Negotiation in the Time of Covid-19

April 2, 2020

 

 

 

The Covid-19 crisis will have a deep impact on the business community.

 

In order to mitigate that impact, many entrepreneurs will seek negotiated relief with their business counterparts. Tenants asking landlords for a rent abatement, suppliers seeking delivery delays, parties changing contract terms.

 

While negotiation is a key tool to enable businesses to survive in this difficult time, this unique environment requires a different approach than standard negotiation techniques.

 

Negotiating in this context is different in that this is likely to be a renegotiation rather than a negotiation - - -in most cases the parties already have a contract in place. 

 

As a renegotiation, while some, understandably, will try to hold on to the original value of their deal, in the face of catastrophic circumstances, flexibility will be the watchword of success.

 

After all, a party to an existing contract is interdependent on the other parties’ ability to perform. If a tenant cannot pay rent, the landlord stands to lose out. If a supplier cannot make a delivery, a manufacturer cannot produce product.

 

In the current crisis, recognizing that the parties are already in contract, means that neither party can walk away.

 

So, a powerful technique in negotiating for relief from contractual obligations in this environment would be to acknowledge out loud the parties’ interdependence.  Parties can set the tone as a joint effort to find a solution rather than adversarial endeavor - - even using language like “we” and “us” to include the other party.

 

A cooperative approach could be all the more useful now, since traditional avenues of recourse are not currently available - - New York courts are closed - - and a negotiated resolution is the fastest, most efficient way to move forward.

 

During the discussion, it may also helpful to make the first ask; this sets the frame of negotiation and could make bigger concessions from the other side possible. A supplier that asks for a one-year delay as an opening offer, is much more likely to get 6 months in a renegotiation, than one who waits for the counterpart to make the first begrudging suggestion.

 

And parties should be prepared to listen to the other side to get a true understanding of what they actually need.  This will help reach results that could not otherwise be anticipated.

 

In any negotiation, whether it's during this unique circumstance or in a more traditional business setting, mutually beneficial outcomes are possible. For instance, while a tenant might need rent relief, a landlord might be happily willing to offer such relief as a deferment rather than rent forgiveness. The landlord will ultimately get paid and the tenant has breathing room - a trade of time for money.

 

In the end, the unique challenges that the Covid-19 crisis have thrown at business owners, call for unique approaches to negotiation.  If done well, business owners may find some much needed relief.

 

For more information about this article or other issues, please contact us, The Bachman Law Firm PLLC at judith@thebachmanlawfirm.com or 845-639-3210.

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