Author Archives: jigordon

What Can’t You Not Do?

Over on her Ask a Manager blog, Alison Green today discussed those personality traits which force you into certain behaviors, resulting in career choices that are almost imperatives.  It’s an interesting thought – are there things that you MUST do to satisfy your own internal itch?  But then I started thinking about how that would affect the world of negotiation and it ties back into a conversation thread that’s been started many times: are certain people more predisposed to being better negotiators?  And, on the flip side, are there people who shouldn’t, under any circumstances, be the negotiator for your firm/organization/self?

Typical negotiation trainers (Karrass, for example) predicate their training materials on the belief that anyone can learn how to negotiate.  Even my favorite professional negotiator, Herb Cohen promises in his book that “You, too, can negotiate anything!”.  But don’t let the razzle-dazzle fool you.  The honest truth is that while everyone can learn techniques to increase their negotiation skills, not everyone can be a good negotiator.

“Wait!” you yell at me – “YOU offer negotiation training, too.  Aren’t you just taking people’s money like everyone else?”  Woah.  I’m not rendering judgment on the value of the service offered by negotiation trainers… lots of the material learned in these courses is excellent stuff.  Heck, even bad negotiators can improve by learning my Five Fundamental Skills for Effective Negotiation.  What I’m saying is that a prospective negotiator needs to be introspective enough to know whether they’re a good negotiator (and sometimes, it’s even case-specific).

So then, what makes someone NOT a good negotiator?  Well, as I just said, it can sometimes be case-specific – I, for example, shouldn’t negotiate the purchase of my own house or car… I’m too emotionally invested in the result.  But more generically, bad negotiators are:

  • ignorant (choosing to be without knowledge – would rather shoot from the hip)
  • overly-emotional (it’s one thing to be “disappointed” in a result… another to be “sad”)
  • hot-tempered (NEVER lose your cool – in fact, keeping cool when the other side is purposefully pushing your buttons is a great skill to have)
  • impatient (negotiations can take a LOT of time and you have to be willing to wait things out)
  • know-it-alls (the flip-side of ignorance is just as dangerous)

What am I saying, then, if you have these tendencies?  Well – either alter your personality (which proves quite hard for the bulk of the population) or find someone else to do the negotiating.  Remember that bullying someone (which is what a lot of these traits manifest as during a negotiation) won’t get you what you desire and might leave you worse off than when you started.

Oh – you don’t like the implication that everyone can’t be a great negotiator?  Blast me in the comments.

The Power (and Value) of “No”

Yes/No.  Yin/Yang. Right/Wrong.  It seems as if there are a lot of ways to say that in many decisions, we have two basic potential responses (and many other shades of gray in between).  Answering “Yes” almost always involves more work, more responsibility and more hassle.  So why don’t we choose “No” more often?

As human beings, there is research to suggest that we want to generally appease others at a very fundamental level.  This isn’t about conflict management, it’s simply about survival and the power that comes with “the return of the favor.”  It’s even got a political science term that sounds awfully legal: “social contract” – that the individual give up some flexibility of behavior in favor of the larger societal good.  But realize that there is a quid pro quo here, we expect something in return.

It’s important, however, to learn the power and value of saying “No.”

At your individual level, “No” might mean that you have more time to devote to your already-full plate of things you’ve said “yes” to. At the societal level, “No” means that you are recognizing participatory limitations – that you believe that you have already contributed (or are contributing) to the “group” (however you would like to define it at that particular moment). Without realizing it, you actually do a form of “hedonistic calculus” to determine the effect of saying No and formulate defenses in the event you’re challenged.

But it’s not wrong to say No – and there are a lot of benefits to saying “No” with compassion and clarity.

While you may be refusing someone something that they want, and as I reminded someone the other day, you’re no good to anyone (including yourself) if you’re not able to do what you have already committed to do.  Saying “No” is a defense mechanism and allows you the ability to regulate your workload.  But, it’s also a starting point (as pointed out by Jim Camp in “Start with No!”) in that only if you say “No” do you have a place to begin a conversation.

Which means that from a negotiation perspective, “No” is a wonderful way to begin when asked for any settlement.  Camp believes that it’s the ONLY starting point – and he says on his website that starting with no is to “gain control of the deal.”  Whether you believe that’s true (or even if you want control of the deal), he is right that without saying “No”, there isn’t a conversation or negotiation at all – saying “yes” is merely a statement of agreement.

