Chicken Little Syndrome And How A Deal Gets Done

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Fair Warning – here’s another Ruminations screed. The sky will fall if you don’t read on. OK, not really, but we were feeling left out. It seems that’s the way some of us talk to each other.

“Tell them that if they don’t sign by noon tomorrow, I’m going to lease the space to someone else!” “If you don’t agree to my insurance language, this deal is dead.” “We have four other people who badly want this space, and each will pay more than what’s in our deal.”

The specter of each possibility is the threat. It doesn’t matter how probable it is that, late in a deal, one party or the other will “walk” if the deal is signed a week from now rather than “now.”

Yes, it’s possible that there are other prospective tenants lurking around the property and it is possible that other landlords are tossing great offers at your prospective tenant.

But, these things are true so rarely, that no one believes these threats. Yet, landlords and tenants keep trying.

Granted that under the right circumstances and with confirming facts to support the urgency of the plea, such threats should be taken seriously. After all, in a very, very small, yet disturbing number of cases, landlords and tenants walk from a late-stage deal to take another, more attractive one. That really doesn’t happen much. More often, a tenant is negotiating for a space that has been “sucking wind” and the likelihood that four prospects have shown up all at once after 18 months is quite low. It could happen, but so could two planes crash mid-air. Yet, brokers and landlords drag that old song out far too often. And, we’re not going to tag just brokers and landlords with that charge; tenants try to sing that song as well.

When such “threats” of disastrous consequences, such as “if you don’t agree to do what I want and do it right now” are tossed across the tables, there are three categories of response. One is to avert the possibility regardless of the probability of the threat being actualized. Another is to laugh it off. The third one we’re thinking of derives from a response to a threat made to the real estate vice president of a large retail chain. The landlord, during the course of tedious negotiations for an anchor store, told this vice president that another tenant was now interested in the space. The response was something like, “That’s great for you because we are bottom fishers and any other prospective tenant will certain pay more than we’re paying. So, call me if it doesn’t work out and we can talk about the new, lower rent.”

What negotiators seemingly fail to remember (or possibly, to know) is that negotiating landlords and tenants are dating, intending to get engaged and then married. There is plenty of time for posturing after they get married. Save the threats and lies for later. Actually, that’s not what Ruminations thinks. What we think is that the dating process allows the parties to learn about each other. It is a time to build trust in one another. When parties impose false conditions on each other and threaten each other, how will they treat each other once a lease is signed?

That’s where Henny Penny (a/k/a) Chicken Little comes in. Yes, the sky may fall, but it hasn’t happened very often. So, who would believe Ms. Penny ever again? While bluffing is a time-honored and accepted negotiation tool, successful bluffing relies on retaining some shred of credibility. Recently we heard a seven year old say this about his parents: “No means yes.” It then came to us: “How are we going to believe you when our experience tells us that you don’t mean what you say?” Bluffing is a valuable poker player’s skill because it isn’t wheeled out at every opportunity. If it were, “I stand” would mean “I am bluffing.”

That’s not all. The practice is obnoxious.

One of our examples began with, “Tell them….” We say, “Tell them yourself. Impair YOUR relationship, not my relationship, with the other side.” Actually, we haven’t figured out how to say that. Suggestions, please? Years ago, a very, very talented lawyer we were using told us to “Tell them this, and then tell them that.” We asked, “Would you tell them?” The answer was, “No, I don’t have the nerve.”

Speaking of lawyers, it is reasonably well know that public trust in them is pretty low. To qualify that, trust in all lawyers (but your own) is pretty low. [What may not be well known is that business executives rate even lower.] A December 8-11, 2014 Gallop poll tells the story. It asked: “Please tell me how you would rate the honesty and ethical standards of people in these different fields – – very high, high, average, low or very low?” The results (for three of those professions on a scale of “Very High/High”): Lawyers – 21%; Business Executives – 17%; and Car Salespeople – 8%. Similar polls say the same thing.

Is this what we want to hear? Probably not. Perhaps, we can all start by speaking to each other and acting with each other in credible ways.

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Comments

  1. Good post Ira. I once made a number of comments to a landlord’s upgraded lease form (the parties had numerous deals before). The landlord’s counsel, who upon instructions from his client said “we are not going to re-negotiate the whole lease” (although the landlord made substantive changes of it own); the enclosed draft is final,take it or leave it.” Although my client tended to panic a little, I urged them to stay cool. I responded with more comments stating that these were issues that I happened to disagree with and presented the language I proposed – in other words I ignored their threat (in the same way Kennedy made pretend that Kruschev’s threat was never received). The fact that there were 4 deals waiting in the wings helped. The landlord, not accustomed to being stood up to, proceeded to negotiate my suggested changes to ultimate resolution. They never pulled that stunt again. Moral – tell the landlord “Do what you need to do”.

  2. In my experience, the biggest problem is my client–doesn’t matter if its the landlord or the tenant. My client always seems to believe, and react to, the threat. Doesn’t matter how experienced and sophisticated the client is. Why, I have no idea. Maybe its the client I attract. Anyway, I think the concept Joel suggested is the best-don’t confront the threat, just ignore it.

  3. Ira, where did real estate agents fall in the ethical standards survey?

    Also, I agree with Joel’s strategy. However, sometimes an agent or attorney will call and make ‘The Threat’. I generally respond that I was not taking notes and can only forward messages which are received in writing. This seems to give them time to react in a more non-emotional manner.

  4. R. Scott King says:

    Great post, Ira.

    My experience has been that I’ve run across as many posturing attorneys as I have unreasonable clients. Bottom line is, as Joel said, represent your client’s interests reasonably and leave the other side to “do what [they] need to do.”

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