I write blithely about contracts and the associated role of internal legal departments. Negotiation of contracts has seemed to me a fairly straightforward matter of knowledge of the business, recognition of leverage and ultimately allocation of risks. How naïve!
My underestimation of the complications involved became apparent as I read the IACCM (International Association of Contract and Commercial Management) 2010 Top Terms in Negotiation. A chart on page 4 shows “Factors that are most significant in limiting your ability to change what is negotiated.” Here are the nine in descending order of significance. “Resistance by the other side” (65%), “Internal/stakeholder resistance” (44%), “Internal rules/power reserved” (44%), “Market practices” (32%), “Market pressures” (31%), “Government” (23%), “Regulatory” (22%), “Knowledge” (21%), and “Insurance” (7%).
It is a curious mix of limits. Non-lawyer contract negotiators may have their hands tied more than lawyers, but I offer these findings to help clarify the challenges faced by commercial lawyers.