Is it possible to have a profitable yet antagonostic business relationship?

In My Humble Opinion
1

In my job, I work with large numbers of sub-contractors in a wide array of industries. Be they in catering, transport, or whatever - I always work really hard to ‘play nice’; I am on first-name terms with dozens of people who I have never actually physically met, and we always preface our business-related conversations with personal niceties. We all do this - I think - because we are pragmatic professionals who realise that…

a) this is a nicer way to do business and conduct professional life
and
b) it is much easier to call in a professional favour with someone if, last week, you had spoken to them about the recent birth of their child/home sale and purchase/the weather/etc… and done a bit of small talk around that
and
c) we are human beings and we have empathetic and emotional needs; even in cold-hearted business transactions, it is nice to feel that you have some sort of emotional connection with the person that you are interacting with.

We all play this game, typically to pretty good effect - modesty aside, I can say that I have positive working relationships with several dozen subcontractors and partners. Sure, they might bitch about me behind my back (as I may do about them), but on the surface, we are *friends{/I]. This is good enough for all of us to get the job done. I am on friendly terms with everyone I do business with. That’s not to say that they all like me (or I like them), but we do a good job of pretending - which is good enough,

But now I find myself with a new potential log-term partner who has made it clear, in no uncertain terms, that their institution holds ours in utter contempt. They have been rude and dishonest with us, and treat our organisation with complete disrespect. We could make a new venture work, financially speaking, but it would be within a context of mutual distrust and hatred. To put it simply. there is no goodwill left between us and them.

It’s easy to say ‘don’t do it’, but we are talking about not insignificant amounts of money over the next few years - and, crucially, we would have a contract to ensure that the services and facilities that we are requiring of this institution will be provided. In other words, we would be ‘okay’ because in the future absolutely everything would be laid out contractually. We don’t need to have a ‘friendly’ business relationship with them, because their provision of services (and our resulting profitability) would be contractually secured.

My question is, do you think it is possible to have a legal and contractual arrangement with an organisation with whom there is an openly antagonistic social relationship?

Thanks in advance

2

Even if this potential business partner would be contractually obligated to provide the services and facilities, that doesn’t mean that they won’t do everything in their power to make your life miserable, while following the letter of the contract. Plus, you’re assuming that they will, in fact, adhere to the contract – as you note, they already have a history of being dishonest in their dealings with you, so I think it’s entirely reasonable to expect that they would continue to be so.

At one of my former jobs, we had some clients who were a pain in the ass to deal with (frequent requests for rework / revisions / demanding things above and beyond the contract). My colleague who was in charge of doing the specifications for our bids actually had a line item in his spreadsheet tool called “PITA Surcharge,” for this very reason. But, even those PITA clients weren’t openly hostile to us, as your potential partner clearly is to you.

My gut tells me that, unless the amount of money in this potential contract is just ridiculously large – or unless you’re seriously concerned that your business might go under without that contract – I would steer far, far away from it. And, even if I were to somehow decide to enter into the deal, I would do so with the assumption that it’s going to be a miserable business arrangement from day one.

3

Rudeness can be endured. Dishonesty is a deal-breaker.

4

Boom, that right there.

They will make you look bad, even if it costs them reparations, it won’t make your profession rep whole.

5

Dishonest business partners are not a long-term profitable notion. Not worth it, ever. You will spend a ridiculous amount of time and effort keeping them within contract, and generate huge amounts of aggravation. I speak from experience. If you do not have their respect, everything will take twice as long at twice the money. Find someone else who can do the same or substantially similar, even if that is at a lower margin.

6

As a former contract manager and a legal professional, I want to say the money isn’t worth it.

A contract is an agreement to do a thing, fair enough. But there will be forever competing interpretations of clauses. You can’t rely on a contract for every day to day interaction.