Saying “No”, however, doesn’t have to be done in a mean spirited manner and doesn’t have to be used with force.  Rather, the manner in which you say “No” can convey almost any conceivable emotion and can even foster a reciprocal compassion for your need/desire to say “No.”  For example, I was asked the other day to complete some new work for an old client on a quick-turnaround basis.

I responded saying that while I wanted to complete their project, I didn’t have time to get it done on their schedule because I was going on a babymoon with my wife.  In other words, I said “No.”  But of course, I didn’t only say “No.”  My next sentence was to give them the option for me to complete the project upon my return.  When they learned that my wife and I were expecting and because they understood the desire to take a last vacation before the baby arrived, they were sympathetic to my reason for saying No – and in fact, their time schedule really wasn’t as inflexible as they first made it appear.  In the end, I will get to enjoy my babymoon, I will complete their work promptly upon my return and they’ll have their needs met as well. [By the way, the ability to say No is founded upon proper use of Information Gathering skills.]

By saying “No” I was actually able to get everyone what they wanted.  Try it yourself and let me know how it works in the comments!

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

New Client Availability

I have a single vacancy in my client list that I’m looking to fill.

My clients are typically organizations that fall into one of three obvious categories:

  1. small organizations who need a contract negotiator for individual large deals;
  2. medium-sized organizations seeking to create a contract management team; and,
  3. large organizations who can benefit from strategic advice to bolster their internal staff resources.

So, if you or your organization have been considering contract renegotiation strategies or mitigation work based on risk management assessments, now might be a perfect opportunity to take advantage of the current economic situation.  Additionally, I can provide a VMO-in-a-box (the creation of all things necessary for the implementation of a vendor management office) or simply act as a sounding board to make sure that you’re extracting all of the value possible from each deal.

Contact me today if you’d like to use my knowledge to your advantage.

The Licensing Handbook Blog is the companion site to the Software Licensing Handbook. Covering licensing topics on a regular basis, Jeffrey Gordon attempts to offer advice, add humor and sometimes even a bit of wit to a practice that most people find abhorrent – namely, reading a contract from start to finish.  Follow me on Twitter if you want up-to-the-minute information on contracting, licensing, negotiation and the law.

This Week on The Web 2009-10-11

These are the discussions that happened around the web this week – maybe you already read about them, maybe you need to again.  Come join the party on twitter (follow me here and you’ll participate in the conversation live.)

I also realized that many of you might have no idea what you’re seeing below.  Sorry.  These are “tweets”, 140 maximum character messages sent via Twitter.  Within the Twitterverse individual users follow others and have followers (think of it like overlapping Venn diagram circles).  To read a tweet, you have to wade through a bit of jargon used to make the most of the 140 character limitation.  “RT” for example, is shorthand for “Re-tweet” and the @____ is the username of some other individual on Twitter.  Combined together, then, “RT @_____” means that someone else wrote a tweet that I found important and I now want to forward along to my followers.  The URL’s are then also shortened by shortening services like bit.ly to make the most of the character limitation, too.  Lastly, you might see “hash” identifiers “#______” which are ways to tag tweets of a particular flavor for easy searching later and “<” which means that I am commenting on what came before it.

FTC Required Disclosure

The FTC now requires bloggers to disclose what they’ve received for free.

I was about to say nothing when I remembered that I received a copy of H. Ward Classen’s A Practical Guide to Software Licensing for Licensees and Licensors.  It took me so long to read and review that Ward probably regretted even having a copy sent to me.  But I got it for free nonetheless.  Oh, and if you want to send me something for free… I love freebies.  Just remember that I’ll now disclose that I got it for free.

But I think the FTC’s missing a real opportunity for regulation.  I think people who send out free things should disclose from whom they’re attempting an endorsement or comment.  I’ll even go first because, frankly, I only send things to people I know and respect and who would actually have a use for what I’m sending.  This, by the way, is also a great list of folks that you should be following/reading (in alpha order):

Announcing the Software Licensing Education Series on DVD

The saying goes that you don’t appreciate someone else until you’ve walked a mile in their shoes. The same can be said for appreciating process. While it is still extremely easy to create new digital works in almost any medium, converting them – especially for sale – is still challenging.

