The Most Important Word in Negotiation

From John DeGroote’s Settlement

Perspectives

High-stakes deals attract some of the best negotiators, and it’s always fun to see the latest techniques in action.  Many of the most sophisticated dealmakers and lawyers are eager to show that they’re on the cutting edge of the negotiating game, impressing their clients with advanced moves from Getting to Yes to Start With No to countless others.  Sadly, they often miss the point.

Why Credibility Is Critical to Negotiation

Somehow the audience for all our efforts is forgotten. No matter how little we actually see one another, negotiation still happens between people.  People take positions, people make decisions, and people close deals.  And much of what they do results from what you say and do.

Pointing Out the Other Side’s Mistake

There’s no doubt that credibility can make the difference in a difficult negotiation.  Not so long ago I settled a severance dispute with a senior-level employee that I doubted would end without a messy lawsuit.  The discussions began on a tense note, with the departing employee forwarding a list of demands and reasons he was entitled to each item.  Immediately I saw a major error in one of his numbers that would save my client thousands — if the employee didn’t catch it.

Once I understood the executive’s error I called it to his attention.  The moment my “opponent” understood what I had done, three things happened:

• the tension eased;
• the employee listened to my positions and “gave” on several larger, more controversial issues; and
• we achieved a resolution acceptable to all shortly thereafter.

The key to getting a deal here was the credibility I had following that initial conversation.  Without my “opponent’s” error, and the way we fixed it, I’m not sure we would be done even now.

Are They Negotiating with You or Throwing Positions at You?

What does negotiation look like without credibility?  Can you get a deal done?  Sure you can, but you can’t negotiate with someone you don’t trust.  Without credibility, no one is negotiating with you — they are throwing positions at you. 

Many who style themselves as great negotiators will tell you about their bluffs made but never called to show how successful they are.  Yet when a bluff is called, or when credibility is strained for some other reason, the harm is often irreparable.  A case I had against a very wealthy individual still reminds me how damaging a loss of credibility can be.

Plenty of Money, No Credibility

As you can imagine, the wealthy individual unhappy with my client was used to getting his way.  Hoping to avoid the public dispute that I knew my opponent would never want, I reached out to his lawyer and proposed a schedule to confidentially exchange documents and information about our positions.  I was soon met with a hot blast of insistence that the dispute had to be resolved immediately or my opponent would “go public” in a lawsuit that detailed what my client had allegedly done.  Knowing my opponent didn’t really want to go public, I let the first deadline pass; no disclosures came from my opposing counsel.  I crossed more lines in the sand, and discrepancies in my opponent’s story began to surface.  I soon recognized that I had no ability to separate fact from fiction in the matter.  Despite repeated threats of it, the tell-all lawsuit never came.

Unable to work with my opposing counsel to settle the case, I was forced to work against him — a cooperative deal was out of the question.  Faced with no alternative, my client’s public response, open litigation strategy and settlement positions were designed to force a settlement that no one would like, since we couldn’t trust anything the other side said or did. 

Sadly, we succeeded. 

Remember — if the other side doesn’t believe what you are saying, they can’t work with you.  On this deal or on the next one.

                       

John DeGroote

John serves as a mediator and arbitrator in complex business, technology, and intellectual property matters involving parties and interests around the country and beyond — often before litigation is filed. Prior to his service as a mediator and arbitrator, John served as the lead settlement negotiator in hundreds of cases,… MORE >