What Did You Just Say?

Originally published in the Advocate, September 2011 Issue

In my mediation practice, where the
negotiation is about money, which it usually
is, I regularly hear these reactions to
offers I am carrying:

“That’s insulting. I’m not even going
to respond to a number like that.”

“They’re just wasting my time.”

“They’re not here in good faith.”

“I’m not going to bid against
myself.”

“Tell them they have to go first.”
“We’ve got to send them a message.”

The mediation of civil trial court litigation
is usually about money. What
starts with a discussion of facts and liability
soon gives way to traditional positional
bargaining, with the mediator carrying
numbers back and forth, trying to keep
the parties calm and optimistic as they
react to the offer that has just been delivered
and formulate offers to respond.
Parties and their attorneys alike can
become so tired, frustrated and angry
that they put an end to the negotiation
even before they reach their bottom line.
This is usually not a satisfying process for
anyone involved, except for the relief
everyone feels if and when the case does
eventually settle.

So it was with great interest that I
read J. Anderson Little’s Making Money
Talk: How to Mediate Insured Claims
and Other Monetary Disputes, published
by the American Bar Association in 2007.
In this gem of a book, Little examines
how parties communicate in a negotiation
about money. His thesis is that monetary
proposals which go back and forth
are a form of communication, the subject
of which is the range in which settlement
can take place. Because the communication
is indirect (nobody is going to tell
the other side straight up what they will
settle for), the parties can unintentionally
miscommunicate and mislead each other.
They negotiate reactively, responding out
of frustration or anger to the other side’s
proposals rather than thoughtfully moving
the negotiation forward into their
own target range.

Little wrote his book for mediators.
My purpose in writing this article is to
bring his approach to advocates, who can
benefit from it in their mediations. With
the help of a thoughtful mediator, they
will find it an even greater advantage.

Consider this scenario used by Little
in his book:

Plaintiff has evaluated his case at
$35,000 to $50,000, $35,000 being his
bottom line and $50,000 being his best
day in court. He opens the negotiation
with a demand for $100,000, on the theory
that he can’t get to his settlement
range if he doesn’t start high.

Defendant has evaluated the case at
$15,000 to $30,000, thinks $100,000 is
ridiculous, and therefore counters at
$2,000.

Plaintiff, furious at the lowball offer,
counters at $98,000.

This scenario is all too familiar in
the negotiation of monetary disputes.
Plaintiff ’s opening demand is much higher
than his own case analysis supports.
Defendant hears the message that the settlement
ballpark is much higher than he
can or will pay. In an effort to pull plaintiff
down into defendant’s own range,
defendant sends the lowball offer of
$2,000. What plaintiff hears, however, is
that defendant is unwilling to pay anything
near what the case is worth and to
make defendant get serious, sends back a
counter offer of $98,000. Both parties
have thus miscommunicated what they
believe to be the appropriate range for
settlement. As a result, they are likely to
give up in frustration or walk out in anger
when in reality their bottom line numbers
are only $5,000 apart (Little pp. 67-68).

To avoid this, Little urges negotiators
to focus on what they themselves can
do to make progress toward settlement
(Little p. 92). In preparation, negotiators
must first thoroughly analyze and evaluate
their case, and then develop a plan
for the negotiation process which allows
them to communicate to the other side
what they see to be the appropriate
range for settlement.

Analyze and Evaluate Your Case

Your case analysis of course begins
with information, the facts – on both
sides of the case. You have to marshal not
only your own facts but the information
from the other side as well. Beyond complying
with the demands of discovery,
you also have to decide what information
to release to the other side. Although the
release of information is often a strategic
decision, and you may want to withhold
certain information for trial, you nevertheless
have to provide ahead of time, or
be prepared to provide at the mediation,
enough information to legitimize your
claim (Little p. 38). It is obviously not
persuasive to take a negotiating position
for which you can show no support.