So it gives me great pleasure to announce the availability of the Software Licensing Education Series on DVD.  While previously offered here as a digital download, I wanted to make these videos available to a much broader audience.  Teaming with CreateSpace has given me that opportunity.

The Software Licensing Education Series is video-based software licensing training.  Designed with even a novice in mind, the Series progressively moves from basic topics to those requiring more experience and background.  Built around a college-courseware format (100, 200, 300, 400 and 500 levels are available), the Software Licensing Education Series provides instruction in bite size pieces for optimal learning.

Pricing for the DVD set is $750 – significantly cheaper than the cost of most software licensing-related conferences and packed with way more instructional time (551 minutes… more than 9 hours of material).  The DVDs may be used in a business setting, too… and are re-usable over and over as needed.

Buy the Software Licensing Education Series now via DVD or digital download and start saving money and reducing risk today!  Oh, and get a 10% discount through the month of October on the DVD using discount code: 89YYH47X

This Week on The Web 2009-10-04

These are the discussions that happened around the web this week – maybe you already read about them, maybe you need to again.  Come join the party on twitter (follow me here and you’ll participate in the conversation live.)

I also realized that many of you might have no idea what you’re seeing below.  Sorry.  These are “tweets”, 140 maximum character messages sent via Twitter.  Within the Twitterverse individual users follow others and have followers (think of it like overlapping Venn diagram circles).  To read a tweet, you have to wade through a bit of jargon used to make the most of the 140 character limitation.  “RT” for example, is shorthand for “Re-tweet” and the @____ is the username of some other individual on Twitter.  Combined together, then, “RT @_____” means that someone else wrote a tweet that I found important and I now want to forward along to my followers.  The URL’s are then also shortened by shortening services like bit.ly to make the most of the character limitation, too.  Lastly, you might see “hash” identifiers “#______” which are ways to tag tweets of a particular flavor for easy searching later and “<” which means that I am commenting on what came before it.

Response to 50 Tips

James Martin, an attorney in St. Petersburg, Florida has an article on his website regarding 50 tips for writing contracts that stay out of court.  Most of the suggestions are good… a few are a little dated.  This is my response to the dated things on his list:

3.  Ask your client for a similar contract. Huh?  If your client has a similar contract, they probably don’t really need you.  Now, I’m not advocating reinvention of the wheel.  If there’s a pre-existing solution to the problem, by all means, use it.  But I’m guessing that someone’s coming to you to draft the agreement because you have the skills.  More importantly, however, is that their template/sample probably contains a LOT of issues.  So it’s usually 110% easier to start from scratch (or from your form) and customize it to your client’s specific needs.

4.  Check the form books and treatises for a contract form. and  5.  Buy forms on disk or CD-ROM. I don’t know who first created form books, but they’re not as good as one might think… and they’re not necessarily battle tested, either.  You’d be better off getting a template from someone else you know if you don’t know where to start.  There are exceptions, of course, but still – be careful (see the second part of my advice for #3 above).

6.  Don’t let your client sign a letter of intent without this wording. Actually, my advice is to NEVER sign a letter of intent, regardless of the wording.  As I’ve said before, a Letter of Intent is usually just a poorly written contract.  Don’t get caught up in that mess.

9.  Identify the parties by nicknames. This isn’t a hard-and-fast rule.  Use nicknames only if it actually makes things easier to draft AND read.  Be careful about using descriptive terms as nicknames (customer, vendor, consultant, etc) because other forms of that word could appear in the agreement.  Use the “Find” feature of your word processor to discover if this is true.

12.  Include recitals to provide background. I know a lot of people love these.  But I hate them.  I hate reading them and I hate writing them.  On the other hand, for complex deals where the agreement could apply to many different things and you want to be clear on what the contract is really covering, this is the place.  But for a standard software agreement, the place to list the products is in a product schedule… that way you can use the same license and only add additional product schedules w/o having to amend the agreement itself to modify some “Now therefore, the parties agree to license Word Processing application.” type of language.

