General Practice, Solo & Small Firm Division

A service of the ABA General Practice, Solo & Small Firm Division

Law Trends & News

Practice Area Newsletter

American Bar Association - Defending Liberty, Pursuing Justice

SPRING 2010

Vol. 6, No. 3

BUSINESS lAW

 

A Common Opening Move Blunder: The Giveaway

A common blunder that illustrates the negotiation axiom “stop, look, and listen” is the giveaway. It usually goes like this: Your client has reached an agreement in principle with another company regarding a business transaction. While the major points have been worked out, numerous issues of varying importance are either still up in the air or have not been addressed at all. Many of these issues are of no real consequence, while others are potentially troublesome. Rather than face up to these thorny issues, the two businesspeople take the easy way out by deciding to “leave the details to the lawyers.” In truth, they are leaving out not only details, but also some very controversial points that could prove fatal to the agreement.

A few hours after the agreement in principle has been reached, you receive a call from your client who is bubbling with optimism. He gives you a thumbnail sketch of the deal and tells you to expect a call from the other party’s lawyer to work out the details. He concludes the conversation by telling you it is all routine and that he is leaving for a well-earned week to Hawaii to celebrate his latest coup. Ten minutes later, the other lawyer calls. After some obligatory small talk, you get down to business. The opposing lawyer suggests that you resolve as many noncontroversial matters as possible to expedite preparation of the documents. Thinking this makes sense, you agree. He ticks off five or six points that his client would like your client to agree to. To each you respond with a “no problem” or “fine.”

Ten minutes into the conversation, he gets around to a zinger that your client probably never thought about but one that you know he should not or would not agree to. Cordiality quickly dissolves into confrontation as the first impasse develops. The conversation ends abruptly as you promise to run it by your client when he returns from Honolulu, knowing all the while that he will never agree to the other lawyer’s proposal.

What is wrong with this approach? Simply this: The next time you call the lawyer with requests that you feel are noncontroversial, you will most likely find him willing to agree, but only if you will make some concessions of your own. Suddenly, you realize that you have given away most of your trade points without anything to show for it. As a result, you are faced with compromising a previously nonnegotiable point or, in the alternative, stonewalling the opposition, thus putting the entire deal at risk. Either option leaves you at a decided disadvantage.

Do Not Get Caught by the Giveaway
The lawyer in this example could easily have avoided this dilemma by making himself unavailable to negotiate until he had time to review the entire deal with his client and formulate a negotiation plan that would have identified problem areas. Unfortunately, this was not the case, thus allowing the opposing lawyer, who had prepared his negotiating plan, to seize an initial advantage. Fortunately, this does not have to happen to you.

Common Opening Move Traps to Avoid
The giveaway is only one example of how a premature opening move can detrimentally affect a negotiation. Other common traps associated with failure to consider your opening move carefully include:

  • overreaction;
  • saying too much;
  • failure to verify important information;
  • acting on insufficient information;
  • failure to grasp points of procedure;
  • inadequate preparation;
  • revealing strategic plans;
  • revealing leverage positions;
  • unwittingly tipping off the opposition to your future moves.

 

Practice Tip
As with the giveaway, most of these pitfalls can be avoided by approaching a negotiation cautiously. A key phrase that will serve you well in constructing the appropriate opening move or response is “Reflect rather than react.”

Note

The Lawyer’s Guide to Negotiation, Second Edition, (pp. 77-79) by X.M. Frascogna, Jr., and H. Lee Hetherington, 2009. ©2009 by the American Bar Association. Reproduced with permission. All rights reserved. This information or any or portion thereof may not be copied or disseminated in any form or by any means or stored in an electronic database or retrieval system without the express written consent of the American Bar Association.

X. M. “Mike” Frascogna, Jr., is the senior partner in the law firm of Frascogna Courtney, PLLC that was established in 1972 in Jackson, Mississippi. He has been involved in international corporate litigation and commercial transactions, corporate acquisitions and mergers, copyright and trademark matters, and practices extensively in the areas of entertainment and sports law. Frascogna is active in alternative dispute resolution, serving on the American Arbitration Association’s panel of arbitrators and mediators. He has arbitrated and mediated numerous international and domestic commercial disputes. In addition, Frascogna has experience in hostage negotiation and is a frequent lecturer on the topic of negotiation. He is admitted to practice before the U.S. Supreme Court, U.S. Court of Appeals, Fifth Circuit, and U.S. District Court, Southern and Northern Districts of Mississippi, and all state courts of Mississippi. Frascogna served as a Bar Commissioner of the Mississippi State Bar Association from 1994 to 1997. He may be reached via email at mfrascogna@frascourtlaw.com.

H. Lee Hetherington is a professor of law at Mississippi College School of Law in Jackson, where he teaches courses in torts, negotiation, trademarks and unfair competition, copyright law, and remedies. During his tenure at Mississippi College School of Law, he has been selected as one of the law school’s outstanding law professors on five different occasions. H. Lee Hetherington may be reached via email at hetherin@mc.edu .

The Lawyer's Guide to Negotiation, Second Ed.

Did you find this article helpful? Do you need more information regarding negotiation? To provide some basic assistance in this area, we are pleased to introduce The Lawyer's Guide to Negotiation, Second Edition. This book should provide attorneys with some basic knowledge that will allow them to negotiate better. It can be purchased at: http://www.abanet.org/abastore/

© Copyright 2010, American Bar Association.