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“Plan B”: A Key To the Successful Negotiation of Executive Employment Agreements

As executive employment attorneys, we help our clients, whether in finance, higher education, media or the other industry sectors we serve, negotiate their most important employment agreements, when they are hired, when they are promoted or changing responsibilities, and when they are terminated. Sometimes we handle the negotiations directly but sometimes we stay behind the scenes and coach those executive clients who want to handle their own negotiations. Each situation requires, at the outset of our engagement, a thorough analysis of each particular client’s executive needs, as well as the human and business factors which are at play in the individual situation.

But though executives and their employment situations differ, one common element of almost every negotiation is the analysis and creation of a “Plan B” for each executive.

Classic (and now familiar) negotiation theory as it has developed over the past 50 years stresses the need for negotiators to have a so-called BATNA, a clunky abbreviation which stands for the “Best Alternative To a Negotiated Agreement.” Simply put, “this is what will happen if we cannot reach agreement.” BATNA is designed to give each negotiating party a measuring tool against which to assess the worth of a prospective agreement when it becomes clear that no further progress can realistically be made in that particular negotiation. If the agreement looks better than the BATNA, take it; if not, pull the plug on the deal and live with the BATNA (I am obviously simplifying what is the subject of hundreds of pages of many leading guides, treatises and articles on successful negotiation strategy, and which also takes up hours of discussion in negotiation courses at law and business schools across the world). Indeed, this analytical tool has become so common that lawyers are used to their executive clients, many of whom are smart and sophisticated, starting a conversation with, “You will obviously want to know my BATNA,” thereby demonstrating their acquaintance with this now familiar lingo.

Actually, what we want to know is something related to BATNA, but more detailed and subtle, namely, the reality of the executive’s “Plan B.” To begin with, does the executive actually have a “Plan B,” and, if so, how concrete and realistic is it? In a surprising number of instances, there either is no “Plan B” or it is sufficiently nebulous as to need considerable development before it becomes a full-fledged and concrete option or options.

It is decidedly inadequate merely to “have spoken to some search firm five years ago.” Our executive employment clients need a detailed and realistic plan of action. Such a plan is usually built on a series of foundational actions, which include the following: always having a fully updated resume ready to hand (rather than stuck on the employer’s server at work); a full understanding of what, if any, post-employment restrictions in the executive’s agreements might limit any current or future job search; the consistent exploration of alternative employment opportunities; and, of course, keeping the executive’s own personal contacts fresh and active (when was the last time that you reached out to friends in your industry to ask how they were doing?). As noted, these are just the first steps that an executive must take to put into place a fully detailed and specific “Plan B.”

Frequently Asked Questions (FAQs)

1.     Q.     “What if my current employer finds out that I am considering my options and other opportunities?”

A.     Do not assume this is necessarily a bad thing, since it shows you to be an executive who knows his or her own worth, and someone who is not waiting around to be made a toy of circumstances. That said, however, any inquiries about the possibility of alternative employment should never be done using any company device (this is a subset of the larger rule that nothing personal should ever be transacted or stored on any device or server belonging to the employer, and no employer email address should ever be used for personal correspondence or personal affairs).

2.     Q.     “What if there truly is no ‘Plan B’?”

A.     There is always a “Plan B,” even if at first glance it looks, and even may be, less appealing than the current employment position. No one rises into the executive ranks without a set of skills and contacts which can be utilized in other settings. If you think there truly is no “Plan B,” you should promptly consult an executive employment lawyer who knows the right questions to ask to help you develop one.

3.     Q.     “I am simply working too hard in my present position to be able to think about a ‘Plan B.’ What do I do?”

A.     Unless you are independently wealthy or have negotiated sufficient severance to tide you over for several years (not common these days), you either have to find the time to develop your own “Plan B” or hire someone to do it for you. We assure you that you will be thankful you did if and when the day comes that you are presented with a document headed “Termination Agreement” and are required to contact your attorney.

About the Author

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George Birnbaum

Since 1980, sophisticated business people have relied on George to apply the meticulous preparation, attention to detail, and devotion to his clients he learned from fabled trial lawyer Louis Nizer. A graduate of Harvard College and Harvard Law School, George has over 35 years of distinguished deal-making, litigation, mediation and arbitration experience which he has used to negotiate high-stakes agreements for senior executives and select business clients throughout the United States.