17.  Title it “Contract.” Actually, the better advice is to simply make sure that it doesn’t say “proposal” or some other transient contract type (like “letter”).  Granted, I like document titles “Software Licensing Agreement” or “Amendment to Master Services Agreement”.  But putting “Contract” in bold at the top of the first page is silly and WAY outdated.

24.  Write number as both words and numerals: ten (10). I agree with Ken Adams on this one.  Use the standard rules for numbers: words for zero through ten and numerals for 11 on up.

25.  When you write “including” consider adding “but not limited to.” Not worth adding.  Ever.

26.  Don’t rely on rules of grammar. WHAT!?!?! OK.  Look.  Use plain English wherever possible.  Write clearly.  Using superior grammatical skills.  If you don’t have such skills, don’t draft contracts.

29.  Be consistent in grammar and punctuation. Well, at least Mr. Martin shows consistency in his inconsistency regarding grammar.

30.  Consider including choice of law, venue selection, and attorneys fee clauses. Consider?  Absolutely include choice of law and attorney’s fee clauses (though in some cases attorney’s fees won’t ever be granted… but it doesn’t hurt to ask).  On the other hand, you’ll almost NEVER get venue if the other side understands it well enough to ask for a different location.  But if you’re both in the same location, it never hurts to add it in to make sure you won’t be dragged out of state.

32.  Define a word by capitalizing it and putting it in quotes. and 33.  Define words when first used. No and No.  Define words in a definitions section up front.  Unless you only have an average of one defined term per section.  Then you can define “in line”.  Otherwise it just gets too ornery to try to make sure you define the term the FIRST time you use it.  This is especially true when definitions end up getting used in the definition of other defined terms.

34.  Explain technical terms and concepts. If you’re using terms that laypeople can understand, the only technical terms that should appear should be in a statement of work or other descriptive document regarding the work.  As such, it should be written so as to be understandable by the people that have to abide by the contract.  Judges and lawyers can find technical people to explain technical terms.  The only time you should explain technical terms is if there’s a reasonable disagreement in the technically-educated community as to the usage of the term.

35.  All contracts should come with a cover letter. Not necessary.  If your contract is so difficult as to not be able to understand how to sign it, you’ve got a problem.  The best thing I’ve seen so far?  “Sign Here” tape flags that you put on the side of the document they’re supposed to sign for each signature line.  Then paperclip your business card to the front with a post-it note attached thanking them for their help and asking them to sign and return one of the two originals.

38.  Use your word processor’s spelling and grammar checker. Yes, but don’t rely on it.  Two, to, too, toe.  Their, there, they’re.  Through, thorough.  Notice anything?  They are all real words and spelled correctly.  Spell checker isn’t going to flag any of these.  Grammar checker is no better: “A parakeet is not a bluebird.” is grammatically correct.  But if you intended to say that a parakeet isn’t blue, the prior sentence is not correct but won’t be flagged.

42.  Save the drafts as multiple files on your computer. Yes, but not how it was recommended.  Unfortunately, using periods in your filename is still problematic for some operating systems.  Weird abbreviations for drafts, comparisons, etc are also hard to decipher.  Instead, try this:  “filename vX date initials.doc”.  So if you have a file called MasterService and it’s the 4th iteration being saved on September 29, 2009 by Jeffrey I. Gordon, the filename would be:  “MasterService v4 092909jig.doc”  Why do I do it this way?  Well: a) it keeps the files in draft order in virtually all file systems (Windows, Mac, Linux); b) it notes which version it is (saves on confusion about which document is the latest); c) notes the date it was created; d) notes who created the draft.  Sometimes I’ll substitute my company’s TLA instead of my name… but usually, I like my initials better to let me know that I was the author of that version of the document.  When I get the last version that becomes the final, I change my initials to FINAL – so the name would now be: “MasterService v10 101509FINAL.doc”.  This lets me know that v10 was the final and which version was signed.

44.  Print the contract on 24 pound bond paper instead of 20 pound copier paper. Not worth the cost of paper.  Especially if you want the other side to sign first – ask them to print two originals, sign both and send to you… you can’t control the paper it’s printed on.  Besides, if you’re using a contract management system, you’re going to scan and forever more look only at the digital version, so the paper is irrelevant and not worth the added expense.

