To reach the deal that you want in a negotiation it's going to take some brain power

To reach the deal that you want in a negotiation it’s going to take some brain power
Image Credit: Allan Ajifo

Negotiations are complicated things. There are often a number of different people involved, there are multiple discussions that are held over time perhaps in different locations, and all sorts of negotiation styles and negotiating techniques are used. As a negotiator, it’s your job to make sure that everything is kept in line – that everyone knows what they’ve already agreed to and what still needs to be hammered out. This is where a LOI and a MOU can step in and help you out.

LOI / MOU Helps You Keep Things Straight

I can’t go to the food store without bringing along a list of the items that I need to get. The few times that I’ve tried to do this without using a list, you know exactly what happened – I came home with the wrong things and none of the things that I actually needed. In a negotiation, the very same thing can happen to us – we can get half-way through a negotiation and lose track of where things are at.

This is when a letter of intent (LOI) or memorandum of understanding (MOU) can come in handy. When you sit down and take the time to create one of these status report documents, the process forces you to really focus on what has already been agreed to in the negotiations. Additionally, you are forced to confront the issues that nobody has been able to reach an agreement on yet.

At this stage of the negotiations, no not everyone is going to be seeing things the same way. However, it can be very important to see if you can get some agreement from everyone in regards to what has already been agreed to. With this type of agreement, you can then get everyone to turn their attention to focusing on only the issues that are still unresolved. This can boost everyone’s productivity.

LOI / MOU Fills In The Gaps Caused By Time

There is an ugly little secret that nobody likes to talk about when it comes to negotiating. It turns out that it can be very, very difficult to reach an agreement with the other side. What this ends up meaning is that we’re never able to resolve everything in a single meeting. Instead, we end up having to have multiple meetings. This means that our negotiations take place over time.

This “spreading out” of our negotiations means that both you and I will have a nasty habit of tending to forget details. Sure, we’ll remember the big things, but it’s the 100’s of tiny agreements that have been made that really go into allowing both sides to reach a final deal. What we really need is a way to bridge our negotiating sessions.

It turns out that LOIs and MOUs are the perfect tool for doing this. A well-crafted LOI/MOU will capture all of the side agreements along with the results that have been hammered out at the main table. The creation of this document will allow both sides to manage the time gaps that occur between negotiating sessions and will allow everyone to stay focused on solving the issues that have not been resolved yet.

What All Of This Means For You

If you want to have any hope of being able to reach the deal that you are trying to get during a principled negotiation, then you are going to have to make sure that both sides of the table have a good understanding of where things stand. A good way to make this happen is to create a LOI or a MOU.

When you are creating the LOI / MOU this will force you think about where the negotiations are currently at. You’ll have to make sure that you know both what has already been agreed to and what is still considered to be an open issue. The list of things that have not been agreed to is especially important. Since negotiations take place over time, a LOI / MOU can help to provide continuity.

The challenges involved in a negotiation are many and varied. As a negotiator you need to make use of LOIs and MOUs in order to help both sides of the table understand where the negotiation is currently at. Create these documents carefully and you’ll be able to get to your desired goal that much quicker.

– Dr. Jim Anderson

Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: How long do you think that it should take to create a good MOU?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

The longer that a negotiation goes on, the more complicated it can become. With all of the different negotiation styles and negotiating techniques being used, as a negotiator it can become very difficult to stay on top of just exactly what has already been agreed to in a complicated negotiation and what issues still remain to be resolved. This is when creating either an LOI to start a new negotiation or an MOU to keep the current negotiation moving forward can be a big help. However, who should actually write these documents?

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A LOI or a MOU can help to keep a negotiation on track

A LOI or a MOU can help to keep a negotiation on track

Image Credit: Republic of Korea

More often than not, the negotiations that I find myself involved in are complex beasts that have a lot of different moving parts. It can become very difficult to keep track of all of the different parts so that I understand what still needs to be worked out. The good news is that this is a very common problem in negotiations. This means that there is a solution for this challenge: a letter of intent (LOI) and a memorandum of understanding (MOU).

