Clients Rate Lawyers on our Platform 4.9/5 Stars
based on 2,656 reviews

Jump to Section

Need help with a Business Contract?

Post Project Now

Post Your Project (It's Free)

Get Bids to Compare

 Hire Your Lawyer

What Is Negotiation?

Negotiation is a strategic discussion between multiple parties, usually resolving issues or persuading one another to reach a favorable agreement.

Often, negotiation is used as part of a business transaction. Negotiating can help all parties reach a compromise. Ideally, this compromise leaves all parties satisfied with the final deal, but in some cases, negotiating may only leave one party at an advantage.

Depending on the contract or issue at hand, a negotiation can lead to mutual benefit or minimize damages to multiple parties.

Contract negotiation aims to reach an agreement rooted in mutual trust and best interest. Therefore, the final result should provide a collective positive outcome.

While one party may leave with a significant advantage, the other may still benefit through conflict resolution.

This article provides a detailed breakdown of negotiation and how the negotiating process works.

5 Stages of the Negotiation Process

Step 1. Issue Identification and Preparation

Before entering a discussion, all parties must agree upon the relevant negotiating topics. For example, in a business proposal, you should be clear about what advantage you pose and how the other parties can benefit from accepting your offer.

The issues at hand should be specified when resolving conflict, including their impacts, implications, and limitations.

If you enter a dialogue in hopes of compromise, you must also be able to recognize the other parties’ perspectives. Without openness and mutual understanding, building trust or reaching a resolution is challenging.

To prepare, compile a list of relevant facts and details about your topic. This should include:

  • All relevant parties and their level of involvement.
  • The issue(s) at hand and desired alternative outcomes.
  • An understanding of each parties’ own advantages and disadvantages, i.e., what they stand to gain or lose through compromise.
  • Any relevant policies, rules, or laws that can support your position.
  • A clear outline to delineate the conversation and prevent arguments.

The preparation stage is also when arranging an appropriate meeting point and time for all parties. If there is a contract involved, all documentation should be prepared ahead of time.

Additionally, you may wish to consult with a business lawyer and have them arrange a negotiation time.

Formal discussions for business transactions are more apt for large-scale organizations. However, small businesses are more likely to hold discussions internally and generally without legal supervision.

However, you may still decide to have a lawyer review an investment or service contract before your meeting.

Meet some lawyers on our platform

Zachary J.

34 projects on CC
View Profile

Tabetha H.

10 projects on CC
View Profile

Anand A.

9 projects on CC
View Profile

Michael M.

2 projects on CC
View Profile

Step 2. Start Discussion on Neutral Ground

Everyone involved in a business transaction or other type of negotiation has a similar goal: to benefit the most and reduce any liability or damage.

Before stating your own argument, begin the discussion by establishing mutual trust. There are three critical communication skills to utilize during this process:

  • Asking clear questions.
  • Listening attentively to learn, not respond.
  • Clarifying and summarizing what’s been heard.

Equality is integral to a fruitful discussion and desirable outcome. Although you may not reach the compromise you desire, it will be impossible to find any resolution if any party is overly defensive or aggressive about their stance.

Step 3. Express Your Goals

You may enter the dialogue with a quid pro quo mentality: the intention to do something for the other party in exchange for a favor.

In this case, you must also be fully aware of and prepared to respond to any potential concessions. Concessions occur by asking one or more participating parties to cease a certain behavior. This is often seen in political negotiations, though it is also frequent in business.

To help reach a favorable outcome as quickly as possible, goals should be clearly expressed at the start of the conversation. Dialogue should not center around the legitimacy of any desired result.

Instead, it should focus on why the said outcome is favorable and what measures can be taken on both sides to resolve.

Step 4. Strive for a Mutually Beneficial Outcome

No party should be negotiating entirely for themselves. Instead, the goal is to reach a positive outcome for everyone. However, the extent of benefits may vary depending on the situation.

However, though a win-win solution may not happen in every case, all negotiating discussions can lead to peace and mutual agreement.

As seen with negotiations between business lawyers, all parties must be willing to listen, understand, and compromise. While multiple parties may have their own goals, they should all share the desire to reach a positive outcome.

To learn more about negotiation skills, you can review this article.

Types of Negotiation

There are several types of negotiation, all of which serve their own purpose depending on the circumstances. All involve some form of strategic discussion, but while some may intend to persuade, others seek to find a compromise or resolve issues.

Below are the two main types of negotiations that you might encounter.

Type 1. Distributive Negotiation

Distributive negotiation involves concessions and conflict resolution. This discussion centers around resolving a problem, such as the final price in a real estate contract or greater benefits from a business proposal.

In this type of discussion, both parties enter with a fixed desired outcome that they know will not be the final result. So, instead, they bargain for the most favorable alternative and, if the discussion succeeds, settle on a mutually beneficial arrangement.

