by Raylene Fang
What is a Negotiation Exercise?
A negotiation exercise usually involves two teams acting as legal counsel to corporate clients in a fictional situation. Common negotiation topics include company buyouts and breaches of existing contracts. In a typical negotiation exercise, both teams will be given a set of shared facts which outline the scenario and background information of the clients. Depending on the format of the exercise, each team may also receive a set of confidential facts specific to their own client, which usually details information that is critical to key areas of contention.
Unlike a real negotiation, where negotiators can walk away from the bargaining table and take another deal, participants in a negotiation exercise should aim for reaching a mutual agreement whilst maximising the benefits their clients can receive under the agreement. This requires a carefully crafted strategy, involving concessions and demands from both teams.
Here are some useful tips to help you navigate through the different stages of a negotiation exercise.
Before a Negotiation
1. Understand Both Parties.
It is essential to fully understand your clients’ aims and objectives (usually explicitly stated, or strongly alluded in the given information), so that you have an accurate idea of what kinds of outcomes will be in your client’s interests. This will often shape the approach you should take during the negotiation.
Take a long-term view of your client’s interests. For example, in a scenario of alleged breaches of a sales contract, counsel representing the Seller should be aware that their client may wish to continue the business relationship with the Buyer in the future. As such, it is in your best interests adopt a collaborative approach in the negotiation, and avoid resorting to litigation action, which would harm the relationship between the parties.
It is also crucial to know the strengths and weaknesses of your client. Be prepared that the counterparty may be aware of your client’s weaknesses, and try to leverage on them during the negotiation. On the flipside, know your counterparty. Consider their weaknesses and capitalise on them during the negotiation.
2. Identify Areas of Contention.
The next step is to identify a range of issues that need to be agreed upon during the negotiations. Be clear on how much each issue will affect your client’s interests, because this will determine how much you are able to compromise on each issue. Likewise, consider the impact of each issue on the counterparty’s client. Try to identify issues that they care deeply about but your client values less: this is where you can make strategic concessions to break an impasse during the negotiation.
3. Communicate with Teammates.
Make sure that you know your team’s plan. Whilst an element of unpredictability is inevitable in the actual negotiation, it is possible for team members to agree on a baseline beforehand to avoid contradicting each other during the negotiation.
During the Negotiation
1. Ask Good Questions and Listen Carefully.
Avoid asking “yes or no” questions. To maximise your understanding of the other side’s demands and concerns, craft questions that encourage detailed responses, such as “Can you tell us about the challenges your client is facing?”
It is a common urge to think about what you are going to say next when the counterparty is talking. Guard against this! You may lose track of valuable information or miss an opportunity to make a bargain. Instead, listen carefully to the other side. Not only does this help you keep track of where the negotiation is heading, but it demonstrates professionalism and respect.
Be attentive to what your teammate is saying. This helps you avoid making repetitive statements or, worse, contradicting your teammate. Not paying attention to your teammate’s speech reflects badly on your ability to work in teams, a crucial quality that judges look for.
2. Make Sensible and Justified Statements.
Another common pitfall is holding out a ridiculous price. Usually, Buyers propose a lower price than they are willing to pay, and Sellers demand a higher price than they are willing to settle for. However, going too extreme either way will suggest you lack commercial sense.
One way to increase your persuasiveness is to justify your demands. For example, counsel of the Seller can argue that their client insists on a higher price because the company being sold has been predicted to have continued stellar profit growths.
Rather than making one offer at a time, consider presenting several equivalent offers simultaneously. If all the offers are rejected, ask the counterparty which one they likes, and the reason for it, in order that you can improve on your offer. This strategy decreases the chances of impasse and promotes creative solutions.
3. Be Willing to Make Concessions where Appropriate, but Stick to the Fundamental Goals and Objectives.
It is strategic to make appropriate concessions when there is an impasse. For example, in a company buyout case where the Target is involved in ongoing legal disputes, it is inefficient for counsel representing the Seller to insist on an absolute exclusion of litigation liability, pre-existing or future. It may be a wiser option to make a qualified warranty against certain types of legal liability.
However, be careful with how much to compromise. Never forsake your client’s fundamental aims and objectives. Moreover, make concessions on issues that the counterparty cares deeply about you value less, in exchange for a concession from the counterparty on an issue you value highly.
4. Give Teammates Opportunities to Speak Up.
Whilst being proactive is appreciated, trying to monopolise the negotiation seldom puts you in favour of judges. Be considerate to teammates who also want to express their ideas. They may bring a different perspective from yours, strengthening your team’s position.
5. Be Respectful of the Other Side.
Given that the ultimate goal is to reach a mutual agreement – even if there is a clear conflict of interests between the parties – being hostile towards the other side only makes this harder. Hostility is often reciprocated.
Negotiating becomes easier the more you practice it! Consider attending negotiation workshops at the Careers Service, signing up for workshops hosted by law firms or societies (such as OWLSS’s own Negotiation Workshop with Vinson & Elkins LLP), and entering competitions such as the Lady Margaret Hall Alternative Dispute Resolution Competition and the Herbert Smith Freehills - NLU Delhi International Negotiation Competition.
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Ruilin (Raylene) Fang is a staff writer for OWLSS. She is interested in commercial law and legal history. Ruilin is a current affairs writer for Right For Education Oxford and a college representative of Oxford Women in Business Society. You can reach her at ruilin.fang@magd.ox.ac.uk.