Contract negotiations are often not on your list of most fun things to do. It can be a long and drawn-out process. There are many red flags to be aware of when entering the negotiation process.
One is the option of a long-term deal. For some, it can seem ideal to lock in a price and put off the next round of negotiations even farther into the future. However, with rare exceptions, a long-term contract is among the worst paths a firm can choose, for several reasons. The first reason seems obvious: change. Technology and pricing are continuously changing. You wouldn’t buy a plan that kept you from upgrading your phone for five years, would you? The legal-information landscape is rapidly evolving, with exciting acquisitions and new companies/products emerging. These products will continue to pull away use and interest in Lexis and Westlaw. It is always possible that one change in the market could make another product irrelevant. And as Artificial Intelligence rapidly gains momentum, there is much to be seen. Generally, a longer contract benefits the vendor. For legal-information contracts, we always advise keeping the term to within your near- and long-term forecasts; generally, that is three years or fewer, unless you are receiving a truly exceptional deal.
Another red flag is the year-over-year increase. Consider what additional benefits you are receiving for an annual increase. Pay attention to the later-year increases, as these can often be higher than the first-to-second-year increase. Complacency or lack of diligence in managing information resources can have long-lasting unfavorable implications on both processes and costs, thereby hampering overall efficiency.
Another red flag are bundles. Bundling products together can be an advantage for some. However, for many, a new contract bundle may be hiding unnecessary products or content that the firm or organization doesn’t need. Take for instance the cable, internet and phone bundle: if cable companies realized a 35% increase in bundling these products, imagine the increases your legal-information vendors are receiving. Take a good look at the bundle being offered. It could be a great deal, or it might not, but in either case, it is worth investigating.
To learn more about the do’s and don’ts of legal-information contract negotiations, click here.
Alex West is Feit Consulting's Senior Vice President working closely with clients on strategy and contract negotiations. With an extensive corporate background in management and marketing at Fortune 500 companies such as Sara Lee, Hasbro and P&G, Alex oversees all Feit client engagements.