I’ve had a complex outsourcing agreement that ran to 500 pages, and we still ended up in a commercial settlement that took 18 months. Our name was dragged through the press. Nobody wanted to sue (too expensive), although at one point we were communicating entirely in dispute notices designed to trigger formal dispute resolution processes that took up time, effort and resources. We threatened injunction twice - although it never went through, external counsel isn’t cheap in any country.

Equally, you will have to fight, possibly daily, to get them to perform. My adage is that if I have to pull out the agreement to get someone to perform, then something is seriously wrong.

And it costs you money? What is your time worth? Your staff? What happens when staff gets so fed up dealing with chuckleheads daily that the bail and you have to train someone else?

You can make money in the short term, but not in the long term.

Have you tried meeting with the party to find out what the issue is before you go to contract?

7

I’m not sure this is an exact match to what you’re describing. But I know a lot of people - some of them quite well - who are business wheeler-dealer types, and many of these people are constantly doing deals with people who they not only assert to be crooks but who they assert have actually ripped them off in the past. It’s weird but you see it again and again, both anecdotally and in court filings where people sue each other and then go back into business again.

I’ve discussed this with one of my relatives who is in that milieu, and he says that’s just the way things work there, for better or for worse. But what I suspect is that people in that space are more prone to risk-taking and to relying on their wits than people in other areas. It’s for this reason that I suggested above that it might not be a perfect match for your situation.

8

Thirding this - not worth it except under extreme financial duress.

9

Thank you, everyone, for saying what in my heart I think I already knew. We don’t ‘need’ them, this would just be a juicy bit of expansion/diversification.

All the best to you!

10

I gather from this that you’re exploring some sort of venture where you need the other company’s expertise/facilities/market penetration/etc., to make this work. In other words, there’s more risk to this than choosing who supplies the paper towels for your rest rooms.

Being “rude and dishonest” would be enough to kill the deal for me. Sounds like you have red flags to spare here.

11

I suspect that whatever money you make or save by your initial alliance with this company will be negated by eventual legal fees. And it will be a miserable frustrating experience.

Do they actually want to do business with you?

When someone shows you who they are, believe them.

12

If they’ve been rude and dishonest before, they may be playing you. Offering you a nice contract and all just so you’ll take it and they’re already intent on screwing you. Sure, you may have a contract but lawyers can get continuances and drag things on forever. And mire you down in fees. Watch out for something straight out of Trump’s playbook - they don’t pay you and force you to settle. Your intuition is already kicking in. Ask yourself why they want to deal with you and not someone else if they already don’t like you.

13

I’d be wondering why a business that holds yours in utter contempt would be interested in partnering with you. It’s certainly possible to do business with someone who you wouldn’t want to have a beer with, but the level of antagonism you’re describing can only lead to bad things.

14

What you describe fits the relationships between the IT department of one of my latest clients, their own internal clients (from the CIO to the newest temp) and the subcontractors. On our side I can say we got paid. On their side, well, they’re one of the 5 biggest companies in their sector, wordlwide, and it’s not one of those sectors which have just half a dozen companies.

To me and another coworker it wasn’t worth it; sending our “reminder of end of contract” letters and getting back “bu-bu-but we were counting on you staying!” was an absolute pleasure. To two others it was: one was terrified of not finding another job within his limited area in a short time, another was counting down to retirement and spent the whole contract in Don’t Give A Shit mode.

Do you need this shit? Like, really need it? Or are you suffering from a bad case of “[del]smoke[/del]money gets in your eyes” meets “razzle dazzle them”?

15

If they are so contemptuous of you, why are they offering you this great contract? Have they finally burned so many bridges with companies they respect more that they will stoop to do business with you? That doesn’t sound promising.

