Negotiations are the process by which the business seeks to reach agreement or resolve a dispute with a counterparty relating to engagements with third parties.

Negotiations in a legal ops context are crucial for aligning legal risk with organizational objectives, managing costs, and mitigating risks, all while maintaining compliance and ensuring operational efficiency.

Every legal team needs to have a defined and structured approach to how they carry out negotiations on behalf of the Business, and by which they give effect to the Group Legal Policy for contracting. 

Effective negotiations require the legal team (and others) to define and implement an applicable negotiation strategy - and for most contract types – this should be supported by a negotiations Playbook. 

Here are the key areas where negotiations typically occur::

◼️ Contract Terms: negotiating terms and conditions of contracts to protect the organization’s interests 

◼️ Amendments and Renewals: modifications or extensions to existing contracts as needs evolve

◼️ Fees and Pricing Models: rates and pricing structures with external vendors and service providers

◼️ Service Level Agreements (SLAs): establishing clear performance standards and metrics

◼️ Deliverables: defining the scopes of work including deliverables, timelines, and associated conditions

◼️ Policy Implementation: relating to internal policies and procedures including risk and compliance 

◼️ Settlements: agreeing the terms of settlements to resolve disputes or legal claims

◼️ Mediation and Arbitration: alternative dispute resolution processes to avoid formal litigation

◼️ Internal: moderating and mediating internal discussion with stakeholders

In GLS legal ops speak – the Negotiations CRE is a “stand-alone” resource within the process ecosystem of an in-house legal team.

This means that it has value in and of itself, but it is not a “Foundational Resource” or a “Repeater Resource”.  

Best practice features for negotiations in a legal ops context include implementing strategies and techniques that help achieve favorable outcomes.

The above must be conducted systematically and while ensuring efficiency, compliance, and alignment with organizational goals (which must ultimately drive said negotiations).

Implementing best practices helps ensure that negotiations are conducted efficiently and effectively, leading to favorable outcomes while managing risks and maintaining compliance.

Some best practice features of negotiations include:

Preparation and Research

◼️ Understand Objectives: know what you need to achieve and what you are willing to compromise on

◼️ Identify Key Outcomes: clearly define the goals and priorities of the negotiation

◼️ Understand the Counterparty: research your counterparties to understand their objectives

Strategic Planning

◼️ Defined Strategy: including your approach, key talking points, and fallback positions

◼️ Identify Key Issues: prioritize key issues and determine non-negotiable versus flexibility positions

Effective Communication

◼️ Clear Messaging: communicate your points clearly and authoritatively

◼️ Be concise: ensure your messages are concise and directly address the negotiation objectives

◼️ Active Listening: understand the counterparties needs and concerns

◼️ Identify Common Ground: this helps identify potential areas for compromise

Flexibility and Problem-Solving

◼️ Explore Options: consider various solutions and alternatives that can meet both parties’ needs

◼️ Co-operate: finding mutually beneficial outcomes can be advantageous

◼️ Adaptability: adapt your approach based the responses from the counterparty

Risk Management

◼️ Assess Risks: evaluate potential risks and impacts associated with different negotiation outcomes

◼️ Mitigation Strategies: agree strategies to address and mitigate identified risks

Documentation and Clarity

◼️ Document Agreements: document your discussions and all points agreed to prevent disputes

◼️ Review and Confirm: review positions carefully to confirm that they reflect negotiated positions

Leverage Technology

◼️ Utilize Tools: use legal tech. tools to streamline negotiations and track progress

◼️ Data-Driven Insights: leverage data and analytics to inform your negotiation strategy and position

Legal and Compliance Considerations

◼️ Ensure Compliance: verify that negotiated terms comply with relevant and applicable laws

◼️ Involve Legal: to review and advise on complex negotiations or high value agreements.

