by Michael Strogoff, AIA
Negotiating Strategies publisher

Clients who insist on using their own agreement forms usually adopt a tough negotiating stance when design professionals propose modifications. Among the reasons cited by clients: “Our attorney spent considerable time drafting this and won’t allow any changes,” “Other design professionals are willing to accept our agreement without any modifications,” and “Making changes will delay the project and jeopardize the ability to meet our schedule.” Some clients think that citing these reasons is an effective negotiating tactic. Others honestly believe that discussing changes might be too costly, delay the project, establish a poor precedent, or result in unwanted liabilities.

Don’t waste your time and good will responding directly to these reasons, regardless of your client’s motives. Until your client has strong reasons to negotiate more balanced terms, no amount of debate will yield the results you want.

Instead, give your client incentives for modifying the agreement. Start by explaining the benefits that result from negotiating a balanced agreement:

A healthy dialogue and efficient resolution of issues. A successful negotiation creates a constructive dynamic for effectively resolving difficult issues that emerge throughout a project—from the initial design meeting to the completion of the final punch list.

Better understanding of the client’s goals. When parties delve into specific contract terms, the client’s goals and expectations invariably surface. For example, when discussing the design professional’s obligations should the final construction costs exceed the owner’s budget, the design professional might gain clarity about the relative importance the client places on quality, schedule, and price.

Clarified roles and responsibilities. By discussing each stakeholder’s services and obligations, the likelihood increases that essential tasks will be completed on time and that fewer tasks fall through the cracks.

Better risk management. A client can gain greater protections by identifying risks as early as possible and assigning each risk to the party with the authority and ability to best control that risk. For example, instead of the client imposing an overly broad indemnification or a largely uninsurable standard-of-care provision, the parties might discover a better way of addressing the client’s concerns about costly errors and omissions, such as incorporating a peer review of the construction documents or getting a contractor involved earlier in the design process.

Better project management. A design professional can refine its work plan and approach in response to the client’s experience and resources. Also, the parties can determine ahead of time how to respond to problems and uncertainties, if these surface during the project.

Elimination of unnecessary fee contingencies. Clients know that unknown site conditions or an onerous set of General Conditions for Construction leads to higher contractor prices. The same holds true for design professionals and their fees when faced with inadequately detailed scope and project descriptions or confronted with an unbalanced agreement.

A higher caliber of design professionals. Given the choice between working with clients that negotiate equitable terms and those that insist on unbalanced terms, the most qualified and in-demand design professionals actively pursue the former.

Remember, your negotiating success depends on your ability to persuade clients that modifying their unbalanced agreements is in their interests. If you effectively make your case, even your client’s attorney will find it difficult to argue with these reasons.

© 2004, Strogoff Consulting Reprinted with permission.

Copyright 2005 The American Institute of Architects. All rights reserved. Home Page