Fee negotiations can be nerve-racking. Not only do we run the risk of underperforming (i.e. not getting the fees we think we should get) but we also run the risk of damaging the client relationship and of losing the specific assignment if not all future work from this client.
Preparations are key to improve the chances of ending up with a “good” outcome. Unfortunately many professionals tend to prepare for fee negotiations too late, too little and often too superficially. There are usually many reasons for this – they can almost all be reduced to two or three basic reasons: fear, lack of prioritisation and a failure to look at the counterparty’s perspective.
There are many elements of good preparation – including running the numbers, researching alternatives (your own and that of your counterparty), preparing for the information exchange, determining a concession strategy, looking for creative ideas and looking at framing issues amongst others.
As part of their preparations great negotiators also look at ways to building a relationship with the counterparty and at ways of influencing the negotiation away from the table in advance. These negotiators differentiate themselves in part by the rigour, discipline, as well as the depth and breath of their preparations.
One approach to preparation however that lends itself particularly well to less experienced or infrequent negotiators is to discuss their preparations and planned approach to a pending negotiation with a colleague or trusted advisor or friend.
In so doing the negotiator begins to reflect on the upcoming negotiation and inevitably starts to consider their negotiation position. If the colleague or trusted advisor/ friends asks simple and reasonably well-informed questions the negotiator will soon broaden the areas he or she will be preparing for. Simply just explaining the background to the negotiation alone is likely to uncover important issues that the negotiator may not have been fully aware of initially.
The discussion may even move into a form of simple role playing in which some of the views and perspectives of the counterparty will start to be explored. This is one of the most important features of good preparations – thinking about a negotiation from the counterparty’s perspective.
One of the other important benefits of discussing a negotiation in advance with a colleague or friend is that most people will find the actual negotiation less stressful than they otherwise would have, having already thought through key issues and anticipated key demands or objections from the other side.
The better the preparations in advance of the discussions the greater will be this benefit as the discussions are likely to go deeper and be better informed. A discussion with a friend or colleague cannot be a substitute to good preparations but it can help get the most out of them.