When you have marshaled the facts
and applied the law to them, you are in
position to analyze the strengths and
weaknesses of your case and assess its
value. This analysis provides the framework
for your negotiation; if you don’t
know the value of your case, you don’t
know what offers to make or accept. To
arrive at the value of your case, you must
be able to answer the basic questions:
what is the likely monetary result of
going to trial; what are your chances of
achieving that outcome; what does it cost
you to obtain that outcome; and what are
your chances of collecting a judgment if
you get one (Little p. 49). Although ultimately
the evaluation should always be
yours, not that of the mediator, the mediator
may be of great help in working
through these issues.

Develop a Plan for the Negotiation
Process

The point of the negotiation of a litigated
case about money is to try to reach
a mutually acceptable settlement. To do
that, the sides have to communicate to
each other their respective ideas of what
an acceptable settlement range is. In the
scenario above, plaintiff ’s settlement
range is $35,000 to $50,000 and defendant’s
is $15,000 to $30,000; yet what
they communicate to each other is not
even close to this. Proposals such as
theirs, formed out of anger and frustration,
do not send clear messages.

Little was intrigued in his mediation
practice by the regularity with which
negotiators reacted emotionally to an
offer from the other side and then
responded in kind. He theorizes that
settlement proposals are a form of communication;
each side wants to “send a
message.” The subject of this communication
is the range in which settlement
can occur. But parties often “send a message”
that directly contradicts what they
really want to say. He outlines this reactive
approach as follows:

I don’t like how they moved.

I want them to move closer to me
and get into my range of settlement.

So, I will make a small move myself
to show them I’m serious and that they
need to come toward me. (Little p.76)

The resulting small move, however,
actually discourages movement toward settlement
rather than encouraging it. This
is because “movement begets movement.”
“The irony of money negotiations is that a
party has to make movement toward his
opponent in order to get his opponent to
move toward him.” (Little p. 76)

When negotiators respond emotionally
to the other side’s offers, they have
in effect taken their eye off the ball and
run the risk of delivering their own miscommunication
about settlement range.
Rather than reacting reflexively to an
offer, Little proposes having a plan ahead
of time for how you will move through
the negotiation.

What Little means by developing a
plan for negotiations is first answering
the following questions:

After I have reviewed my case,

After I have decided what I get on a
good day and on a bad day in court,

After I have factored in all of the
costs and contingencies,

After I have conducted a thorough
case analysis,

After all of that,

At what number will I start the
negotiation?

At what number will I walk away
from it?

How will I move from number to
number in between? (Little p. 77)

Your starting number should be
clearly supported by your case analysis.
In the scenario above, plaintiff ’s own
evaluation was that the best he could do
at trial would be $50,000; yet he opened
the negotiation with $100,000, a number
for which he had no support at all.
Defendant, on the other hand, had
determined that he would get hit with at
least $15,000 at trial; yet he reflexively
countered with $2,000. To communicate
to each other their respective perceptions
of appropriate settlement range, plaintiff
should have opened with a number much
closer to $50,000 and defendant should
have countered with a number much
closer to $15,000.

Your initial walk-away number
should be the point beyond which your
analysis has told you it is worth taking
the risk of going to trial. This number is
of course subject to change during the
course of the mediation. You may learn
new facts, change your perception of
existing facts, or generally change your
evaluation of your own or the other side’s
case. Your initial bottom line, however,
along with your starting number, will
frame your negotiation plan.

The possibilities for a plan for
movement from number to number in
between are virtually limitless, but one
Little sets out is this: proceed by dividing
up the available range for negotiation
into a number of equal increments. Let’s
say the plaintiff has determined that his
settlement range is $50,000 to $100,000;
that is, the best he can do at trial is
$100,000, and his walk-away number is
$50,000. He might divide the $50,000
range into eight increments or moves of
$6,250 each. Plaintiff ’s moves – irrespective
of defendant’s counters – would thus
be $93,750, $87,500, $81,250, $75,000,
and so on. At any point in this process,
plaintiff could reevaluate and divide the
available range into smaller equal increments
to signal that he was getting near
the end of the range (Little, pp. 81-82).

