The Secret Sauce of Negotiating Contracts with Laura Frederick

Hello, my friends, and welcome to another exciting episode of Negotiate Anything. This show is produced by the American Negotiation Institute, and with over 5 million downloads and listeners in over 180 countries, listeners just like you have made this the number one negotiation podcast in the world. Hi, my name is Kwame Christian, and I am the founder and CEO of the American Negotiation Institute. Here at AI, we believe that the best things in life are on the other side of difficult conversations. And we are passionate about providing you with the best content that will help you to make your difficult conversations easier, both at work and at home. Lastly, I want to remind you that we offer consulting and conduct trainings both virtually and in person all around the world. Our focus is in three main areas. First, negotiation and conflict resolution. Second, leadership. And lastly, diversity, equity, and inclusion. Check the link in the description below to learn more about how we could work with you and your team. And now, without further ado, let's jump into the interview.

Foreign.

Laura, thanks for joining us today.

Thank you so much for having me. I'm so excited to be here.

Yes, we are excited to have you. This has been a long time coming. So how about you start us off by telling the listeners a little bit about yourself and what you do.

Sure. So I am an attorney. I've been doing commercial contracts at large law firms and in house for about 25 years, up until about a year and a half ago when I opened up my training business that teaches people practical ways to draft and negotiate contracts. And so that business is called how to Contract. And so that's my main thing these days, is I spend all my time training and teaching people about contracts.

This is great. And Laura, my humble friend, can you please give a shout out to your upcoming conference? This is a big deal.

Yeah, no, I'm so excited about it. It's called Contracts Con and it's, we're calling it a training extravaganza because it's not like your traditional conference, which has a bunch of paid sponsors who are speaking on panels and everybody's talking at a high level. This is 100% training, unpaid. This, you know, there's no paid sponsor speaking slots. And we're just going to bring all this practical training to everyone about contracts. It'll include include sessions that go into indemnification and revenue recognition and intellectual property, all the meat and potatoes stuff that you need for contracts. And then it'll also have workshops to improve our skills, our understanding in a more dynamic way.

This is great. What kind of speakers are coming to this event?

Laura, we've got some great speakers. There's one in particular I want to tell you about. His name's Kwame Christian. He is amazing. So the beautiful thing, you know, I was putting together these workshops and I wanted to cover negotiation and I was like, well, I have to ask Kwame. And not only that, but we have you coming for two workshops, which is tremendous. So you're going to be the first workshop of each of the two days. And the first day you're going to cover kind of core skills and then the second day we're going to apply those to contract negotiations. So this, these sessions, the workshops, because of their nature, are only going to be for the in person attendees. It was going to be a little bit tough to try and create that training environment. It was going to be a little too hard to just broadcast the workshops because they're going to be so interactive. So those are just going to be for the people who come in person to Miami and join us for this amazing contract party. And then those who can't, join us. We're still going to have 12 fantastic sessions taught by lawyers who are all practicing lawyers who are going to be focused 100% on practical what you need to know to do your job today kind of information.

This is great. So, yes, listeners, if you want to hang out in Miami with Laura and Kwame, check out the link in the description. So if you want to learn more about the contract, the contracts con, it is going to be fantastic. I'm excited and I'm happy for you too because I know this is, this is big for the business. Business.

Yeah. And some of your other, the people that have been part of your community, whether it's Lisa Lang, Nadel Najafe, a lot of other people like that are also going to be there too. So it's going to be all star cast.

That's great. Yeah, there are some former guests that will be there too. This is going to be fun. This is going to be fun. So, yes, if you want to nerd out with all of us in Miami, make sure you check that out. And so let's get into this episode today. This is going to be exciting because we're talking about your unique philosophy to negotiating contracts. And I thought it was really interesting because of all the ways that we could go with your negotiation philosophy because like you said, you've negotiated at the highest level in house with major corporations, with big law firms, and now on your own, with your own firm. You said kindness is a guiding philosophy. And I know there are going to Be some hard nosed negotiators out there saying, oh, here's this woo woo soft stuff again. Well, I'm here to get deals done. So when you think about kindness as your guiding philosophy for contract negotiations, where do we even begin?