47.  Initial every page of the contract. Wholly unnecessary unless you don’t trust the other side and you’re signing first.  But as I’ve said before, if you don’t trust the other side, you shouldn’t be doing the deal in the first place.

48.  Identify the parties and witnesses who sign by providing blank lines below their signature lines for their printed names and addresses. and 50.  Add a notary clause that complies with the notary law. Witnesses and notaries aren’t necessary unless required by law for the specific type of contract you’re closing (usually for real property, but I’m not sure it’s required for any other type… anyone know for sure?).  Many businesses have a notary on staff, but unless the document is required to be signed “under seal”, this also is usually not a requirement and is an added expense to some (and added time/effort for everyone).

This Week on The Web 2009-09-28

These are the discussions that happened around the web this week – maybe you already read about them, maybe you need to again.  Come join the party on twitter (follow me here and you’ll participate in the conversation live.)

I also realized that many of you might have no idea what you’re seeing below.  Sorry.  These are “tweets”, 140 maximum character messages sent via Twitter.  Within the Twitterverse individual users follow others and have followers (think of it like overlapping Venn diagram circles).  To read a tweet, you have to wade through a bit of jargon used to make the most of the 140 character limitation.  “RT” for example, is shorthand for “Re-tweet” and the @____ is the username of some other individual on Twitter.  Combined together, then, “RT @_____” means that someone else wrote a tweet that I found important and I now want to forward along to my followers.  The URL’s are then also shortened by shortening services like bit.ly to make the most of the character limitation, too.  Lastly, you might see “hash” identifiers “#______” which are ways to tag tweets of a particular flavor for easy searching later and “<” which means that I am commenting on what came before it.

Insurance Basics

Over the span of my career, I’ve seen thousands of insurance sections in various contracts.  At the beginning (and at certain employers), I would have to run this section by the insurance people in the event of any changes to our template language.  But as time went on (and with a different employer), we really only paid attention to the need for insurance certificates and the actual amount of coverage listed.  Then one day, I found myself in charge and needed to set the policy for how we were going to handle this oft-ignored/misunderstood area of the contract.  So I brought in the insurance folks to talk with me about this interesting topic.  [Note:  What I’m about to tell you is what I’ve learned as a result of countless deals and several discussions with dozens of insurance agents.  But if your insurance folks advise you differently, just remember where your bread is buttered.  Hint: it’s not by me.]

Insurance Types

There are five basic types or categories of insurance policies: Commercial General Liability, Professional Liability (errors and omissions type), Excess or Umbrella Liability, Workers’ Compensation, and specific liability policies for particular types of work (auto, boating, construction, etc).  Your contract should at least list the first four and optionally include reference to any other policies necessary based on the work you (or your vendor) are performing.  There are, of course, some caveats.

  1. Not all professional services will qualify for Professional Liability policies.  It’s conceivable that you (or your vendor) will not be able to provide this type of insurance because of the nature of the work completed.  However, many insurance companies will interview the insured organization and “create” a Professional Liability policy for that service – the key is to simply ask.
  2. Excess or Umbrella Liability policies can’t exist without a primary Commercial General Liability policy on which to hang (hence the term “excess”).
  3. Workers’ Compensation is MANDATORY.  In fact, in most contracts, you’ll see this called out as statutory Workers’ Compensation.  In other words, if state law requires it, the insured must have it.  If the insured is a sole-proprietorship (ie: they are their only employee), this policy probably won’t apply.  Again, however, it’s based on the state’s law in which the work is being performed.
  4. Specific Liability policies aren’t always easy to determine up front.  Who today can guess that you’ll need “boater’s insurance” five years from now?  If you don’t list these policies in the master agreement, simply remember to add them to a particular Statement of Work when needed.

Insurance Limits

Typically, when talking about Insurance Limits, we’re really talking about the maximum dollar value of each policy.  Some organizations love to go for broke on this – asking for $10M minimum aggregate and $5M per occurrence, etcetera.  Lets break down the distinction and then talk about dollars.

