This article is a reprint of the introduction to Chapter 23 of Transactional Skills – Contract Preparation and Negotiating, Carolina Academic Press (2019). It is reprinted here with the permission of Carolina Academic Press.
I dedicate the article to Justice Gerald Lebovits, who diligently, tirelessly and relentlessly strives to improve the writing of the members of our profession.
I hope the article addresses the complaint voiced in the quotation that introduces Justice Lebovits’ article in the June/July 2019 issue of the Journal.
There are two things wrong with almost all legal writing. One is style. The other is content. Fred Rodell, Goodbye to Law Reviews, 23 Va.L. Rev. 38 (1936-1937).
For me, three principles govern the proper execution of a good essay, and legal briefs, articles and other legal writings that are not contracts are no more than essays:
2. Development, comprising exposition and support;
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Some time ago, a neighbor of mine, a businessman, told me that he was taking a course in negotiating. The course had mock negotiating sessions, and my neighbor said, with smug confidence, that the one principle he had learned was that after the parties establish their positions, the person who opens his mouth first loses. That observation is true in such a limited number of situations that it would be misleading to raise it to the level of an axiom. Further, the idea of taking a course in negotiating strikes me as absurd, for like sex, negotiating is not something you can learn from a book or in a classroom.
A person learns to negotiate by negotiating. And the human being, of necessity, begins to learn the technique from childhood, seeking from the earliest ages to get what it wants by whining, squealing and screaming.
The pressure of time cannot be created in the classroom. The reality of negotiating cannot be simulated there. In a staged negotiation, nothing is at stake. No one is at risk; there are no financial consequences. An actual job does not hang in the balance. An acquisition, a financing, a contract for the construction of an $80 million ship does not depend on the outcome. The parties to the classroom negotiation leave the table as they arrived. Beyond the classroom, parties’ leaving the table as they arrived can only happen when the negotiation fails. All participants maneuver to gain as much as possible without losing the deal. The desire for gain and the fear of losing an opportunity are the centripetal forces that keep the parties in orbit, that keep them searching for solutions. For example, when the publisher and I negotiated the contract to publish my first book, we quickly reached agreement on all but one of the points. On this one issue I could not accept what the publisher wanted, and what I proposed was unacceptable to the publisher. But the publisher wanted the book enough and I wanted that publisher to publish it enough to make us jostle and jostle until we fashioned a solution.
The desires and fears that drive the parties toward agreement cannot be engendered by simulation. They can only be experienced when an opportunity is at stake. Yet sometimes the differences on one or more fundamental issues are too great. In those situations, it is natural and best not to conclude an agreement. But it is essential that the parties be imaginative and flexible, so that if agreement is not reached, the failure is due to genuinely incompatible positions and not to stubbornness or a lack of creativity.
Another reason mock negotiating sessions are deceptive caricatures is they cannot realistically duplicate an entire transaction. The acquisition of a company, a financing, the arrangements to form a business or joint venture, a contract to publish a book: all of these do not begin and end within a classroom period. Depending on size and complexity, they take days, weeks, and even months to conclude. And they are continuous, without scheduled breaks as there are between classes.
Just before writing this chapter, I closed a management buyout that tested the patience of the participants for over nine months. The situation was quite desperate for my client, the seller, because his wife was terminally ill, and unknown to me, so was he.
When management could not perform the terms originally agreed, a relatively simple transaction was renegotiated and became more complex. These new arrangements, though, raised problems with the company’s bank that could not be resolved; so the management team had to change banks to conclude the deal. Now, points negotiated once and renegotiated had to be negotiated again; and the transaction became still more complex. Not unexpectedly, participants from time to time threatened to abandon the deal. But these gestures were merely feints from frustration to accelerate the process. As the transaction developed and evolved, the parties, as they often do, became more involved, more committed (like being drawn into a vortex) and were less likely to quit. With so much time and energy invested, the alternative – i.e., not closing – usually becomes more distasteful. Now, at 5:00 p.m. on the day before the closing, the management team called to tell me of a last minute impasse with the new bank that would kill the deal. “Peter,” they asked, “could you agree to a new arrangement that would solve the problem and save the deal?”
I said that I would have to think about any new arrangement, explaining that even if agreement could be reached, it would require changes in the documents, would delay the closing, and would make the lawyers even richer. “I’m going home,” I said, declining an invitation to join the discussions, knowing that if I did join, my client would only lose. Experience had taught that the management team would have to accommodate the bank, because not closing at this stage would have been a disaster for the business and so for the futures of all concerned. The decision to decline the invitation was a tactical risk far less than the risk involved in accepting it.
My wife complained that I did not sleep well that night, flapping around like a flounder out of water. But when I returned to my office in the morning, I found a fax timed 12:48 a.m. (ah, yes, this was still before creation of the internet) confirming that the closing would take place as scheduled.
No classroom simulation can create these pressures or impart the knowledge necessary to deal with them effectively. No matter how powerful the intellect, no matter how many negotiating techniques it devours, without sufficient experience programmed into the data base, the individual will not possess the judgment required to assess a situation properly and to know with confidence what to do and when to do it. And a lack of confidence makes a person a weaker and less effective negotiator.