Building Relationships

◼️ Foster Goodwill: establish and maintain positive relationships with negotiating counterparts

◼️ Consider Approach: a collaborative approach can lead to better outcomes and long-term benefits

◼️ Professionalism: be professional and respectful throughout the negotiation process 

Post-Negotiation Review

◼️ Evaluate Outcomes: review the outcomes and assess whether the goals were met

◼️ Reflect: analyze what worked well and what could be improved for future negotiations

◼️ Implement and Monitor: monitor implementation and execution of agreed outcomes

Properly structured, planned and executed negotiations can deliver the following value to the Business: 

Enhanced Outcomes

◼️ Win-Win Solutions: negotiators can craft solutions that benefit all parties involved

◼️ Better Terms: more likely to secure favorable terms and conditions, enhancing value and profitability

Improved Relationships

◼️ Trust Building: fosters trust and cooperation leading to longer term relationships and benefits

◼️ Reduced Conflict: early and amicable conflict resolution in a collaborative manner

Increased Efficiency

◼️ Faster Resolutions: streamlined and reducing negotiation time, enabling quicker implementation

◼️ Resource Optimization: minimizes the need for extensive resources reducing overall cost 

Strategic Advantages

◼️ Competitive Edge: competitive advantage by securing better deals, terms and conditions

◼️ Enhanced Market Position: strengthened market positioning and opportunities for strategic alliances

Risk Management

◼️ Mitigated Risks: early identification and management of potential risks, improving overall risk profile 

◼️ Safeguards: well-negotiated deals and agreements are less likely to encounter issues and disputes

Organizational Learning and Development

◼️ Skill Development: helps develop and refine negotiation skills within the organization

◼️ Knowledge Sharing: negotiation wins can be shared within the organization improving know-how

Financial Benefits

◼️ Cost Savings: significant cost reductions in procurement, contract terms, and other areas

◼️ Revenue Growth: secure new revenue streams, better pricing models, and improve performance 

Customer and Market Impact

◼️ Customer Satisfaction: well negotiated terms can enhance customer satisfaction and loyalty

◼️ Market Reputation: strong negotiation creates a positive reputation in the market and new biz oppos

Best practice negotiation practices can enhance the value provided by a Legal Department in the following ways:

Optimized Contractual Terms

◼️ Risk Mitigation: carefully negotiated contracts enable effectively managed and mitigated risks

◼️ Increase Certainty: uncertain contractual positions are perilous and a source of frequent dispute

◼️ Favorable Conditions: informed negotiations enables ability to secure more advantageous terms

Cost Efficiency

◼️ Reduced Legal Consumption: minimizes the need for extensive legal revisions and avoids disputes

◼️ Reduced Cost: reduces the time and costs associated with lawyer support (internal and external)

◼️ Lower Costs: streamlined negotiations mean lower transaction costs (time, resources and budget)

Enhanced Compliance and Legal Protection

◼️ Regulatory Compliance: ensures agreements are in line with applicable laws and regulations

◼️ Robust Legal Framework: well-negotiated contracts best protect the organization’s interests, 

Improved Relationship Management

◼️ Stronger Partnerships: effective negotiation fosters positive relationships with external parties

◼️ Conflict Resolution: enables pre-emptive management of potential conflicts and disputes

◼️ Reduced Litigation: better agreements and relationships mean reduced time cost of litigation

Strategic Value

◼️ Alignment with Business: enables negotiation which supports the broader business strategy

◼️ Aligned Agreements: contractual terms reflecting strategic / aligned positions is good for business

◼️ Leverage and Influence: enhances the legal department’s influence as a key strategic advisor  

◼️ Faster Dealmaking: organized and strategic negotiations enable faster deal closure and more deals

Risk Management

◼️ Early Issue Identification: allows proactive risk management, risk sign-off and problem-solving

◼️ Contingency Planning: enables contingency planning for managing unforeseen circumstances

Increased Efficiency and Productivity

◼️ Streamlined Processes: streamline legal processes meaning reduced resource consumption

◼️ Improved Productivity: empowered and informed negotiations are efficient and drive productivity

◼️ Correct Documentation: good agreements are correct agreements reflecting aligned positions

◼️ Reduce Ambiguity: clear and correct documentation reduces the need for amendments

Reputation and Credibility

◼️ Positive Reputation: An organization known for effective and fair negotiation practices often gains a positive reputation among clients, partners, and within the industry, enhancing its credibility and attractiveness as a business partner.

