Author Richard Solomon is a conflicts and crisis management lawyer with 50 years of experience in business development, antitrust and franchise law, management counseling and dispute resolution including trials and crisis management.
Whatever the nature of any agreement, it is a device to obtain expected value. The parties have usually anticipated the ranges of that value over the life of the agreement. These are goals. They are not achieved realities. They sometimes don't work out the way you intended and sometimes there is an element of "fault" associated with its not reaching fruition. What usually happens then? In modern America the first reactions include blaming others (often without knowledge of the true entire situation); self justification (also known as covering one's ass); and reactions in furtherance of those first impulses.
Of course it is upsetting. Being upset is a symptom here, not the problem itself. Upset just comes with this territory. Usually before calling in the lawyers there is some repositioning, gamesmanship so that when the lawyers arrive they are presented with what is hoped/believed will be the basis to enable them to obtain vindication of your interests through enforcement of terms of the agreement.
The emphasis now shifts from sorting out the relationship's remaining useful potential to redressing grievances. The launching missile for this is the "demand" letter, essentially a letter insisted upon by your lawyers putting the other side on notice that you claim a breach by them that caused injury to you resulting in damages.
The other side, aware of the rift, sets roughly the same process in motion for the same motivation. The rationale, according to most lawyers, is that without this initial accusatory letter you risk waiving some important right. Now both sides are adversaries. Wasn't that quick and easy now?
It was quick and easy and most of the time about the worst mistake that you could have made in terms of your ever realizing anything worthwhile out of this situation. You can preserve your rights without this approach. Another approach is more positively calculated to produce less injury and damage; a shorter path to amicable resolution of everything present; preserve the most that can be preserved out of this bad situation; and save enforcement costs that today often run into hundreds of thousands and even millions of dollars.
If you want to salvage the most from a deal gone bad, in the shortest time, at the lowest cost, you owe it to yourself to consider the other approach as the first thing you do, not as some afterthought alternative when the well has already been poisoned by following bad legal advice. The legal advice was technically correct but not the best advice and rather immature in almost every instance.
With the better approach you have preserved all your rights and can always go back to warfare if the other side fails to see the potential and reciprocate in kind. The odds are that they will reciprocate, especially if you have not already followed your lawyers into confrontation in which only they end up winners most of the time.
There are usually forces working on you that want to propel you into conflict. They are normal human forces and instincts, but they have to be resisted in favor of a more rational parsing of the values as they now are rather than what you hoped they might be when you entered into the agreement. Consider, for example, that while the deal may well have been thought out to the point of very high positive probabilities, all deals include risks, many of which are not controllable. No deal entry stage valuations are solid. They are theoretical. In the best mode you would often have come out with substantially less than expected. Market conditions change.
Globalization expanded the ranges and sources of risks far beyond what they were ten years ago. If you applied formulae that were effective ten years ago to the entry stage evaluation of this deal, and did not adjust for the enhanced risks, the valuations were never realistic in the first instance.
Don't go immediately to war over expectations! Since the value of expectations is now changed due to the pending break up there is now an element of your doing little more than chasing after sunk costs. Chasing sunk costs is usually considered to be a terrible decision. Reassessment of valuations associated with the deal at the time of its impending collapse ought to provide you with serious attitude revision concerning how aggressively you want to pursue vindication of interests that in retrospect may not have been what you thought and hoped. The present tense value of the deal is now far less, and far less should be expended in cash and other resources trying to resurrect those expectations.
Find lawyers who can live outside contract language and "rights and wrongs". While contract language is very important, how you use it when trouble appears can be more important. Call it finesse if you will, but it usually provides much better, swifter, less expensive resolution.
I believe, based upon 50 years in formal dispute resolution practice, that the way businesses usually go about dealing with major problems is wasteful and unnecessary. I have tried the approach of which I speak in this article in several instances in the past few years and it resulted in extremely satisfied clients every time.
It won't always work. Some situations are inherently more difficult to work in due to perceived leverage advantages and ego issues. Those can sometimes be turned around and sometimes not. But with rights reserved in the interim this value preservation approach to dispute resolution will always be worth trying.