From Shouting Matches to Cultural Misunderstandings: Navigating International Contract Negotiations
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Iulia is a proud new associate at one of the largest firms in town. She decided to join the firm due to its reputation on handling high-profile matters for clients around the world.
One day, her supervisor gave her the awesome responsibility to negotiate a minor purchase agreement with lawyers from a neighboring country. Unfortunately, these lawyers are driving Iulia crazy with not only their contract comments but also their aggressive negotiation tactics. In fact, she would candidly convey to you that she has wanted to tell them to ….. off on several occasions.
If you’ve found yourself in a similar situation with foreign lawyers, read on for some tips about how to effectively handle such drafting negotiations. In particular, you will learn about:
How to manage bizarre behavior and emotions in the conference room,
How to respond to requests for suspicious provisions, and
How to deal with overly-complex provisions from your counterparts.
I. Why are they yelling at me?
When I was a young associate in Chicago, we sometimes engaged in screaming matches with the other counsel about philosophical differences over the “right” provision language for a contract. Although this behavior wasn’t very professional, it wasn’t that surprising either.
Later on, when I started working with European lawyers, I discovered that most of them don’t like to shout. In fact, they frustrated the hell out of me with their passivity. What gives?
As you probably know, there are huge differences between how different cultures handle negotiation differences. Some cultures love to express their emotions (e.g. Italians and Israelis), while others view emotions as having no place in the room (e.g. Koreans and Japanese).
So what?
If you find yourself getting frustrated by the other lawyers, ask yourself whether this frustration is due to them truly being jerks (probably not) or due to cultural communication differences.
If it’s the former, you might want to point out to them the behavior that you find inappropriate. (Surprisingly, this tactic often works well, because most people aren’t aware of their bad behavior. More importantly, they don’t want to be seen as acting like a jerk.)
But, if it’s the latter, you should take a step back and reassess their communications from the perspective of their culture. This approach should not only be helpful for decreasing your frustration levels, but it might also help you uncover some negotiation and drafting tactics that would be more effective given their cultural preferences.
II. Why are they pushing for that provision?
When I first started training EU lawyers on contracts, I was frequently surprised by their attitudes towards arbitration clauses. In the States, I was always told that arbitration clauses were a great solution for clients, because they offer a quicker solution for parties AND they are usually much cheaper than lawsuits. But in some European jurisdictions, the lawyers feel that arbitration is actually a more expensive solution for their clients and can lead to problems regarding enforcement of arbitral awards.
Here's the problem. I didn’t know about this reasoning of EU lawyers, and they definitely didn’t know my American reasoning. These hidden differences in reasoning can easily lead to unnecessary levels of frustration between the parties.
So what?
If you find yourself getting frustrated by a foreign lawyer inexplicably pushing a particular provision, ask them for the reasoning behind their request.
Their answer will have two benefits. First, they will probably have a good reason that you never thought of, so you can calm down. Second, once you understand their reasoning, you can likely come up with an even better provision that (i) addresses their goals and (ii) eliminates the frustrating aspects of their original provision.
III. What the hell does that even mean?
I never realized how annoying contracts can really be until I had to review a contract in a foreign language. (I got assigned a German contract in a due diligence, because apparently, I was the only person in our Chicago office with any German skills.)
Unfortunately, when lawyers get the opportunity to work on international deals, they not only fail to take into account the likelihood of key readers not being proficient in the underlying language, but they also tend to make their provisions more complicated due to the prestige of being involved in an international deal. As a result, we have a perfect environment for creating confused clients and frustrated lawyers.
So what?
If you find yourself getting annoyed because you have no idea what the other party’s provision is trying to say, take a deep breath and recognize that some of your provisions are probably creating the same effect on others.
Next, make the provision more readable for international audiences via the following steps:
Break up the provision into its main elements: (i) obligations/rights and (ii) conditions or other qualifiers;
If possible, rewrite each of the main elements by beginning with (i) a party and (ii) what they will do or need to do; and
If the provision contains multiple obligations/rights, communicate these in separate sentences.
Once you have created a more logical version of the provision, test out the new language on the other lawyers AND their clients. Most likely, they are going to be happy with your improvements. But, even if the other lawyers are dismissive of your provision deviating from their preferred language, their clients will likely overrule them due to this preferred language between unnecessarily complex.
Learn More
If you are looking for more tips on negotiating international deals, download the great free report from Harvard’s Project on Negotiation titled - International Negotiations: Cross-Cultural Communication Skills from International Executives.