Legal negotiations are a process in which, ultimately, a bargain is struck by opposing sides in order to resolve as many present legal issues as possible. The process involves examining the facts of each side, and considering the common and differing interests of the parties involved in the legal dispute or arrangement.
Simply put, a negotiation involves two or more parties attempting to reach an agreement. Negotiations generally involve the parties exchanging something they have, for something they want. The exchange need not involve physical items; services or statuses can be exchanged just as easily as objects.
Negotiations are used in many different areas of the law to resolve disputes, although they are mostly common in the area of contracts. Although the exact process will vary greatly, some aspects are common and can be considered negotiation basics. Some examples of this would be preparing for the negotiations process, and adhering to a sound negotiations strategy.
Negotiation can be an extremely useful tool to resolve disputes and save the parties from going through long and expensive litigation. Such proceedings are often informal, and less expensive or stressful than a full lawsuit. Even if a lawsuit is pending, negotiations between both parties often take place at the same time in order to determine whether a settlement may be reached. More than 95 percent of civil claims are concluded by negotiations, not by litigation.
What Does Negotiation Look Like?
Oftentimes, the parties involved in negotiating terms and conditions will go back and forth and talk freely about their needs and differences, in order to come to the best possible agreement for all involved. If you are preparing to enter negotiations, it is important to consider what it is you want to achieve with the negotiation, and what you have to offer the other party in return. This offer could be anything valuable, whether money, services, or goods.
Once the other party or parties receive the offer, they will consider the value of the offer. From there, they may decide whether to accept or decline the offer. Alternatively, they may present a counter-offer. A counter-offer usually adjusts the original offer, and the first party can then determine whether to accept the adjustments. Or, they may make yet another counter-offer.
If all parties are in agreement with each other, they may proceed to having a contract drafted to establish all the terms of the agreement in writing. If the parties decline, the negotiations come to an end, and they never reach the written contract stage. This would likely lead to a lawsuit or some other form of legal action to settle the matter.
How is Negotiation Different from Litigation? How is Negotiation Different from Mediation and Arbitration?
In financial terms, negotiation is generally cheaper than litigation. The negotiations process also tends to take less time than litigation. Litigation is far more involved and takes a good deal more preparation up front. And, while negotiation may be conducted according to the parties’ own timetable, litigation is always conducted on the court’s timeline.
Negotiation does not require you to wait for the court to schedule the case before it gets heard, or wait for the judge to settle another case before getting to yours. This can save a significant amount of money on legal fees when you consider that attorneys often charge for their services by the hour. Additionally, negotiation gives the power to the parties, rather than to a judge. All parties must agree with the outcome of the negotiation before it is finalized, whereas a judge may issue a ruling in a case that leaves both parties unhappy and dissatisfied.
Although negotiations and mediation do have some similarities, mediation is overseen by a mediator. The mediator gives advice and works with the parties to help draw them into a mutual agreement. The negotiation process differs in that it does not always have a mediator involved. If there is mediator involvement, the parties are the ones with the control to ultimately decide the issue. The mediator’s role is simply to make sure that negotiations continue in a fair manner.
Arbitration is more similar to a lawsuit, than it is to mediation or negotiation. Negotiations are far more informal, and arbitration has set rules and guidelines for all disputes. The arbitration process tends to be complex and formal, which differs greatly from informal negotiations.
What Is Contract Negotiation?
Negotiation is most commonly associated in the context of being able to negotiate contracts. Contracts refer to a set of promises or obligations made by each party. These promises and obligations are legally binding, which means if one party fails to keep a promise or obligation, the other party may be able to file a lawsuit in order to recover damages.
Contract negotiation specifically refers to the process in which the parties specify the details of the contract before committing the terms to writing. Parties typically attempt to negotiate terms that are favorable to themselves. When negotiating, each party will assess the risk or benefit of including a particular term.
What are the Legal Aspects of Negotiation Preparation? What are the Business Aspects of Negotiation Preparation?
As part of the preparation process, parties involved would do well to familiarize themselves with the laws of their state. As previously mentioned, laws of what the contract covers could vary widely from state to state. An example of this would be how a party should review the intellectual property laws of their state before attempting to negotiate a licensing agreement that involves copyrights.
Additionally, parties should research their state’s specific contract laws. State contract laws will clarify what terms, if any, may not be included in an agreement. State laws also indicate what kind of remedies are available should a contract breach occur.
While in the preparation phase, each party should consider their individual practical business concerns. This largely includes having a clear understanding of what the actual objective of the contract is. Each party should also consider what they are willing to compromise over, in order to reach that objective. If the parties involved have negotiated contracts with each other in the past, knowledge of those prior contracts could prove useful in terms of negotiation strategy.
Each party should also prepare for how to answer any concerns or arguments the party may encounter when making a demand. An example of this would be that a party may state in a negotiation that they intend to charge a higher sum than the industry average for a good or service. As justification for this, the party may assert that their brand name is valuable and as such increases the value. That party must be able to back up this assertion if they are questioned about it.
If a document supports a demand a party intends to make, the party should bring that document to the negotiation. A contract negotiation attorney can help simplify the process by proofreading all documentation and proposed terms prior to any negotiating session.
What Are Examples of Negotiation Strategy?
Some common contract negotiation strategies include, but may not be limited to:
- Acting credibly, and in good faith, at all times during the negotiation process;
- Recognizing when the other party is not acting credibly, in order to avoid agreeing to their proposal when it is not in your best interest to do so;
- Not losing sight of the overall objective; and
- Clarifying any vague terms and ensuring all ambiguous points or terms have been addressed and/or resolved.
Do I Need a Lawyer to Participate in Negotiations?
Working with either a financial negotiation lawyer, or a contract negotiation attorney, can benefit your case by ensuring you are thoroughly prepared to enter into negotiations. If you are involved in any sort of legal situation requiring negotiations, you should consult with a skilled and knowledgeable business attorney.
An experienced business attorney can help you clarify your overall goal, and also ensure that all contract language is legally enforceable. Additionally, they will represent you in court should any legal issue arise.