Negotiation is a strategic discussion between multiple parties which typically resolves issues and persuades all involved to reach a favorable agreement. Often used as part of a business transaction, effective negotiation can help parties reach a compromise that hopefully leaves all parties feeling satisfied with the final deal. Depending on the issues, negotiation can have either mutual benefits or minimize future damages.
Whether it’s drafting a partnership agreement or executing a contract, there are steps that should be followed in every negotiation.
Step 1: Identify the issue and prepare for discussion. At this stage, all parties should agree upon relevant negotiating topics. All parties at the negotiating table must recognize potential conflicts, impacts, implications, and limitations of their desired outcomes. Attorneys prepare their clients for this initial step by identifying all relevant parties, the issues at hand, the desired outcomes, relevant policies and laws, and a clear outline to delineate the conversation and avoid arguments.
Step 2: Begin on neutral ground. Everyone at the table has the same goal—to benefit the most or reduce any liability or damage. A seasoned attorney like Edward Reyes begins by establishing mutual trust, using critical communication skills such as asking clear questions, listening attentively, and clarifying and summarizing what’s been heard. Equality is key to a fruitful discussion and the best possible outcome. It is impossible to find resolution if any involved party is overly defensive or aggressive about their stance.
Step 3: Express goals. Many negotiations begin with the intention to do something for the other party in exchange for a concession. Your attorney will make sure you are fully aware and prepared to respond to any potential concessions. When goals are expressed clearly, it helps you reach a favorable outcome as quickly as possible. However, the conversation should not center solely around the legitimacy of a desired result. Instead, it should focus on why a specific outcome is favorable and what measures can be taken by both sides to reach each other’s intended goals.
Step 4: Seek a mutually beneficial outcome. Effective negotiations can never happen if one party is negotiating entirely for their sole benefit. Instead, the goal should be to reach a positive outcome for everyone. While a win-win situation might not happen in every case, all successful negotiations can lead to a respected and mutual agreement. All parties must be willing and able to listen, understand, and compromise.

There are two main types of negotiation, distributive negotiation and integrative negotiation. Both involve some form of strategic discussion and may intend to either persuade or seek others to find a compromise or resolve issues.
Distributive negotiation revolves around concessions and conflict resolution, such as the final price in a real estate contract or the terms of a business proposal. In this type of discussion, both parties agree to a fixed desired outcome that may not necessarily be the final result. This leads them to bargain for the most favorable alternatives and settle on a mutually beneficial agreement.
Integrative negotiation, on the other hand, respects each party’s desire for a different outcome. This form of negotiation helps expand the potential outcome for all parties. There may be concessions involved, but most likely evolve into a quid pro quo that benefits each party through agreed-upon trade-offs.
A real estate contract is one of the most common types of negotiated contracts. Ultimately, both parties agree upon a price by meeting in the middle or accepting the terms at face value.
A negotiated business transaction might involve an investment contract or a service contract for a business that has decided to expand its supply chain or find a new manufacturer for its products. For example, through negotiation, the business is able to successfully acquire two new suppliers, allowing the business to expand its inventory, save money, and provide more goods without dramatically increasing operational expenses.
Hiring an experienced business lawyer like Edward Reyes can put your business in its best position for success. To learn more, call 813-421-3411.