Using Creativity When Negotiating Commercial Disputes – A Challenge For Lawyers?

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             “Negotiations which
end in a resolution that satisfies all parties are rare”[1]. 
Why should we nevertheless strive for integrative win-win solutions rather than
accepting that usually only one side can win?  Especially a lawyer representing
a client in a commercial dispute – where at least one party believes it has
legal rights against the other that are enforceable in court – may argue that
only the own client’s benefits matter but not the opponent’s interests[2]. 

For several reasons,
integrative agreements are considered to be the most desirable outcome in
negotiations[3]. 
Negotiations are unpredictable[4],
neither side can be absolutely sure to prevail in a distributive negotiation
and impose the own position on the other side.  If, however, the negotiators
use integrative bargaining they may be more likely to avoid litigation.  Furthermore,
if they manage to increase the size of the bargaining pie it is more likely
that also the own share of the pie is bigger[5].

Reaching mutually
beneficial resolutions can also create additional short- or long-term values.  A
win-win solution may be the basis for a future business relationship, or a remarkable
settlement may enhance the reputation of a company in its business community
and thereby facilitates other, unrelated negotiations[6]. 
Consequently, trying to reach a win-win solution and caring about the
opponent’s interests eventually is in the own client’s interest. 

I.         Why can creativity
challenge lawyers in particular?

Creativity is
considered a “key ingredient in the creation of value, and in transforming
fixed pie or even deadlocked situations into integrative, win-win agreements”[7]. 
At the same time, using creativity is challenging for negotiators[8],
and maybe even more for lawyers.          

When we think of
creative professions we typically have designers, artists, architects, or
perhaps even teachers in mind, but not lawyers.  We may like it or not: The
legal profession is, generally speaking, not notorious for its creativity.  Generally
speaking, lawyers are said “to exacerbate disputes by increasing the demands
and conflicts and narrow disputes by translating into limited legal categories
what might have been broader and more general”[9]. 

Already the
legal education does not aim to develop creative skills at the first place: 
Rational thinking, analytic skills, sharp argumentation, and efficiency – not
creativity – are necessary to pass exams[10]. 
In court, the judge will typically be more impressed by precedent rather than
novel own ideas.  The work product of lawyers frequently has to be in a certain
format, perhaps even using forms, which does not leave much room for creativity
either.  Overall, the adversarial system often appears to dominate the “mental
landscape” of lawyers[11]. 

Also other, more
practical restrictions can prevent lawyers from developing creativity.  Clients
give narrow instructions.  Furthermore, a lawyer has to protect the client’s
interests what typically raises the desire to control the negotiation process
and the communication vis-à-vis the opponent[12]. 
Revealing information is often perceived as being dangerous and incompatible
with the own strategy but, at the same time, a key of integrative bargaining[13].

Also an immense
workload or small remuneration may limit the available options.  Obviously,
unlimited time and funds – two parameters seldom found – are likely to promote
creative alternatives.  However, if the lawyer’s fees are based on an hourly
rate the client may not want to “waste” time/money on creative open-ended brainstorming
or rapport building social conversations prior to the core negotiation. 

At the same time,
some areas of law appear to be more creative than others.  Family law, for
example, is associated with “creative solutions”[14]
and known for using such alternative approaches as transformative mediation[15]. 
In contrast thereto, business, corporate and commercial law, where typically
two corporations or businessmen interact with each other, do not have the
reputation to be extremely creative using “alternative” or “novel” approaches. 
Particularly when negotiating commercial disputes – where litigation often will
be the best alternative to a negotiated agreement – the atmosphere is competitive
and the parties, driven by fixed-pie-perceptions, use positional bargaining.  A
competitive approach, however, typically blocks the imagination and creativity
because it requires that the negotiator takes a firm position on a single issue
and tries to persuade the other side[16]. 
In contrast thereto, being cooperative may be interpreted as a sign of weakness
arguing that “people with strong cases do not make concessions”[17]. 
This raises the question:  Is creativity when negotiating commercial disputes too
challenging for lawyers?  The answer is: “No”.  Creativity “is available to
everyone and can be acquired as a skill through training”[18]. 
Thus, all lawyers can be creative and improve their creativity.  

II.        What is creativity
and why is creativity beneficial when negotiating commercial disputes?   

A.        The attempt of
defining creativity

Creativity can
be defined in many, very different ways focusing on either a “novel” work
product or the process of “restructuring ideas into a new form” or “unique
self-expression”[19].
 Now, lawyers may think that the law, in general, does not allow for “unique
self-expression” and the format of the work product is set forth in statutes
and/or unwritten rules.  However, apart from certain basic legal and ethical
ground rules, the negotiation process gives lawyers a great flexibility to
tailor the process to the client’s needs.  This should be considered as an obligation
to make use of this freedom.     

