Surviving Goliath

Small, But Smart

Indeed, despite our sympathy for the “little guy,” he wins more often than most of us realize. As chronicled by Arregu'n-Toft and Gladwell, little guys who “think independently,” who “challenge conventional wisdoms” and “look at things in different ways,” can and do prevail. In fact, when the “little guys” “acknowledged their weakness and chose an unconventional strategy,” and instead chose not to play by Goliath's rules, their winning percentage shot up to 63.6% ' “even when everything we think we know about power says they shouldn't” have (see, http://nyr.kr/TDyk3o).

But do consumers root for the little guy? Certainly not if it costs more, or is less convenient than doing business with a big firm. While some altruistic individuals may be willing to pay extra for locally produced products, or to support local
merchants, that choice is not sustainable in the long run, if their competitors do not share their values ' and can undercut the prices enjoyed by the local firms' customers. Moreover, in today's complex world, the reality is that doing business with “big business” is inevitable.

Unfortunately, however, in business, often the David vs. Goliath story turns out horribly for the little guy. Too often, Goliath wipes the floor with David's slingshot. For example, one classic nightmare for entrepreneurs, and a staple of small-business magazines, is the person who “sold out” to a big firm, on non-negotiable terms that were one-sided in favor of the buyer. Within a short time, the seller finds himself outside looking in, with little to show for his sale or equity, and his company has lost its identity after being swallowed by the buyer.

In a deal in our own office, and which we saw after the fact (it was a legal malpractice claim), a technology firm was sold to a much a larger competitor, largely for equity in the continuing firm. Unfortunately, the sellers' counsel failed to notice the traps in the buyer's documents ' the sellers were soon presented with impossible tasks (at least with the financial resources they received), and they failed to hit their performance targets. Under the “standard” documents of the buyer, that lack of performance led to termination of the sellers' employment, and forfeiture of their stock ' and its future appreciation, which was the key value in the sale.

Less dramatically, any owner of a small business knows that a “big contract” can be a blessing and a curse. No one can deny the comfort of an order that will keep the firm and its employees busy for the foreseeable future, and provide steady cash flow. Similarly, the big firm may offer cost advantages in procurement, marketing and other forms of overhead, because of its efficiencies of scale.

But too often, the big contract also imposes unexpected costs. The change in volume may increase fulfillment costs beyond current capacity and eat into profit margin. As is increasingly common, the buyer may have stringent procurement standards to avoid doing business with firms that may have skeletons in their closet, or may source goods from countries or firms that society has deemed unacceptable ' all of which takes time to investigate and, if necessary, fix.

Consider: The seller may have to dedicate personnel and production time to the big firm's order, to the detriment of the seller's traditional (but smaller) customers' business. Similarly, management may have less time to attend to the needs and concerns of existing customers. As a result, the seller may find itself losing its own business ' for the benefit of a big buyer willing to shift its order to any competitor willing to give a minimal price break, and jump through all the buyer's hoops.

In addition, big firms simply do things differently (and often more expensively) than a typical, thinly staffed e-commerce firm that operates “on the fly” may or can do. A cost-conscious and time-stressed entrepreneur may be perfectly content to negotiate deals via e-mail (or even via Twitter, or on a social-media platform). Some may still even be comfortable closing on just the traditional handshake. But a big firm may require paper-intensive forms and move more ponderously than the smaller firm is used to moving, all of which takes more time and expense, two commodities in short supply for many e-commerce firms, particularly startups.

There's Always an Exception

However, perhaps the greatest problem lies in the nature of a contract itself. While na've entrepreneurs may think the contract fixes terms, aggressive firms look at it as just the starting point for the re-negotiation. When you sign a contract with a large firm, one hidden “benefit” you get is the right to spend money, and lots of it, on legal fees to enforce the contract, if the other party chooses not to follow it, because it knows that the cost of fighting will be more than the contract is worth. In other words, while a small firm may be happy to have established legal rights against the larger firm in the agreement, what realistic options does it have if the bigger firm simply ignores the contract, especially if the larger firm has in-house counsel, which makes defending a claim ring up only minimal additional cost?

Certainly, the principals of large firms know that practical reality and use that knowledge in deciding how to behave under the agreement. For example, if the larger firm will miss a shipping deadline for which the contract imposes a penalty, it may simply notify the smaller firm of the new date. While the smaller firm may have a great case to sue for breach of contract, the wise leaders of that firm recognize that the case won't be heard for several years, and that a win means only that the smaller firm can try to seize assets to sell to collect the judgment, another lengthy and expensive process. How can any e-commerce firm call such a state of affairs a “win” or “success”?

