‘Avoid deals where the other side does not demonstrate commitment’
There are many books that have been written on the art of negations (few outside the legal world on the understanding of when to use “without prejudice”).
The books that have been popular are Getting to Yes: Negotiating Agreement Without Giving In by Roger Fisher and William L. Ury or Never Split the Difference: Negotiating As If Your Life Depended On It by Chris Voss
with Tahl Raz.
There are many styles and guides but at the end of the day you have to be armed with the perimeters of negations and understand if you are the weakest link. So when do negations actually begin?
Parties can discuss, for an example, an agreement and if both parties agree, you have an agreement/contract. At no point has there been a negotiation. That is to say that each party accepted what the other has suggested/ offered.
A negotiation starts when one party says “No”. No should not be viewed as a rejection, but as an opportunity to discuss and negotiate terms.
I am not of the opinion that your only position is how to get to yes for the question/deal that you seek. What can happen in negotiations is that sometimes you find a different deal, and sometimes a better deal through negations. This also does not necessarily involve comprise.
Negotiations are part of the everyday life of a business from negotiating your new terms of lease on a property to a new manufacturing agreement.
The important stages of any negations are –
Prepare: Ensure you are clear on what you really want out of the arrangement. Research the other side to better understand their needs. Focus as well on their strengths and weaknesses. Enlist help from experts, such as an accountant or solicitor in your preparation so you are armed with arguments or details as to why you seek what you do.
For example, if you were in talks about merging, speak to your accountant in terms of your figures and ensure you understand why you are seeking a set financial amount. Equally, speak to your solicitor before the meeting as they will be able to advise you on what type of structure in terms of the company or shareholding, you should be looking at upon a merger.
If you don’t ask, you don’t get. I am a firm believer in always asking for what you want. The worse that can happen is they say no and then you can begin your negations. Always have someone with you that will ask for the moon and beyond. When we negotiate for ourselves we sometimes tend to worry about losing the deal and therefore ask for less!
Offer and expect commitment. The only thing that will keep the deal together is your ability to ensure you deliver. Equally, avoid deals where the other side does not demonstrate commitment. If your instincts are telling you to walk away – Walk Away!
Obstacles: The other party will always have a reason why they cannot do something. Deal with these head on and solve them where possible.
Confidential: Always consider if you want to carry out any negations on a confidential basis.
Sometimes during the negations, the phrase “without prejudice” is used. This phrase tends to be used (but not always) when parties have a falling out and are attempting a settlement of a dispute.
Throughout my 20 odd years in the legal profession and 10 years in the business world, this is by far the most common misunderstood phrase and most incorrectly used phrase during negations.
What I have found is that people use it believing that if you head up a piece of communication with the phrase “without prejudice” then the communication cannot be relied upon. This is not necessarily the case. The without prejudice rule – in general terms.
The rule generally is, if you are in a dispute and are making statements in terms of negations and are making a genuine attempt to settle a dispute, then that statement or statements are prevented from being put before the court as evidence against the party that made them. The important points to note are that the statement must be:
An attempt to resolve the said dispute; and
A genuine attempt at resolution. Why have the phrase Without Prejudice? Surely any party should be able to rely upon what another party says? The thinking behind this rule is to encourage parties to attempt early settlement.
In the current climate where the courts are encouraging alternative resolution, then it can save going down the court process.
So when do I use it? You can mark communication as “without prejudice”
when negotiating a deal or resolution of a dispute. This is not to say all communications are to be marked without prejudice, it has to contain information that is directly related to the negations in hand.
For example, if you were attempting to settle a dispute concerning late delivery of a consignment where you are due to make a payment of £10,000.00 you may write to the supplier on a “without prejudice” basis offering £8,000.00, but do an open letter ( a letter that is NOT marked without prejudice) explaining the late delivery and the issues this caused and any costs as a result.
The offer of the £8,000.00 is part of your negations to resolve the matter while the open letter is stating what the issues are. What does the court have to consider in deciding whether communication is actually made on a “without prejudice” basis?
The circumstances in which the communication was made;
What was intended by the party who sent the communication; and
What was believed by the receiving party.
Labelling communication “without prejudice” will not automatically lead the communication to be deemed as without prejudice. Equally, by not using the phrase, the document will not automatically be admissible.
The position is far from being clear cut.
Therefore, in a dispute, attempts to settle in a genuine manner need to be clear to ensure that the communication is without prejudice.
So, in terms of business negotiations – be prepared, seek advice, deal with any obstacles, be committed and remember it is not all on a “without prejudice” basis.
Negotiations are part of the everyday life of a business.
MEETING OF MINDS:When we negotiate for ourselves we sometimes tend to worry about losing the deal and therefore ask for less.