Friedman’s Law of Triangular Relationships

I’ve said it before, and I’ll say it again: the odds of a commercial relationship involving three or more parties going off the rails are far higher than commercial relationhips involving two parties.

There’s a reason for this. Say that three parties, called A, B and C, are working together on a commercial endeavor. The endeavor could be just about anything, but to give context, two classic cases of three-party commercial endeavors are architect/builder/owner and stockbroker/brokerage/customer, while a case of more-than-three-parties is your basic complicated business transaction involving Client 1, assisted by Client 1’s lawyer and Client 1’s CPA , all of whom are doing a deal with Client 2, assisted by Client 2’s lawyer and Client 2’s CPA, and on and on and on for big transactions.

But lets just look at the simple three-party situation without context, OK?

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Why is the three-party-or-more relationship difficult? Oh why oh why oh why is it more delicate, more fragile — more brittle — than a two-party relationship?

Because it’s a triangle, that’s why, and that means there are four different information flows involved.

Let’s count them all, shall we?

First, A and B can talk. That’s one conversation.

And B and C can also talk. That’s a whole ‘nother conversation, separate from the conversation A and B have.

And then A and C can talk. That’s yet another.

And then they can do an all-hands, with A and B and C all in one conversation.

That’s a total of four different conversations, any one of which can get out of synch with any one or more of the remaining three conversations. And that’s where things can go awry, where they can get out of whack. And just think about all the possible combinations that can happen in the two-clients-and-their-lawyers-and-their-CPAs situation I trotted out above. Combinations and permutations and iterations and such, oh my!

By contrast, if the transaction is just a two-party transaction, t’is but one conversation that can take place, and that’s A and B talking.

So the triangle serves up lots of ways for information to travel and slither and slink, while the line affords not much by way of combination; it brooks no permutation nor allows any iteration.

Nuff said. And simple: no synch necessary!

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And then there is the non-commercial side. Think about it, eh?

Let me get personal and historic here (which is a whole lot better than getting hostile and histrionic, right?).

When I was a kid, there was a time when I had a single best friend; his name was Doug. I once accidentally (I swear!) hit him in the face with the sharp, blade end of a shovel. Really. We were snow fighting, throwing shovels full at each other, and one of my shovel-throws happened to have the shovel make contact with his face. Oops.

Later on, though, I hung with Marty and Scott, pretty much equally; we were a trio, pretty much always together. Scott lived next to a little slice of woods between a Burger King (which is still there) and a skinny two lane road (which then as now is called Lake Cook Road, aka County Line Road, demarcating the boundary between Cook County, in which Chicago sits, and Lake Country, which starts about 28 miles north of Chicago’s Loop, and which is now fully a 10-lane divided-highway of a road and surely represents the very worst that modernized suburbia has to offer), and in those woods we surely did play all the livelong day.

Those woods are gone.

But given what I understand now of the ways of the world, looking back I can see that the single-best-friend situation was inherently more stable than the trio was, though nothing could’ve been further from any of my young buddies’ and my thoughts at the time — and, no, the trio never had anything get out of whack and, no, the shovel-hit did no permanent damage (nor the broken window that followed soon after . . .).

We were all just hanging and having fun. Though apart we did eventually grow.

In the commercial world, though, where hanging and having fun and being young ‘uns is definitely not part of the mix, it’s:

Trio (or more) beware and be vigilant!



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