“If you don’t stand up to your clients when negotiating fees, they probably won’t hire you”
Many routine negotiations are more about behavioural skills than negotiation theory. Firms that ignore practical training in favour of cost effective “seminars” are unlikely to produce a return on their investment in either the short or long term.
It’s a tough time for many of our clients in the professional services sector. Costs are rising, fees are being scrutinised more closely. Lawyers and accountants in large firms who have traditionally marked down fee rates by as much as 40% (yes, 40%!) for volume work with long standing clients are finding it difficult to maintain their profit margins.
Of course there is an argument that says that firms should always stick to advertised rates, in order to maintain their pricing power in the long term. In reality however, it is a very competitive environment and we are all working in the here and now. Short term-ism rules. Over the past couple of years many firms have survived by doing what they can to keep the work flowing in. This may have meant adding in “extra” services at no cost – but unfortunately these have now become an accepted part of any package and attract no value. It’s a trap many firms need to get out of…. quickly.
Talking to colleagues and clients alike, a great deal of training within professional services of late has been focused on understanding profitability, making everyone aware of how their business works and the importance of understanding the big picture. This is all well and good – but what has surprised me is the lack of extra training on “negotiating for more“ – the behavioural side of the whole process that will develop the skills to help people win work and win it well.
“We had a talk on this the other day” or “I went to a seminar on negotiation” are often heard when I ask clients about negotiation skills training. “But I am still really terrible at it” is generally the comment that follows.
The reality is that a lot of lawyers and accountants know HOW to negotiate, they just cannot DO IT when it matters, because too often they are being educated in theory, rather than trained in a skill. It’s not necessarily the fault of the L & D teams. Budgets are tight and lawyers often will prefer this type of event because they prefer to be educated, rather than test themselves in a practical (potentially risky) environment. A seminar for 25 people is generally cheaper per head than a half day coaching programme for 4 people. The problem is, it doesn’t often help most of them negotiate any better when they are under pressure, and therefore it is a false economy. It offers very little return on investment, and of course it is very difficult to measure a lack of return!
This isn’t just about winning new work either. An example of how damaging this failure to address practical training needs is, both in the short term and long term, was made by one of my clients at a well-known US investment bank. She was speaking to me during a coaching session about a law firm they had just “uninstructed”. My client, an MD within the Investment Banking division, had pressed a Partner within a large city law firm about a reduction in fees for a particular transaction.
“He just agreed there and then, caved in basically, and gave me an extra 10%! I just thought…. if he’s doing that with me, I don’t believe that he is robust when he is speaking to our counterparties. I went out and hired a more expensive firm”
Of course, this isn’t always going to be the case, but I am hearing a similar story from many other sources. My point is that many routine negotiations are more about behavioural skills than negotiation theory. Taking the time to understand the other side, their mind-set, their values, their ambitions, their intentions and aspirations, and finding a way to put these first is the key objective we set during our Negotiating for More training. Then, it’s about understanding what is on the table, and the value you and the other side attach to those things. Of course it is also about having a clear understanding of what you need to achieve, and when you need to walk away.
Often when we play back the video of a simulated negotiation, we typically hear “I didn’t think of it at the time” as an excuse when an opportunity was lost to exchange rather than give away, or ask for more rather than accept an initial offer. This again demonstrates that it is a lack of practise, and familiarity with the pressure of the moment, rather than knowledge that is lacking.
So – negotiation is not all about the knowledge, it’s a people business.
Practical negotiation training will deliver a return on your investment both in the short and long term. If people need negotiation theory – buy them a good book.