A few tips to guide you toward successful contract negotiation

Just when you thought the hardest part of implementing a new business agreement was over (identifying a potential client and convincing them to purchase services from you), the arduous task of contract negotiation is looming right around the corner. My intention in this week’s post is to provide guidance on ways to simplify and make manageable the process of finalizing a contractual agreement. I will not promise it to be an enjoyable experience, but the reward of seeing it through to completion is well worth the time and effort.

My wife has always despised the process of purchasing a vehicle. Ever since we have been married (22 glorious years) when it is time to purchase her a new vehicle, she decides what she wants and then asks me to find it. I personally enjoy the challenge of searching for the vehicle, the banter back and forth with the salesperson, having a price in mind I believe is fair and working through the negotiations to ultimately end up purchasing the car she wants at a price I can live with. My experience talking with family, friends and colleagues over the course of my life would suggest this is the exception rather than the rule.

What has worked for me regarding contracts

The foundation of a successful contract negotiation is starting with a template on which to build. Shortly after I had come to a verbal agreement on my first population health project, I began scouring the internet for contract templates. I had no idea what I was looking for, what it should say, how it would be formatted, nothing. After many unsuccessful hours and a sense of disappointment in myself I reached out to a friend and mentor to see if she would provide some guidance. Her advise was short and sweet; “Don’t reinvent the wheel.” Ask your business partner if they have a contract they are comfortable using with outside contractors. Most companies are much more likely to edit a contract template already being used than one they have never seen before. Their legal department has most likely reviewed and approved the contract. Making edits to this will save you ample amounts of time and money.

Second, make sure you seek out legal counsel to protect your position. Full disclosure, I am not an attorney, nor do I play one on TV. We ask others to pay for our expertise all the time, so make sure to find an attorney with experience in contract negotiations in the field your contract will apply to. It will also be helpful to have a list of “Wants” and “Needs” to be included in the contract. Be willing to give up a “Want” in order to get a “Need”. I have found it most effective to let the attorneys communicate back and forth and for me to get out of the middle. Your attorney should come to you with questions and provide status updates throughout the process.

An approach that has worked well for me is to identify timelines for project status updates and key metrics to be included as part of the updates. Work in conjunction with your business partner to ensure you include status updates important to them. For example, if a contract is written for providing chronic disease management for patients with diabetes and hypertension and relies on providers referring patients to the program, I might provide the following quarterly updates:

Total number of patients referred:
Total patients referred per provider: 1. Provider A: 2. Provider B: 3. Provider C: 4. Etc.
Number of patients with HTN:
Number of patients with diabetes:
Number of patient contacts made:

Some finals words of advice

Finally, don’t run the risk of not completing a contractual agreement because you didn’t get every “Want” on the list. Would you walk away from a car deal because you and the dealer are $100 apart? Would you walk away from your dream home because the seller won’t accept your offer that is $2000 lower than what they are willing to take? Most people would not. Remember, the best negotiation occurs when both parties walk away happy and not feeling taken advantage of.