Well, I think we start from a place of what are you trying to accomplish with this negotiation? You always have to be thinking about that. And our clients who hire us to negotiate contracts aren't hiring us to have a battle of the wits. They aren't hiring us to get the best win on every single point. In most cases, they're hiring us to try and get a solution. And that solution is either they're making money or they're solving some kind of problem if they're buying a service or a product. And so often that service or product, or even getting money that is going to create a successful deal that is not a once and done event. Often there's a long term relationship that comes with that. So by approaching with that all in mind, by approaching kindness, approaching your negotiations with kindness, you are setting up that relationship as a successful one for a long term. And you are creating a relationship that's based on mutual trust, on mutual, I mean even friendship. And that's a lot of what I'm always trying to get at when I do my deals. I go in looking to make friends with the other side. And that doesn't mean I let them walk all over me and I offer unreasonable positions or any of that. But what it means is I'm creating bonds in the relationship and I'm looking for ways to extend kindness to my counterparts. I'm looking for ways to give them points as often as I can so that they will extend their kindness to me as well. So it's a mutual, kind approach. But even when they're not officially outwardly extending kindnesses to me, I still see it behind the scenes. Because if I'm being supportive, if I'm being engaging, if I'm being generous, it's human nature to be generous back. Even if you're gruff and holding on and being the jerk there. Even in those cases, I find when you're being kind to the person who's the jerk, it unnerves them and they, that jerk facade starts to break down and you start to get behind these stances and this rigidity and you find the person underneath and then you just have that human connection and it just works so much better. Because I, I've tried other ways too and it just didn't work. And some of it too is because of my personality, that I'm a really nice person and I like being nice and I don't want to be a jerk. So when I was used to try and do the hard nosed negotiations, it just didn't fit because it wasn't me. And so for me, being kind, which is kind of my approach to the world in general, and bringing that into my negotiations means I have a much more genuine experience and I can focus all my energy on my goals and what I'm trying to accomplish as opposed to how I'm supposed to look or be.

Oh, this is great. There's a lot to dig into because we have kindness as a guiding philosophy, but then we also have the reason why. And it sounds twofold. Number one was efficacy because you've tried other, other pathways and they weren't as successful. And the other one was authenticity. You tried those other pathways and it didn't feel good. It wasn't who you wanted to be. And I think this is really important for everybody listening that you need to create your own negotiation philosophy. You need to determine how it is that you want to navigate the world. And it really needs be to to be based on efficacy and authenticity. Because you don't want to listen to this episode and say, I want to negotiate more like Laura, or I want to negotiate more like Kwame, you should be saying, what from this can I take to put into action in my own life so I can be a better version of myself? And it takes a lot of courage to do that. Because again, with the approach to negotiation with kindness, sometimes people would look at that and say, well, how could you ever do this? How is that possible? So how did you get the courage to be yourself in this way? Does your company invest in professional development training? If you believe that your team would benefit from a negotiation workshop, all you need to do is go to our website, fill out the workshop request form, and then we'll set up a time to chat. These workshops are completely customizable and we've done them all around the country. Negotiation and conflict resolution skills are beneficial across all professions, but they're especially useful in procurement, purchasing, sales, sourcing and contract management. Our calendar is filling up quickly and we even have some workshops scheduled for next year if you think you might want one. I'd suggest reaching out soon so you don't miss out. Check out the link in the description to learn more and we will be right back after this.

I think what I found is that at least for me, I am much more successful with this approach than any other approach I've ever used. And I think I'm more successful than a lot of the other negotiators I work with. So I regularly, I've, I took on a lot of responsibilities. So I was at Tesla, for example, negotiating billion dollar deals. I've negotiated lots of billion dollar deals for other clients as well. So I'm operating at that high echelon of commercial transactions. But even in those ways, kindness is my most powerful weapon because people don't expect it, they don't see it. Everybody's so focused on getting their wins that they are disarmed by it. And I find it's a lot of the philosophies of negotiations where it talks about working together to solve a mutual problem. And kindness is really embracing the other people on the other side of your deal and really coming together, not just, you know, at an arm's length, let's solve this problem together. But connecting with the human behind the person who's negotiating, behind their company, behind their title, whatever they are, and trying to connect with them at a real heart to heart, way apart from the deal. And this also benefits so much because, for example, if I'm negotiating, it's a hard negotiation and I reach out to the other lawyer and I say, hey, today was tough, wasn't it? And you know, it's, I'm so glad you're on the other side. And those things just create a closer, closer relationship. We may fight at length about points. It's not like I'm rolling over and conceding everything, but I'm going to treat them with respect and I'm going to just extend them all the kindnesses I would of other people in my life, whether it's my family or my friends or my community.

This is really helpful and I like that you've. You gave that example. Let's go a little bit deeper with some of these examples too. So let's say somebody says, all right, I want to use this human to human approach where I'm approaching this with kindness. The other side is approaching this with hostility. I haven't talked to them yet, but I can see their email correspondence. It's a little bit spicy here. Right. And so how would we put this into action at the beginning of the conversation? How do you make that connection early on to show that you want to be collaborative and you want to work with them in this way?

