Introduction
Entities often come together to create and enhance technology, including in the IT, biotech and energy sectors. If properly established, multiparty research agreements provide unique opportunities to combine a range of skills, experience and facilities to produce an outcome: a classic case of the whole being greater than the sum of its parts. Negotiating such agreements can be challenging. This article considers some strategies for making this negotiation process run more smoothly.
The Differences Between Multiparty Negotiations And Bilateral Negotiations
The logistics of negotiating a multiparty arrangements in themselves make the negotiations more complex than those involving only two parties.
In addition, the potential for coalitions to form between parties adds to the complexity of multiparty negotiations. Coalitions will form to increase the coalition members' capacity to achieve a common benefit or to block a perceived common detriment. In research agreements, the coalitions are often well established from the start: public sector bodies tend to view themselves as having common interests and form a coalition, as do private sector bodies. Obviously, a group of collaborators will have more impact if they speak with one voice.
Another factor that makes multiparty negotiations more complex is that there are more options for a party if they go outside the negotiations. In a bilateral negotiation, one party's best alternative may be to collaborate with another entity entirely, instead of the other party. In multiparty negotiations, the best alternative may be a collaboration with any combination of the entities involved in the negotiations, as well as any third party. If a coalition emerges, it may change these alternatives. Similarly, collaborators may have the additional concern of being left out of a deal made between the others (rather than there being no deal at all, as would be the case in bilateral negotiations).
Preparing For The Negotiations
Consider: what's in it for you? As for any negotiation, identify what you are trying to achieve, and your best alternative if the proposed collaboration does not go ahead. This helps prevent you from doing a deal that you should not have done. For multiparty negotiations, you should expect this to change throughout the negotiations given that (as discussed above) there will be a greater range of alternatives to the collaboration, so the best alternative should be continually re-assessed throughout the period of the negotiations.
Consider: what's in it for them?
S pend some time analysing each other party's alternatives to the collaboration by putting yourself in their shoes. What is the bare minimum they will need to get from the collaboration to stay involved? What alternatives are available to them? This process will help ensure that you understand each party's bargaining power and the issues of particular importance to each of them.
Who's going to speak on your behalf?
O bjectives may vary not only amongst collaborators, but also within each research organisation. For example, a principal investigator may have different objectives from the commercialisation arm of a university. It is vital, therefore, that each collaborator takes responsibility for managing its internal stakeholders, so as to ensure it speaks with one voice at the negotiating table.
Managing The Process
Identify a facilitator or lead organisation to keep the negotiations on track
In practice, a facilitator tends to be the collaborator who has the greatest interest in the outcome of the negotiations (as this party typically wants to ensure the negotiations stay on track). The involvement of 'minor' collaborators (who make relatively little contribution or take on relatively little risk) needs to be managed so they do not have undue influence in the determination of principles and document preparation.
For particularly complicated multiparty negotiations, it may be appropriate to engage an independent person to act as a facilitator.
Where the arrangement will involve the creation of a new research company, it may be prudent for the facilitator to be an individual with a leadership role in that company. This will assist in focussing that person on the interests of the company and how it will be able to fulfil its objectives, rather than the interests of any individual collaborator.
Set a timeline for the negotiations
T here needs to be a person to co-ordinate all of the collaborators by setting the timetable and following up those who do not adhere to it. However, the timetable should be set in consultation with all of the parties involved to ensure that they each of them buy into the deadlines set, and to take into account any issues specific to particular collaborators which may affect timing. Where a collaborator has a particular approvals process (for example, the agreement will need to be tabled in a meeting of senior management) the collaborator should disclose that information in advance, and identify any relevant dates when approval can be sought.
The timeline for the negotiations should be consistent with the objectives of the collaborators: for example, if a research collaboration is being established to access government funding, then the negotiations may need to be concluded by a particular time for the collaborators to be eligible to obtain the funding.
Where there is a large number of parties involved, some flexibility is likely to be required. Ideally, there should be buffers built into the timetable, even if these are not communicated to all of the collaborators.
Start as you intend to go on
I dentify a clear decision making process, and stick to it.
If your research collaboration will result in the incorporation of an entity, then it is a good idea to start acting like a company from day one. For example, if you have independent representatives on your governance board, then have them present during the negotiations. This helps collaborators focus: a process or approach may sound workable in the negotiating room, but the collaborators need to consider how this would actually operate in practice.
Conduct face-to-face negotiations
F ace–to-face negotiations are particularly important in the context of multiparty negotiations, because of the difficulties in ensuring effective communication between a large number of parties.
Also, if coalitions are formed, they will become more readily apparent in face-to-face negotiations.
Consider the limitations on the authority of each negotiator
I t is almost inevitable that there will be limitations on the authority of a negotiator representing a university or research institute. Therefore it is important, at the outset of the negotiations process, that you confirm that each representative has authority to act for the party they are representing, or ensure that any limitations on that authority are clearly disclosed at the start. It is of little benefit for the collaborators to negotiate and conclude an issue, only to have it reopened without notice during one of the collaborators' internal review process. Failure to disclose the possibility of such an occurrence erodes trust during the negotiations.
Use of sub groups
I n multiparty negotiations, it can save time if a small group of interested people get together to identify a preliminary proposal for consideration by the broader group.
It may also be useful to use sub groups to help draft particular provisions in a way that deals with the subtleties of collaborators' internal policies. If some of the collaborators have particular requirements in relation to an issue for negotiation – for example, the right to use research outcomes for internal purposes – then those collaborators could come together to agree on wording that accommodates their specific requirements.
Comments matrix
C ollating comments in a matrix is simpler logistically rather than allowing each party to mark up their comments in each draft of the agreement. Use of a comments matrix also helps all of the parties to understand and accommodate each stakeholder's concerns and motivations, as it requires a collaborator to justify any proposed changes.
The following is an example of a comments matrix:
|
Clause |
Issue |
Suggested change |
Rationale or Justification |
Importance (High/ Moderate/ Low) |
Party suggesting change |
Confirm non-binding key principles before formal documents are prepared
There is a significant benefit in preparing a term sheet to set out key principles for the arrangement where it involves multiple parties. Through this process, the collaborators will identify any insurmountable differences (and abandon the proposed collaboration if appropriate).
As negotiations progress, term sheets can also help to focus the collaborators on the key (agreed) principles of the arrangement.
Drafting documents with an eye on the future
As well as negotiating agreements to establish the research arrangement, it may be useful to negotiate templates of the agreements required for its ongoing operation. For example, in a CRC context, you could negotiate only the company constitution and the participants' agreement, or also negotiate at the start template project agreements and commercialisation agreements. Although this is likely to be a significant upfront expense, it may allow the collaborators to move forward more quickly with the research program.
This may also become important when the arrangement is wound up, as winding-up is made significantly more complicated if the arrangements made during the collaboration have not been clearly documented.
It may also be appropriate to negotiate the agreements as a package so that there can be trade-offs between the risks and benefits under different agreements, rather than each being negotiated in isolation.
Use of lawyers
Like all risks, the legal issues in entering into a multiparty research agreement need to be identified and analysed by someone qualified (and included in a risks register for the collaboration rather than being filed away in a letter of advice).
If an external legal advisor is to be consulted, your best chance of ensuring that you receive advice which both facilitates the negotiations and is provided in the context of the decision-making environment, is to consult a lawyer early and ensure that he or she is made aware of the objectives of the collaboration.
This will give your lawyer better scope to identify options to achieve the parties' objectives and provide guidance on decision making, and avoids a breakdown in trust between the negotiating parties if one of the collaborators reverts on an agreed principle on the basis of legal advice obtained late in the process.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
