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Managing Expectations at the Negotiating Table

Posted: March 21st, 2016

By: Joe Campolo, Esq. email

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Managing expectations is critical to forming and keeping rewarding relationships with clients, colleagues, employees, and virtually anyone else you come across in business.  It’s therefore not surprising that it’s just as important to manage expectations when you’re at the negotiating table.

Research has shown that parties to a negotiation can have vastly different feelings about the exact same result achieved in negotiation, based in part on their expectations going in.  For example, before a meeting to discuss a shareholder buyout, you may expect that your adversary will agree with your proposed price.  You predict that the meeting will focus instead on hammering out other details, which you’ve prepared for extensively.  If you go into that meeting and your adversary balks at your number, it can rock your confidence for the entire negotiation – not to mention you may not be fully prepared for the meeting’s new focus.  You’re almost guaranteed to leave the negotiation disappointed.  But if you go to the meeting expecting a fight, and that’s just what you get, you’ll be happier with the result – even if the result is the same as in the other scenario.  The key is not only to keep your own expectations in check, but to set the other side’s expectations as soon as possible.  Voicing your negative impression of your adversary’s position, or using body language cues to send the same message, can go a long way to lowering that party’s expectations, leaving an opening for you to push for more of what you want.

In a recent blog post (below), the Harvard Program on Negotiation shared additional examples of how to manage expectations to your advantage.

Managing Expectations in Negotiations

http://www.pon.harvard.edu/daily/conflict-resolution/managing-expectations/

Good negotiation examples about the importance of managing your counterpart’s expectations while negotiating

BY PON STAFF — February 25, 2016 

Here are some good negotiation examples about managing your counterpart’s expectations during negotiations. Successful negotiators work hard to ensure that when they and their counterpart leave a negotiation, both sides feel satisfied with the agreement. Why should you care whether the other side is pleased with the deal or not? First, because satisfied negotiators are more likely to uphold the terms of a deal. Even a lengthy contract cannot cover every possible contingency, and the costs of enforcement are high.

Second, if your counterpart is satisfied with the deal, she is also more likely to seek you out again and recommend you for future business. The more satisfied she is, the more cooperatively she will approach future negotiations. Conversely, a dissatisfied counterpart is likely to try to “even the score” during the next round of talks.

Good Negotiation Examples on Developing Expectations at the Negotiation Table

Prior to and during a negotiation, people develop expectations about the type of deal they will receive.

Negotiation research by business-school professors Richard Oliver and Bruce Barry of Vanderbilt University and Sundar Balakrishnan of the University of Washington demonstrates that negotiators automatically compare their actual outcome with the outcome they expected prior to negotiating. As a result of this process, two negotiators with the exact same outcome can feel very differently about their deal.

For example, consider two car buyers who both purchased the same model car for $30,000. The buyer who expected to pay $29,000 will be dissatisfied with this deal, while the buyer who expected to pay $31,000 will be quite pleased.

Skilled negotiators manage expectations prior to and during a negotiation. Some managers do this instinctively.

For example, in the month prior to salary negotiations with employees, managers may broadcast the message that this has been a difficult year for the company. After having their expectations lowered, some employees may be satisfied to receive even a small cost-of-living raise.

Your reaction to an opening offer can also influence your counterpart’s expectations.

By reacting with a surprised look, a laugh, or a flinch, you can lower your counterpart’s expectations about the feasible bargaining zone, or zone of possible agreement (ZOPA). Conversely, by appearing very cooperative or particularly eager for agreement, you may raise your counterpart’s expectations.

Good Negotiation Examples Concerning Common Bargaining Errors While Negotiating

One common negotiation mistake is to escalate expectations by making a steep concession that could lead the other side to expect another).

Imagine that you’re bidding on a house that has been on the market for some time at a high list price of $390,000. You like the house but start with a low offer: $300,000. In response, the seller offers a slight reduction from the list price: $385,000. Hoping to bridge the gap, you make an offer close to your bottom line: $340,000. The seller may misinterpret this move and believe that you can easily make another $40,000 jump. Rather than quickly agreeing to your offer, the seller might escalate her expectations regarding likely outcomes.

A related mistake is to agree to your counterpart’s demands too quickly.

