Negotiation

2 June

• For #5, I am Morro, negotating vs. J. Engel.
• Exercise #2.
  • Royal York attorneys think the claims are baseless
  • Attorneys General think the complaints have some merit; Wassim: the legality of the contract is moot-- it's a criminal matter.
  Turns out the AG would rather settle than litigate-- it turns out that this was in their instructions. It also turns out that crafting the press release could have allowed us to deflect the blame onto the prior owners.
• Exercise #3:
  • Buonelli attorneys differ about whether the Roberts are being reasonable. They're at fault, but the other bids are reasonable.
  • Roberts attorneys agree that they're being a little unreasonable, but it's not clear that Excel's prices are improper.
• Negotiating an agreement is an agreement that does not require coming back to the table; it isn't contingent on someone moving off their position. Sometimes that's the best you can do, but it's not an agreement.
• So one side may have zero leverage, and this can make both parties uncomfortable, but you just have to deal with it.
• In each of these cases, the side with the leverage has the right and the power to do what they want. The moral of the story is that nothing influences the outcome of negotiations more than leverage.
• We need to assess leverage (ours and theirs) accurately, just as much as we need to spot the money-only trap. Only then will we be in a position to make the best deal we can under the circumstances.
• You'll never have full knowledge about both parties' leverage. A buyer often doesn't know how much leverage he has, because he doesn't know the seller is in distress. So figuring out the amount of leverage is probably priority #1, and you have to be realistic about it.
• Our job as negotiators is to cast the outcome in a way that is the best we can hope for under the circumstances, and leverage determines the circumstances.

4 June

• Issues from exercise 5: Who owns the photos, what are the terms of the contract? Clearly there is a contract, but we don't know what it says as a matter of law. Is this a partnership?
• Need to identify legal issues and research them.
• Consider the effects of doing a full accounting: will it help, and how will we value "sweat equity?"
• One intrinsic aspect of negotiations is that the parties don't agree 100% on the values of their sides' assets. You know in advance that the other side doesn't agree with you, and as a practical matter, if you can't address their concerns, you're not likely to get a deal (or at least not the one you want).
• If we can anticipate what the other side's requirements will be, we'll do better.
• No matter how strongly we believe in our position, the reality is that the other side sees it differently, and we need to negotiate. We might sometimes convince them, but we have to deal with the fact that they have their position.
• The more of this we can do before we get to the table, the less we'll have to work out at the table.
• Preparation is always more intricate and subtle than you think.
• Make sure you get the context right: make sure you've given thought to who the parties are, what's important to them, how they make decisions, who/what influences them, etc.
• Know the strengths and vulnerabilities of each side, and what they have in common with one another. How do they do what they do? are they good at it? what's their reputation? Are there any particular time constraints or other conditions that control the situation?
• How did we end up at the table? What are the surrounding circumstances within which these negotiations take place?
• Are there particular allies or adversaries that might be involved?
• What is the law? Most lawyers forget about this, but it is a powerful tool. There is great advantage in being sure you understand the basic legal principles of the situation. You don't have to do exhaustive research so that you're prepared for appellate argument, but you do need to know the general principles that govern. Even though the parties are going to disagree, we should never allow the disagreement override the basic legal principles. Neither side is likely to capitulate on the basis of a legal argument, but it allows you to frame the situation. It's not that hard to do this-- 15-30 minutes, if you spot the issue.
• Don't take the other side's word for it on points of law, and don't expect them to take your word for it.