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Unexpected Friends

Never assume a third-party is aligned with an opponent.

It happens all the time in disputes. You believe that a friend of an opponent will be against you. A client and I just received a reminder of the opportunities that can be created by working with friends of an opponent.

We were able to resolve a dispute that was beyond settlement. This resolution prevented almost certain bankruptcy for my client and will likely lead to fabulous success instead.

There is an old saying, “the enemy of my enemy is my friend.” Is the converse true? Is a friend of your enemy also your enemy? Surprisingly, not always.

In the early days of my legal career, I handled complex business litigation. There is no better preparation for making deals and preventing legal problems than the experience of tearing problem deals apart. Over time, as more clients relied upon me for advice, I gave up litigation so that I would be available (not tied-up in multi-day trials) when clients call for assistance. One of the lessons I learned early on was not to assume that an employee of an opposing party would be against you.

In a deposition or at trial, if you treated an employee of an opponent hostile, the employee would respond in a hostile manner. A surprising number of times, however, when treating opponents’ employees in a respectful, courteous and even friendly manner, they would disclose information helpful to our case that we would otherwise never discover.

Sometimes opponents’ employees would see us as the enemy and there was nothing we could do. Other times, maybe the employees could see a wrong had been committed. Or maybe the employees had their own complaints with their employers. In any event, it was not uncommon for opponent’s employees to give very truthful answers if asked the right questions in the right manner.

This same principle played out just the other day with a twist. A supplier to an agreement breached the supply agreement and refused to turn over products, parts and work in progress that would allow the client to fill orders and find an alternate supplier. Did the supplier have a strategic plan to try to take over the client’s business, was it being petty and vindictive or was it merely incompetent? We could not tell.

What we did know is that the client had initial purchase orders from major fortune 500 companies that may very well lead to millions of dollars in sales. But if the client could not fill even small simple orders, the sales would be lost and the client would need to close its doors.

All attempts to reason, negotiate and settle with the supplier failed. That supplier had a key vendor. That key vendor had far more to lose by the refusal to come to terms than the supplier. That key vendor, however, worked with the supplier on many other projects. Obviously, that key vendor would side with its customer, the supplier, not my client right?

Come to find out - not so. A three-way settlement with the key vendor at the table with the supplier resulted in a temporary resolution. Perhaps the mere presence of the supplier’s vendor required the supplier to moderate its prior unreasonable positions. Perhaps the vendor, recognizing that it too was paying the price for the supplier’s posturing, put pressure on the supplier behind the scenes. Whatever the reason, bringing the supplier’s vendor to the table worked and a temporary settlement was reached.

There are other issues between my client and its supplier. It remains to be seen how those issues will be resolved. As to the most pressing current issues, without creative deal making, no interim agreement would have been reached.

When you are negotiating agreements or attempting to resolve disputes, remember that bringing other parties to the table can sometimes work to your advantage. Don’t automatically assume that parties are aligned in lock-step with an adversary or opposing party. They might just recognize when the adversary is being unreasonable or, if presented with your position, will see the merits of your offer. This is particularly true if you can craft a proposal that is better for the third party than your opponent’s proposal.

Remember, you may find friends where you least expect them!

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