This contract tip is about using fear-setting to identify and manage risks in your contracts
Fear can be a powerful tool when we use it to calibrate our thinking. Tim Ferris has a fantastic TED talk about fear-setting and how he uses it to make better decisions. His approach requires that we get specific about everything that can go wrong. "Cut through the vague unease and ambiguity anxiety," Tim says.
Here's his process in a nutshell -
- In the first part, create three columns labeled define, prevent, and repair. Define your biggest fears, note what you could do to prevent or reduce those risks, and identify how you could fix things if they happen.
- In the second part, identify all the benefits of doing the things that scare you and the costs of not doing them.
Most lawyers and contract professionals already use a version of the first part. We are natural fear-mongers. We imagine everything that can go wrong with our deals and build provisions to prevent those things.
But contracts should not just be about preventing the terrible. They also should be about enabling greatness.
Take time to focus on that second part too. Look at all the deal's benefits and how your contract can enhance them. Draft the agreement to set your client up for success.
How do you manage fear in your contract relationships?