Type 2. Integrative Negotiation

Interrogative or interest-based negotiations leverage advantage by respecting each party’s desire for a different outcome. Rather than settle on a specific outcome, this form of strategic discussion helps expand the potential of outcomes for all parties.

While there may be some concessions, they are more likely to adopt a quid pro quo structure that ultimately benefits each party through a series of trade-offs.

4 Most Important Elements of Negotiation

Before entering a discussion, you should know the four key elements of any successful negotiation.

Element 1. Trust

All negotiating parties must have mutual trust. Otherwise, there is little hope for a successful outcome. While trust may not exist immediately, it can be built by offering different advantages and trade-offs for a shared arrangement.

Element 2. Understanding

Every party has to understand the other’s vantage point. Rather than argue the rightness or wrongness of an argument, parties must recognize that each one has its own reasoning. Through listening, respectful dialogue can lead to greater understanding between all parties.

Element 3. Open-mindedness

No matter what you hope to achieve, you must enter a conversation with an open mind. Willingness to consider alternatives and even make some sacrifices can lead to the healthiest compromise for everyone involved.

Element 4. Scope

A narrow scope can limit opportunities for resolution. Conversely, with a larger scope, the negotiating parties may achieve even more excellent outcomes with a larger scope than they initially anticipated.

Negotiation Examples

These examples can help showcase the different types of negotiation and how employing understanding and mutual trust can help reach desirable outcomes.

Example 1. A Real Estate Contract

A homeowner wishes to sell their property for $500,000 and net a profit of $150,000 after paying all the respective costs. They receive an offer for $450,000, but they are not willing to settle for that price. Instead, they propose an alternative price to the buyer for $480,000, which receives a counter-offer of $470,000.

Ultimately, both parties agree to meet in the middle of their offers. As a result, the homeowner sells their property for a final cost of $475,000.

Example 2. A Business Transaction

Using an investment contract and service contract, a business decides to expand its supply chain and find a new manufacturer for its products.

They meet with several potential suppliers who offer different price points and advantages.

Through negotiation, the business successfully manages to acquire two new suppliers. The first will provide double the initial supplier’s inventory for 10% less.

The second will provide a more significant discount for a marginally smaller output, ultimately bridging the gap between suppliers.

The business can expand its inventory, save money and provide more goods to its customers without increasing operational expenses.

This article provides even further detailed examples of negotiation strategy.

Tips To Develop Negotiation Skills

Developing negotiation skills takes time, but it does get easier with practice. So before you enter any dialogue, these tips can help you improve your communication skills.

  • Practice clearly stating your arguments, speaking with facts and details over emotion.
  • Learn how to listen to others and ask specific follow-up questions.
  • Take turns in real-life conversations, noticing when you are more likely to talk over someone or put your opinion before theirs.
  • Build confidence in your arguments, but recognize that your ideal outcome will not always happen.
  • Be open-minded, and accept reasoning with others to reach alternative solutions.

This article can teach you more about negotiating, including what to do when your efforts do not pay off.

Get Help with a Negotiation

Do you need help with a negotiation? Post a project in ContractsCounsel’s marketplace to receive quotes from lawyers for negotiation support. All lawyers in our network are vetted by our team and peer-reviewed by our customers for you to review before hiring.

How ContractsCounsel Works
Hiring a lawyer on ContractsCounsel is easy, transparent and affordable.
1. Post a Free Project
Complete our 4-step process to provide info on what you need done.
2. Get Bids to Review
Receive flat-fee bids from lawyers in our marketplace to compare.
3. Start Your Project
Securely pay to start working with the lawyer you select.

Meet some of our Lawyers

View Matthew
Member Since:
November 6, 2020

Matthew R.

Free Consultation
Get Free Proposal
Denver, Colorado
15 Yrs Experience
Licensed in CO, OH
Case Western Reserve University

I am an attorney located in Denver, Colorado with 13 years of experience working with individuals and businesses of all sizes. My primary areas of practice are general corporate/business law, real estate, commercial transactions and agreements, and M&A. I strive to provide exceptional representation at a reasonable price.

View Christopher
Member Since:
November 6, 2020

Christopher S.

Free Consultation
Get Free Proposal
Toledo, Ohio
5 Yrs Experience
Licensed in OH
University of Toledo

Chris Sawan is a JD/CPA who practices in the area of business law, contracts and franchising in the State of Ohio.

View Elizabeth
Member Since:
November 23, 2020

Elizabeth C.

Contracts Specialist
Free Consultation
Get Free Proposal
Sarasota, FL
13 Yrs Experience
Licensed in NJ, NY
Quinnipiac University School of Law

As an experienced contracts professional, I offer an affordable method to have your contracts reviewed! With my review of your contract, you can understand and reduce risks, negotiate better terms, and be your own advocate. I am an Attorney, Board Member, and Freelance Writer with a Bachelor of Arts degree, magna cum laude, in Film, Television and Theatre (“FTT”) from The University of Notre Dame. I was awarded The Catherine Hicks Award for outstanding work in FTT as voted on by the faculty. I graduated, cum laude, from Quinnipiac University School of Law, where I earned several awards for academics and for my work in the Mock Trial and Moot Court Honor Societies. Additionally, in my career, I have had much success as an in-house Corporate Attorney with a broad range of generalist experience and experience in handling a wide variety of legal matters of moderate to high exposure and complexity. My main focus in my legal career has been contract drafting, review, and negotiation. I also have a background in real estate, hospitality, sales, and sports and entertainment, among other things.

