Two Essential Questions to Ask BEFORE You Start a Negotiation!

One of the best ways to accomplish something with other people, including business negotiations, is to communicate effectively. That doesn’t always happen despite one’s expectations and best intentions.

Shot of two young men having a discussion indoors

Shot of two young men having a discussion indoors

Last month, I negotiated a very simple and conventional material transfer agreement (MTA) for a client that wanted to give some pharmaceutical compound samples to an academic scientist for pre-clinical studies. My assumption — proved wrong — was that the scientist (and his legal support) were familiar with similar transactions and documents, and the way we communicated wasn’t helpful.

The basics. A material transfer agreement generally is a simple contract, of a few pages in length, that sets out rules for the use of materials that someone is providing. Usually, it serves to retain various rights (ownership of the material), prohibits some uses (like transferring the material to others, using the material for therapeutic purposes), confirms that the recipient can publish the results of their studies using the materials, and gives the provider an opportunity to review publications before submission to consider whether patentable discoveries might need to be protected. Usually there’s no charge for the materials and academic research is facilitated. For more information, the National Institutes of Health has some useful model agreements.

In this instance, the marked-up document returned by the university reacted to unmentioned and unintended issues that went beyond the scope and language of the MTA itself. For instance, the draft MTA said the university owned the results of its research although it didn’t explicitly say that such results included patent rights. This was perceived as overreaching on the part of my client. The markup also truncated customary periods of time to review a draft manuscript describing the use of the material from 30 days to 5 days, which simply is not enough time.

Shortly after I started working at NIH, I learned an elegant and effective conversation and negotiation approach from Josh Kalkstein and Paul Armond, both then at Pfizer. They started a negotiation with a question: “What’s important to you about this transaction?” I’ve used their approach with appreciation for almost 30 years. Ask that question and you might hear about institutional policy concerns, timing and deadlines or even hopes and dreams for the underlying research!

Back to my MTA kerfuffle of last month, I should have asked another question about the scientist’s familiarity with deal negotiations and the patent process. As it turns out, he’s never been involved with a patent application. So he truly didn’t know that reviewing a manuscript for inventive content takes time — more than five days — and involves multiple people at the material-providing enterprise (that is, management, scientists and IP attorney). And his familiarity with contracts like this MTA also was very limited.

To sum up: ask both of these questions as you start negotiating a transaction rather than just sending a draft agreement by email. And tell me what works for you in a comment below?