Some Business Battle Strategies

So how can a small e-commerce company dance with Goliath intelligently to get the benefits of Goliath's scale and to get the business, yet preserve itself? How can it become part of the 63% of small firms that win with unconventional tactics, according to Gladwell?

Let me offer a few suggestions, from actual (and sometimes bitter) experience, when you have to deal with non-negotiable, unfriendly form agreements.

First, you can just sign them. If you truly have no choice, you save the legal fees to be told that the agreements are, as you already know, slanted to protect their author. You may be grateful for the business, and don't want to blow an opportunity that your competitors would be glad to grab if you declined it, or botched it. Most “bad” language applies to situations that may never occur, so the benefits may be worth the risk that a formal “default” will never happen.

If you feel you must speak with counsel, try to limit your cost. As one client tells me, when he gets such an agreement he asks that I look only for “show stoppers” ' provisions so bad they may outweigh the contract's benefits, such as an unexpected personal guarantee, or a volume or price commitment that could bankrupt the company.

Another approach, which I have used successfully with several large branding companies, is to focus on the few (one to three) key points that you must change. For example, I almost never meet resistance to a request for written notice of any alleged default, and a right to cure that breach. (This can be critical when dealing with form documents that can put almost anyone in technical default.) You then ask for those changes in a side letter with your business contact, not with the other side's counsel. Another business person may be better able to recognize a reasonable compromise necessary to close a deal than can an attorney who is fixated on the sanctity of a contract (and who may well be inflexible enough to think differently about how to get the deal done).

Be on Guard

Implicit in these approaches, and the topic of this article, is the premise that the big firm is not your friend. In some cases, however, the relationship is even more adversarial, which can be a disaster if the smaller firm does not realize it while basking in the glow of the larger firm's attention. This is often a common complaint from clients who operate small firms (particularly in the tech sector) and who invested considerable time negotiating a deal with a larger firm, but the deal never came to closing. By the time the deal was called off, the bigger firm had learned all the key information it would have gained had there been a deal, whether it would have been an acquisition or just a contractual arrangement.

In that scenario, while the smaller firm likely has a strong case for breach of a confidentiality or non-disclosure agreement, again, filing suit and prosecuting the case to completion costs money and time. Moreover, while the decision to begin litigation is always critical, from legal and financial perspectives, here it will also expose to the world that the smaller firm was victimized by “theft by due diligence,” which could harm that firm's ability to attract another deal (not to mention the overall damage, and cost, to its reputation). And as noted above, the bigger firm will generally be able to afford the case much more easily. Finally, if the agreement was written by the larger firm, it probably has “escape clauses” that it can use to justify its theft, and that will turn on factual determinations ' always expensive and time-consuming. While the bigger firm may not have already known the key information (e.g., contact persons at key customers), as it often claims, can your firm actually prove that, and at what cost might that be pursued or accomplished?

Pick Your Fights, and Your Foes

Therefore, the smaller firm must be much more selective in deciding to whom it speaks. Online resources can help determine the prospective purchaser's track record, and whether it has been sued by prior failed transaction partners. If possible, the small firm also should investigate how the buyer has treated employees of the companies it has acquired because you and your employees may soon receive the same treatment.

So You Say

Of course, the larger firm will claim that a mutual confidentiality agreement proves that it is being fair. That is correct, in theory, but wrong in fact, because, as highlighted above, a smaller firm won't have the cash or personnel to devote to a lawsuit against a well-funded foe. Because of the disparity in resources for litigation, if you have to rely on an agreement with a larger firm to protect your rights, then you have essentially already lost, because you will bear not only the cost of the bigger firm's breach, but also the legal expense to fight over it ' a fight that often may carry on for years.

Keep Data Close, if You Can

Far better, therefore, is building into the business relationship protection for your firm against such behavior, if possible, much earlier in the relationship. If your due diligence indicates concerns about the opposing, bigger, firm, then don't talk to it, or disclose only information that is not harmful (if stolen) until you have a financial commitment in hand. (In one of the largest deals in which I have been involved, the critical information, the commission splits with key sales representatives, was delivered only after it was confirmed that the purchase-price wire payment had been transmitted.)

