The Steak Dinner Clause/Martin Rosenfeld,JD

Posted on December 19, 2020


I just read about a most unique solution to a potential deal-breaker. Hootsuite is an on-line educational service which reaches clients via a Vendor. The deal was described by CEO Ryan Holmes in a July 26, 2016 blog post. The deal hit a roadblock when Vendor and Hootsuite could not agree as to whose responsibility the payment of credit cards fees should be. It was a quibble over a modest sum but neither side was willing to budge. Until the following agreement was reached…

“Upon every $100,000 in revenue generated, and at the discretion of Hootsuite, Vendor will take two Hootsuite representatives out for a steak dinner, at a price not more than $450 including tax and gratuity.

In other words, we agreed to cover the fees, but they’d have to take us out to a steak dinner — their treat. In one sense, we got the short end of the stick — the fees far exceeded the value of the dinner. In another sense, however, this represented a huge win-win.

Why? The dinners would turn out to be a powerful way to build a business relationship with this vendor.”

A successful dispute resolution often needs creativity and the ability to “think outside the box”. Mr. Holmes resolved a dispute with a steak dinner and created a long-term business relationship. By thinking of a deadlock as an opportunity to come up with new solutions Win-Win becomes a potent force in the relationship between two parties. There is no textbook that can yield this type of solution. But open-mindedness and good-will can go a long way. One P.S. to this story is the reaction of Mr. Holmes’ attorney when se reviewed this agreement. She laughed, and then exclaimed that it was a great piece of legal work.

Mediate don’t litigate.