Integrating the
above-mentioned different approaches of defining “creativity” creativity can be
described as “a process by which persons develop novel outcomes that are
acceptable, useful, and satisfying to a given audience”[20]. 
“The outcome” of creativity is “a new way of perceiving things, a new
possibility, or a new path or direction to explore”[21]. 
Isn’t this exactly what we should look for when negotiations have come to an
impasse?   Nevertheless, “(t)he creative aspect of negotiations is too often
ignored by negotiators, who fixate on the competitive aspect of negotiations” [22]. 
    

B.        The benefits of
creativity in commercial dispute negotiations

Negotiations of
commercial disputes are, usually, complex and perceived as a rational,
unemotional process in which a fixed pie has to be split between highly
competitive parties.  For example, in a breach of contract scenario, the
discussion will primarily focus on the legal question whether there is a cause
of action and what amount of damages has to be paid.  The more money is at
stake, the more aggressive is the negotiation style and the higher the
willingness of the parties to litigate if no negotiated agreement can be
reached.  Overall, commercial disputes have the potential of causing a
particularly tense atmosphere in which the negotiators usually chose a
competitive bargaining style. 

This reminds us
that the parties to a negotiation always are in conflict and negotiation is a
“conflict management process”[23]. 
Frequently, the communication between the disputing parties is or will become
ineffective[24]. 
For instance, the negotiators focus on accusing and blaming each other rather than
on creating value and generation options[25]. 
Additionally, it is likely that the negotiation style of one or all parties
leads to a deadlock which the parties are not able to overcome because of the
advanced level of their conflict[26]. 
Eventually, parties are not able to reach an agreement.

Even though
negotiators of commercial disputes probably won’t focus on creative solutions
at first place, creativity can be a valuable means of deescalating, and managing
the conflict.  Primarily, creativity can be used to overcome the fixed-pie
perception and transform deadlocked situations into integrative solutions[27]. 
Compromising and reaching settlements is obviously significantly easier “when
the pie has been enlarged via creative and insightful problem-solving
strategies”[28].

However,
creativity can be used also in other regards, for instance in order to improve
the communication and relationship between the parties.  It is widely accepted
that relationships among negotiators may affect the results of the negotiation[29]. 
Positive emotions and positive moods improve the relationship between the
negotiators and help them to identify joint gains which further the
understanding of the underlying interests of both parties[30].
 Negotiators reach most creativity when they approach the negotiations in the
mental model of problem-solving rather than other mental models such as
haggling or game playing[31].

Overall,
creativity can contribute in different ways to the outcome of negotiations in
commercial disputes.  Creativity may enable the parties to think out-of-the-box,
expand the pie, and reach integrative win-win solutions.  Also, creativity may
be beneficial in particularly critical stages of the process in order to
overcome impasse.  Creative tools may be used to facilitate the communication
between the parties which is of essence during all stages of the negotiation.  Finally,
creative techniques may contribute to a positive atmosphere and support the building
of trust and rapport.  However, creativity never means that the lawyer should
not analyze carefully, “rationally identify all issues and each party’s
relative concerns for these issues and by rationally thinking about the
bargaining zone”[32].

C.        Possible facets of
creativity in commercial dispute negotiations – “substantive” and
“procedural” creativity

In the context
of negotiations, creativity is often described as a tool producing “freshness”
which may appear in a new offer, a new approach, or both[33]. 
Such new offers must be perceived as “breaking new ground” and being beneficial
to all sides[34]. 
For example, the parties may discover possible side deals which may increase
the bargaining pie[35]
and which at the beginning of the negotiation process did not appear to be
possible.  Section I. below addresses the issue of generating fresh offers introducing
the term of “substantive creativity”. 

However, often
nobody actually wants the orange peel[36]
and it is in fact not possible to generate an integrative win-win solution. 
Even in such situations, creativity still should be used to improve the
communication between the parties, change their attitudes and perceptions in
order to eventually lay the foundation for reaching a mutually acceptable
settlement.  This second kind of creativity which focuses more on a “fresh
process” is described in Section II. below introducing the term of
“procedural creativity”. 

Consequently,
there are different ways how creativity can improve the outcome of negotiations
and which a lawyer should be aware of.

I.         “Substantive
Creativity”

Generating new
options, increasing the bargaining pie, is definitely the most challenging task
when negotiating a highly disputed matter.  Some key elements to achieving
creative agreements are increasing the size of the resources available for
allocation, nonspecific compensation (i.e. making payoffs to the other side in
some other currency that it finds beneficial), trading off one issue for
another, minimizing the costs incurred by one party in accepting what the other
side wants (so-called cost-cutting), and satisfying the true underlying
interests of both sides by bridging[37].

