Refers to someone who takes an extreme initial position in negotiations, i.e., makes ‘wish-list’ of fantastic proposals that it is inconceivable that the counterparty will accept, i.e., it is outside the counterpart’s Zone of Possible Agreement or ZOPA. Although maximalist negotiators tend to see this approach as a demonstration of strength and sophistication, other negotiators tend to see it as an indicia of lack of experience, lack of confidence, weakness and dubious competence. A more typical approach to negotiation is where both parties start from an initial positions that are perhaps somewhat unreasonable, but not absurd, with the intent to ultimately arrive at a reasonable agreement.
A maximalist will usually start from a position that is in fact totally outrageous, in the belief that by so doing he/she will either:
(a) secure an agreement that is unreasonably in favor of the party he/she represents; or more commonly;
(b) offset that negotiator’s deficient negotiating skills so as to end up with a reasonable agreement.
This approach to negotiation is inadvisable not only because it makes the maximalist seem naïve, but because it tends to make negotiation highly contentious and horribly protracted while souring commercial relationships. Maximalist positions in draft agreements are sometimes referred to by the derogatory and sexist description of “testosterone-surge drafting,” although both genders can be prone to this tactic. A maximalist approach may also consist of refusing adequate opportunity in a transaction for due diligence, which again can create significant execution risk if the agreement turns out to be considerably less attractive to the counterparty as facts emerge.
Where a party has initial control of the draft agreement, another drawback of the maximalist approach is that it may lead that party to create such an extreme draft that it is discarded by the counterparty, who then submits its own much more reasonable (but favourable to itself) document as a new starting position. In this way taking a maximalist position may prove totally counterproductive since it loses control of the negotiation. A maximalist approach may also run the risk of an unbalanced agreement, which in turn creates significant execution risk.