On a raw and rainy winter day in Boston, in a small room at Harvard Business School, two teams of students sit facing each other across a conference table. Each team is made up of two HBS students playing the roles of corporate executives at major drug companies, and an HLS student acting as their corporate attorney.
Using an example from real life—the current conflict between Merck and Johnson & Johnson’s Centocor unit over distribution rights for two blockbuster arthritis drugs, Remicade and Simponi—the students are here to see if they can negotiate an agreement instead of heading into arbitration. A lot is at stake: The drugs are worth an estimated $4 billion to $9 billion, and the negotiations quickly become animated.
In an expensive-looking suit and tie, Henoch Senbetta HBS ’11 leans back in his chair and takes the friendly approach. “Let’s discuss both sides’ interests,” he says languidly, with a broad smile. “The value of the contracts, the options.”
But his teammate, Olga Vidisheva HBS ’11, jumps in aggressively. “The ideal is to end this here today!” she says, leaning across the table, her tone more intimidating than collegial. If their goal is a “good cop-bad cop” approach, she and Senbetta are pulling it off well.
Their “lawyer,” Ian Wildgoose Brown ’11, speaks up. “There’s a lot of potential to get a deal done,” he says, in a quieter voice. “But the arbitration elephant is in the room. To be frank, we’re pretty confident in our position going into arbitration.”
Brian Kozlowski ’11 has a very different opinion. “Both sides want to resolve this in a friendly way, and it’s counterproductive to say what the arbitration outcome would be,” he says, firmly. “From a business standpoint, it’s scary because there’s no certainty. But it’s also scary from a legal standpoint.”
For two hours, the teams debate and argue, discussing such things as expected value calculations and settlement options. In the end, they agree to shorten the distribution contract between their companies by several years. Among the 15 teams participating in the joint HLS-HBS negotiation exercise, nine reach a deal—in a wide variety of ways—while six do not.
“The students were very creative, and there were lots of different solutions,” says Guhan Subramanian J.D./M.B.A. ’98, who holds joint faculty appointments at HLS and HBS. It is the first negotiation exercise to bring HLS and HBS students together in a mock business negotiation.
Subramanian divided the students in his HBS course on negotiation into 30 teams of two. He then reached out to HLS Clinical Professor Robert Bordone ’97, director of the Harvard Negotiation and Mediation Clinical Program, to find HLS students to play the lawyers. Bordone sought volunteers from his popular Negotiation Workshop, and, despite the additional time commitment the exercise required, 40 HLS students participated.
“For many of my Negotiation Workshop students at the law school, working with their counterparts at HBS was their first taste of managing a two-level negotiation game,” says Bordone. “My hope, then, is that this will be the first of many opportunities for HLS negotiation students to collaborate with their peers at our other professional schools.”
Bridging the law-business gap among students was valuable, says Subramanian, who hopes to expand the schools’ collaboration in the future with the strong support of HLS Dean Martha Minow and HBS Dean Nitin Nohria. One valuable aspect, he notes, is that it gives students a realistic preview of the kinds of expectations that CEOs and lawyers will bring to the table in real-life situations. “On many teams, the M.B.A.s kept pushing their lawyers for the likelihood of winning in arbitration,” says Subramanian. “The lawyers initially resisted the idea of providing a percentage and wanted to do the typical law school thing, ‘On one hand, this; on the other hand, that.’ But during the exercise, they realized that in order for the businesspeople to make business decisions, the lawyers needed to provide a number.”
It was clear from the post-exercise debriefing that the chances of success in the negotiations often hinged on intangibles; for instance, instead of sitting across from each other, one group chose to alternate the members of both teams to create a less confrontational atmosphere. One student took the opposite approach, bringing along the biggest law book he owned—an old Black’s Law Dictionary—to see if he could intimidate the other side. In some groups, the lawyers led the discussions; in others, it was the M.B.A. students who dominated as they debated cash flows and valuation methods.
Alan Cheuk ’11 says the exercise was worth the hours his team put into preparing for the negotiation and doing the actual negotiation. “I saw an entirely different side of things,” he says. “In the Negotiation Workshop, what we usually do is value-building, developing trust, more information-sharing and problem-solving. But this was very tense. Nobody wanted to share information.”