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When Do You Negotiate a Contract?

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Contract negotiations sound intimidating. Whether you hire a contract negotiation lawyer or negotiate on your own, there are many strategies you can utilize to get the most favorable terms for your contract. However, any contract lawyer will tell you that the negotiation process starts early.

Many clients come to me after having already ‘negotiated’ their contracts and leaving the legal aspects until the very end. While it is definitely smart to start negotiating early, it is important that all of the parts, including what many view as ‘mere’ legal technicalities, should be considered very early on. The time to start negotiating your contract is even before you choose who you want to negotiate with. Part of your leverage in the negotiating process is greatly affected by who is on the other side. So negotiating starts with knowing what you want and researching early on in the game. Here are some important points to consider before you even choose to walk to the negotiating table:

  1. The ultimate goal of a particular negotiation. This takes some introspection. For example, on the surface, you may want to choose a vendor. Although that is the superficial goal, it is not your ultimate goal. Ultimately in choosing this vendor, are you looking to grow your business? Increase quality control? Tighten your budget?
  2. What you are willing to give and your leverage. We all know that negotiation is both a give and take process. However, it’s important to consider what we have to offer (and our leverage). This would actually be a good point time to consult with a contract lawyer because the contract negotiation lawyer can give you insight into what leverage you have that you were not otherwise apparent.
  3. When you would walk away. This also takes a lot of introspection and research as well. Negotiators often call this particular line of ‘walking away’ a BATNA, which stands for Best Alternative to Negotiated Agreement. Knowing your BATNA is important to know even before coming to the negotiating table. One example of a BATNA, which is a simple one for the sake of understanding, is if you are negotiating with a marketing company. If you know a very reputable marketing agency charges $1,000/mo for a 6-month contract but you are negotiating with another equally good marketing agency and the latter agency refuses to negotiate to a price lower than $1,100/mo (all things being equal), then you know that the former agency is a BATNA. Having a clear BATNA up front, you know upfront what your alternatives are so you do not fall for emotional-based techniques or get caught up in sales tactics.

The above considerations all happen early and are a part of the negotiation process because negotiation starts long before coming to the table.

Now that you have identified your main goals and concerns, you can start to actively negotiate by setting your terms, knowing whom you want to do business with, and analyzing specific offers and terms. But it’s clear that the contract negotiation process starts early on.

Need a contract negotiation lawyer? Call us today (630) 517-5529.

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