Similarly, if the small firm's key asset is its intellectual property, then critical information should not be made available until after the bigger firm has performed its part of the deal, if ever. Once knowledge is “out of the bag,” it cannot be put back in. Sophisticated firms will find ways to show that they obtained or developed the key IP other than by getting it through due diligence ' and no small firm can afford the litigation expense to prove otherwise.

Because We Don't Have To!

Of course, from the perspective of a smaller firm, it is critical to understand that most larger firms will simply not change some things when you deal with them, whether the issue is their standard forms, their own IP-protection policies or simply their commercial terms. For example, it is common that such firms will insist on ownership of any IP they touch. If your firm does a deal with a larger firm, and an individual is employed, the agreement will likely include “work made for hire” language so that, generally, all rights belong to the larger firm.

Think Differently

Therefore, consider trying to preserve rights through less traditional methods. For example, consider promoting that individual in the conduct of the business, to develop a “cult of personality.” When your individual has become the public face of the business, even a big firm has to accede to some of her demands, such as reserving veto rights on use of her name or image, or, even better, retaining control of those rights apart from the business (subject perhaps to non-competition restrictions). Other approaches will, of course, depend on the particular facts of each case, and, of course, on the creativity of the rights owner.

Playing the Quick Game

Gladwell's article cites another advantage (using metaphors from basketball) that nimble e-commerce firms may have over their larger rivals, such as the ability to press, or to “speed up the game.” In e-commerce terms, a smaller firm can react more quickly to changes in the marketplace, or initiate those changes itself ' and change the direction of the market. When negotiating an agreement, they can propose terms that are sharply different from “the way things always have been done” and that leave more traditional rivals unable to respond. For example, consider how Zappo's free-returns policy helped it compete with long-standing shoe manufacturers for customers used to the slow “try it on” experience.

Duck the Competitors

Similarly, in this holiday shopping season, many big-box retailers have finally offered to match online pricing, recognizing how easy it has become for shoppers to compare prices and take advantage of the best deal with smart phones and bar code recognition. I would not be surprised, if by the time this article appears in early November, to see that online sellers move to counter that effort, whether by offering special deals or pure cut-throat price competition, the cost of which will be borne, in part, by the traditional retailers ' who will also have their real-world overhead for rent, and other bricks-and-mortar expenses, that e-sellers do not have.

Use the Big Firms' Mass and Momentum

From the opposite perspective, do not forget the benefits large firms can provide, in return for what the small firm must give up. For example, larger firms can improve your procurement staff and logistics, shorthand for obtaining needed materials at a lower cost, and provide access to a broader array of vendors from which to purchase. For an e-commerce retailer, access to better inventory can help it stand out from competitors on a basis other than brutal price competition. Similarly, marketing expenses may drop, and access may improve to media previously unavailable to a smaller firm. Good advice ' whether legal counsel, accounting and financial planning or investment advisory services ' may now be available, and from firms that would not have given the smaller firm the time of day on its own. If working with a behemoth is making a deal with the devil, often the devil offers far better working conditions ' so take advantage of them.

Remember: Success Is Never Guaranteed

Although I have tried to provide e-commerce firms ideas on how they can negotiate with much larger firms, when necessary, my suggestions won't always be feasible, or work. The hard truth of legal questions for business is that size and money often dictate the result, regardless of right or wrong, or what the law or contract says.

In thinking about dealing with large or better financed firms, normal “contract thinking” ' protecting rights, so that you can go to court ' is simply wrong. Being able, in theory, to resort to judicial protection to enforce the terms of an agreement is being legally short-sighted: By the time a smaller firm gets to court, the costs of litigation today will likely have drained its budget far beyond the value of whatever the underlying issue may have been.

Instead, structure deals, including your choice of those with whom you do business, so that going to court never need become an option. Using “normal” negotiating techniques, with standard agreement forms and routines, is like David fighting “a conventional battle of swords against Goliath.” Win or lose, when a smaller firm must litigate against a larger one, the smaller firm has already lost. Instead, when the smaller firm does the unexpected, size ' whether physical or financial ' often becomes irrelevant.

Since Biblical times, humans have rooted for the “little guy” competing against a much bigger foe. From King David to Rocky Balboa, everyone loves the underdog. We even have a proverb for this situation: “The bigger they come, the harder they fall.”

But the truth is that, despite David's victory in the Bible, the Goliaths of the world usually win. e-Commerce tells the same story, as many of the strongest retailers are equally big in the virtual world ' Walmart.com, Target.com, Apple.com, QVC.com or BestBuy.com, for example.

