Negotiations might seem like the Wild West to most people—a place where you do whatever you can get away with. But if you’re a contract attorney, you know that negotiations are subject to legal rules and codes of conduct. And yet there are gray areas.
Recently, more than 500 attorneys attended a general session of the Association of Corporate Counsel Annual Meeting to discuss negotiating ethics. Attorneys voted on how they would respond to hypothetical situations. A capable contract management solution can help you navigate the waters of ethical negotiation.
Negotiation Ethics Hypothetical 1
Consider the following situation: You are negotiating a contract with a party represented by both legal counsel and a business representative. You realize from the context of negotiations that the other party’s legal counsel didn’t have full information about the business side of the agreement, and so agreed to language detrimental to their side. Do you point out the problem to the other side?
Presented with this situation, 63% of the lawyers voted that they were not ethically bound to point out the other side’s mistake.
What does this mean for you? Whether you are an outside counsel or represent your company, you don’t want to be the one lacking key business information about your negotiation. You need to make sure you have access to all business terms relevant to your deal—and to real-time reporting and search capability for all of your contracts so you know your guidelines.
Negotiation Ethics Hypothetical 2
Here’s another brain teaser: You see that the other side has made a mistake in the contract draft. Do you tell them?
About 90% of the 500 attorneys said they would tell the other side about the mistake—but just 54% believed they were ethically bound to do so. The others would point out the mistake only because it would save their own side potential problems later, such as the need to amend a final agreement.
If you make a mistake, the other side will probably—but not always—point it out to you. And either way you won’t look very good. So prevent mistakes with legal templates, pre-approved clause libraries, and best-in-class version reconciliation.
Negotiation Ethics Hypothetical 3
Has this ever happened to you? You receive a contract draft and the other side left their comments in it. Can you use the comments to your benefit?
Some 58% of the voting attorneys said yes, you can use the comments to the benefit of your party. What’s more, 54% said you aren’t obligated to tell the other side about the inadvertent disclosure. So more than half the time, failing to “scrub” your own draft could damage your negotiating position.
If you use built-in collaboration tools, you won’t ever have to leave comments in a document draft. Give yourself all the freedom you need to talk to your team without adding new risks.