Adam Galinsky and Victoria Medvec of Northwestern University, Vanessa Seiden of Chicago-based Ruda Cohen and Associates, and Peter Kim of the University of Southern California studied reactions to first offers in a negotiation. They found that negotiators whose initial offers were immediately accepted were less satisfied with their negotiated agreement than were negotiators whose offers were accepted after a delay—even if the former group reached better final outcomes than the latter group. Those whose initial offers were immediately accepted were more likely to think about how they could have attained a better outcome than were negotiators whose offers were accepted after a delay.

As these results suggest, you can actually make your bargaining counterpart less satisfied by agreeing too quickly. In fact, by delaying agreement and even asking for additional concessions, you may be able to make your counterpart more satisfied with a deal.

Campolo featured in LIBN article “Have Plan, Will Practice”

Posted: March 15th, 2016

Have plan, will practiceBy Kyle Barr, Long Island Business News

When they come out of law school, attorneys often understand the law better than they understand how to run a business. Many, like Thomas Foley, had to find that out on their own.

“I was ready to be a lawyer, but I was not ready to be a business person,” said Foley, a partner at Foley Griffin in Garden City, who co-founded his firm in 1997.

Now a seasoned business owner, Foley, also an assistant dean of the Nassau Academy of Law, has hosted two seminars at the Nassau County Bar Association on the creation of business plans for law practices. The latest, which took place March 3, covered formulating a plan and strategy for both the near- and long-term future, as well as networking and managing a practice’s finances and marketing.

“Everything is a business,” Foley said. “This one just happens to be the practice of law.”

The two Nassau Bar seminars were geared mainly toward new attorneys or those looking to leave their firm to start their own practice. Seminar attendee David Adhami, an attorney who is looking to build a practice, said he learned the importance of developing a business plan from his family’s background in retail.

“Ultimately, I want to have a successful practice,” he said.

At one time, many law firms earned much of their revenue through corporate retainers, which provided good, consistent income, said Joe Campolo, managing partner of Ronkonkoma-based Campolo, Middleton & McCormick.

In recent years, however, law firms have had to adapt to a new type of single-issue clientele as long-term contracts have declined.

“Companies got smarter,” Campolo said. “Attorneys were not doing all the work; say if they were making $5,000 a month on retainer, many law firms were only doing $2,000 worth of work.

“Now, everything is on an annual basis,” Campolo continued. “You have to recreate the business from the previous year.”

If law has become more of a business, then what goes into the business of law? Like any industry, the end goal is customer satisfaction, said Karen Tenenbaum, the founder of Tenenbaum Law in Melville, who is celebrating her 20th anniversary in private practice. She attributes much of her success to a focus on long-term goals and attention to growth planning.

“All businesses are the same,” Tenenbaum said, noting a law firm’s business plan should take the same shape as other categories of businesses, such as retailers or restaurants. Tenenbaum’s business plan involves looking at the skills and abilities of the staff she wishes to hire and maintain; short-, mid- and long-term growth plans; marketing; dealing with competition; the feasibility of expansion and other risks.

Tenenbaum has also taken a page from retail businesses by itemizing the services her firm offers and listing itemized pricing.

As in Tenenbaum’s case, a law firm’s business plan should take into account current and future staffing.

“Your staff should be representing you and your ideas,” Foley said. “You’re running a business, and your clients are your customers.”

“Every year we have to look inside ourselves. We do it in stages; we get the whole staff involved in the business planning,” Campolo said. “We have to recreate ourselves, which is no different than any other company who has to look at their price point.”

Before starting his practice, Campolo was the president of Expedite Inc., a technology company. With that experience, the first thing he did when starting his practice was create a business plan.

“I still have it to this day,” he said. “It’s written on loose-leaf paper.”

Tenenbaum said most attorneys should attend a business planning seminar or conference, or at least read up on how to develop a business plan.

“The concept is the same in every business,” she said. “If you and I went into a forest, we wouldn’t know where to go. But if someone has done it before…you have programs that show you the path through.”

After attending the Nassau Bar seminar, Adhami said he feels he can more confidently move toward opening his own practice.

“They teach us law and contracts in school, but they don’t teach us business,” he said.

While business plans can change rapidly and can require constant attention and revision, the risks of going into practice without a business plan can be severe.

“Running a practice without a plan is throwing a dart with a blindfold on – the legal market is so competitive on Long Island,” Campolo said. “The days of the Yellow Pages are over; the days of random clients are over. If you don’t have a real focused plan of attack for that year you’re going to succumb to the realities of now.”

Campolo sees the legal business heading in a direction that will focus even less on hourly rates and more on flat fees and cap fees, which will demand further reformation of practices and business plans.