Surprisingly, though, Goliath does not win 100% of the time ' only 71.5%, according to a study by Boston University Political Science Professor Ivan Arregu'n-Toft. Arregu'n-Toft specializes in the study of conflict, and was cited by guru Malcolm Gladwell in his recent article and forthcoming book, David and Goliath, on how the same principles that allow small combatants to prevail can apply to business (see, “How David Beats Goliath,” The New Yorker, http://nyr.kr/TImyig).

Small, But Smart

Indeed, despite our sympathy for the “little guy,” he wins more often than most of us realize. As chronicled by Arregu'n-Toft and Gladwell, little guys who “think independently,” who “challenge conventional wisdoms” and “look at things in different ways,” can and do prevail. In fact, when the “little guys” “acknowledged their weakness and chose an unconventional strategy,” and instead chose not to play by Goliath's rules, their winning percentage shot up to 63.6% ' “even when everything we think we know about power says they shouldn't” have (see, http://nyr.kr/TDyk3o).

But do consumers root for the little guy? Certainly not if it costs more, or is less convenient than doing business with a big firm. While some altruistic individuals may be willing to pay extra for locally produced products, or to support local
merchants, that choice is not sustainable in the long run, if their competitors do not share their values ' and can undercut the prices enjoyed by the local firms' customers. Moreover, in today's complex world, the reality is that doing business with “big business” is inevitable.

Unfortunately, however, in business, often the David vs. Goliath story turns out horribly for the little guy. Too often, Goliath wipes the floor with David's slingshot. For example, one classic nightmare for entrepreneurs, and a staple of small-business magazines, is the person who “sold out” to a big firm, on non-negotiable terms that were one-sided in favor of the buyer. Within a short time, the seller finds himself outside looking in, with little to show for his sale or equity, and his company has lost its identity after being swallowed by the buyer.

In a deal in our own office, and which we saw after the fact (it was a legal malpractice claim), a technology firm was sold to a much a larger competitor, largely for equity in the continuing firm. Unfortunately, the sellers' counsel failed to notice the traps in the buyer's documents ' the sellers were soon presented with impossible tasks (at least with the financial resources they received), and they failed to hit their performance targets. Under the “standard” documents of the buyer, that lack of performance led to termination of the sellers' employment, and forfeiture of their stock ' and its future appreciation, which was the key value in the sale.

Less dramatically, any owner of a small business knows that a “big contract” can be a blessing and a curse. No one can deny the comfort of an order that will keep the firm and its employees busy for the foreseeable future, and provide steady cash flow. Similarly, the big firm may offer cost advantages in procurement, marketing and other forms of overhead, because of its efficiencies of scale.

But too often, the big contract also imposes unexpected costs. The change in volume may increase fulfillment costs beyond current capacity and eat into profit margin. As is increasingly common, the buyer may have stringent procurement standards to avoid doing business with firms that may have skeletons in their closet, or may source goods from countries or firms that society has deemed unacceptable ' all of which takes time to investigate and, if necessary, fix.

Consider: The seller may have to dedicate personnel and production time to the big firm's order, to the detriment of the seller's traditional (but smaller) customers' business. Similarly, management may have less time to attend to the needs and concerns of existing customers. As a result, the seller may find itself losing its own business ' for the benefit of a big buyer willing to shift its order to any competitor willing to give a minimal price break, and jump through all the buyer's hoops.

In addition, big firms simply do things differently (and often more expensively) than a typical, thinly staffed e-commerce firm that operates “on the fly” may or can do. A cost-conscious and time-stressed entrepreneur may be perfectly content to negotiate deals via e-mail (or even via Twitter, or on a social-media platform). Some may still even be comfortable closing on just the traditional handshake. But a big firm may require paper-intensive forms and move more ponderously than the smaller firm is used to moving, all of which takes more time and expense, two commodities in short supply for many e-commerce firms, particularly startups.

There's Always an Exception

However, perhaps the greatest problem lies in the nature of a contract itself. While na've entrepreneurs may think the contract fixes terms, aggressive firms look at it as just the starting point for the re-negotiation. When you sign a contract with a large firm, one hidden “benefit” you get is the right to spend money, and lots of it, on legal fees to enforce the contract, if the other party chooses not to follow it, because it knows that the cost of fighting will be more than the contract is worth. In other words, while a small firm may be happy to have established legal rights against the larger firm in the agreement, what realistic options does it have if the bigger firm simply ignores the contract, especially if the larger firm has in-house counsel, which makes defending a claim ring up only minimal additional cost?

