One of the great benefits of the Internet economy is that e-businesses can concentrate on their core competencies and use third parties to increase their sales, services, and branding. As e-businesses scramble to conserve cash, however, there is a new challenge to create relationships in a more cost-efficient way. The following are some factors to consider as you develop partnership agreements.

Efficiency is Critical

Juggling these elements was relatively easy when online merchants had the time and money to test new deal types and pursue deals of unascertainable value. Now with money scarce, merchants do not have the luxury of creating hundreds of relationships and hoping that one or two become profitable. Efficiency is now critical to survive. Deals should be as simple as possible, and the use of sales staff, form contracts, methods of negotiation, and attorneys must be closely synchronized with business development goals.

Focus on Your Product

With boundless possibilities for packaging, selling, cross-selling, and branding, it is easy to get sidetracked. Do you offer content, goods, stickiness, distribution, eyeballs, relationships or a combination thereof? Knowing these aspects of your business allows you to focus on business development strategy, giving you authority in the marketplace, and guiding your creation and use of contracts.

Know the Other Side

It is equally important to use due diligence to select appropriate partners. Is the other party financially stable or likely to be sold? Are they at risk of being de-listed from NASDAQ? An agreement is pointless if the partner won't be around in three months.

Likewise, does your partner get the type of visitors that will want your product? Links from home pages are great, but can you acquire less expensive real estate deeper within the partner's site for a similar amount of traffic and sales? Nonetheless, it may be useful to do an otherwise unfavorable deal if you gain the legitimacy of partnering with a "Yahoo" or "Amazon."

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Contracts are Sales Documents

Although contracts are usually seen as a method to create obligations and allocate risk, don't forget they are also sales documents. Your contracts should stand behind your product, and be consistent with your sales pitch and pre-existing business terms. For example, you will license more software, text or images if your contract provides expected warranties and indemnities.

To facilitate deals in a fast-paced environment, it is preferable to have concise jargon-free documents. Cumbersome or unfair documents generally lead to unnecessary negotiations or substantial rewrites. To this end, keep in mind the following while formulating contracts:

* Along with your attorney, create one or more form contracts for your core products and deal types. Make these easily adaptable for a variety of deals.

* Be the one to draft and present the initial contract. This allows you to dictate the starting point and parameters of the negotiation. In a situation where both parties have strong incentives to quickly close a deal, the non-drafting party will often avoid creating unnecessary barriers to closing, by limiting the number or type of objections.

* In some cases you may want the partner to prepare the initial contract in order to avoid drafting costs. This may be the case when the subject matter of the agreement does not involve your core product.

* Stay flexible. Recognize provisions that create barriers to closing and consider changing provisions that repeatedly call for negotiation.

Stake Out Your Position

Your contracts must vigorously protect your business interests by establishing your "line in the sand" positions on critical issues. These positions should be made clear to your staff and to the opposing side, so that you avoid discussion of non-negotiable points and avoid inadvisable agreements.

Do not sacrifice important provisions for the sake of brevity. Everyone understands the purpose of articulating performance and payment obligations, but many important provisions are often dangerously denigrated as "boilerplate."

Except on issues where there is an accepted industry standard or corporate policy, leave some room to negotiate. You can isolate several provisions in the agreement where you can identify both a starting and fall-back provision, and you can attempt to gain some benefits in areas where there was no previous agreement.

Negotiation

Once you have identified an appropriate partner, your strategy should be driven by the bargaining positions of the parties. You may need to make a splash just to get "face time" with a major player. Even if you do not have leverage with a larger party, you may be able to use your agility and intelligence to your advantage.

For example, business development staffs often have discretion on business points, but need attorney approval on legal points. With such knowledge, you might have success by conceding legal points to obtain a business advantage with a counterpart who is also eager to close a deal.

To avoid wasting time, make sure you are negotiating with a person with sufficient authority in your counterpart's organization. Do not begin negotiating with a business person only to learn that you will have to renegotiate with the CEO or an attorney. You will not be able to retract previous concessions.

Implement Quickly

Once you have signed the deal, make sure you move quickly toward implementation. There is a temptation to enter into many agreements, and then fail to execute. This not only hurts your ability to generate the revenue, traffic, or branding that you hoped to gain from the deal, but can substantially damage your reputation in the marketplace and make it more difficult to complete other deals in the future.

* Stephen Filler has been the principal in his own law firm since 1993. His practice focuses on the legal issues concerning the information and technology industries, such as copyright, trademark, intellectual property, electronic commerce, Internet law, and general business law.

He is a chairman of the Intellectual Property Law committee of the Entertainment, Media, Intellectual Property and Sports Law Section of the New York County Lawyers Association and a member of the New York New Media Association.