On a Handshake?
While many people would like to say doing business on a handshake is an anachronism — like the telefax or formal business attire — my partner and I are here to prove the handshake is far from irrelevant. In fact, it remains one of the most powerful tools we carry in our proverbial briefcases. The sophisticated folks – or as my new friend, Manoj Bhargava, the founder of Five Hour Energy, refers to them as the fancy pants — would surely chalk me up as naïve and innocent.
Anybody who knows me well knows nothing could be further from the truth. I have been through the agony of court battles where the stakes were higher than any currency holds. I have had enormous victories in court, and I have been crushed by a jury of locals ready to hang the “big bad” corporate entity. I have devised strategies to legally wrestle my way out of contractual obligations to save our business. I have deep scars and dried blood under my fingernails from getting tangled up in situations where the only option was to fight. I don’t wish that nightmare upon my worst enemy.
As the point, reader, please accept my humble assertion that these situations were not resolved because of the contracts. Even in the court battles, perfectly crafted written words were secondary.
It was the character of the people involved and their commitment to getting to a decisive outcome that brought resolution. In some circumstances, we had the resolve to see it through, and in others, we did not. Looking back, when we lost, it was on us, period. Sure, it would be convenient to blame the contracts or the attorneys that drafted them. However, when I signed the papers and behaved in such a way to get us into the given situation, it was me who got us in a jam. Period. Full stop.
Let me be clear, this is not a disparaging piece focused on attorneys, quite the opposite. One of the most powerful moments of my life came through my attorney. We were in the thick of a trial and working harder than I hope to ever work again. She looked at me and said, “I need to give you some advice, not as your attorney but the advice I would give to my brother.” What came next was a bombshell that shook me to my core. She told me if we lose, I had to give up the fight. You see, we only had one bite at the apple. We were talking about custody of my firstborn, and the stakes were staggering.
We went on to win, but it had nothing to do with words on paper. It had everything to do with the commitment we made to each other and to the process. It was a commitment that we were going to give it our all, throw everything we had at it with the acceptance that if we lost, we could look back, with hearts swollen, knowing we gave it everything.
A good lawyer is one of the most powerful forces in business. It is your job as the leader to make sure you have a “good one.” Of course, they must be skilled with words, but that is just the cost of entry. Good lawyers understand the power of commitment. They respect everyone’s intention and know the endgame each party desires. Essentially, they see the power of the handshake. The lawyer’s job is then to document the commitments being made by the handshake. In fairness, often, it is impossible to capture all of it on paper, and that is when looking in the whites of someone’s eyes, pressing palms, and committing to each other is how things get done.
We do it every day in one form or another. When we commit to our peers in a meeting, we either live up to those commitments, or we don’t. With every interaction, we either build the relationship or dismantle the trust we have with others. We either have character, or we don’t. We are committed to the desired and shared outcome, or we are not. If not, we now have a different outcome in mind. We must communicate the change in intention. If we don’t, shame on us.
Let me share an example. We have been working for many months on the formation of a new company. It is quite complicated with hundreds of variables at play. My partner, Bob, and I were in one of our semi-annual ‘walking’ board meetings and discussing the progress of creating this new company. We were talking about the potential partners and the various issues/complexities of each. Our intention was to make sure we understood what each needed and how best to support them. One of the partners has made a massive investment in an adjacent company and had some valid concerns about how intellectual property was assigned. We had been around the contractual rosy pole once, and it didn’t work- the first version of documents would have blown up the relationship. I committed to coming up with agreements that would outline our relationship and take care of everyone.
As we walked, my partner cut through all the mangled wires with these words, “Don’t we all just need to schedule a time to meet and talk it over?” This meeting involved travel, something we infrequently do now, but we sucked it up and made the trek. I had presented the document a few days before the meeting as my best effort to get it right. We talked for almost four hours and worked through just about everything. We knew it was 90% there, and based on the relationship, we were willing to move forward. We looked at each other in the whites of our eyes and shook hands. It was done.
This is how business gets done. Leaders make commitments to one another, and content experts administer the details. Things work when leaders live up to their commitments while clearly communicating when the desired outcomes change. When this happens, leaders sit down again and figure a resolution that works and press palms. Lawyers are there to help us understand our risks are and their depth. They are there to communicate intentions via the written word, but it is up to leaders to then live up to their commitments.
Business gets done because people believe in each other. Business gets done because people have character and live up to the commitments they make. Business gets done because leaders cause their lawyers a whole bunch of heartburn. Business gets done in the end because we push forward, knowing not every contingency is worked out, but in the end, we are going to take care of each other and make the deal happen. If you disagree, I guess you aren’t used to getting much business done in the world. I personally love doing business on a handshake, and when I come across people who don’t, they scare me.