Certainly, the principals of large firms know that practical reality and use that knowledge in deciding how to behave under the agreement. For example, if the larger firm will miss a shipping deadline for which the contract imposes a penalty, it may simply notify the smaller firm of the new date. While the smaller firm may have a great case to sue for breach of contract, the wise leaders of that firm recognize that the case won't be heard for several years, and that a win means only that the smaller firm can try to seize assets to sell to collect the judgment, another lengthy and expensive process. How can any e-commerce firm call such a state of affairs a “win” or “success”?

Some Business Battle Strategies

So how can a small e-commerce company dance with Goliath intelligently to get the benefits of Goliath's scale and to get the business, yet preserve itself? How can it become part of the 63% of small firms that win with unconventional tactics, according to Gladwell?

Let me offer a few suggestions, from actual (and sometimes bitter) experience, when you have to deal with non-negotiable, unfriendly form agreements.

First, you can just sign them. If you truly have no choice, you save the legal fees to be told that the agreements are, as you already know, slanted to protect their author. You may be grateful for the business, and don't want to blow an opportunity that your competitors would be glad to grab if you declined it, or botched it. Most “bad” language applies to situations that may never occur, so the benefits may be worth the risk that a formal “default” will never happen.

If you feel you must speak with counsel, try to limit your cost. As one client tells me, when he gets such an agreement he asks that I look only for “show stoppers” ' provisions so bad they may outweigh the contract's benefits, such as an unexpected personal guarantee, or a volume or price commitment that could bankrupt the company.

Another approach, which I have used successfully with several large branding companies, is to focus on the few (one to three) key points that you must change. For example, I almost never meet resistance to a request for written notice of any alleged default, and a right to cure that breach. (This can be critical when dealing with form documents that can put almost anyone in technical default.) You then ask for those changes in a side letter with your business contact, not with the other side's counsel. Another business person may be better able to recognize a reasonable compromise necessary to close a deal than can an attorney who is fixated on the sanctity of a contract (and who may well be inflexible enough to think differently about how to get the deal done).

Be on Guard

Implicit in these approaches, and the topic of this article, is the premise that the big firm is not your friend. In some cases, however, the relationship is even more adversarial, which can be a disaster if the smaller firm does not realize it while basking in the glow of the larger firm's attention. This is often a common complaint from clients who operate small firms (particularly in the tech sector) and who invested considerable time negotiating a deal with a larger firm, but the deal never came to closing. By the time the deal was called off, the bigger firm had learned all the key information it would have gained had there been a deal, whether it would have been an acquisition or just a contractual arrangement.

In that scenario, while the smaller firm likely has a strong case for breach of a confidentiality or non-disclosure agreement, again, filing suit and prosecuting the case to completion costs money and time. Moreover, while the decision to begin litigation is always critical, from legal and financial perspectives, here it will also expose to the world that the smaller firm was victimized by “theft by due diligence,” which could harm that firm's ability to attract another deal (not to mention the overall damage, and cost, to its reputation). And as noted above, the bigger firm will generally be able to afford the case much more easily. Finally, if the agreement was written by the larger firm, it probably has “escape clauses” that it can use to justify its theft, and that will turn on factual determinations ' always expensive and time-consuming. While the bigger firm may not have already known the key information (e.g., contact persons at key customers), as it often claims, can your firm actually prove that, and at what cost might that be pursued or accomplished?

Pick Your Fights, and Your Foes

Therefore, the smaller firm must be much more selective in deciding to whom it speaks. Online resources can help determine the prospective purchaser's track record, and whether it has been sued by prior failed transaction partners. If possible, the small firm also should investigate how the buyer has treated employees of the companies it has acquired because you and your employees may soon receive the same treatment.

So You Say

Of course, the larger firm will claim that a mutual confidentiality agreement proves that it is being fair. That is correct, in theory, but wrong in fact, because, as highlighted above, a smaller firm won't have the cash or personnel to devote to a lawsuit against a well-funded foe. Because of the disparity in resources for litigation, if you have to rely on an agreement with a larger firm to protect your rights, then you have essentially already lost, because you will bear not only the cost of the bigger firm's breach, but also the legal expense to fight over it ' a fight that often may carry on for years.

