Fear Not Contract Negotiations

Often we here contracts called a necessary evil, full of legalese, unintelligible, draconian. Contract signatories on both the service provider and recipient side trade horror stories of bogged down contract processes, debating "what-if" doomsday scenarios of project failure, rights and liability that seem to hurt project relationships more than help.

While contracts often come bundled with these negatives, I see contracts and contracting processes offering a terrific opportunity to establish strong, successful partnerships. While there are clearly important legal protections a strong contract offers, what's important for me is contracting as a tool for really understanding relationships better.

I really appreciate certain powers of contracting, including how these processes can:

(1) Detect the "Pink Elephant in the Room"

Contracting processes are like radar, seeking out uncomfortable truths. These are often discovered in subtle ways, such as a shift in seating position, a glance, falling asleep... In one negotiation this year over the phone, my contracting partner very quietly scoffed at some of the needs I expressed. It became evident that we were not a good match, and I did not go any further with negotiations.

In text, various passive voice sentence structures often refer to the pink elephant without actually pointing right at it. I found this one in a recent contract: "Client must be notified of any project scope increases resulting in additional cost, and consultant must receive approval of these costs prior to performing additional work." Who will notify the client exactly? Who gives the consultant approval? The lack of project decisionmakers may be the elephant here.

(2) Seek Common Ground

Ok so finding a pink elephant can be awkward. The good thing is, we found it, and now have a good excuse to talk to it. We all want a successful project, now I can simply ask my contracting partner what they need. "Are you concerned about keeping to the timeline? Ok, what can we do to make sure we can make good decisions and stay on task together?" We could just shuffle the contract paper back and forth, compiling huge collections of changes tracked in multiple colors, but I find it more effective to simply use conversational language first to work it out, then try out a few sentences together that can form the basis of the contract language.

(3) Clarify Meaning

With all the varieties of agreements out there, as well as experiences with successful and failed projects, we come to the table with lots of preconceptions. This happens a lot in billing practices. Some people expect the invoices to delineate time and materials, even if the contract is fixed fee - it just seems like the right definition for an invoice. Some may expect no deposit, or payment after the full project is completed, bi-weekly invoices, etc, etc. People have different understandings of what sign-off means - when can I expect delivery, and how to I communicate if it needs more work? Intellectual property is often a difficult issue. Some folks simply assume a blanket "we own everything you give us" policy without realizing what it means to their contracting partner, or whether they actually need all that control.

(4) Support the Work Plan

I appreciate contracts that do a good job integrating the work plan. For instance, the schedule in the work plan should accommodate the contractual obligations to deliver and provide feedback on deliverables within a certain time. If these are properly bundled together, the workplan helps to make the contract less "offensive", less of a weapon for both parties and more as a common platform for executing the project.

(5) Test the Strength of the Relationship

This is the biggest advantage of contracting processes. Often the conversations prior to contracting are about whats possible, how great the project is, how skilled the consultant is, how amazing the client is, and focuses on reasons why we are a good fit. But after the honeymoon is over, do you still get along? Can you actually work out a difference of opinion? There is no shame in discovering that you cannot. Every year I have projects that get to this stage, and should not go any further. It's likely a huge benefit for both parties to recognize as early as possible that the relationship is not working, even if the match on other levels is great. Missed expectations emerge often, and require strength of communication and trust to work them out to the advantage of all.