It should come as no surprise that many professionals find fee negotiation one of the most trying and difficult challenges of their work. It may however come as a major surprise (especially to the very professionals finding negotiations so difficult) to discover that many of these difficulties are in fact self inflicted. It is often the very behaviour of the professional that prompts the other side to adopt a tougher, more challenging negotiation approach. Here are some of the most common examples:
Making an opening offer that is too aggressive: Often professionals will start a negotiation with an opening offer that is very much higher (in the case of a seller) than the other side consider acceptable (we refer to this as a “Micky Mouse” opening). This will either prompt the other side to terminate the negotiation prematurely or to counter with a counter offering than is significantly lower than would otherwise have been the case (aka a Donald Duck reply). Of these two possibilities the later is by far worse because under such circumstances both sides will have to work harder or conced more to reach common ground. This raises the chances that one side will cede disproportionately more than the other (and feel aggrieved) and that the process becomes acrimonious – potentially harming the relationship.
Making an opening offer that is too soft: Some readers may be surprised to read that starting softly, i.e. low (as a seller) can also make life more difficult. We frequently observe in our work that when one side opens with an attractive offering that the other side will frequently decide that they have nothing to lose and may as well hang tough to turn a good offer into a highly attractive one. The opening party (often the professional) thus encourages a more aggressive negotiation stance from its counterpart and either has to yield additional concessions or be considered inflexible or worse still, to be negotiating in bad faith. We often refer to this phenomenon as the “sharks smelling blood” – and going for more!
Delivering a weak opening: Irrespective of the level of the opening offer many professionals want to signal a willingness to be negotiable. They do so be opening in a manner we describe as “floppy”. This is often done out of fear of potentially losing the work. Trained or only semi-trained negotiators will not hesitate to pick up on the invitation to negotiate whatever opening position has been made. Although a negotiation is usually very likely the invitation to negotiate will encourage an even more rigorous approach from the client.
Making a best and final offer: Making a best and final offer is often an attempt to head off further negotiations. Although some think this a signal of strength, most trained negotiators don’t believe it and simply see it as a clumsy attempt to shorten a process – so they will insist on continuing. Often however many negotiators will see a best and final offer as an oportunity to test the resolve of the side taking this stance.
Point scoring: Some negotiators think that they have to score points in front of their colleagues or others to show how good they are. Avoid this as someone on the other side may be tempted to see this as a sport and will also try to score points.
Bad preparation: Whatever happens in a fee negotiation – not preparing is probably the worst mistake a professional can make. See Chapters 7 and 8 for what good negotiators do to prepare.
How to avoid these mistakes and others is described in more detail in High Impact Fee Negotiation and Management for Professionals.