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<xTITLE>Compared to What?</xTITLE>

Compared to What?

by Joe Markowitz
April 2017

Mediation's Place by Joe Markowitz

Joe Markowitz

In my sometimes over-simplified way of looking at negotiated agreements, I have argued that the most useful way to evaluate a potential deal is to compare it to alternatives that are actually available. Do not compare it to the deal that you think your side is entitled to, but instead compare it to whatever is likely to happen if you don't make a deal. When nations are considering entering into peace treaties or trade agreements, for example, it's generally not helpful to evaluate their benefits by comparing them to the best agreement your side might want. Instead look at whether the deal on the table is a better alternative than not making any deal at all. The same with settlements of litigated disputes. Don't compare a proposed settlement with the best possible result you might hope to achieve at trial. Instead just compare it to the costs and risks of continued litigation, and consider the whole range of possible outcomes and their likelihood.

Following this logic, the failure of the House of Representatives to pass the "Repeal and Replace" bill offered by House leadership and the Administration is difficult to understand. Republicans, especially in the House, have been saying for years that Obamacare is a disaster, and have repeatedly voted en masse to repeal it. Now that they finally have a president of their party who would presumably sign a replacement plan, they should have been able to come to agreement on something that they would all agree is preferable to the current "disaster." Yet they could not reach consensus. In an effort to placate more conservative members, they made the bill less palatable to moderates. No bill could satisfy enough members of the Republican caucus to pass.

An article in Politico argues that the Republican repeal and replace plan failed because it was a bad piece of legislation that most people opposed, not because the Republicans are bad dealmakers. But the article goes on to compare the failed Republican effort to achieve consensus on their bill to the work that Democrats did for nearly two years in 2009 and 2010 to keep their coalition together sufficiently to pass Obamacare in the first place. Like the Republican caucus this year, Democrats then faced the challenge of satisfying both their more conservative and more liberal members. The resulting bill was more conservative than the liberals would have liked, and probably more liberal than the more conservative members would have liked. It took months of hard work to keep the coalition together; time enough to persuade a sufficient number that the resulting compromise was better than the alternative of doing nothing.

The lesson is that while it might be easy to understand that proposed deals should be compared to their real world alternatives, and not to either party's wish list, it is very difficult to persuade people involved in negotiations to do that. People have a hard time letting go of their goals, and tend to be critical of any agreement that falls short. It takes sustained effort to get people to accept that something that to them appears much less than ideal is better than the available alternatives.

On the other hand, if it's true, as the Politico piece cited above also states, that the hastily-put-together Republican health care replacement, was just a bad piece of policy, then it's possible that many Republican members of Congress would just as soon keep Obamacare in place, and continue to blame Democrats for any problems with it, than take responsibility for a new plan that was full of its own problems. If that's the case, then letting the bill die in the House can be seen as an example of legislators understanding their interests very well, and making the right comparison.


Joseph C. Markowitz has over 30 years of experience as a business trial lawyer.  He has represented clients ranging from individuals and small businesses to Fortune 500 corporations.  He started practicing with a boutique litigation firm in New York City, then was a partner in a large international firm both in New York then in Los Angeles, then returned to practicing with a small firm and on his own.  In addition to general commercial litigation, Mr. Markowitz has expertise in  intellectual property, employment law, entertainment law, real estate, and bankruptcy litigation.  Mr. Markowitz has managed his own firm since 1994. Mr. Markowitz was trained as a mediator more than 15 years ago, and has conducted a substantial number of mediations as a member of the Mediation Panels in the Los Angeles County Superior Court, the District Court and Bankruptcy Court in  the Central District of California, as well as private mediations.  He has served since 2010 as a board member of the Southern California Mediation Association.   

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