Neutralising the lawyer

Every now again you end up in a negotiation where the other side’s lawyer is making things very difficult.

How do you neutralise them?

Understanding two key points will give you the way in.

1. Most contentious legal issues (limitations of liability, indemnities, etc) are about the allocation of risk.

2. Most risk issues are (or should be) about price.

Some businesses build their price explicitly around risk. For example, a lender will adjust the price of the loan to reflect its chances of being repaid, and for that reason will price a secured loan differently to an unsecured loan.

But for most businesses, the assumption of risk is implicit. Their pricing reflects (whether they are conscious of it or not) the risks they are willing to take on.

So, when the other side’s lawyer states “we don’t want your standard 100% cap on liability, we want a 300% cap”, you can logically respond “Actually, that’s not included in our price but – no problem – we can increase our price to allow for this”.

At that point, you’ve turned what was a legal issue into a commercial issue, and the lawyer will back off and leave the issue to his or her commercial colleague. The lawyer is neutralised.

Whether or not the conversation ever moves onto the right amount of price increase is not the point (in practice, it rarely does): the point is that you have moved the conversation to the commercial domain where, typically, conversations are a lot easier.

22 October 2024