            Lawyers should
exhaust all possible legal constructions which may facilitate creative
agreements.  Amongst others, contingency contracts which are capable of
addressing future factual uncertainties can increase the probability of reaching
a settlement[38]. 
Also option contracts, inventive payment plans or alternative forms of
compensation (stocks options or profit sharing) can create new ideas and generate
fresh offers.  Since this relates to basic legal skills, lawyers should be
familiar with the variety of creative solutions the law offers for inventive
negotiation agreements.     

            Given the high number
of creative approaches the benefit and feasibility of which, however, largely
depend on the circumstances of the individual case, the attempt of listing all
of them would be inappropriate.  Therefore, only the brainstorming technique
which is frequently recommended but at the same time particularly challenging
for lawyers, will be described in further detail below. 

Creativity
requires the negotiator to consider differences between the disputants as not
being the ending point.  Differences need to be perceived as “opportunities
rather than barriers”[39].  
The negotiators have to try to find solutions which “lie outside the
assumptions” which can be achieved when the conflict is redefined, underlying
interests are identified, and brainstorming is used for creating a variety of
potential solutions[40]. 
The aim is to generate as many options as possible without evaluating,
criticizing or judging the ideas[41].

The way the
human brain usually operates imposes an obstacle which prevents negotiators
from creating new solutions because we tend to develop solutions for a current issue
based on previous solutions to similar problems[42]. 
Thereby, we limit option generating because we neither invent new solutions nor
consider previous solutions to problems which were not similar to the present issue[43]. 
Creativity, however, requires breaking out of this “patterned way of
thinking”. 

Especially
lawyers are likely to approach a new case by recurring to previous similar
matters.  Finding a precedent which supports the present case increases the
probability of prevailing.  A lawyer has to overcome this approach in order to avoid
being limited to how similar disputes have been solved in the past.  Ideally, options
need to be generated without comparing the present case to previous similar cases[44]. 

Brainstorming is
considered as a valuable technique which, however, may also be challenging for lawyers
because of a perceived lack of control over its dynamics, or the risk of
revealing too much information.  Research has established that when looking for
creative solutions “quantity equals quality”[45]
which contradicts to the usual thinking of lawyers.      

However, even if
a lawyer perceives brainstorming with the other side or the client as inappropriate,
brainstorming may still be used by the lawyer individually.  In fact, so-called
“individual brainstorming” is considered as being able to produce an even wider
range of options because nobody has to worry about other people’s opinion and
thus people can be more freely creative[46].
 The key is not to limit the available options because of assumptions which are
either unnecessary or incorrect. 

II.        “Procedural
Creativity”

Assumed a certain
commercial dispute, in fact, is not capable of an integrative solution, the
negotiator can nevertheless improve the success of the negotiation by using
creativity.  In such situations, creative ideas can still further the overall
atmosphere and communication between the parties and thereby improve the final outcome
significantly.  The creative means may relate to small details the impact of
which sometimes cannot be measured rationally.  However, based on the knowledge
of the factors which contribute to the success of a negotiation these minor
details appear being worth considering during the stages of the negotiation[47].   
  

For instance, the
key problem in most conflicts consists in getting the participants to talk and
listen to one another[48]. 
Today, it is well established that negotiators who manage to establish a
trusting relationship increase the probability that a win-win settlement will
be reached[49]. 
Thus, a lawyer should not feel being limited to “traditional” approaches with
regard to communication, rapport and relationship building but moreover consider
new approaches.  Creativity may be used with regard to the following issues:       

1.         Creative venues  

Frequently, the
parties will not spend many thoughts on where the negotiations take place and
rather chose one of the lawyer’s offices or perhaps a convenient neutral conference
facility.  Commonly, negotiating on the own turf is considered being an
advantage[50]. 
Thus, a pre-existing power relationship between the parties can be either
increased or decreased by choosing the turf of one party.  Several examples of
international, mainly political negotiations exemplify that the choice of the
venue can be of essence because the location is able to set the tone and raise positive
associations[51]. 

Lawyers should
be aware of those small details and always make a deliberate decision regarding
the location.  Perhaps a neutral forum or a less formal locale is less hostile. 
Depending on the circumstances it may be appropriate to overcome the usual
formal business setting, and instead meet for a joint dinner or social activity
in the evening before the negotiations.  An informal setting may invite the
participants to openly communicate with each other.  Perhaps the disputants
recognize that they have common private interests or views which are the basis
for a more friendly relationship and facilitate the communication about the
dispute the following day. Studies have established that groups of negotiators
in a positive mood were able to achieve larger joint gains than negotiators in
a neutral or negative mood[52].  

