How to Negotiate a Non-Negotiable Contract

--By Hays Ellisen 

Have you heard about the new prime-time legal drama about transactional lawyers who draft and review contracts? Probably not. Negotiating legal agreements isn’t great material for winning Emmys, but it is perhaps the most common legal work performed by transactional attorneys on a day-to-day basis. In law school, students spend most of their time discussing cases, but on the job, most transactional attorneys spend their days (and nights) poring over the minutiae of reps and warranties, indemnities, limitations of liabilities, and remedies. Most seasoned transactional lawyers develop decent negotiating skills, but what happens when the other side won’t negotiate at all?

This situation recently arose for one of my clients in the technology industry. The client, a salesman, was offered a potential employment opportunity with a private firm. The company provided no details about the nature of the opportunity and asked him to sign a confidentiality agreement. I analyzed the agreement and suggested some changes to limit its very broad scope and duration and to remove a vaguely-worded non-compete clause. The client forwarded my revisions to the company and received a response that the terms were non-negotiable and that no changes would be accepted.

What kind of advice can a lawyer offer when the opposing party won’t negotiate? The client needs to fully understand the risks of proceeding. While the company’s take-it-or-leave-it approach might lead a court to declare the agreement an unenforceable contract of adhesion, public policy arguments are weak bases to challenge clear contract terms. A judge might limit the scope of non-compete language to give an employee the freedom to work. But, that’s a gamble, and losing that bet could have serious consequences.

The best a lawyer can do is provide the client with all the information he or she needs to understand the contract’s terms and advise the client to trust his or her instincts. A lawyer may know the law, but clients understand their businesses. The lawyer’s role is to provide insight, but only the client can decide how much risk is acceptable in order to seize a potential opportunity.

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Hays Ellisen is the co-founder (along with Eli R. Shahmoon) of Shahmoon & Ellisen LLP, a boutique New York City law practice focusing on corporate, real estate and technology clients. Hays has a BA in Philosophy and Norwegian from the University of Minnesota and a JD from Michigan Law School. Hays has practiced corporate securities law in New York at Brown & Wood LLP, Sidley Austin LLP, McKee Nelson LLP and Katten Muchin Rosenman LLP. FB: @Shahmoon & Elllisen. Twitter: @sandelaw.

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