When should you not involve legal?

It is the summer of 2003 and I am in the middle of a contract negotiation between two multinational companies. The purpose of this negotiation is to create a partnership for a joint product set which will create a triple win. A win for the end-user of the combined products, and a win for both our companies by having a better offer for customers. In addition, the partnership was set up to enable collaboration between our sales forces. This was already in operation, we just needed the contract to get it embedded in the systems and procedures of our two companies.

There was just one minor element we had overlooked on both sides of the negotiation table. We had both been working on arms length with our respective legal departments. These departments had never been to the negotiation table. Now we felt the need to do so. On the 11th of July 2003 we had our first conference call with the purpose to include our joint legal departments hands-on in the negotiation.

At hindsight that was not one of the best decisions we made. On both sides, legal had their own ways of doing things, their own peculiarities so to say. That first conference call would become one of many. One of the legal representatives was replaced in the process, and on the other side some lawyers refused to participate in the calls. Changing the negotiation team made that the whole negotiation process was now notoriously difficult. The sequence of events, combined with some poor communication, made that people were acting from the trenches defending their own positions, instead of reaching out to look for mutual solutions.

In the early summer of 2004 we finally reached an agreement and on the 11th of July 2004, indeed exactly one year after our first conference call, we signed the contract. A contract that in the end was never used, since the people in the field had already found their workarounds to continue their business.

This contract negotiation taught me a lot about involving stakeholders, about communication and about bringing the right people to the negotiation table. Optimal stakeholder involvement requires a constant consideration of who to involve when in a process, whether it is in a partnership negotiation or other aspects of business. As for the legal function, that experience made me realize again that in a partnership creation process the legal function is one of the stakeholders. It taught me to always involve the legal function early on as an advisor, rather than later on as a negotiator.

Often we learn the most from the lessons that really impact us. At the moment we experience them, those lessons might not be the most pleasant experience. However, at hindsight they can turn into excellent learning points. Preferably I call these experiences lessons, rather than failures. They teach us what works, or what does not work. It is like Edison once said:

“I have not failed 10,000 times. I have not failed once. I have succeeded in proving that those 10,000 ways will not work.”

 


 

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