2.         Creative agendas

            During the initial
preparation, a lawyer will typically think of an agenda for the negotiation in
order to structure the process.  Already at this stage, creativity is important
as the agenda is the first step of defining the issues and establishes priorities,
hierarchies or dependences between issues.  An agenda is therefore able to presume
a certain order or priorities which are possibly not shared by all parties,
and, thus, may limit communication as well as creativity. 

            The way parties frame a
certain issue is able to determine whether or not they will be able to find a solution[53]. 
“Fractionating problems into solvable parts” is a basic creative technique
facilitating problem solving during negotiations[54]. 
Especially where matters appear to be one-issue negotiations, which is likely
when negotiating commercial disputes, negotiators should try to break one big
issue down into parts and reach a multiple-issue negotiation[55].
 

            Negotiators should also
consider is the impact of links between issues. Ideally, multiple issues should
be aligned in a way which allows an independent negotiation of each issue as
well as a trading off of issues[56]. 
If, however, issues appear to be linked and one issue cannot be solved without causing
impacts on other issues, a deadlock is likely to occur[57]. 
Consequently, it is again of essence to break down issues into parts and try to
align these parts in a way which allows flexible solutions.  

Overall, a
lawyer should assess whether there are different aspects which impact on the
conflict rather than focusing on only the main legal questions such as whether
or not the contract was breached.  For example, the parties may be in agreement
or disagreement regarding particular facts, the results of expert opinions or
particular legal evaluations.  By setting an agenda which fractionates the main
issue into multiple pieces the parties may have the opportunity to address all relevant
issues and identify to what extent they disagree or perhaps agree.  An
agreement in one, even small area may encourage agreements in other parts. 

Consequently,
the agenda can be a useful tool to further creativity rather than preventing
out-of-the-box-thinking by limiting issues and flexibility.        

3.         Other creative steps

Multiple other
small, creative means may be used to facilitate the communication, relationship
and outcome of the negotiation.  In general, lawyers should consider what means
are able to further mutual understanding, listening and communicating.

A lawyer should
always identify the most efficient way of communication in light of the issue
in dispute and the audience bearing in mind that, according to studies, only a
small portion of communication is through the spoken word[58]. 
Today it is well-established that using computer presentations, flipcharts or
flowcharts helps visualizing the issue and improves the understanding of the
audience[59]. 
Depending on the individual case, it may be beneficial to use demonstratives,
show photos or videos, bring a model of the defective product, or run a test in
order to explain a complex, possibly technical issue with which not all
negotiators may be familiar.     

Another example
of creativity relates to the question who participates in a negotiation.  Also
in this regard, lawyers should not feel restricted by traditional habits.  For
instance, if a communication breakdown occurred or the personality and style of
a certain negotiator appears to be an obstacle it may be worth considering a
replacement of the negotiator.  A new negotiator may be able to communicate the
same message more effectively than the predecessor.

III.      How lawyers can become
more creative when negotiating commercial disputes: A four-step-approach

            It is crucial for a
lawyer to overcome general assumptions and limitations which are possibly build
by past experiences.  Moreover, the aim is reaching breaking new ground. 
However, as already mentioned above, creativity always requires a rational
analysis.  Thus, a sound balance has to be found while there is not only one possible
way of improving the own creativity.  As usual, the circumstances of each case and
the characteristics and styles of the persons involved determine what creative
means are likely to be successful and appropriate. 

            In order to find a
reasonable and successful way of enhancing the own creative skills the
following four-step approach may offer guidance how lawyers may approach the
use of more creativity in negotiations:     

1.         Become aware of the benefits of creativity and the possible
areas where creativity can improve the outcome

2.         Find the right balance between highly innovative and
inappropriate means – test creativity and get acquainted in a safe environment

3.         Educate the client about the benefits of creativity and get
the client’s consent to using particular creative means

4.         Apply creativity in negotiations

IV.      Conclusions

            A lawyer has to strive
for the best possible result for the client.  Creativity should be used as an
effective means of improving the client’s results by improving the outcome of
the negotiation.  Creativity is a useful tool even when negotiating commercial
disputes where typically a competitive bargaining over a perceived fixed-pie
will be applied. 

Creativity of different
kinds may help reaching a settlement even in legal matters which we do not
typically associate with creative negotiations.  The above distinction between
“substantive” and “procedural creativity” illustrates that creativity can not
only create novel offers and options for integrative win-win solutions.  If it
is not possible to reach a win-win solution creativity can still be used to
facilitate the negotiation process in various ways.  Creativity may enhance the
overall atmosphere of the negotiation, improve the communication between the
negotiators and, eventually, the likelihood of reaching a settlement.  Also,
creativity never means that the lawyer should refrain from rational analyses which
are always necessary.  Moreover, using creativity is an additional skill lawyer
should use. 

End Notes

[1] Max H. Bazerman, Margaret A. Neale, Negotiating Rationally,
New York et al., 1992, 16.