  1. “Minimum aggregate” refers to the total amount of money recoverable under the specific policy regardless of the number of claims for the entire life of that policy.  If a $1M aggregate policy is claimed upon by 1000 people equally (over the span of the policy’s life), the most each person would get is $1000.  ($1,000,000 / 1000 = $1000).  But things don’t usually work out that way.  Rather, these same 1000 people might claim at different times during the life of the policy.  If the first of those thousand people recovers $900,000 from the $1M aggregate, there will only be $100,000 left to satisfy the other 999 future claims.
  2. “Per occurrence” then is a limit on the per-claim reimbursement/coverage.  The per occurrence limit is usually 1/2 the value of the minimum aggregate.  So if you have a $1M aggregate policy, you will then typically see a per occurrence limit of $500,000.  This partially helps with the problem from the end of the last section, where the first claimant receives an abundance of the value of the policy, leaving little remaining value to any other aggrieved party.
  3. Excess or Umbrella Liability policies usually only list a “not less than” amount which is almost always 2x the minimum aggregate of the Commercial General policy.  For our example here, if the CG had a $1M minimum aggregate, the Excess or Umbrella limit would be not less than $2M.
  4. Statutory Workers’ Compensation almost never lists an actual dollar limit.  Again, because it’s based on different state laws (which could change like the tides), most contracts simply state that the insured will meet the requirements of the law, whatever they happen to be at the time.

Dollar limits on insurance policies can get really interesting in a hurry, partially because of the nature of the work that many professional services organizations perform and partially because of the nature of insurance policies in general.  In most cases, I ask for insurance dollar limits that are far and above what I would ever expect the value of the work performed to be.  This freaks out my vendors – they worry that they won’t be able to get a $10M policy (or, more accurately, won’t be able to afford it).  But I have to remember something that they would rather I didn’t – that their single insurance policy is covering the work that they do for EVERYONE.

That’s right, the nasty little insurance secret that no one really wants to discuss is that almost 100% of the time, the policy that covers your work is also covering 100+ (or 1000+) other jobs.

But wait, you say, I am named as an additional insured.  That bumps me to the head of the line.  Not so fast.

Insurance Certificates and Additional Insureds

In almost all cases, the customer is able to get the insured to provide them an insurance certificate directly from the insurance company as proof of the existence of the policy.  And in many cases, the customer (as well as its officers, employees and agents) can also be added as additional insureds to the Commercial General Liability policy only (even if you want to be an additional insured on the other policies, most insurance companies won’t allow it).  The customer then asks to have the insurance certificate even state that the customer is a named additional insured entity.  What you don’t see, however, is all of the other additional insureds.

What you’re really looking for, then, is to find a way to make sure that the policy limits are going to cover the work that the vendor is performing for you – and making sure that you’re going to be able to fully recover that amount in the event a claim is properly brought.  The solution?  Ask the vendor to get a specific policy just for you – on a “primary and noncontributing basis” and including a waiver of subrogation in favor of you.  The vendor might still balk at this – you’re asking for an individual insurance policy.  But you can now decrease the policy limits to be more manageable because now you know that this policy is just for you.  So the overall cost to provide insurance to you for the work performed might actually be less than if you required the vendor to increase the policy limits to extraordinary heights.

Oh, and don’t forget that you want the certificate of insurance to indicate that the Excess or Umbrella Liability policy is a “following form policy”.  This means that if the excess or umbrella policy has terms or conditions that conflict with the Commercial General policy, the CG policy terms will control.  But there is some controversy given current insurance practices which may make this difficult.

Insurers

Many customers also want to be certain that the insurance company providing the policy is reputable.  There are different ratings institutions, but I prefer A.M. Best with a rating of no less than A-, Class X.  The A- means that they’re still in the Excellent rating category and the “Class X” is an indicator of their financial health (X is actually a Roman numeral) with an adjusted policyholder surplus of $500-750M.  This is to ensure that the money actually exists to cover the upper limits of any potential claim.

Policy Changes

Relatively speaking, insurance is easy to obtain.  It’s not always cheap, though, so there have been times where insureds have made financial decisions to decrease policy limits or change coverage types as a cost-savings method.  If you’re a customer, you want to know about this as it’s happening (and not at the start of the next year when the next insurance certificate arrives with lowered limits, leaving you to wonder when the change actually happened).  So always remember to include language in your insurance section that requires the insured party to notify the other of any changes to the policy within 30 days of any adverse change (you really don’t care too much if limits are increased).