How To Avoid Legal Hassles with Customers
Lawyers and sales professionals are like oil and water; they simple don't mix together very well. Sales pros are optimists who see business as a world of opportunity and full of win/win scenarios. By contract, lawyers are pessimists who see business as a world of risk, where (as in a courtroom) there is always a winner and a loser.
Nobody would care about this if it weren't for the fact that sales deals often end up generating contracts. And contracts usually means getting the lawyers involved. Many a sales professional has watched a deal go up in smoke because the lawyers got to work "fixing the deal." Not to worry. Here's a simple 7 step program that can help you avoid problems or (at least) keep them from becoming deal-breakers:
- STEP #1: Fly below the radar if possible. If both you and your customer are willing to do business using letters of understanding, your lawyers (and your customers) will probably sit on the sidelines. Signed letters are legal documents so they're good enough for simple deals. Similarly, most companies give managers a certain amount of leeway when it comes to purchasing. If you can keep the deal within the parameters of your customer's signature approval, you can avoid an irritating (and possibly costly) legal tussle.
- STEP #2: Cultivate a corporate lawyer (or two). Lay the personal groundwork, so that if a contract get's involved in legal issues, you have an ally in the legal department. Consider: you're a sales pro, you're good at relationships, right? Then use your relationship building skill to create allies in your legal department. Let them know you appreciate their "help." Thank them when a contract goes through. I'm not suggesting that you sweet-talk them, only that you try to get them to bollix your deal ONLY when they're 100 percent convinced it's a big mistake.
- STEP #3: Simplify your sample contract. Sit down with your lawyer and over your firm's sample contract. Read each paragraph aloud and ask the lawyer: "what does this mean in plain English?" The lawyer will say something like: "Oh, that means that they can't sue us if our product kills someone." Next to the contract paragraph (which probably consists of 500-plus legal buzzwords), write: "You can't sue us if our product kills somebody." When you're done, you'll know what each part the contract means and will be able to explain it to your customer.
- STEP #4: Flatten the inevitable roadblocks. Early in the sales cycle, get a copy of the customer's standard contract that would cover the kind of product or service that you're selling. Pass that document to your own legal staff so that they can identify items that might be a problem or which different wildly from the provisions in your standard contract. If you've identify the problem early, you have the time to work with your lawyers to come up with a compromise that keeps both sides happy.
- STEP #5: Manage the obvious risks. Contract laws are not inviolable, like the laws of nature. A lot of interpretation goes into each element of a contract so there are undoubtedly items in your firm's standard contract conditions where your lawyers can give you negotiating leeway. Lawyers are all about managing risks, so if you're going to deviate from whatever makes the lawyers feel warm and comfy, you'll need to find other ways to cover your company's behind.
- STEP #6: Leave time for legal review. Many sales professionals try to close deals at the end of a quarter, simply to make their numbers. The natural impulse of a lawyer, when feeling rushed, is to apply the brakes. So the last thing you want is knotty contract problems surfacing at the end of a sales cycle. Do you habitually try to squeeze sales into the last few days of the quarter? If so, you're probably writing deals that are likely to attract your legal staff.
- STEP #7: ALWAYS REVIEW THE CONTRACT. Never send a contract to a customer until you've reviewed it to confirm that it 1) says what was agreed upon, and 2) says it in a way that comprehensible to mere mortals. Many deals have been lost and relationships soured because some lawyer added a "proviso" that wasn't part of the deal. A sales contract is a SALES document, which means you can't afford to let some clueless lawyer have free reign with it.