Yeah, so the main way I do, first of all, when you're, and when you start out that you're smiling, you're laughing, you're saying, oh, I love whatever your town is. You, you know, joke about something and you bring some of your human elements, like, oh, my God, sorry I'm late. My kid was just doing this because the. They can get to know you as a person and the more little bits that you give them about you and that transparency, I think that sets the stage. And again, not being obnoxious about it and going on and on, but giving them insights that you're not a robot, that you're a human, you have human issues, human problems. All that I find is really great. And then once if they're coming in hostile, then I'm starting with, okay. Then I really focus on two things. One is anything that is going to generate more hostility. So let's say it's a super difficult point in the negotiation and I typically will try and put a pin in it and hold on, because I never want to have those big fights early on in the relationship. I always want to save the fights for later when we got to know each other really well. So in the beginning, let's say we're starting to negotiate and they start getting hostile, even more hostile. Like, such a good point. You know what, let's put that on hold for a little while because I want to think more about all those great points you just made and talk to the client. Let's see if we can come around. Because you do make such great points on it. So sort of that way. And then focus on as much as many concessions as I can give, because I'm always looking throughout my negotiation for making as many concessions as I can on the things I don't care about. Because then when it's time for things that I really do care about, there's that human nature where they have to be reciprocal and they're having to give things back to me. And then even if the lawyer's being the jerk, the business people who maybe don't negotiate full time will kind of put pressure on their lawyer. You know, just, no, I'm okay with it. Let's give it to her. So my audience is not just the lawyer, the jerk. This is presuming the lawyer is the jerk in the room, which isn't always the case. But let's say the lawyer's being the jerk. It's rarely. Everybody's a jerk. It's usually just one or two. And so I am building allies on the other side by being reasonable, by giving up a lot of concessions, by being nice. And so I get them on my side, helping me get the solutions that we're looking for.

I love this. There's so much goodness in here to explore. So let's start off with that expert point that you made about holding off those contentious issues. And I really want to talk about momentum here, because everybody knows that momentum exists. We can feel it. It's hard to define and explain. It's like a nebulous energy that moves in different directions. And a lot of times when you're having these difficult conversations, you can start to feel that resistance. You're like, momentum is moving in a bad direction. We need to stop this. Right. And so you're doing is at an expert level. You're not just brushing it aside and belittling them and their opinion by making it seem as though you're ignoring it. You're acknowledging it. You're validating it by saying you've brought up some really good points and you're actually giving a little bit more credence to those points because you say, you know what? I want to stop. I want to stop and think about this. I need to talk to my client about this. Let's. Let me marinate on this and let me get back to you. So they don't feel like they're being ignored. They feel like they're being respected through that process. And then it allows you to organically reorient the conversation to something that is a little bit more positive, where you have have a little bit more overlap, and then you can generate some positive momentum and then tackle that once you gather that momentum. I also like the idea of the concessions. That's really great because a lot of times people play so defensively that they don't acknowledge that there are some really cheap and easy ways that I could help this person that means the world to them but is not much for me. And that's really the heart of creativity, trading things of unequal value. What do you value highly? That I don't value very much. I can trade that. What do you value? Not very highly, but I value a lot. Let's trade there, too. And so you hold on to those things. You let them show that. You show them that they're reasonable, that you are reasonable and willing to make concessions. Then when it's time to make an ask, you can list out those concessions. And something that I like to do is I don't like to say, hey, here are, boom, there are all the concessions, and kind of lump it all together. I want to disaggregate those. I want to put it line by line. Well, I gave you this and I gave you that and this and that. What are you willing, what are you willing to give? And then they feel that pressure, positive pressure to say, oh, you know, it is time for me to reciprocate. So I really love all of these tips.

And I think another way, especially in the setting of contracts that works is that typically when we sit down to negotiate a contract, we have, let's say, 20 points in contestion on day one and we go through the first round and we've knocked out 10 easy ones and now we've got 10 left. And then those are going to be somewhat of a horse trade, but often it's not five for five. You really have to be looking strategically what's important to me. And there may only be one of those 10 points left that I really, really care about. And so I am investing all of my energy and trying to make sure that I get that one point, even if it's their top point too. You know, a lot of the dance that you do during negotiations is to achieve that goal, Always what's the goal? And so using that momentum and using the, the trading and using the, you know, that approach gets you there. And again, I find that adding that kindness layer on top makes it so much more powerful because not only am I saying, you know, I gave you this, this, this, it's, I gave you this, this, this, and I'm your friend and what are you going to do for me as opposed to I'm your combatant, what are you going to do for me? And so the, the human nature, the human urge to be kind back when someone shows kindness to you is documented and well established and using that to your benefit is so powerful.