What if you don’t want to communicate
your target settlement range to the
other side. What if you want to make the
other side think the range is higher (or
lower) than it is, to pull the other side
more in your direction? Little would say
this is precisely the misguided approach
for which he has written his book.
Misleading the other side about where
your settlement range actually is can lead
to frustration and anger as well as
squelch the possibility that the negotiation
process will result in best numbers
on the table. Moreover, Little would say,
again, that misleading about the target
settlement range, making small moves,
does not draw the other side to you but
actually has the opposite effect.

What if the other side does not
respond favorably to your thoughtful,
planned moves? What if you march forward
with regular concessions, and the
other side is not drawn toward your settlement
range? If your plan is not working,
you can of course always change it.
As the negotiation proceeds, even in the
best of circumstances moves will become
smaller as parties close in on their best
numbers; as set forth below, they will
then know what their real gap actually is.
The point is to have a plan to start with –
to be in charge of your negotiation and
not react reflexively to the other side’s
proposals.

Bridging the Gap

So far we have been talking about a
planned negotiation to get each side to
its best numbers. When those best numbers
are reached, the real gap between
the parties may be much smaller than
anticipated. And when that real gap is
known, many cases will actually settle
(Little pp. 75, 190). Whereas parties may
be reluctant to continue moving if they believe that even if they get to their best
numbers the case won’t settle, parties
who do get to their best numbers often
discover that they are not that far apart
and then see the negotiation in a new
light (Little p. 75). “So, while movement
breeds movement, proximity of the parties’
best numbers breeds settlement.”
(Little p. 75)

The negotiation that bridges the gap
between the parties’ bottom lines is often
experienced by the parties as a new, second
negotiation (Little p. 192). Parties
often at that point can re-energize, relax
their best numbers, and become more
creative. The gap can sometimes then be
bridged when parties call their supervisors,
letting them know the progress that
has been made and the size of the gap.
Sometimes parties come up with solutions
they hadn’t thought of before, or
the attorneys get together and find a
solution, or the parties accept a midpoint,
or the mediator makes a proposal.
When the parties know that a bit more
effort can actually bridge the gap, they
usually are willing to stretch to make it
happen (Little p. 193).

When the currency of settlement is
money, analyze and evaluate your case,
plan your negotiation, and then draw the
other side into your settlement range by
communicating with your negotiation
moves about where that settlement range
is. Don’t respond to settlement proposals
reactively and reflexively. Rather, ask
what you really want out of the negotiation
and then negotiate in such a way as
to get it.

 

                        author

Barbara Brown

Barbara Brown is a private mediator in Los Angeles with her own firm, Brown Mediation, focusing on business, commercial, real estate, and employment matters. Since 2006 she has been devoting full time to her mediation practice. During her 28 years as a litigator she represented both plaintiffs and defendants. She… MORE >

Featured Mediators

ad
View all

Read these next

Category

Resolucion de disputas en y por internet

Objetivos pedagógicos: Enmarcar el campo naciente de la resolución online de disputas dentro del marco general de los métodos alternativos, y de sus criterios estructurales; Identificar los criterios y observar...

By Nora Femenia, Ph.D
Category

Eight Benefits of Collaborative Practice Training

I had decided, for professional reasons, to take a course in Collaborative training. I opted to take a course far from home. My trainer was Christine Crilley of Hiawatha, Iowa....

By Martin Rosenfeld
Category

Peace And The Environment: The Effect Of Linkages In Policy And Development Projects

Full Abstract: Through the 1990s, with the ending of the Cold War, there has been increasing research into methods of peace-building and reconciliation in areas of conflict. One of these...

By Christina Simokat

Find a Mediator

X
X
X