[IMGCAP(1)]We all have our own styles. Many have different styles for different things. Over the years I’ve developed an individual style for negotiating on behalf of clients that I have been very successful with, which I am sharing with you now.
When entering a negotiation, it is very important to have clients clearly articulate their thoughts about what they want. This takes time and patience, along with some prodding and challenging. But if it’s done right, clients will be clear about what they want.
When the clients are finished deciding, I prepare a memo with everything they said they want. The memo is nothing fancy and contains numbered paragraphs that develop the scenario. Occasionally I start with the facts, issues, development of the premise, and a conclusion. I also add sections describing the tax ramifications, cash flow and payment terms, interest, guarantees and any continuing involvement, and extra payment for that. I try to get everything down in one place with clear, concise language, short sentences, and one thought in a paragraph. Of course, I include the appropriate caveats and warnings. I caution that that this is a “first” draft not intended for anything other than a discussion between the client and me.
I then go over it with the client and get his or her buy-in. I tell the client this is the “first” proposal and hopefully negotiations will start from it on a point-by-point basis. I then suggest that the document be provided to the “other side,” with the admonishment that this is a first draft prepared by the accountant, it hasn’t been adopted or accepted by the client, but it looks like a good start and could they please review it. Since every agreement has tax issues, it is not unusual for an accountant to be involved.
I also tell my client that if there is a serious disagreement, they could disown it since “the accountant” prepared it, and it is a draft to get the other person’s “starting” points. I also tell my client that their goal is to get me a meeting so I can review the memo and discuss the reasons for everything in it.
The purpose of the memo is to present a first offer without locking in the client to something that can be offensive and to facilitate making a deal. This method works very well since all the issues are presented in such a way that the other side does not feel that it is a “take it or leave it” situation. Instead they can feel empowered and retain a degree of control.
Edward Mendlowitz, CPA, is partner emeritus at WithumSmith+Brown, PC, CPAs. He is the author of 24 books, including “How to Review Tax Returns,” co-written with Andrew D. Mendlowitz (published by CPATrendlines) and “Managing Your Tax Season, Third Edition” (published by the AICPA). Ed also writes a twice-a-week blog addressing issues that clients have at www.partners-network.com. Art of Accounting is a continuing series where Ed shares autobiographical experiences with tips that he hopes can be adopted by his colleagues. Ed welcomes practice management questions and can be reached at (732) 964-9329 or firstname.lastname@example.org.