There are many great things about being a mediator and for me, one of them is the opportunity to study the art and science of negotiation. I have been honored to have been chosen as a mediator by hundreds of lawyers from across the state. I thank them for that because by doing so, they have given me a laboratory to study a subject that I never studied in law school: how to negotiate well and with confidence.
Many full-time mediators have been witnesses to thousands of private sessions in which negotiating teams, plaintiffs and defendants alike, struggle to develop proposals in response to proposals from the other side. We have seen the good, the bad and the ugly, but most of all, we have seen the patterns of successful negotiations and the patterns of ones that end in what I call, “premature impasse.” When that kind of impasse occurs, it is characterized by a series of decreasing incremental movement. The result? An impasse occurs before either side has reached the final number of their predetermined bargaining range.
The Bargaining Death Spiral
This is my name for the phenomenon I just described. An example might be the first three or four moves in the negotiation of an insured claim. Plaintiff starts with a number, the defense thinks is “way out of the ballpark,” and the defense responds with a number that is less than they had planned to start.
The plaintiff receives that proposal as a “low ball” and responds with little movement of his own. The defense reads this latest proposal as an indication that the plaintiff will end up at an extremely high number and refuses to respond with significant movement, claiming that she would be “bidding against herself ” if she did and so on and so forth.
The death spiral in this example is a phenomenon I’ve witnessed thousands of times. It’s often accompanied by heightened emotions and derogatory outbursts about the other side’s legal abilities. During each iteration of it, the parties become increasingly irritated with the other side and the process. So why does it occur and what can be done to prevent it?
The bargaining death spiral is caused by what I call, “reactive bargaining.” In order to respond to a proposal that one side deems to be “out of the ballpark,” the other side formulates its counter proposal in reaction to it. The formulation is often justified by well-worn clichés such as, “we don’t bid against ourselves” or “we don’t reward bad behavior.” Those statements are so common that I have begun to suspect that they are part of lawyers’ DNA.
The reality is this: without a mediator to guide the parties to more productive proposal making, the parties will reach impasse and go home. Mediators help the parties over these humps, but even with the help of mediators, most negotiations last far longer than they would if the parties engaged in more proactive bargaining. So how can we become more proactive in our negotiations?
Proactive negotiators plan their negotiations and their movement. Planning starts with good case analysis and the development of information that will support it. It continues with the development of a negotiation range based upon one’s case analysis. Additionally, it is implemented with a plan of movement from starting number to final number in a planned and orderly way. Most negotiators have no plan for movement.
Instead, their movement is decided in reaction to the other side’s movement Many have asked me, “How do you deal with the possibility that the other side’s moves suggest that he won’t get into our range? Do we just keep moving along regardless of what the other side does?” The answer is both, “yes” and “no.” The “yes” part of it is that you cautiously continue moving through your planned range. However, the “no” part of it is that you begin to signal early on that you can’t move into certain ranges. I frequently suggest to my clients that they couple a monetary proposal (their next number) with some information about where they can’t go. “I’m going to go to $55,000 but we can’t get to $100,000. As long as you’re above that number, we aren’t going to be able to settle this case.”
This kind of messaging prevents the bargaining death spiral and continues to send accurate messages to the other side. That will either prompt the other side to speed up their movement or let you know that your range of settlement will not work for them.
So, here’s the take-away: (1) develop a negotiation range before you arrive at mediation that is based upon a careful analysis of your case and (2) plan your movement through that range rather than simply reacting to the other side’s movement. Your negotiations will be shorter, less anxiety provoking and lead to a result in which you will have great confidence. Andy Little