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5 hot tips for successful commercial negotiations

Negotiating a better deal

My negotiation training ground

Today I’m sharing 5 hot tips for successful commercial negotiations, tried and tested by me during my legal career.

If there’s one thing I did a lot of as an in-house lawyer, it was negotiating. Part of my job was helping the company reach an acceptable position on commercial contracts, but there were other kinds too. I frequently bargained with internal stakeholders about management of risky projects. Other times I dealt with landlords, insurers and other service providers. And last but certainly not least, I supported my employer’s navigation of disputes.

All of those negotiations reached a more satisfactory conclusion when I was working with the commercial team rather than out in front as the lone legal representative. My experiences taught me that a collaborative approach is always more productive than lawyers brandishing writs at fifty paces.

My time as a company lawyer taught me 5 vital skills that I still use every day and try to instil in my clients:

1. Don’t be afraid to negotiate

So often, contractors feel that they have to capitulate to their client’s demands, just because they are the smaller fish in the pond. However, your client will typically expect to concede some commercial and legal points. They know that negotiation will likely result in a stronger project outcome. Capitulation can also appear very unprofessional. It looks as if you haven’t even read the contract, which in itself makes you a risky prospect.

2. Understand your commercial position

Go into every negotiation with the best possible understanding of your position. Know how much margin you have to play with, what your risks are and how you can manage them outside of the contract (e.g., changing the specification, buying project specific insurance).

3. Understand your legal position

Make sure you have read and understood the clauses that deal with the key project variables, including:

  • each party’s expectations on scope and price;
  • change management, including variations and extensions of time; and
  • relationship management, such as dispute resolution and termination.

4. Workshop the other party’s likely position

Get the project team together and think about your client’s pressure points. Examples might include scheduling, lead time for materials and upstream variation management.

5. Give yourself a pep talk before the meeting

Even small negotiations tend to stimulate tension, emotion and adrenalin. Take 10 minutes before the meeting to think about your best and also acceptable outcomes. Remind yourself to keep an open mind and stay calm in the face of aggression from the other side.

Bonus tip! Know when to zip it

Want to know one of my favourite strategies for getting the other party to give up information and ground?

It’s SILENCE. Most humans are made uncomfortable by silence, and feel compelled to fill it with noise. If you pause, it will often cause the other party to speak first just to avoid a (perceived) uncomfortable silence. The more they speak, the more information they are forced to share. Information is power in any negotiation.

Interested in helping your commercial team develop stronger negotiation skills?

So there you have it – my 5 hot tips for successful commercial negotiations. But what about your business – are you great negotiators, or could you use some help?

As an in-house lawyer I helped to develop and deliver a training program for project managers. It successfully improved their ability to achieve better deals and hence better project outcomes. This was one of the most effective risk management strategies I have had the pleasure to be involved with. It inspired me to help other companies arm their commercial teams with similar skills. Let me know if you would like to discuss a tailored training workshop for your commercial and contract managers.

Favourite negotiation skills resource

“Getting to Yes: Negotiating an Agreement Without Giving In” by Roger Fisher and William Ury. An oldy but a goody, still stands up after almost 40 years.

Photo of Gemma Nugent

About Gemma

I help construction, engineering and consulting businesses create and negotiate clear contracts so they can achieve great project outcomes. I founded SoundLegal to help SMEs in the engineering, construction, consulting and light industrial sectors manage their risk to support business growth, by finding practical, common sense solutions to contractual and other legal challenges. Subscribe to the SoundLegal newsletter “No Jargon” to hear monthly business insights from me.

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