Don't Be Afraid To Negotiate Key Contracts

You finally got their attention. You got a meeting scheduled with a huge prospect that could make the difference between this year turning out as break-even or spectacular. Your pitch is flawless and you’re ready to reel in the big fish. 

Then they hand you a contract.

It’s a bunch of legalese with jaw-breaking language. Your head is about to explode at the very thought of reading it. What should you do?  

1. Do you squeeze your eyes shut and sign on the dotted line, hoping everything will turn out alright?  
2. Do you pour yourself an energy drink and try to plow through the agreement on your own?  
3. Do you call your lawyer and ask for help?

While your head might tell you the correct answer is 3, especially since this article is being written by a lawyer, your gut may be screaming, “Take door  number 1.” 

Indeed, many small businesses and entrepreneurs do take door number 1. Why? Because they’re afraid of losing the deal.  They are afraid of asking questions that make them look uninformed or unsophisticated, and that the contract terms are not negotiable.

Poppycock!

Contracts between businesses are rarely etched in stone. They are also often written to heavily favor one side over the other -- as a way of testing the waters. Blindly accepting such language can actually mark you as the unsophisticated rube you’re trying so hard not to be. So what can you do? These tips can help even the most faint of heart:

• Read the contract. Make an effort to understand what it’s trying to say. If the language is confusing or doesn’t match your understanding of the deal, ask for “clarification.” It’s entirely possible that the cookie-cutter language that has always worked for them in the past does not apply here. After you ask for clarification, the other side may suggest more-accurate language. It’s a tactful way of tailoring the agreement -- and it works.

• Beware of standard excuses large companies, and especially market leaders who are used to getting their way, use. To learn how to counter them, see my previous posting: Minor Contract Issues or Major Headaches?)

• Get legal advice. If the deal is truly significant and you can’t afford to have something go wrong, investing in timely legal advice is a smart move. Before you sign the contract. Most of us would not self-diagnose a medical condition, do our own surgery, and then ask a doctor whether we got it right. Why should your company’s legal health be any different? Get the proper advice before you engage in heavy negotiations.

If you wait until after the fact and then tryto change something you already agreed to, it will look like you’re back peddling. That can be a big black eye unless you make it clear up front that the contract is still subject to legal review and therefore contingent.  

With proper planning you really can have the best of both worlds: protection for your business while earning the respect of the other party with your savvy negotiation techniques.

Of course, if you're still worried about blowing the deal you can still opt for door number 1. But you know what they say about legal issues... it's not a problem until there's a problem. Know your risk tolerance and act accordingly.

Hanna Hasl-Kelchner is a business legal strategist, author, speaker, and trainer who teaches and coaches business people on how to avoid lawsuits. She is the author of The Business Guide to Legal Literacy: What Every Manager Should Know About the Law and the forthcoming "How to Turn Your Business into a Litigator’s Chew Toy: Taking the Bite Out of Legal Liability." Follow Hanna on Twitter @nononsenselawyr and her Chew Toy sidekick @acelitigatorwit.