Justin Fogarty from Supply Excellence e-mailed last week and asked me (and some others as well) about what we thought would be the biggest supply chain risks in a recovery. He was kind enough to think that my response on “Instant Amnesia” warranted a guest post on Supply Excellence. Thanks to Justin for the opportunity!
A few months ago, I wrote that you can’t contract trust – that if you don’t trust someone, the contract isn’t necessarily going to help. D.C. Toedt picked up the baton and discussed how parties can help build trust between two parties (presumably who do not have an existing history). I really liked his points on the prenuptual provisions folks could employ and I was struck specifically on his followup point that merely proffering a balanced document to start contract negotiations could set a positive stage. I hadn’t really given it too much thought before, but I realized I’m biased based on the first document I receive prior to the start of negotiation.
I’m sure it sounds silly. Heck, it sounds silly to me. Even though I consider myself fairly introspective, I hadn’t considered this bias before. I hadn’t considered that I prejudged my negotiation adversaries based on a piece of paper. But there it was. I am a balanced-contract bigot.
I do not think well of people who allow unbalanced template contracts to leave their outbox headed in the direction of @licensinghandbook.com. I don’t like the language, I don’t like taking the extra time spent reviewing such agreements, I don’t like re-inserting and re-balancing the same typically imbalanced sections over and over again. So once I am forced to do it, I hold it against the people who sent me such an off-kilter document.
This isn’t good.
First of all, it’s probably not their fault. Most of the contracts people I meet didn’t write their own templates – and those that do, probably have to cede control over the final verbiage to another set of individuals. Second, even if they did write the language, there’s a certain amount of zealous advocacy I respect and admire that comes out as one-sided contract provisions. But overall, as a professional negotiator, I believe Herb Cohen got it right when he said that our job is to “care, but not that much.”
I also think that I’m biased because even when I don’t have complete control over templates used by my myriad employers, I always try to encourage contractual balance … especially in those contract sections where I know balance will eventually occur in each negotiation. (Quite frankly, it’s a time waster to have to re-negotiate each of those sections and I’d make those recommendations if for no other reason than to save myself effort.)
So the lack of respect I feel towards people who allow these imbalanced agreements to come my way at least affects my very first impression and initial response. This can come across in any number of emotional behaviors (I can be pissy, stand-offish, brusque, curt, argumentative, etc). Note that none of them are positive emotions. So what do you think the other sides’ response is to my behavior? Typically, it’s mirroring (and not the positive kind). In the end, my behavior contributes to the destruction of trust. Not a good place to be to successfully negotiate an agreement.
What do I do? The bias is there. And I’m never going to be happy about imbalanced agreements. Well, I can:
- start by making sure that I continue to advocate for balanced contract provisions based on actual risk allocation;
- check my attitude at the door when I receive a new agreement and remember that the person who sent it didn’t necessarily control the drafting;
- ask for a more balanced agreement to serve as the starting point (if the other side doesn’t have one, we can always use mine); and
- do as D.C. suggests and proactively note the balanced provisions in my template when I send it.
Perhaps, most importantly, I can remember that I am 50% of the trust equation and need to act in a manner both deserving and proffering of trust. Thanks to D.C. for reminding me of one of my responsibilities as part of the negotiation process.
Today’s edition of SpendMatters discusses merger and acquisition issues as they relate to software licensing. Jason Busch was kind enough to seek my opinion on the matter and through my long and winding response, he pulled out the best nuggets.
At the end of the day, the time to think about M&A-related stuff is when you’re entering into each relationship… not when the vendor announces they’re getting bought or sold.
Are there any negotiators, contract professionals or sourcing folks (or anyone else for that matter with a voice on a particular subject) out there who would like the opportunity to write an article to appear here on the Licensinghandbook Blog? I’m looking for a few good guest posts – on topics of virtually anything you can think of that’s related to the general nature of this site.
If you’d like the chance to reach a rather substantial audience on a particular subject, now’s the time to act! 🙂
Simply contact me and let’s get you booked.
I have a lot of “pet peeves” when it comes to negotiating a supplier’s contract-like when they don’t want to make indemnification mutual or they give me a hard time about carving out infringement from the limitation of liability. What that says to me is that I’m not a valued customer and I’m dealing with someone that has either just graduated from law school or is on a low rung of the supplier’s corporate ladder. But what really ticks me off, what really sends me into orbit, what really makes me want to go ballistic on a supplier is when a supplier sends me their contract in PDF format. Mind you, I absolutely love Adobe. I think they make some of the best nearly-bug-free software products out there. So, it’s not that I don’t like Adobe-it’s the fact that I’ve gotten a contract in an unchangeable format.
I mean, aren’t contracts intended to be negotiated? Sure, I clench my jaw when I have to click-through online license agreements, and I smile and suck it up when it comes to shrink-wrap agreements. But that’s OK, because that’s what I’ve bargained for. When it comes to a semi-COTS software package, especially one that is pricey, I want to negotiate the *(&^%@# contract. Otherwise, if I can’t negotiate it, it’s just another adhesion contract and I have enough of those in my personal life, like when I park my car and “assume all risk.” I’m still OK with that, but I’m not parking a car here, I’m buying an expensive piece of software (or whatever)!
When a supplier sends me that PDF contract, they’re impliedly saying a number of things I really find offensive. “We don’t want you to redline the contract.” “We don’t trust you to redline our contract.” “We want to make redlining so painful for you, that we want you to write the redlines in the form of an amendment to our PDF contract.” At the same time, the supplier wants to be my newest best bud and take me out for lunch. Stand in line, supplier, there are other suppliers out there that want to take me to lunch AND use MY contract template.
So what do I do when I get a supplier contract in PDF format? Well, the first thing I do is send them my contract template-again, because I probably already sent it and the supplier is now engaging me in a dizzying battle of the forms. If I have no leverage because the supplier has hypnotized my customer and I’m forced to use their contract template, I give them an earful about how unprofessional it is to send a PDF contract and I scream bloody murder for them to send me their template in a Word format. Or better yet, use my contract template. If they still give me a hard time, and sometimes they do, I whip out one of my trusty PDF crackers and bust their PDF into a Word document so I can hack at it. If you don’t have one of those crackers, they’re worth every penny.
So suppliers, wake up and get real, save the PDF format for the final version of the contract and treat your customers like we keep you in business. You might even be able to reduce your own costs (and mine, right?) by not having to buy so many Adobe Acrobat licenses.
Here’s the irony that makes everything all better for me: I just love sending my comments back to a supplier in a PDF format.
[Stephen R. Guth, Esq., CCCM, C.P.M., CTPE is the executive director of NRECA’s Vendor Management Office. He can be reached via e-mail at firstname.lastname@example.org.]