“It’s going to look like a Chinese menu in the future,” he said.

Read more: http://libn.com/2016/03/14/have-plan-will-practice/#ixzz42yrhPsao

Long Island High Technology Incubator (LIHTI) Welcomes Campolo to Board of Directors

Posted: February 25th, 2016

Campolo, Middleton & McCormick, LLP is pleased to announce that the Long Island High Technology Incubator (LIHTI) has welcomed managing partner Joe Campolo to its Board of Directors.  Affiliated with Stony Brook University, the nonprofit is dedicated to providing support, resources, and services to new technologically innovative companies.

“As an active Stony Brook alum and supporter, I have long admired LIHTI’s track record of serving startup companies in the technology sector,” Joe said.  “LIHTI’s goal is to help businesses grow, which aligns exactly with our mission at CMM.  I’m really excited to share what I’ve learned from working with our tech entrepreneur clients, and I look forward to learning a lot from LIHTI.”

Since opening in 1992, LIHTI has worked with more than 70 businesses.  The 44 companies that have completed the LIHTI program have contributed over $2.5 billion to the economy and created over 500 jobs.  LIHTI’s affiliation with Stony Brook University has bolstered the organization’s success, transferring cutting edge research, development, ideas, and technology from the university to the private sector.  Learn more at www.lihti.org.

 

Little-Known Payroll Avoidance Loopholes Eliminated in New York

Posted: February 22nd, 2016

New York business owners, take note: loopholes offering the potential to avoid personal liability for unpaid wages to employees have been recently eliminated.  Prior to these changes, owners of New York limited liability companies, as well as owners of LLCs and corporations created outside of New York (for example, Delaware), were not personally liable for paying wages to their New York employees.  Now, owners of New York corporations and LLCs, as well as owners of corporations and LLCs created outside of New York, could be personally liable for failure to pay wages.

An amendment to the law on limited liability companies (Limited Liability Company law) was modified, effective February 15, 2015, so that the 10 LLC members with the largest percentage ownership interest are personally liable, jointly and severally, “for all debts, wages or salaries due and owing to any of its laborers, servants or employees, for services performed by them for such limited liability company.”  This imposition of liability on the 10 largest LLC members creates an exception to the general shielding of an LLC member for claims made against the LLC.  The definition of “wages or salaries” includes all compensation and benefits payable by an employer to an employee, such as overtime, vacation, holiday and severance pay, employer contributions to pension funds, and insurance payments.  To hold the 10 largest LLC members personally liable for non-payment of such benefits, an employee must notify the member(s) in writing within 180 days of termination of employment of his or her intention to do so.

This amendment closely mirrors an already existing provision of New York’s law on corporations (Business Corporation Law) that holds the 10 largest shareholders of a corporation jointly and severally liable “for all debts, wages or salaries due and owing to any of its laborers, servants or employees…for services performed by them for such corporation” and also requires notice to such shareholders.  BCL § 630.  Therefore, by expanding personal liability for LLC members, the amendment removes one of the distinctions between corporations and LLCs in New York.  (There remain other differences, such as the relative flexibility of LLC governance and structure, that may still make the LLC an attractive option to business owners.)

Effective January 19, 2016, New York further expanded unpaid wage liability when Governor Cuomo signed an amendment to the BCL expanding this liability to foreign corporations that operate and have employees in New York State.  In removing the domestic incorporation limitation on personal shareholder liability for unpaid wages, the law allows employees of out-of-state corporations to seek payment of wages from the 10 largest shareholders.

These pro-employee amendments push New York further from the mainstream view in other states that a corporate owner is typically personally liable for the debts of his or her entity only in cases of the shareholder’s wrongdoing.  Importantly, the BCL and LLC Law do not distinguish among owners by any basis other than percentage of ownership, such as responsibility for incurring the debt in the first place.  The changes therefore underscore the importance for business owners to review their wage and hour payment practices and ensure compliance with these policies.

Abracadabra! Delaware Court Does Away with “Magic Words” for Valid Anti-Reliance Provisions

Posted: February 19th, 2016

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Integration clauses typically state that an agreement is the entire and only agreement between parties, superseding any prior written or oral agreements.  Similarly, “anti-reliance” language provides that the only representations on which the parties relied in deciding to enter the contract are those within the contract itself.  Integration and anti-reliance clauses are commonly found in M&A agreements and contracts for other complicated transactions.  The rationale behind such language is to limit a party’s recourse for misrepresentations made outside the agreement.  The enforceability of such clauses varies by jurisdiction.  As a recent Delaware Court of Chancery decision indicates, the law is constantly evolving even within jurisdictions.