View Elizabeth
Member Since:
January 20, 2021

Elizabeth R.

Free Consultation
Get Free Proposal
Columbus, Ohio
11 Yrs Experience
Licensed in FL, OH
Florida International University School of Law

Elizabeth is an experienced attorney with a demonstrated history of handling transactional legal matters for a wide range of small businesses and entrepreneurs, with a distinct understanding of dental and medical practices. Elizabeth also earned a BBA in Accounting, giving her unique perspective about the financial considerations her clients encounter regularly while navigating the legal and business environments. Elizabeth is highly responsive, personable and has great attention to detail. She is also fluent in Spanish.

View Abby
Member Since:
December 7, 2020

Abby V.

Free Consultation
Get Free Proposal
Washington, DC
15 Yrs Experience
Licensed in DC, NJ, NY
Loyola University Chicago School of Law

Abby is an attorney and public policy specialist who has fused together her experience as an advocate, education in economics and public health, and passion for working with animals to create healthier communities for people and animals alike. At Opening Doors PLLC, she helps housing providers ensure the integrity of animal accommodation requests, comply with fair housing requirements, and implement safer pet policies. Abby also assists residents with their pet-related housing problems and works with community stakeholders to increase housing stability in underserved communities. She is a nationally-recognized expert in animal accommodation laws and her work has been featured in The Washington Post, USA Today, Bloomberg, and Cosmopolitan magazine.

View Brit
Member Since:
December 29, 2020

Brit B.

General Counsel
Free Consultation
Get Free Proposal
Remote (company based in Houston)
8 Yrs Experience
Licensed in TX
University of Maryland, School of Law

First in-house counsel for small TX-based company operating in the Middle East. Experienced with drafting, revising, and editing a variety of domestic and international contracts.

View Matan
Member Since:
January 4, 2021

Matan S.

Free Consultation
Get Free Proposal
Philadelphia, PA
9 Yrs Experience
Licensed in NJ, PA

Matan is an experienced M&A, corporate, tax and real estate attorney advising closely held businesses, technology start ups, service businesses, and manufacturers in purchases, sales, and other exit strategies. Matan works with founders and first-and-second generation owners to strategically transition businesses.

View Octavia
Member Since:
January 30, 2021

Octavia P.

Free Consultation
Get Free Proposal
Chicago, IL
15 Yrs Experience
Licensed in IL
The John Marshall Law School

I am a business law attorney with over 10 years’ experience and a strong background in information technology. I am a graduate of the University of California Berkeley, a member of the Illinois bar and a licensed lawyer (Solicitor) of England and Wales. I actively partner directly with my clients or indirectly, as Of Counsel, to boutique law firms to streamline business practices and manage legal risks by focusing on essentials such as - business contracts, corporate structure, employment/independent contractor agreements, website terms and policies, IP, technology, and commercial related agreements as well as business risk and compliance guidance.

View Sean
Member Since:
January 25, 2021

Sean D.

Business Attorney
Free Consultation
Get Free Proposal
Elkridge, Maryland
24 Yrs Experience
Licensed in MD
University of Maryland Francis King Carey School of Law

Accomplished and results-driven business attorney with extensive experience in commercial real estate / project finance, commercial transactions, and entity formations, that possesses a winning blend of subject matter expertise, skill in client relationship management, and practical experience. Leverages a unique mix of legal, strategic, and analytical expertise that consistently meets and surpasses client expectations. Specialties: Commercial Real Estate Law, Contract Negotiation, Entity Formation, Joint Ventures, Procurement, Lease/Buy/Sell Transactions, Business Consultations, Team Leadership, and Economic Development

View Jonathan
Member Since:
February 8, 2021

Jonathan D.

Free Consultation
Get Free Proposal
4 Yrs Experience
Licensed in FL
Florida International University School of Law

Miami-based duly licensed attorney and customs broker with significant experience in various types of supply chain business agreements, as well as experience in entertainment law.

View Albert
Member Since:
February 8, 2021

Albert M.

Free Consultation
Get Free Proposal
Woodbury, NJ
19 Yrs Experience
Licensed in NJ
Rutgers School of Law - Camden

I am a New Jersey licensed attorney and I have been in practice for over seventeen years. My practice mainly consists of representing public entities (municipalities, school boards, etc) and businesses, both small and large. In that capacity, much of work consists of drafting, reviewing and revising contracts.

Find the best lawyer for your project

Browse Lawyers Now

Want to speak to someone?

Get in touch below and we will schedule a time to connect!

Request a call