Vol. 3 No. 8		August 1984

In the world of industry and commerce, negotiation is something of a great game. From your perspective, it may be a game with a strange set of rules. This is not surprising, for the rules are written and refereed by players whose motivations are often very different from your own.

A professional services agreement drafted by an attorney for one of your clients is an invitation to you to join the game. As foreign as the rules may seem, and as unappealing as the prospect of joining in may be, the invitation is one you can hardly turn down. Careful negotiation of your contracts can be critical, not only to the success of your projects, but to the financial well-being of your firm. The key is to master the rules first.

The underlying assumption is that a contract is the product of negotiations conducted in good faith by parties of equal bargaining power. Never mind, for a moment, that your client may be the largest industrial complex in the western world. At the outset, everything is negotiable.

According to the rules, the game is set in motion when two parties identify a common objective. An offer is made, it is accepted in principle, and one of the parties undertakes to draft a written instrument of understanding as to how and under what terms and conditions the objective is to be accomplished.

Those who are experienced in the game know that the first party to the table with a draft agreement is at a decided advantage. That draft defines the framework for the discussions which follow. It places the initiators in a position to identify all of the benefits they would like to have and to present them in the form of a set of demands. They may even take the preposterous stance that their demands are non-negotiable (knowing, even as they do, that this is nonsense).

Their goal is to win. Their strategy is to expand their initial advantage through intimidation. The more off balance the party on the other side of the table is going in, the more likely it is that the desired benefits can be preserved. Not all will survive the process, but some will. The more, so this line of reasoning goes, the better.

Enter the architect or engineer, who by nature, training, and experience wants more than anything else to avoid conflict and get on with the work. Reading the contract is burden enough; the idea of taking exception to it can be problematic, at best. Nevertheless, that is precisely what you are expected to do, because that is the way the game is played.

Your goal is not so much to conquer as it is to create realistic expectations. You know how difficult it is to bring a complex building project to a successful conclusion, even under the best of circumstances. If the basis for your relationship with your client is one of adversarial posturing going in, the odds are already working against you both.

What you need more than anything else is a clear understanding of your respective obligations and an agreement that reflects that understanding equitably. To get there, you are going to have to hold your client's attorney at bay long enough for you to work through important issues of risk and responsibility directly with your client.

The problem, at this point, is that you have already lost the first and, perhaps, most important round. The time to begin to play by the rules is at the very outset.

If you do not already have a set of standard forms of agreement, you might start with those published by your professional society. Work with your attorney and your insurance broker to adapt them to the unique needs of your practice. Make certain you understand the issues they raise and their relative importance to you. Then, within 30 to 50 seconds after you learn of the award of a new project, forward a copy to your client suggesting that it serve as the basis for your negotiations. Here is a letter you might use to do so:

Dear New Client:

We are pleased to have been selected to design your international headquarters complex at Spirit Lake. We are excited about the project, and we look forward to meeting what promises to be an interesting challenge.

A copy of our standard professional services agreement is enclosed for your review and information. It is the product of extensive efforts over many years, efforts involving owners, architects, engineers, and contractors in the joint development of fair and equitable contract documents. It addresses issues of great importance, both to us and to you. It also represents the assumptions underlying our estimates of professional time and cost.

The terms and conditions of this agreement, of course, require discussion. The purpose is to arrive at a clear, mutual understanding as to our respective roles and responsibilities on the project and the extent to which our services might reasonably be expected to reduce your risks in construction.

Please take the time to review the agreement carefully. We are prepared to answer any questions you might have and to explain the reasoning behind the provisions it contains. I plan to give you a call in a week or so to see if we might not set up an early meeting to finalize our understanding.

What good does this do? It gives you a reasonable point of departure. Even if your client ignores your request, you have established your own framework for the give and take expected to follow. You have taken a position you believe to be fair, and you have made clear that whatever it is your client may wish to extract in addition, it is likely to be subject to negotiation. This is very different from being forced to inquire politely as to whether anything of consequence might somehow be salvaged from your client's draft.

The idea is to strike a balance. For everything you concede, it is reasonable for you to expect some concession in return. Thus, the importance of understanding the issues, knowing your priorities, and having acceptable, fall-back alternatives at hand. The better prepared you are to give in where it matters little in return for a gain where it can matter a lot, the more likely you are to come out of your negotiations reasonably intact.

In the process, you have a one-time opportunity to educate your client about the risks involved and a one-time opportunity to discuss the limitations on your ability as a professional to help to mitigate those risks. But, what happens if all you get in return is a deaf ear? We will deal with ways to cope with typical barriers to your efforts to negotiate reasonable agreements in a future Part II.