Last month, I was consulting with a software company on a deal and it seemed the more they tried to pin down the various flanks and end-points of the agreement, the further they (hereinafter “we”) got from defining anything that might work for both sides.
What we were writing (or, attempting to write) was the working definition of a software product/service for a brand-new client. The buyer didn’t wish to pay for the product up-front. Instead, he wanted only to do a “pay-as-you-go” deal whereby his monies would be released only when he was “satisfied” that a particular software program “worked.”
This, of course, brought up a number of issues and definitions. Chief among them:
- What, exactly, was the software “Product”?
- When was that software technically considered to be “Working”?
- What constituted “Satisfaction” on the part of the Buyer, and,
- What were the remedies whenever the above issues could not be resolved?
And these were only the “Big” issues, of course. There were myriad other points of negotiation, including such classics as:
- What constituted a ‘Working Day’?
- What constituted ‘Payment’? (no, I’m not kidding), and,
- What constituted ‘Acceptance’ of the software by the Buyer?
I had been hired to help both parties get this deal DONE! And as I sat in the room watching and listening to the back-and-forth, I realized that this negotiation was doomed; for the more definitions and “work-arounds” the two parties came up with, the more complicated the overall deal itself became.
The software specifications were a circus unto themselves … I remember thinking to myself, “Ron, there are simply not enough words in the English language to adequately define the intentions and deliverables of these respective parties.”
And so I sat … silently cursing the law and the lawyers, for it was these people, I was certain, who were causing me to miss lunch, dinner, and probably (eventually) my wedding anniversary. I looked around the room so that I could at least glare at one of the no-good lawyers --- so they would at least feel the steel and heat of my gaze.
Which is when I noticed it! There were no lawyers in that room!
And that was when it really hit me … the problem wasn’t lawyers at all! No, the problem was the guys in that room who were making things so damned complicated that the lawyers would have no choice but to write an agreement that was some thirty inches thick and well over twenty-five pounds in weight (cover optional.)
And whenever an agreement like this is fostered upon the world, two things inevitably happen:
- First, the Agreement, once properly executed by the parties, is shelved somewhere. Hopefully that “somewhere” is a place where no one will ever again read it, and,
- Unfortunately, some day it is read … at which point at least another half million dollars will be spent on even more lawyers whose job it will be to interpret just exactly what the first group of lawyers DID say.
All of this just doesn’t have to be.
Instead, all that needs to happen is for both sides to dispense with all of the micro-definitions and the petty and nuanced language in favor of some good old-fashioned TRUST. And here, I’m not talking about Trust between and among lawyers. No, what I am talking about here is trust between the two parties – the two parties that, after all, are forming a business relationship. (With emphasis on that last word --- relationship.)
So, it’s not the lawyers, folks … it’s US! The lawyers, after all, are merely the servants of the businessperson. They act at the behest of the businesspeople. The businessperson needs to define and document the terms and conditions under which he or she will perform and/or pay for performance. (Depending on which side they might find themselves on.)
And, the extent to which the Seller can properly and honestly define those terms and conditions goes a long way towards getting the deal done! If the Seller is sleazy or sneaky or unscrupulous, those characteristics of his personality will ultimately find their way into the deal and its document (to be blamed on the lawyer.)
You see, this more than anything else, is why we hate lawyers. Because we want an “edge” in our deal, we define that edge to the lawyers and the lawyers in turn know precisely how to “write it in.” They can do this because it is what they (all too often) DO. When you do something a lot, you get good at it.
And if a particularly scrupulous lawyer gets his back up and says, “I’m not writing this … you’re taking advantage of the Buyer/Seller,” the Buyer/Seller merely says, “OK, goodbye … there are plenty of lawyers who can and will write it.”
So, it’s all about character. And, as the Greek Philosopher Heraclitus once said, “Character is Fate.” But it is the character of the businessperson that sets the tone. Not the lawyer.
So, to all of you out there ripping on legal man and his or her penchant for destroying deals, just remember … these people are merely doing precisely what you have paid them to do. That’s all.
My advice? Sit down with your business partner …. You know, the same one with whom you seek a business relationship? … and decide whether or not you can TRUST this person.
Because if you DO (trust), then you likely have the beginnings of a long and mutually-beneficial working relationship by and between the two of you.
And if there is no trust? Well, in this case there really should be no deal in the first place. Go instead and find a vendor/buyer whom you DO believe in. Sure, this is work … but it is just a fraction of the work that it takes to undo the results of a bad partnership.
Once again, isn’t it amazing how many of our problems are in the mirror?
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About Ron Morris
Ron Morris puts over thirty years of entrepreneurial experience to work answering your business questions, solving your business problems, and bringing you all the latest information about everything that is happening on the entrepreneurial landscape. “I’ve built companies with ZERO money and I’ve been associated with companies who have borrowed money”, says Morris, “I’ve merged companies, I’ve sold companies, and I’ve even bankrupted a company. (My “greatest learning experience.”) So, when you tell me about your business problem, it’s a pretty sure thing that I’ve ‘seen it at least once before ... this ain’t textbook stuff ...this is ‘real bullets’, real world stuff.”