing pain that is too severe, it is human nature to merely capitulate on these arguments rather than beat your head against a brick wall.  So, when intentionally employed, this can be a good strategy for wearing down your opponent in a negotiation.

This also shouldn't be taken as an attack on attorneys.  For these deals to work, each side needs a partnership between the business development and legal functions.  It just isn't going to work at ALL if there is a situation where the business development folks negotiate the "business terms" and then toss the whole thing to the attorneys to finish up.  Every word in the contract is a "business term" and without a partnership in how the risks and rewards are managed, you end up with a disjointed process.


I wish I had good suggestions about how to deal with these problems.  Typically sometimes challenge the pride of my counterpart and suggest that they shouldn't let their attorney dictate the business practices of the company.  Sometimes it helps to get their attorney on the phone because you can learn whether they are truly an all-powerful overlord controlling the process or merely a back-office functionary who can be overruled by business development.  You can also try to type your rationale for redlined changes in the draft contract into the actual draft itself (email comments get ignored). 

These approaches sometimes work, but when they don't, you have to question the wisdom of getting into a business relationship with a company that is controlled by its legal team.

- Dean Stell