The best case scenario is that this deal will be incredibly labor-intensive as you check and double-check contract terms and compliance because you can’t rely on their good faith. You will have to interpret every ambiguous or debatable provision in the way that is most beneficial to them to guarantee your compliance and it will cost you more than you estimate. You can’t ask them to interpret the contract because they are untrustworthy. The worst-case scenario is that they claim in bad faith that you violated the contract and they refuse to pay you or they seek to extract damages. In either case, they will absorb your expansion capacity with low- or no-margin business and the psychic toll of dealing with them will distract you from pursuing better opportunities.

A little antagonism is manageable under the right circumstances and for enough opportunity. This doesn’t sound like such a case.

16

Contracts are for when things go wrong. Planning to actually rely on the contract to govern day-to-day operations is IMO nearly a formal request for disaster.

17

I worked for 5 years as a director at a privately held manufacturing company that was owned by two partners, one was the President and CEO (my boss), the other the CFO…one was second generation, the other the third and they had each purchased their 50% from their fathers…they generally got along, but my boss used to tell me that, had it not been for the company, they would never be friends as they were just two very different personalities…

And they had some epic screaming matches, they could needle each other, there were times when they didn’t speak to each other for a week or so, so while they were mostly civil and sometimes friendly, they could be very antagonistic towards each other…

BUT, they both believed in then business, they both put their heart and soul into it in their own way, they both possessed skill sets that, while it might not make for good friends, made for a good partnership…

We were out to dinner one night, my boss would talk openly about their relationship, he said something to the effect of, “I don’t always like the guy, and sometimes he pisses me off to no end, but I completely trust him”, and I think that was the key…they both trusted each other to do the right thing for the business.

I also give them credit as they never tolerated an ‘us or them’ mentality, it was never sales vs finance vs technical, and while we knew they didn’t always get along, it was because they wanted the best for the business and employees - they just sometimes disagreed on the form that would take…

About nine years ago, I got an offer I couldn’t refuse, they completely understood and were happy for me. But I made some lasting friendships during that time, one guy I worked with I consider one of my closest friends, we talk daily, others are still friends after all those years…about two years ago, the partners were also given an offer they couldn’t refuse and were bought out by a large corporation for over ten times what they had paid their fathers 22 years earlier, so it worked out pretty well for them…

Last year, I caught up with my old boss, I asked how the former partner was doing, he said they get along better now than they ever have, that they’ve actually considered going into business together in a couple of other ventures…

IMHE, you don’t have to like someone to be a business partner, heck, you can actively dislike each other, but you better trust each other completely…

So, my question would be, do you trust them? Yes, contracts make it easier to lay out the tasks and would be an attempt to hold the other accountable, but at the end of the day, contracts are only as good as the person/organization standing behind them…contracts make a lot of lawyers very wealthy…

18

You see it all the time – even among us here.

How many deal every month with Comcast or Verizon, or bank at Wells Fargo, or fly almost any airline, or deal with the electric company? And can you say they aren’t crooks and haven’t ripped you off in the past?

19

I’d say do some math and assume they’ll shirk and steal to X amount, and multiply that out over the next ten years. If you think it’s possible that you’ll end up in a lawsuit against them, then add that cost in as well. That value, Y, is the amount you lose by working with them.

Now compare Y to the cost of hunting down an alternate source and getting a deal with them. We’ll call that Z.

Is Z less than Y?

20

I think you have found an opportunity.
The subcontractor you have identified is clearly not worth dealing with. You did your due diligence considering the possibility. But as everyone has said, trying to work with them is a sure path to disaster. There, that decision was easy.

But you have a real opportunity. The rude and dishonest subcontractor is likely one of several subs in that business. Go looking at his competition. Find other subs that dislike the bad one and won’t say anything about them. You know that you never disparage other companies in public. That reflects poorly on you. You don’t want to work with any company that would disparage anyone else. So you find people who won’t say anything about them. That is all the info you need on that subject. Look at the competition and come up with partners that together can go after the companies that the bad sub is currently working for. You can bet that you aren’t the only victim of the bad sub. So not only do you have a good way to find a good partner, you have a good way to find new customers for your new team.