Keep Data Close, if You Can

Far better, therefore, is building into the business relationship protection for your firm against such behavior, if possible, much earlier in the relationship. If your due diligence indicates concerns about the opposing, bigger, firm, then don't talk to it, or disclose only information that is not harmful (if stolen) until you have a financial commitment in hand. (In one of the largest deals in which I have been involved, the critical information, the commission splits with key sales representatives, was delivered only after it was confirmed that the purchase-price wire payment had been transmitted.)

Similarly, if the small firm's key asset is its intellectual property, then critical information should not be made available until after the bigger firm has performed its part of the deal, if ever. Once knowledge is “out of the bag,” it cannot be put back in. Sophisticated firms will find ways to show that they obtained or developed the key IP other than by getting it through due diligence ' and no small firm can afford the litigation expense to prove otherwise.

Because We Don't Have To!

Of course, from the perspective of a smaller firm, it is critical to understand that most larger firms will simply not change some things when you deal with them, whether the issue is their standard forms, their own IP-protection policies or simply their commercial terms. For example, it is common that such firms will insist on ownership of any IP they touch. If your firm does a deal with a larger firm, and an individual is employed, the agreement will likely include “work made for hire” language so that, generally, all rights belong to the larger firm.

Think Differently

Therefore, consider trying to preserve rights through less traditional methods. For example, consider promoting that individual in the conduct of the business, to develop a “cult of personality.” When your individual has become the public face of the business, even a big firm has to accede to some of her demands, such as reserving veto rights on use of her name or image, or, even better, retaining control of those rights apart from the business (subject perhaps to non-competition restrictions). Other approaches will, of course, depend on the particular facts of each case, and, of course, on the creativity of the rights owner.

Playing the Quick Game

Gladwell's article cites another advantage (using metaphors from basketball) that nimble e-commerce firms may have over their larger rivals, such as the ability to press, or to “speed up the game.” In e-commerce terms, a smaller firm can react more quickly to changes in the marketplace, or initiate those changes itself ' and change the direction of the market. When negotiating an agreement, they can propose terms that are sharply different from “the way things always have been done” and that leave more traditional rivals unable to respond. For example, consider how Zappo's free-returns policy helped it compete with long-standing shoe manufacturers for customers used to the slow “try it on” experience.

Duck the Competitors

Similarly, in this holiday shopping season, many big-box retailers have finally offered to match online pricing, recognizing how easy it has become for shoppers to compare prices and take advantage of the best deal with smart phones and bar code recognition. I would not be surprised, if by the time this article appears in early November, to see that online sellers move to counter that effort, whether by offering special deals or pure cut-throat price competition, the cost of which will be borne, in part, by the traditional retailers ' who will also have their real-world overhead for rent, and other bricks-and-mortar expenses, that e-sellers do not have.

Use the Big Firms' Mass and Momentum

From the opposite perspective, do not forget the benefits large firms can provide, in return for what the small firm must give up. For example, larger firms can improve your procurement staff and logistics, shorthand for obtaining needed materials at a lower cost, and provide access to a broader array of vendors from which to purchase. For an e-commerce retailer, access to better inventory can help it stand out from competitors on a basis other than brutal price competition. Similarly, marketing expenses may drop, and access may improve to media previously unavailable to a smaller firm. Good advice ' whether legal counsel, accounting and financial planning or investment advisory services ' may now be available, and from firms that would not have given the smaller firm the time of day on its own. If working with a behemoth is making a deal with the devil, often the devil offers far better working conditions ' so take advantage of them.

Remember: Success Is Never Guaranteed

Although I have tried to provide e-commerce firms ideas on how they can negotiate with much larger firms, when necessary, my suggestions won't always be feasible, or work. The hard truth of legal questions for business is that size and money often dictate the result, regardless of right or wrong, or what the law or contract says.

In thinking about dealing with large or better financed firms, normal “contract thinking” ' protecting rights, so that you can go to court ' is simply wrong. Being able, in theory, to resort to judicial protection to enforce the terms of an agreement is being legally short-sighted: By the time a smaller firm gets to court, the costs of litigation today will likely have drained its budget far beyond the value of whatever the underlying issue may have been.

Instead, structure deals, including your choice of those with whom you do business, so that going to court never need become an option. Using “normal” negotiating techniques, with standard agreement forms and routines, is like David fighting “a conventional battle of swords against Goliath.” Win or lose, when a smaller firm must litigate against a larger one, the smaller firm has already lost. Instead, when the smaller firm does the unexpected, size ' whether physical or financial ' often becomes irrelevant.