What Really Matters?

Let's assume a situation where you represent party X. Party Y is represented by an attorney as well. Before you begin any negotiation, ask yourself these questions:

1. Will the parties have an ongoing relationship? In other words, is this negotiation the beginning of a relationship that the parties are trying to formalize?

2.

3. Does reputation matter to the parties or lawyers involved?

If the answer to question 1 is yes, then consider the negotiating style most appropriate. Is a scorched-earth approach where you win every point and drive up legal fees on both sides the best idea? No, it's not and you'll damage your reputation in the process. In the worst situations, we've seen deals fall apart simply from bad attorney behavior. There is an old saying, “You never make money on terms.” This can be particularly true in venture financings. If the company at issue turns out to be the next Google, then it's largely irrelevant what the deal documents say. Everyone gets rich. And if it's Theranos, it's the same story on the other end of the spectrum. Everyone loses their investment.

If you answer no to question 1 and yes to question 2, then you no longer care about party X and party Y getting along afterward. You have more latitude to torture the opposing attorney, so long as your client is willing to pay for it and it's legally ethical.

Lastly, know what you agreed to. It sounds obvious, but it's amazing how many lawyers think they negotiated for A, the other side thinks it is B, and the clients want C. Remember, humans are bad witnesses. Check out the early 1990s courtroom classic My Cousin Vinny if you don't believe us.

Bottom line: Pay close attention at all points during a negotiation.