High-profile contract negotiations can present a number of unique challenges. When there's a lot of money on the table, it's particularly important for negotiations to be conducted properly, assuring there are no significant delays and that both sides are satisfied with their respective commitments and obligations before the contract is signed. This becomes even more important when the results of a negotiation can have a seismic impact on an organization.
Baseball: The Robinson Cano Contract Negotiation
All-Star New York Yankees second baseman Robinson Cano will be the hottest free agent on the market this winter and a nation of baseball fans are interested to see where he ultimately lands. Although the Bronx Bombers missed the playoffs this year for only the second time in 19 seasons, Cano continued to establish himself as one of the best players in baseball and this off season he expects to be paid as such. According to an ESPN report, he is seeking a 10-year, $305 million contract, which would tie the same deal the Yankees gave Alex Rodriguez as the most lucrative contract in the sport's history.
High Profile Negotiations Change the Playing Field for Others
Sources close to Cano told ESPN that if he does not receive the money he wants from the Yankees, he may go to another team. New York will have a chance to negotiate with its superstar, and nothing will happen until at least November, but it's wise for the Yankees to prepare now, given the high stakes nature of the impending negotiation. Not only will Cano and the Yankees organization be impacted by what ultimately transpires, New York fans across the globe are anxious to know if the Yankees' best player will still be on the team when they report to spring training next February. Moreover, the dollar amount on the contract Cano ultimately signs will likely play a significant role in determining the value of future contracts around the league, as the history of the sport has proven.
The Contract Process- Avoiding Pitfalls
Given the number of people invested in the outcome of this negotiation, the manner in which it is carried out will be crucial. Both the Yankees and Cano's team of agents and advisers will have to follow best practices during the every phase of the negotiation, leading up to and including the signing of the contract. There needs to be a sense of urgency on both sides, as both will want to come to a timely resolution that best suits everyone involved.
Not every organization has to concern itself with a $300 million baseball player, but that doesn't mean there aren't high-stakes contract negotiations taking place every day across the globe. When a contract has a major impact on a large number of people, whether they are baseball fans or workers affected by a business merger, all sides involved in the process cannot afford to make any mistakes along the way. Lost documentation or a failure to recognize language amendments could hinder the process, delay signing or even result in litigation during the lifecycle of an agreement.
Keeping the Process Moving
A centralized contract lifecycle management system can help reduce many of these risks. When documents are passed back and forth, whether it's through email or another communication means, both sides of the negotiation run the risk of losing something important or inadvertently working with an outdated version of a document.
Did You Know?
Did you know that experts agree that a Contract Lifecycle Management (CLM) system can reduce negotiation times by 30%, reducing costly legal man-hours and the possibility of lost opportunity cost. Enabled Contract Lifecycle Management solutions can achieve this through the use of a a negotiation deal room—a virtual negotiation room/folder, which can be accessed by all parties exclusively, a place where all negotiation documents can be stored and shared. This reduces the likelihood of losing documentation. It's crucial for the Yankees or any other organization partaking in a high-stakes negotiation to ensure it doesn't lose any of their documentation. While every negotiation is not necessarily complex, whenever two parties unknowingly refer to different documents during a negotiation, the complexity of the negotiation and any resulting frustration escalates accordingly.
Minimize Miscommunication and Maximize Your Results
Like the Yankees will do this winter, organizations should aspire to minimize negotiation confusion, allowing contracts to be signed in a timely manner, while creating an environment that will bring negotiations to a successful conclusion. This doesn’t imply that negotiations should be rushed, rather, that obvious pitfalls should be avoided. Filled with egos, strategies, and expectations, negotiations don’t need the additional burden of unnecessary confusion and miscommunication.
The CLM Solution: A Powerful Contract Management and Negotiation Tool
Reducing the chance of lost notes, exhibits, addendums and agreement versions helps minimize complexity, making it so organizations don't have to spend time looking for a particular file. There are other ways businesses can improve negotiation efficiency as well. For example, most contracts go through multiple iterations, sometimes as many as 40 or 50 for a major negotiation. Both sides want to make sure the any language that has been agreed upon is properly incorporated and correct. The ability to make changes and quickly compare versions allows both sides to quickly see what was changed and compare documents. This helps keep the negotiation moving without running the risk of one side signing a contract they don't agree with, because an element was added or removed and without them recognizing the change.
There are many factors that contribute to a successful negotiation, whether through the use of a disciplined process, the use of a contract management tool or a proven strategy. Though these issues become all the more important when the stakes are this high, implementing a Contract Lifecycle Management (CLM) solution addresses many potential issues, helping to facilitate virtually any negotiation through improved clarity, communications, and a well-proven, disciplined process.
Tags: CM News