If properly established, multi-party research agreements provide unique opportunities to combine a range of skills, experience and facilities to produce an outcome: a classic case of the whole being greater than the sum of its parts.

Negotiating such agreements can be challenging, but there are ways to make the negotiation process run more smoothly.

The differences between multi-party negotiations and two-party negotiations

The logistics of negotiating multi-party arrangements in themselves make the negotiations more complex than those involving only two parties.

In addition, the potential for coalitions to form between parties adds to the complexity of multi-party negotiations. Coalitions will form to increase the coalition members’ capacity to achieve a common benefit or to block a perceived common detriment. In research agreements, the coalitions are often well established from the start: public sector bodies tend to view themselves as having common interests and form a coalition, as do private sector bodies. Obviously, a group of collaborators will have more impact if they speak with one voice.

Another factor that makes multi-party negotiations more complex is that there are more options for a party if they go outside the negotiation. In a two-party negotiation, one party’s best alternative may be to collaborate with another entity instead of the other party. In a multiparty negotiation, the best alternative may be a collaboration with any combination of the entities involved in the negotiation, as well as any third party. If a coalition emerges, it may change these alternatives. Similarly, collaborators may have the additional concern of being left out of a deal made between the others (rather than there being no deal at all, as would be the case in a two party negotiation).

Preparing for the negotiations

Consider: what’s in it for you? As for any other negotiation, identify what you are trying to achieve, and your best alternative if the proposed collaboration does not go ahead. This helps prevent you from doing a deal that you should not have done. For multi-party negotiations, you should expect this to change throughout the negotiation given that, as mentioned above, there will be a greater range of alternatives to the collaboration, so the best alternative should be continually reassessed throughout the period of the negotiation.

Consider: what’s in it for them? Spend some time analysing each other party’s alternatives to the collaboration by putting yourself in their shoes. What they can obtain from an alternative will be the bare minimum they will need to get from the collaboration to stay involved. This process helps to ensure that you understand each party’s bargaining power and the issues that will be of particular importance to each of them.

Who’s going to speak on your behalf? Objectives will vary among collaborators, but also within an organisation. For example, a principal investigator may have different objectives to the commercialisation arm of a university. Each collaborator needs to take responsibility for managing its internal communication to ensure it speaks with one voice at the negotiating table.

Managing the process

Identify a facilitator or lead organisation to keep the negotiations on track. In practice, a facilitator tends to be the collaborator who has the greatest interest in the outcome of the negotiations (as this party typically wants to ensure the negotiations stay on track). The involvement of minor collaborators (who make relatively little contribution or take on relatively little risk) needs to be managed so they do not have undue influence in the determination of principles and document preparation.

For particularly complicated multi-party negotiations, it may be appropriate to engage an independent person to act as a facilitator.

Where the arrangement will involve the creation of a new research company, the facilitator may be an individual with a leadership role in that company who will be more focused on the interests of the company and how it will be able to fulfil its objectives, rather than the interests of any individual collaborator.

Set a timeline for the negotiations. There needs to be a person to co-ordinate all of the collaborators by setting the timetable and following up those who do not adhere to it. However, the timetable should be set in consultation with all of the parties involved to ensure that each of them buys into the deadlines set, and to take into account any issues specific to particular collaborators which may affect timing. Where a collaborator has a particular approvals process (for example, the agreement will need to be tabled in a meeting of senior management), the collaborator should disclose that information in advance, and identify any relevant dates when approval can be sought.

The timeline for the negotiations should be consistent with the objectives of the collaborators: for example, if a research collaboration is being established to access government funding, then the negotiations may need to be concluded by a particular time for the collaborators to be eligible to obtain the funding.

Where there is a large number of parties involved, some flexibility is likely to be required. Ideally, there should be buffers built into the timetable, even if these are not communicated to all of the collaborators.

Start as you intend to go on

Identify a clear decision-making process, and stick to it. If your research collaboration will result in the incorporation of an entity, then it is a good idea to start acting like a company from day one. For example, if you have independent representatives on your governance board, then have them present during the negotiations. This helps collaborators focus: an approach may sound okay in the negotiating room, but the collaborators may also need to be encouraged to consider how that would work in practice.

Conduct face-to-face negotiations. Face-to-face negotiations are particularly important in the context of multiparty negotiations, because of the difficulties in ensuring effective communication between a large number of parties.

Also, if coalitions are formed, they will become more readily apparent in a face-to-face negotiation.

Consider the limitations on the authority of each negotiator. It is almost inevitable that there will be limitations on the authority of a negotiator representing a university or research institute. Therefore, it is important that when you come to the negotiating table, you confirm that each representative has authority to act for the party they are representing or ensure that any limitations on that authority are clearly disclosed at the start. It is not fair on the collaborators to negotiate an issue and have reached a conclusion, only to have it reopened without notice during one of the collaborators’ internal review process. Failure to disclose the possibility of such an occurrence erodes trust during the negotiations.

Use of sub-groups. In multi-party negotiations, it can save time if a small group of interested people get together to identify a preliminary proposal for consideration by the broader group.

It may also be useful to use sub-groups to help draft particular provisions in a way that deals with the subtleties of collaborators’ internal policies. If some of the collaborators have particular requirements in relation to an issue for negotiation – for example, the right to use research outcomes for internal purposes – then those collaborators could come together to agree on wording that accommodates their specific requirements.

Comments matrix. Collating comments in a matrix is simpler logistically than allowing each party to mark up their comments in each draft of the agreement. Use of a comments matrix also helps all of the parties to understand and accommodate each stakeholder’s concerns and motivations, as it requires a collaborator to justify any proposed changes.

Example:

• clause

• issue

• suggested change

• rationale or justification

• importance (high/moderate/low)

• party suggesting change.

Confirm non-binding key principles before formal documents are prepared. There is a significant benefit in preparing a term sheet to set out key principles for the arrangement where it involves multiple parties. Through this process, the collaborators will identify any insurmountable differences (and abandon the proposed collaboration if appropriate).

As negotiations progress, term sheets can also help to focus the collaborators on the key principles of the arrangement.

Drafting documents with an eye on the future. As well as negotiating agreements to establish the research arrangement, it may be useful to negotiate templates of the agreements required for its ongoing operation. For example, in a CRC context you could negotiate only the company constitution and the participants’ agreement, or also negotiate at the start template project agreements and commercialisation agreements. Although this is likely to be a significant upfront expense, it may allow the collaborators to move forward quickly as the research program drives ahead.

This may become particularly important when the arrangement is wound up, as winding up is made significantly more complicated if the arrangements made during the collaboration have not been clearly documented.

It may also be appropriate to negotiate the agreements as a package so that there can be tradeoffs between the risks and benefits under different agreements, rather than each being negotiated in isolation.

Use of lawyers. Like all risks, the legal issues in entering into a multi-party research agreement need to be identified and analysed by someone qualified (and included in a risks register for the collaboration rather than being filed away in a letter of advice).

If an external legal advisor is being consulted, your best chance of ensuring that you receive advice which facilitates the negotiations and is provided in the context of the decision-making environment is to consult a lawyer early, and to ensure that they are made aware of the objectives of the collaboration. This will give the lawyer better scope to identify options to achieve the party’s objectives and provide guidance on decision making, and avoids a breakdown in trust between the negotiating parties if one of the collaborators reneges on an agreed principle due to obtaining late legal advice.

Kate Rintoul is a senior associate with the law firm Minter Ellison. Email kate.rintoul@minterellison.com