What A LOI And A MOU Is

A modern negotiation is a complicated thing for even the best of us. The number of issues that need to be discussed and the number of people who may eventually be involved in the negotiations can make it very difficult to stay on top of exactly what is going on. Because knowing where the negotiation is at all the time is part of our job, we need to find a way to help us stay on top of what is going on. This is where LOIs and MOUs come in to play.

Generally speaking, most negotiations are not that much of a surprise. Before they even start, we pretty much know what we are getting ourselves into. When we take a look at what will be covered during the negotiation, we can spot the complex negotiations that will take a long time from the simple ones that we should be able to wrap up in a day. A letter of intent (LOI) is a document that we can prepare before we get started with one of the complex negotiations. This simple document lays out what we believe that we’ll be negotiating. By signing the LOI, the other side is agreeing that what has been documented will provide the boundaries for upcoming negotiation.

Getting an agreement as to what we’ll be discussing before all of the negotiation styles and negotiating techniques start to get used is always a good idea. However, we all know how things tend to go – they can get very tricky very quickly. It can be easy for a negotiator to lose his or her way half-way through. This is where a memorandum of understanding (MOU) comes in. At any point in the negotiations you can call a halt to what is going on and then use your knowledge of where things currently stand in order to create an MOU. The other side will review the MOU and if they agree that it accurately summarizes where things currently stand, then they can sign it. An MOU is a non-binding document that simply states where things currently stand in a negotiation.

How To Use A LOI And A MOU

Now that we know what an LOI and an MOU are, how should we go about using them in our next negotiation? The most important thing to keep in mind might be to understand what they are not. They are not intended to be used as legal documents. The final result of your negotiation will be a legal agreement that will be drawn up probably by lawyers and it will be written in that legal speak stuff.

An LOI and MOU are not intended to replace the function of the legal documents that are a part of every negotiation. Instead, they are simply designed to allow everyone to agree on where the negotiations are at a given point in time. What this means for both you and the other side is simply that you are not going to want to try to write your LOI and MOU in “legal speak”. Instead, you are going to want to write them in clear-cut language that everyone is going to be able to understand. Do take care to make sure that what you write can’t be interpreted in multiple ways!

If it’s clear that an LOI should be used prior to starting a negotiation, then just exactly when should an MOU be used? I really only plan on using a MOU once during a negotiation if at all. This means that I need to plan out when I’ll use it. Generally speaking, when I feel that both sides have reached a number of critical agreements and that the end of the negotiations is in sight, this is the right time to use the MOU. I feel that the MOU serves to remind both sides of just how much has already been worked out. By using the MOU to identify what remains to be worked on, I’ve found that I can direct the other side’s attention and prevent any stepping back and having to renegotiate things that have already been agreed to.

What All Of This Means For You

Your goal when negotiating is to be able to walk away with the deal that you want. The challenge is that there are often so many different things that are going on during the principled negotiation. In order to keep track of what is going on, you need to know how to use a letter of intent (LOI) and a memorandum of understanding (MOU).

An LOI and a MOU are basically the same thing. The difference is when you use them. An LOI is used at the start of a negotiation to lay out what you’ll be negotiating. An MOU is used later in the process to keep track of what is going on. The key to doing this correctly is to make sure that the wording of both documents is complete, but not too legal.

The one thing that you never want to have happen during a negotiation is that you lose track of where you are at. Understanding what a LOI and a MOU are is the right way to make sure that you are able to keep track of where things are at. Use these tools to get the deal that you want!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Negotiating Skills™

Question For You: Do you think that you should refer to the LOI or MOU during the negotiation if things go off in a different direction?

Click here to get automatic updates when The Accidental Negotiator Blog is updated.

P.S.: Free subscriptions to The Accidental Negotiator Newsletter are now available. Learn what you need to know to do the job. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

Negotiations are complicated things. There are often a number of different people involved, there are multiple discussions that are held over time perhaps in different locations, and all sorts of negotiation styles and negotiating techniques are used. As a negotiator, it’s your job to make sure that everything is kept in line – that everyone knows what they’ve already agreed to and what still needs to be hammered out. This is where a LOI and a MOU can step in and help you out.

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