A shot over the bow

Recent vendor events have prompted us to address what may seem obvious: our duty is to our clients. Period. Another event with a vendor functions as a compliment to our firm’s value proposition—but also as a warning to our clients about sneaky practices of a small number of industry vendors.

Duty to our clients

Bear in mind our goals when reviewing and negotiating contracts for our clients. We strive to: (1) educate the client about the agreement, (2) suggest changes to the agreement to lower potential risk, and (3) negotiate at the client’s direction. Ultimately the client will decide whether to move forward and at what point to do so.

Recently, a vendor’s representative told us that when our firm reviews an agreement for one of their customers, the vendor’s staff assumes the process will take four months longer than it would with another (unrepresented?) customer. The representative seemed annoyed that we would slow down the vendor’s business cycle. It’s understandable that vendors want to sign up business as quickly as possible, but that is not our principal goal (unless it’s the client’s).

Our response is simple. If the client slows down the process because the client more fully understands the benefits and risks of an agreement, we are doing our job. The converse is sometimes true, too. We help the client better understand the agreement, which prompts the client to move quickly.

Our value proposition

The second event is in a way a compliment, but also somewhat troubling (ridiculous? desperate?). We often review the same contract from the same vendor for multiple association/MLS clients. As a result, we come to know the vendors’ contracts; we also learn where our clients can push the negotiating envelope and where they are unlikely to succeed. This state of affairs is true with a number of vendors: MLS systems, data licensing, you name it. Our clients recognize that we offer that value, and from this anecdote, you’ll see that the vendors do, too.

Recently, a vendor representative sent two ‘final’ versions of an agreement to a client: one with better terms, which only the client was supposed to know about, and one with less beneficial terms which the vendor asked our client to share with us. In other words, a vendor asked our client to hide from us the beneficial term the client received, presumably so that we would not ask for the same term on behalf of other clients. We are the client’s attorneys, negotiating the deal on the client’s behalf, and even under any confidentiality provision in the agreement, our client was entitled to share the ‘true’ terms of the agreement with us. Our client chose not to play the vendor’s childish games.

Presumably, the vendor representative did not want us to know that it was accepting particular terms because we’ll negotiate similar agreements with the vendor for other clients in the future. As I said, this is one reason clients choose us for representation; apparently, this vendor recognizes that. However, by attempting to have the client hide one version of the agreement from us, the vendor has potentially hurt future negotiations. With future clients, we are likely to be more cautious as a result of the vendor’s past actions, and the client may be more cautious about moving forward, too – which could slow down the process further. (As a side note, it is strange actions like this that help fuel industry conspiracy theories.)

Neither event is a ‘big deal.’ And there are other examples of strange interactions like this, but hopefully you get the point. It is understandable that any perceived impediment to forward progress may seem unacceptable, but that’s not how we see it. In fact, a client slowing a deal down, or even choosing not to continue with a vendor, can be a manifestation of us achieving one of our goals – that the client better understands a proposed agreement. Our firm’s value proposition is in part founded on our repeat experience with events and agreements that are commonplaces for associations and MLSs; a vendor that tries to prevent us creating that value with our clients is likely to look silly, or worse yet, desperate and dishonest.

So, there’s our warning shot over the bow. If you are a Patrick O’Brian fan, think of it as being fired from the bow chaser (maybe a nine-pounder). If such shenanigans continue, next time may be a broadside of 24-pounders.

-Brian