Delaware courts have generally viewed integration clauses on their own as insufficient to preclude fraud claims stemming from representations or actions outside the contract at issue.  Rather, courts looked for specificity as to what was being disclaimed and what had (or had not) been relied upon in entering the contract.  Case law was unclear as to whether such provisions required specific language to be effective.

In the November 2015 decision Prairie Capital III, L.P. v. Double E Holding Corp., however, the Court of Chancery clarified that no “magic words” will render a provision enforceable; rather, an agreement “must contain language that, when read together, can be said to add up to a clear anti-reliance clause by which the plaintiff has contractually promised that it did not rely upon statements outside the contract’s four corners in deciding to sign the contract.”  Prairie Capital III, L.P. v. Double E Holding Corp., 2015 WL 7461807 (2015), quoting Kronenberg v. Katz, 872 A.2d 568, 593 (Del. Ch. 2004).  Still, while particular words are not required, the court emphasized that Delaware law enforces only those provisions “that identify the specific information on which a party has relied and which foreclose reliance on other information.”  Prairie Capital, citing RAA Mgmt., LLC v. Savage Sports Hldgs., Inc., 45 A.3d 107, 118-19 (Del. 2012).  This approach is similar to New York’s policy to enforce only those provisions drafted with specificity rather than boilerplate disclaimers.

Coming from the highly respected Delaware Court of Chancery, Prairie Capital serves as an important reminder of the importance of drafting contracts carefully, intentionally, and specifically.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

I Need an Estate Plan – Part Two

Posted: February 19th, 2016

By: Martin Glass, Esq. email

Tags: ,

Last month I discussed the ins and outs of a Health Care Proxy.  This month I’d like to discuss its sister document, a Living Will.  This is not to be confused with a Last Will and Testament (commonly known as “the Will”). The Will does not become effective until after you die, whereas the Living Will is effective prior to death.

In its simplest terms, a Living Will states your end-of-life decisions so people (doctors, hospital staff, family) will know how you want to be treated and what you do (and do not) want.  If you are capable of making those decisions at that time, you are always able to do so.

You are always allowed to make your own decisions about your medical care, even if that decision is to refuse medical treatment, and even if that refusal will lead to your death.  If you are capable of making that decision, then medical providers must abide by it.

The problem comes in when you are not capable of making that type of a decision.  This can be because of a permanent mental impairment such as dementia or a temporary one such as being on large amounts of pain medication or if you are under general anesthesia during an operation.

If this is the case, the doctor now must try to find out what kind of a decision you would have made if you could have.  If he or she cannot find that out, the course of action is fairly straightforward: keep the patient alive.  That is what they get paid to do.  That is what they were trained to do.  That is what they even took an oath to do.  What they’re looking for at this point is some evidence of what you would have wanted to do.

If your spouse tells the medical staff that you would not have wanted “heroic means” to keep you alive, i.e. artificial nutrition, artificial hydration, artificial respiration, etc., that’s some evidence.  Would it be enough for them?  Maybe, maybe not.  It depends of the totality of the situation.  What is your disease, what is your age, what is your total, overall health?

If your spouse and all your children tell the medical staff that you would not want to be kept alive in this situation, that is more evidence of your wishes.  Again, it may or may not be enough.  But, if one of your children tells the doctor that he wasn’t sure about your wishes, all bets are off.  They will then use all means available to them to keep you alive.  Let the hospital administration and the courts figure it out.  The doctors understand that once they “pull the plug,” they can’t put it back in.  We’re talking about your life, not a set of Lionel trains.

A Living Will is a written document, read and signed by you in front of two witnesses.  This is a tremendous amount of evidence to the medical staff of what your wishes truly are.  Is it a guarantee?  No.  The Living Will is not a statutory document and the medical staff is not, by New York law, obligated to follow it.  But it will go a long way if they know what your true wishes are.

Lastly, try to remember that signing a Living Will does not mean that they’re immediately going to cease all life-sustaining treatment.  If the medical staff can maintain or give you back some quality of life, they will do so.  It is only when giving such treatment would serve only to prolong the dying process that they would consider withholding or withdrawing such treatment.

The information contained in this article is provided for informational purposes only and is not and should not be construed as legal advice on any subject matter. The firm provides legal advice and other services only to persons or entities with which it has established an attorney-client relationship.

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