Absolutely. And I'd like to compare this to other methodologies that might be a little bit more positional. And so one of the things that you mentioned is that sometimes there might be an approach where we focus too much on extracting value from other people without focusing enough on the relationship. Can you go a little bit deeper into the danger of being too self interested in these approaches?

Yeah, 100%. And also just too focused on the transaction and not as focused on the relationship. So most of what I do is buying, selling and licensing stuff. There's goods, services, technology, something like that. And those things rarely happen on a single day. They're delivered over time. If it's a product, there's a warranty, we need that breaks, we need fixes, we need you to, you know, deliver this emergency supply when we need it or when we want it. Services, the same thing. And if you have this confrontational, extract everything from your counterparty approach in the negotiations, just wait three months. And when you need something from them and they're not going to give it to you, even if it's an easy give, I found over my career, they still don't give it to you. And that's again, human nature because we hold this resentment in us. When you have this kind of combative negotiation of the contract, and I find this is a mistake that a lot of more junior lawyers or people who are newer to negotiations make because they see the black and white, they say, oh, here's a provision, this is the right way, this is the wrong way. I'm going to do it the right way because I'm an overachiever and I'm going to get a good deal. And they're losing sight of the bigger picture, that it's not about winning and losing individual points. And in my mind, it's not about winning or losing the whole negotiation. It's about creating a solution for both of you that works, that manages the risk appropriately and creates a good setup for both of you to be successful.

Yeah, it makes a lot of sense. And essentially when it comes down to good decision making in general, and it applies of course to negotiation, what we have to do is we have to prioritize long term thinking over short term thinking. And a lot of times what ends up happening is if you're too aggressive and you focus too much on extracting value, you're thinking in the short term, what can I do right now to get a massive win right now? Fantastic. And it's like what you said, just wait, the time is coming. And I think people really don't fully appreciate the, the reality of vengeance. I think about vengeance almost like as the opposite of reciprocity. Right. Reciprocity is, you gave me something good, I'm going to give you something good in return. Vengeance is, you gave me something bad and I cannot wait to give it back to you. Right. And when you look at the studies, it's really interesting because the pleasure centers of the brain are activated when people are given an opportunity to give revenge in a lab setting. First of all, kudos, kudos to the researchers for finding a way to do that. Right. But it's really fascinating because we might say, let's say we extracted a lot from this person. Now it's six months later. Now it's time to pay the piper. They have the leverage because power dynamics shift with time. Now it's time to get you back. And you might say, laura, why would you ever do this to me? It doesn't help you. It's not a logical thing. It is not a logical thing. They are doing this because just the mere act of hurting you is pleasurable to them.

I am 100, I will tell you, having spent 14 years in house, 25 years as a lawyer on deals, 100% true that that desire to get back at counterparties who are, you know, really screw you over in the negotiations is so strong. And I believe even the contracts that I've done where maybe my business person was very aggressive and very extracting that in so many of those cases that the with we would have been better off not doing the deal or extracting that in the negotiation because it came back to bite us, because we didn't build goodwill and a relationship and they didn't see us as their friend. And again, I know we're business and it's all touchy feely friendship, all that, but it's when I say friend, I mean, you know, I want to do business with my friends. I don't want to do business with jerks. I don't want to have to deal with jerks. So creating that sense, even if you don't call them your friend, if you think of them as your friend, as you're approaching it and you're looking for win wins, and it's not that you're going to just let them walk all over you, but you're treating with that respect. And that respect will carry on for throughout the relationship.

Exactly. Oh, this is great. This is great. So, Laura, I could talk to you forever. And I know that because we Talked for about 40 minutes before this podcast even started. But for the listeners who are new to you, before you go, can you let them know about the work that you do, why they should follow you on LinkedIn and why should they should hang out with us at contractscon in Miami?

Yeah. So everything I do is around howtocontract.com you can find out all the details there. And the best place to interact with me is on LinkedIn. So I have a tradition, a habit that I post every single day and I post a contract tip. And I've created these little silly cartoons with cows and aliens and lots of other things. So a lot of, you know, you can check those out too when you check out the daily contract tips. But it's just going to be so much fun. And I just love contracts, as you can tell. And that passion for contracts is in everything I do. So if you kind of like contracts, but are wondering why somebody could nerd out this much, come hang out with me on LinkedIn @contractscon. I also have a membership and training. I've got courses coming up, so I'm here to make your life easier. That's my goal, is to help you learn like an auto mechanic learns how to fix a car. I'm here to help you learn how to do contracts and give you the point by point instructions of how you approach each provision, each negotiation challenge, each everything. So I would welcome them to come and join this community.

Perfect. Thank you, Laura. And everybody links in the description. Make sure you check those out. Laura, thank you so much for joining us. Really appreciate it.

Yeah, no, it was great. Great talking to you.

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