Identify Risk in Your Agreements and Develop Preemptive Negotiation Strategies Kathy Crannell Orion Aerospace, LLC President/General Counsel November 10, 2010 Presented to the National Contract Management Association, Cape Canaveral Chapter

Orion Aerospace, LLC Woman Owned Small Business Company formed in response to Shuttle Retirement and Shift in Space Program Provides Engineering, Analysis, Design, and Research for Sustainable Space Systems Extensive Shuttle and ISS Experience and Expertise in Flight Crew Provisioning Subcontractor to Significant Commercial Space Venture Firm

My Experience –Lawyer for 18 years –Commercial Litigator- Handled Contractual Disputes –Corporate Counsel for large aerospace company –Negotiated Large and Small: Contracts Teaming Agreements MOAs MOUs NDAs LOIs

Choose Your Battles Consider the following as critical issues to your company when negotiating contracts: Payment and withholding; Indemnity; Warranty and Guaranty; Standard of Care; Claims and Dispute Resolution; Limitation of Liability; Confidentiality; and Non Compete

More Clauses to Consider Audit Rights; Choice of Applicable Law; Insurance Requirements; Consequential Damages; Procedure for Changes; Third Party Beneficiaries; Intellectual Property

Who Negotiates For You? End User/Business Development Responsible For Performance of contract; Agreeing to contractual provisions without advice; Compensation generally based upon sales/business; Perceived lack of appreciation of legal terms and issues Legal Department Disconnected from the performance of the contract; Perceived as an obstacle to Signing a deal; Compensation not based upon sales/business; Inability to explain legal significance of legal and issues

Recommendations You need to have a unified voice within your organization; Take control of Negotiations; Who are You Dealing With? Lawyer; End User/Purchaser; Contracts Manager; Buyer; Agent

It’s All About Leverage Who is getting the pat on the back or the “atta boy” for the successful negotiation of the contract for your customer? Who is the decision maker and who is the gatekeeper?

Strategies for Getting What You Want Just Ask!; Pick Top Five Provisions; Negotiating with Someone Who Understands Your Business; Face to Face Contact; Form Agreements, such as AIA Documents; Wordsmith the Term or Provision

Strategies For Getting What You Want Change the Messenger; Be Prepared!; Listen Carefully to Client and Other Party; Appeal to Customary Conduct within the Industry; Know Your Style (“cooperative” or “the heavy”) and have the other style available in your arsenal; Have a short memory if you lose and move on to the next provision

Attention To Details Wordsmithing Examples “reasonable” and its variants; “to the best of its knowledge”; “endeavor to” “consistent with customary practice”; “to the extent” Use of Definitions, i.e. “cure period”; “from time to time”; “material”; Be creative

Be Careful of Certain Terms “Notwithstanding” – despite; “Indemnitee” and “Indemnitor”; Terms of art; Innocuous sounding terms: “assure”; “ensure”; “represents”

Attitude is Everything Be Credible, Consistent, Dependable, Nice and Trustworthy; Reference the benefits of the deal as much as you can when negotiating; Timing– Time works both ways; Be Nice (it’s worth repeating); It’s Not Personal

Common Objections (You’ve heard these) “If we accept changes to your contract, all the other contractors will be at a disadvantage” “We need to be protected in this manner because everyone comes after the deep pockets”; “Our ____________ (insert the dept. or title of person of your choice) won’t accept any changes to the agreement.” “You or your representatives signed this agreement before, and it was OK. Why can’t you sign it now?”

Overcoming Objections “What about the mutual drafting clause?”; “Is there another agreement that is more appropriate for these goods or services?”; Enforceability problems with applicable federal/state law; Using “reasonable” or similar words to mollify

Here is the Absolute, Guaranteed, Proven to Work in All Situations Strategy:

“Intellectuals solve problems; geniuses prevent them.” -Albert Einstein