◼️ Internal Credibility: A legal department that consistently demonstrates strong negotiation skills earns internal respect and trust, positioning itself as a valuable strategic asset to the organization.

Knowledge and Expertise

◼️ Skill Development: enhances the legal team’s expertise and knowledge, and experience

◼️ Improved Competency: contributes to ongoing professional development and competency

◼️ Know-how: successful strategies can be documented and shared within the team for training

Operational 

◼️ Empowerment: an empowered team has the best chance to drive deal closure on favourable terms 

◼️ Resourcing: helps the legal team to make informed resourcing requirements and budgeting

◼️ Prioritization: enables strategic prioritisation of key issues, strategy and “must haves”/“must avoid”

◼️ Legal Dept Design:  can shape legal dept. design & architecture re support models for negotiations

◼️ Morale: clear instructions contributes to purposefulness which drives team morale 

◼️ BU Co-operation: helps to clearly set legal department boundaries (commercial-v-legal points)

◼️ Tech Adoption: provide the rules needed for future tech adoption (e.g. can/cannot accept)

A clearly defined negotiation strategy and policy is essential for:

◼️ All Businesses: helps negotiators act effectively, and aligned with internal policy and strategy

◼️ Legal Operations Teams: enables the most efficient negotiation support scenarios to emerge 

◼️ In-House Counsels: helps in managing risks and ensuring legal and regulatory compliance

◼️ Compliance Officers: ensures consistency and effectiveness of engagements with third parties

◼️ Senior Management: helps achieving favorable outcomes and alignment with business goals

Not implementing a negotiation strategy and policy can lead to several negative productivity consequences, impacting both individuals and the business.

A lack of a structured approach to negotiation can affect productivity as follows:

◼️ Inconsistency: inconsistent approach in securing required positions and managing risk

◼️ Delegation: impaired ability to delegate thus creating bottlenecks and blocks to deal closure

◼️ Time Cost: the time cost of negotiating without a clear and defined strategy increases exponentially

◼️ Risk Costs: risks that “manifest” due to incorrect or missed handling are costly

◼️ Tech Adoption: an impaired ability to embrace legal tech that relies on defined positions

◼️ Process Adoption: unable to delegate workflows to established and approved processes

◼️ Resourcing: reduced ability to plan and resource due unclear positions & associated work effort

◼️ Training & Development: an impaired ability to train in relation to required positions 

◼️ Prioritization: business unable to prioritise key risks/positions thereby diluting potency

◼️ Empowerment: lack of strategy/policy around who can negotiate/agree undermines authority 

◼️ Morale: deteriorating team morale due to lack of positional clarity and proper empowerment  

◼️ Budgeting: negotiating without strategy means resource budgeting assessment is almost impossible

◼️ Internal Conflict: increased internal conflict due to lack of clarity over authority and strategy

◼️ External Conflict: increased risk of third-party disputes 

◼️ Housing: the negotiation strategy and policy should be housed electronically and subject to user access restrictions (no hard copies)

◼️ Legal Tech Configuration: the negotiation policy will be the basis upon which most legal tech applications will be configured (e.g. CLMS, MLM, A.I. Contract Review, Document Automation, etc)

The GLS Knowledge Centre has a wealth of resources available for learning more about the importance of Negotiations and how you can effectively do them - check out a few on the right.

The GLS Legal Operations Centre contains everything you need to effectively execute negotiations in a cost-effective and timely manner. Check out the resources linked on the right. 

Also, feel free to contact GLS to book a consult to discuss your negotiation needs right here.