I have been counting my lucky stars recently. Not that lawyers are ever renowned as in need of sympathy, but I can only feel sorry for some of my profession in the worst hit areas of corporate, real estate and banking who are perhaps somewhat underutilised at present. In contrast, for us in the technology and sourcing world, things continue pretty much as normal.

Part of this is of course driven by outsourcing, given the payoff which it promises to provide in terms of cost reductions. But, for every new outsourcing project which I have been asked to advise on in recent months, there has been at least one re-negotiation of an existing deal.

One might assume that the re-negotiation process is not that different from the original contract negotiation discussions between the parties. But in fact, the dynamic is very different. After all, in the original discussions the customer will usually have the option to simply not sign the contract, which invariably means that it has the whip hand in the negotiations. With an existing deal, however, the supplier has the ability to simply say "no" and to insist upon the existing terms as originally drawn and agreed, no matter how unpalatable that might appear to the customer.

Some of the supplier community (and particularly the larger suppliers) will often take this approach, or at least ask the customer, "what's in it for me?" (e.g. in terms of an extension of the term, additional service scope or other deal sweeteners). The customer can end up feeling that it was held to ransom in order to secure the more short term financial advantages which its re-negotiation efforts were focussed on achieving (at least in the current markets). The process ends up being somewhat counterproductive.

That said, on a couple of recent projects I have been working on, it has actually been the supplier who could justifiably claim to have come away from the re-negotiation table feeling as if they had been somewhat "mugged". In one case, the customer threatened complete contract termination (with only minimal compensation payments) and a "blacklisting" on future contract work if the supplier did not agree to both a cost reduction and an adjustment to the service level regime. Other customers have been a little less blunt about it, but have been equally Don Corleone-like in looking to make the suppliers an offer they cannot refuse, at least if they ever wanted to win any more work from the client in future.

The truth appears to be that in difficult markets, the larger (and financially stable) clients continue to hold all of the aces, and can in extreme cases simply look to tear up existing contracts and start to negotiate afresh, however reluctant the suppliers may be to go along with such a process. I am driven to wonder quite how far down this road we'll end up, as the recession continues to elongate and even deepen, and what implications it may have for the future relationships and negotiations between such customers and suppliers.