The Opening Demand
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July 2003 |
How many times have I heard those words when sitting down with the defense lawyer and his client in the first caucus? And why do plaintiff’s counsel always start with such a large opening demand? The reality is that the opening demand is often at least three times what plaintiff’s counsel thinks the case may actually be worth. Part of the explanation, of course, is that any good negotiator wants to leave himself plenty of room to bargain and so will always "anchor high." Or counsel may be waiting for the other side to make the first move. How often have mediators heard plaintiff’s counsel say that “I won’t bargain against myself."
Just as importantly, plaintiff’s counsel never wants the client to think that he or she started out by asking for too little. At the end of the day, when the defense is offering $200,000 counsel does not want the client to think that the offer would have been $400,000 if only the opening demand had been for $2,000,000 instead of $1,000,000. And mediators, for much the same reason, will regularly communicate high opening demands even when they know that the defense may become discouraged if not outraged. The mediator who balks at communicating a plaintiff’s opening demand risks alienating that party and causing him to question the mediator’s neutrality.
Rather than walking out the defense may respond with an extremely low offer. This tactic risks provoking a reaction that is the flip side of what the defense may have displayed. But again the defense lawyer and the mediator may be reluctant to try to dissuade the client, at least at this initial stage, from responding to the plaintiff in kind. Eventually, the mediator will have to urge one of the parties to “make the first move” so that serious negotiations can begin. Bear in mind that making the first move should not be considered a sign of weakness. Simply tell the mediator to convey to the other side that you are making a significant move with the expectation that they will do the same. You may be surprised at the reaction.
Biography
Michael Carbone is a full time neutral whose practice focuses primarily on construction claims and defects, real estate, business disputes and complex litigation. He has mediated and arbitrated for approximately ten years. He has served as a court-appointed referee in real estate and business matters.
He is a past president of The Mediation Society, a member of the State Bar Standing Committee on ADR, the ADR Committee of the State Bar Business Law Section, and the Board of Directors of the California Dispute Resolution Council.
He practiced law for more than thirty-five years. His practice emphasized commercial real estate and general business matters, including litigation of construction, real property, land use, and business cases.
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