2018 Contract Negotiations Competition Chairs: Charles King & Ryan Palardy Committee: Christina Jaccard, Tyler Grandgeorge, Vanessa James, Marten King, & Evan Boeshans

OVERVIEW Format Negotiation Context Strategies and Practice Tips Negotiation Process Writing Component

Format Each team will receive BEFORE the round: General information about the problem Confidential information for their side Oral Negotiation Format: Teams will negotiate for 1 hour per round. You may bring flip charts, white boards, blackboards or proposed Term Sheets. Breaks: Each team gets one (1) 5-minute break to have a private conversation with your teammate.

Preparation Understand the context of the negotiation Dispute or Transaction? Single Issue or Multiple Issues? Ongoing Relationship?

Negotiation Context Distributive Context Single item/issue being negotiated Parties’ interests are oppositional Negotiators stake out positions Task is dividing the fixed resource, e.g., $$ Every dollar gained is an equivalent dollar loss to the other negotiator (zero-sum) Integrative Context Multiple items/issues Creative options for resolution Mutual gains possible (bargain on the deal) Future relationship involved or possible Applies to most contract negotiations

Negotiation Strategy Informed by: Context Negotiator Personality External Constraints (time, client goals & instructions) E.G. collaborative, competing, compromising Scoresheets weigh in favor of less hostile strategies; use competitive strategies carefully, with purpose; remember context PRO TIP Convert a distributive to an integrative context by finding a additional issues to bargain over

Collaborative Strategy Bargain based on needs “The reason that is important to me is …” Exchange Information Focus on interest, preferences, and goals Identify trade off They care about x more than we do, and we care about y more than they do, etc. Make pie bigger Don’t be afraid to bargain on the deal

“Getting to Yes” Putting Getting to Yes to work 1. Separate the people from the problem 2. Focus on interests, not positions 3. Invent options for mutual gain 4. Insist on objective criteria 5. Know your BATNA

Separate the people from the problem Build Relationship Integrative bargaining cannot occur if each party is trying to win at the expense of the other Only by working together can parties come up with the best possible solution Efficient/Clear Communication Be willing to reveal your interests and preferences (Tactfully) ***There may be some information you want to protect Listen carefully to understand opponent’s interests and preferences

Know your BATNA BATNA Best Alternative to a Negotiated Agreement The best alternative available to you if you do not settle DO NOT commit to an agreement unless it is better than your BATNA

Steps of Negotiating Before During Preparation Process Agreement Information Exchange Bargaining Resolution Suggested... Not written in stone

Preparation Before the negotiation Prep Sheet planning Essential for: Setting negotiation goals Selecting appropriate strategy and tactics Negotiating with confidence Strongest indicator of negotiation success Should be no less than preparing for trial Review Negotiation Prep Sheet Parties & Stakeholders Client’s Goals Negotiation Issues Alternatives Information planning Interests & options Distributive issue Before the negotiation Prep Sheet planning Their information – what do you need Your information – share Openly Guardedly Never

Information Exchange Establishing good rapport is essential for creating most productive negotiation climate Importance of “small talk”*** Develops a relationship Creates trust which will be needed later Allows you to find out who you are dealing with Test your assumptions or stereotypes Gives you hints of his/her likely negotiation strategy and tactics Helps you decide how much information to share

Bargaining Negotiate the process first Agree on a plan for an orderly discussion Discussion Making Offers & Proposals First offers made by both sides PRO TIP – making the first offer (“Anchoring”) may be a good strategy, but holding off can be effective as well; keep in mind time constraints Followed by a series of exchanged proposals Identifying and overcoming barriers to settlement High vs reasonable offers

Decision Making Reaching agreement Restate the final terms to confirm agreement Consider negotiation a bit more to “sweeten” the deal “Bargain on the deal” / “deal on the bargain” Formalize Agreement Memo of Understanding*** Offer to draft the agreement Agreement needs to be: Clear Comprehensive Durable

Decision Making Impasse Restate final proposals Confirm lack of agreement Identify barriers to settlement More information needed? Greater authority needed? Go to your BATNA, hopefully not your WATNA Identify next steps, if any

Review of Agreement Process is not always linear While finalizing agreement in the resolution stage, a new issue may arise, requiring more information exchange and bargaining Memorialize what you can agree on

Final Tips “Winning” not everything: Outcome Advancing Client’s Goals Effective Communication Planning & Flexible Strategy Teamwork

Writing Credit Each 2L/3L competitor may write two term sheets and an operative provision. 2 Term Sheets (from any night your team competed in; only one per night) 1 Operative Provision

What is a Term Sheet? Sets out the key terms of a transaction agreed on in principle by the parties There is no such thing as a typical term sheet, but they generally have: A basic description of the transaction and its structure The principal deal terms Key dates (if applicable) A statement whether the term sheet is binding or non- binding Confidentiality provisions, if there is no separate confidentially agreement

Operative Provision What is are “Operative Provisions”? The body of the contract—provisions that contain the key terms governing the rights and obligations of the parties Example: Lease Agreement Paying Rent Assignment and Subletting Repairs and Maintenance

Resources Bloomberg Practical Law (Westlaw) Google/free resources

Questions?