Can You Tell The Difference Between The Bagel And the Hole?

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Yes, this will be a complaint; one we think is shared by many readers. Have you ever worked on a deal with someone who, as we say in New York, confuses the hole for the bagel itself? [Years and years ago, we might have said, “donut,” but it seems that you can now buy the “hole” by itself. Think about that. Are we really buying a “hole”?]

Ruminations offers two examples of the kind of people accused of this approach to deal making. The first is the person who had a “bad” experience in a deal and is driven, compelled, obsessed, preoccupied, and engrossed to make sure that if the agreement being discussed covers anything at all, it absolutely must have language that will make sure the disturbing experienced is never experienced again. As we see it, however, the problem is that the “driving” experience either came out of the facts in the earlier situation or the perceived “drafting shortfall” in the earlier “nightmare” agreement and was really a proxy for whatever went on. And, all too often, the prior situation was for a different kind of deal – basically, the deal on the table and the “nightmare” deal have little, if anything, in common. Yes, in the prior deal, had the parties been required to wear fur mittens, they wouldn’t have gotten frostbite. But, in this “put up a building on the equator” deal, requiring fur mittens actually interferes with getting the project completed.

The other example is similar in nature. It is when you are working with someone “on the other side” who specializes in a particular area and, probably to compensate for a shortfall in knowledge, experience or understanding of the important aspects of the deal, focuses on the area she or he “knows.” Yes, one of the parties might go bankrupt before a project is completed, but (frankly) that’s just, plain, not the core of the deal itself. It may be an important matter to be dealt with if the deal at hand springs out of a potential insolvency situation, but (frankly) if the parties are normal ones, spending all of one’s energy and negotiating capital on what isn’t even a third-ranked possibility is just a distraction. And, distractions not only add time and money to deals, but they very often keep us from focusing on the important, operative provisions of the “deal” itself.

We offer the following proposition: “No agreement can cover every possible future situation, no matter how good the craftspeople are and no matter how many words or pictures it contains.” One source tells us that over an average life-span of 80 years, each of us has a 1 in 176 trillion chance of having our 2,500 square foot house hit by a meteorite. Should our agreements include a “what happens if the building is hit by a meteorite” provision”? What if you knew the following Ann Hodges and were negotiating an agreement? Would you focus on the absolutely needed meteorite clause?

According to the website, www.lottoland.co.uk: “Ann Hodges of Alabama, USA was the only person in recent times to be actually hit by a meteorite. And by recent, we are talking about 1954. The 4-kg meteorite crashed through the roof of her rental home, bounced off a radio, and struck a sleeping Ann Hodges. It burnt her hip in a pineapple sized mark, but did not do any permanent damage. Of course, the meteorite did finally takes its toll on the family in the end, thanks to the ensuing global media frenzy and the 3-way legal circus on ownership of the celestial rock involving their landlady and the US military. Anne later suffered a nervous breakdown, separated from her husband in 1964 and died in 1972 at the age of 52.”

We don’t have unlimited time or resources to cover every possibility. We don’t have the intellectual ability to cover every possibility. We don’t have any chance of knowing every possibility. And, most important of all, let’s think in terms of probabilities, not possibilities.

Ruminations wonders whether one should try to accommodate these distracting negotiation demands or refuse to go down that road. Accommodation seems like the right thing, but what happens all too often is that we wind up with convoluted provisions, those looking very much like having been drafted by the proverbial committee, and (worse than that) ones that pervert the central purpose of the agreement in the first place.

What is Ruminations’ plea? – “Let’s listen to each other and accept that we might be allowing ourselves to become distracted by the bagel hole.”

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