1. Introduction
The best negotiation
strategy to use will typically be determined on a case by case basis and
generally depends the type of case, strength of your position, and
personalities of the parties, attorneys, and mediator. However, there are general principles that
can be applied in nearly every case to help you get the best settlement outcome
for your client.
Like most success in
the legal profession, being a successful negotiator begins with
preparation. Knowing your facts, jury
composition, opposing counsel, and judge are basic foundation for a successful
negotiated outcome for your client. Such preparation allows the attorney place an
appropriate independent value on the case.
Formulating an independent value of the case allows you to proactively formulate
a negotiation strategy to achieve results better than that estimated
value. It also allows you to set your
client’s expectations appropriately.
Those that fail to prepare go into negotiations partially blind and will
be at a reactive disadvantage to the other side’s position and demands.
BATNA stands for “best
alternative to a negotiated agreement.”
BATNA is a concept made popular by the Fisher and Ury book, “Getting to
Yes,” and it is a concept that largely determines how much leverage one has in
a negotiation. It asks you to consider
the most likely outcome if the case does not settle. That outcome could be a favorable ruling on
summary judgment, or it could be a long drawn out trial that your client will
likely lose. BATNA determines the point
that you walk away from negotiations because the alternative is better.
a. Client
The client normally has
the final say and setting appropriately expectations will greatly increase the
chance of success in a negotiation.
Discussing the attorney’s independent case value, BATNA and general
negotiation strategy with the client in advance will increase the client’s
comfort level and help them understand when and why adjustments in settlement
strategy and position need to be made.
For example, additional medical bills come to light during settlement
talks or opposing counsel threatens to add a count for punitive damages if the
case doesn’t settle. Both are factors that may require adjustments
of case value and BATNA if not originally considered. While the goal of preparation is to avoid
such surprises, an informed client will at least understand that such factors were
not part of the original evaluation and likely be willing to adjust accordingly.
b. The opposing side
Setting expectations
for the opposing side in advance of a negotiation at mediation can be a
successful strategy in some types of cases.
Initial demands and offers to the other side prior to mediation can set
the starting point and tone for the negotiation. This is especially true if the other side has
done insufficient preparation or hasn’t independently placed a value on the
case. Even if this is not the case, a
pre-mediation demand or offer will inform the other side of your expectations for
settlement and the basis for the same. A
detailed demand or offer letter is often one of your few opportunities to tell
the other side’s client an unfiltered version of your side of the story. Most attorneys will forward your demand letter
to there client and the ethical rules require them to relay such settlement
offers. Further, this can be especially helpful
when the other side’s client or decision maker is an insurance company. This will let adjusters know if reserves
might need to be adjusted or if they need to discuss additional authority with
their manager in advance of the mediation.
a. Bracketing: is a commonly used technique for
establishing a zone of potential agreement in mediation — an upper and lower
limit between which the parties are willing to negotiate. Bracketing moves the
parties closer to the true gap and makes bridging that divide seem far more
attractive and possible.
You
“bracket” for the parties or solicit a bracketed offer or counteroffer by
suggesting that you put $X on the table if other side will agree to accept $Y
in settlement. For example, if the parties are stuck at $500,000 (defendant)
and $1,000,000 (plaintiff), a bracketed offer or proposal might look like this:
If the
defendant will offer $600,000, would the plaintiff be willing to reduce her
demand to $900,000? If the parties are willing to do so, the gap is narrowed
from $500,000 to only $300,000. The parties also have broken the barrier of
round numbers beyond which they’ve previously pledged not to venture.
Through
bracketing, you:
·
Protect the parties from anchoring
the next round of negotiations too high or too low. When the parties have some
idea of the actual range in which their negotiating partners are really in,
they’re far less likely to present extreme offers.
·
Test the distance between the
parties’ true bottom lines without requiring them to reveal their bottom lines
to each other.
·
Encourage the parties to continue
negotiating. You make the gap smaller and give them hope of bridging it.
b. Look for win/win opportunities that don’t solely
involve money: Most negotiations focus only on the amount of money one
party will pay to another. Straight
monetary negotiations are a zero sum game with a winner and loser. Defendant often believes they lost when
required to pay more, Plaintiff perceives loss when they get paid less than
expected, and vice versa.
However,
there are often opportunities for a win/win where, as part of the settlement,
the defendant gives the plaintiff something of value that costs the Defendant nothing
or less than 100 cents on the dollar.
Common examples can be as simple as an 1) apology, 2) products or
services that have greater value to Plaintiff than Defendant (like gift cards, airline
miles, construction work, professional services, etc.), or 3) structured
settlements or payment plans. While some
of these can be considered case equivalents, it can still be viewed as a
win/win as the Defendant is paying less than 100 cents on the dollar.
Win/win
opportunities are specific to the facts and parties of each case. Through preparation and active listening it
is up to counsel to identify when these opportunities exist.
