Archive for October 3rd, 2011
The ability to negotiate well is one of the most important tools you can have in business. Not only do you negotiate deals with clients and vendors but you also spend time negotiating on your own behalf. For example, we all have to negotiate our own salaries and employment terms. Well, in spite of their importance in business, negotiations is also popular at the law school. And this semester, I’ve been enrolled in a negotiations course where we are learning many of the basics about how to negotiate going forward.
This semester I am taking a negotiations course at the law school. As a JD-MBA, we have the choice to either take the class at the law school or at the business school; and either way, the units count for both schools. As far as I gather, the two options are pretty similar conceptually. But they do have a couple of tangible differences that can influence which school we decide to take the course at.
The first difference is the principle versus agent distinction. At Kellogg, you negotiate as the principal. This means you take on the role of CEO, or newly hired employee, and think about what your interests are. From there you determine the best strategy and negotiate to come up with the best deal possible.
On the other hand, at the law school, we negotiate as agents (e.g. lawyers). In that role, we think about the best interests of our client, take on the role as representative, and work to structure a deal on the client’s behalf. Unlike our professors at Kellogg, our negotiations professors at the law school are not tenured professors. Instead, they practicing attorneys, who not only negotiate for a living but also get trained to teach negotiations throughout the semester.
Another distinction is the type of students in the class. On the business side, you have people with more experience negotiating. They’ve negotiated deals at banks and consulting firms. They’ve negotiated employment agreements more often since they’ve worked longer. And they have more work experience generally, so that lends itself well to understanding terms of a negotiation. On the other hand, law students tend to be a lot more aggressive. They read more details of the case. Find more loopholes. And are a bit more focused in trying to win.
And finally, another difference is the type of professor that teaches the course. Unlike Kellogg, where negotiations courses are typically taught by tenured faculty, at the law school the class is taught by practicing attorneys. My class is taught by a corporate lawyer at Sidley Austin. He focuses his practice on real estate transactions, where he represents international lenders, real estate funds, investors, public and private companies, and developers.
In general,the course is broken up into a number of negotiations – we usually have one negotiation per week. Before each negotiation, we do a pre-negotiation analysis where we discuss these concepts in the confines of our own positions and interests. This is helpful because it ensures we come to class very prepared.
Likewise, after the negotiations process, we spend the class discussing some of the fundamentals of negotiating. So we talk a lot about things like BATNA, zones of interests, mutual gain, concessions, and reservation points. The terms and tools are good because they help you to remember what things to think about; how to understand your opponents underlying interest; and how to consider the importance of ethics in the process.
In sum, I’d say that the best negotiators create the most value possible, take their fair share, give others value as well, but prevent themselves from being exploited by the other side.
In the end, it pays to know your opponent. Know their strengths and weaknesses. Understand your interests and theirs. And analyze who has the upper hand.
In the words of Sun-tzu (as quoted by Bud Fox in the movie Wall Street) “If your enemy is superior, evade him. If angry, irritate him. If equally matched, fight, and if not split and reevaluate.”