In navigating today’s turbulent business environment, open and collaborative relationships are increasingly essential. This is a point recognized by many executives and endorsed by more than 80% of contract negotiators. Yet our recent global study reveals a startling truth: most companies remain stuck in an outdated, adversarial approach to deal-making. This conflict-oriented mindset not only hampers innovation and growth but also leaves significant value on the table. So, why are we stuck and how do we make the shift? Businesses must fundamentally reimagine their approach to contract negotiation, moving from a mindset of conflict prevention to one of collaborative value creation. This shift isn’t about being “nicer” in negotiations; it’s about unlocking hidden potential, driving innovation, and creating sustainable, mutually beneficial relationships. And part of that is getting better at selecting partners we trust. Our comprehensive study of the most-negotiated terms, surveying 937 organizations worldwide, and representing both multinational corporations and small-to-medium enterprises (SMEs), paints a clear picture of the current state of contract negotiations: Misaligned priorities: The top five most negotiated terms (limitation of liability, price changes, indemnification, termination, and payment options) focus primarily on risk mitigation and worst-case scenarios. The primary message they send is: “I don’t trust you.” Disconnect between negotiation and reality: While companies spend considerable time haggling over legal protections and penalties, the most common sources of disagreement during contract execution are practical issues like pricing, scope, and delivery. Power imbalances: Negotiations are driven by power. Fifty-seven percent of negotiators say they regularly encounter situations where the counter party is a non-negotiator, aiming only to impose their template terms, regardless of suitability. The power imbalance is particularly acute in large-small business relationships, where 88% of SMEs report facing inflexibility from larger partners, and only 34% of large firms recognize SMEs’ strategic importance. This dynamic isn’t just ostensibly unfair; it’s increasingly unsustainable in an economy where agility and innovation drive competitive advantage. Missed opportunities: This failure to engage on “the things that matter” means that important conversations are missed. Only 16% of negotiators believe that they focus on the right topics, and only 39% believe that their contracts contribute to successful business outcomes. Misunderstanding of risk: The legal/financial stranglehold over contracting continues to prioritize mitigation (the false assumption that risk can be controlled with contractual terms) over meaningful risk management (a broader approach of understanding, monitoring, and actively addressing risks throughout the relationship). This adversarial approach to negotiation comes at a significant cost: Wasted resources: Companies spend inordinate amounts of time and money negotiating terms that rarely come into play, neglecting the operational details that truly drive success and influence cost and value. Stifled innovation: When negotiations focus on risk mitigation and the imposition of standards, they leave little room for exploring creative solutions or novel partnership structures. Damaged relationships: The entire approach to bidding and negotiation typically generates an atmosphere of competition rather than cooperation. It’s an environment where transparency and openness are notable by their absence — and where contracts are divisive, rather than unifying. Missed value: By focusing on protecting their own interests, organizations often overlook opportunities for mutual gain and value creation. A New Framework for Collaborative Contracting These findings reveal the importance of new thinking in business contracting and an escape from the “mitigation mindset.” Our research identifies three interconnected strategies that characterize successful collaborative contracting: Leading organizations are shifting from risk transfer to value creation. This means focusing on terms that directly impact operational success and creating integrated negotiation teams that bring together commercial, legal, and operational perspectives. Success requires aligning negotiation priorities with operational realities. Organizations achieving this alignment prioritize practical terms that impact day-to-day operations and create frameworks for handling scope changes and delivery challenges. Those making this shift report significantly fewer disputes and stronger partnerships. Modern contracts need structured flexibility. Rather than trying to predict every contingency, successful organizations are building in mechanisms for collaborative adjustment and establishing governance frameworks that enable rather than restrict. This approach isn’t about leaving terms vague — it’s about creating clear paths for evolution. Our research shows that 72% of respondents believe simpler contracts improve understanding and reduce negotiation time, while also making negotiations more accessible for smaller partners. This isn’t just theory — one business services company in our study increased contract acceptance rates from 10% to 70% through targeted simplification efforts, while another reduced negotiation time by 68% by adopting market norms in their standard terms. These results demonstrate how simplification can transform business relationships while simultaneously improving efficiency. The approach moves beyond making contracts easier to read to becoming a strategic tool for creating more equitable and effective business partnerships. Making Collaborative Contracting Work The transition to collaborative contracting requires systematic change across multiple dimensions. Our research identifies five critical implementation elements that distinguish successful transformations: Executive leadership as the catalyst. Leadership commitment must go beyond verbal support to active championing of new approaches. This means executives need to visibly prioritize practical terms over risk mitigation in their own deal reviews. Leaders must actively challenge the traditional focus on liability and indemnification terms, redirecting attention to operational success factors. They must become clear about their approach to risk and set internal measurements accordingly, freeing their negotiators to act differently. Process integration and planning. Successful organizations establish structured approaches to bringing stakeholders together early. Our research reveals that fragmented processes are a key barrier to effective negotiations. Rather than having legal teams focus on protecting against risks while commercial teams concentrate on practical terms, leading organizations create integrated teams that develop a common definition of success. This integrated planning should involve commercial, legal, and operational stakeholders from the outset, ensuring that key business terms like scope, delivery, and service levels are prioritized alongside necessary protections. Capability development. The capability gap in negotiations is particularly pronounced in relationships between large and small organizations. Progressive companies of all sizes are implementing comprehensive support systems for understanding and evaluating key terms, establishing market norms, and developing effective planning techniques. Technology and process enablement. Rather than using technology merely for contract storage and basic workflow, leading organizations are leveraging it to transform their negotiation approach. Our research reveals opportunities to use technology, such as generative AI, for negotiation planning, identification of market norms, analysis of term effectiveness, and support for simplified contract creation and management. The data shows that organizations systematically implementing technology enablement achieve significantly better outcomes than those taking a piecemeal approach. Critical success factors. Success in this transformation requires clear metrics that measure both efficiency and relationship quality. Organizations must regularly review and adjust negotiation practices based on actual dispute patterns, while maintaining ongoing investment in capability development across all stakeholder groups. Active executive sponsorship and monitoring of implementation progress remains crucial throughout the transformation journey. A Call for Change The evidence is clear: traditional approaches to contract negotiation, heavily focused on risk mitigation, are increasingly misaligned with business needs. Our study shows that while companies spend considerable time haggling over legal protections, the most common sources of disagreement during contract execution are practical issues like pricing, scope, and delivery. The path forward requires a fundamental shift in how we approach negotiations. This isn’t about abandoning risk management — it’s about recognizing that the best risk management strategy is often creating clear, practical agreements focused on mutual success. Organizations that make this shift are seeing tangible benefits: faster negotiations, better acceptance rates, and most importantly, more successful business relationships. By reimagining contract negotiation as an opportunity for collaborative value creation, companies can unlock new sources of growth, foster innovation, and build the kind of resilient, adaptive partnerships needed to thrive in an uncertain future. The question is no longer “How can we win this negotiation?” but rather “How can we use this negotiation to create lasting value for all parties involved?”