Negotiation Strategies: Tips for Establishing Connection and Optimizing Results
Series: Part 4
Mediation is generally a useful way to slow negotiating parties down and open their minds to optional pathways to an acceptable settlement. Accompanied by a willing counterparty and qualified, experienced mediator, you can often move immovable issues, explore “win-win” propositions, and finish the day satisfied, not necessarily happy, with the results. There are times, however, when participants in mediation, especially the less experienced, misunderstand the process, underestimate their opponents, overestimate the mediator’s influence, or just run into simple bad luck. The result: very unhappy parties leaving the mediation table with unresolved disputes, a day of mediation expenses, and disdain for their counterparty.
At this point, parties ask themselves: Was this process all for naught? Did we fail to prepare properly? Did I misread the talent of the mediator or my counterparty’s intention to work towards a resolution? What happened??
In this article, I will explore these and other questions and propose steps to lessen the likelihood of an unfavorable or unproductive result.
The best time to avoid an impasse is before it happens. When parties commence a mediation, they should consider certain truths about the process:
1. Never try to “win” the mediation. By its nature, mediation is a process based in cooperation, candor, and (a dirty word to some) compromise. Abject advocacy has no place at the mediation table. Rather, curiosity should be the order of the day. Openly and generously seeking to understand the other side, letting them explain their position and even repeating it back so your counterparty knows you’ve heard it, pay far more dividends than arguing the merits of disputed issue. Studies have proven that people are more willing to disclose more information, exchange useful ideas, and compromise once they know they’ve been fully heard and understood. If the magic happens, prompted by a wise mediator, these candid discussions open doors to settlement possibilities never contemplated by the parties.
The point is simple: your intent should be to understand, explain and seek mutually beneficial results, not to win over the other side with your dazzling arguments.
2. Manage your expectations. You must always plan for a settlement, but not become unglued if one isn’t reached. Your expectation going in must be to have the best possible, open discussion with your counterparty and continue negotiations as long as possible to make progress. Even if you don’t settle, you often obtain valuable information sitting and speaking with your opponents for an entire day. Who are the best, most persuasive speakers (i.e., witnesses)? What interests underlie their positions? How do they react to your arguments? Have you moved them at all off of any of their positions? These and other things can be learned even if you don’t achieve a settlement. And they become more valuable going forward if the parties return to litigation.
3. Let the other side have it your way. Characterized as the definition of diplomacy, this phrase tells it all. The goal of any mediation should be to knowingly develop and present proposals to the other side that you can live with, and they can sell inside their organization. This translates into planning moves in advance but being prepared to make strategic concessions, designed to get you what you need and give the other side something as well. The more you understand their arguments and the interests underpinning them, the better you will be able to propose solutions to meet those interests.
So let’s return to our dilemma. Mediation started, proposals exchanged, negotiations begun and bang, the parties hit an impasse.
1. Although it sounds counterintuitive, when you hit an impasse, you have made progress. Why? You have drilled down from preliminary, possibly inflated demands and offers, to the detailed points that reveal the true roadblocks to reaching agreement. Armed with this information, you know what you need to work on together to get the negotiation back on track. That is very valuable information. Remember, an impasse is not permanent – it was created by people, can be removed by people, and provides the parties a chance to create value.
2. At this point, ask yourself whether your impasse results from a people or principle problem? Did the two negotiators hit a point where they became angry at or frustrated with each other? Or, have the parties bargained down to a point where they are refusing to move on principle?
If it’s a people problem, you should break off negotiations for an hour or the rest of the day, if necessary, and resume discussions thereafter. In his book Getting Past No – The Five Steps Of Breakthrough Negotiation, William Ury calls this “going to the balcony.” Don’t get mad or plot revenge, just buy time to think about your interests, reconsider your best alternative to a negotiated agreement (“BATNA),” and keep your eyes on the prize. Getting some fresh air, going outside, relaxing, and resetting your negotiation stance give you an opportunity to reexamine what happened and assess and develop possible solutions consistent with your target resolution.
Alternatively, if the negotiators still dislike each other, you can go from face-to-face negotiations to pure shuttle diplomacy or replace the angry negotiator with new people from your team, or with counsel, to continue negotiations.
But what if the parties are so frustrated with each other that they automatically shift into reactive devaluation, that is, where one party views any proposal from the other side skeptically, automatically devaluing it given its source. If the parties so distrust each other but still trust the mediator, you can give the mediator your most novel, updated settlement proposal and have him/her present it as their idea, not yours. Often the other side will more readily accept it, unclogging the impasse in negotiations.
If the problem truly is one of principle, you have an arsenal of choices:
1. First, if the principle gap is due to the parties’ differing opinions about a legal issue or trial outcome, honestly ask yourself “if the case went to 10 appellate courts or jury verdicts, how many times might we win or lose”? If you honestly answer this question, the resulting percentage of success gives you a factor to apply against your current position, possibly moving it further towards your counterparty’s and reigniting your negotiations. Note that it would be best if both parties did this together.
2. Second, if there is a large gap between the last negotiated demand and offer, or the parties “just cannot move any more, given how much we’ve already moved,” suggest that the mediator try conditional offers or “bracketing.” In this process, the mediator goes to the parties and asks, “if they go down to X dollars will you be willing to go up to Y dollars” (and vice versa)? That is, the mediator picks two numbers that are closer together, based upon his assessment of what each party might be willing to, or should, do. The resulting 2 numbers form the bookends or brackets of the final negotiation gap. Often, when each party sees the other’s willingness to move further than expected, negotiations restart, and the parties now have a smaller gap to resolve.
3. But let’s say bracketing doesn’t work. You can ask the mediator to have each party give him/her privately their last best demand and offer. With this information, the mediator could be set up to do different things: first, the simplest direction is for the mediator to announce a settlement if each party’s last best proposals overlap. Unless they meet exactly, the mediator can split the difference between the overlap and use that number to announce a settlement of the case. For example, if the plaintiff’s last best demand was $250,000, and the defendant’s last best offer was $260,000, the mediator can split the $10,000 overlap and announce a settlement at $255,000.
A more refined version – avoiding the likelihood of no overlap – is for the parties to instruct the mediator in advance to announce a settlement if the parties last best demand and offer fall within a certain prearranged narrower gap. For example, if the parties have a $100,000 gap between their last negotiated numbers, the mediator can be asked to get their last best demand and offer and announce a settlement if the numbers fall within, say, $40,000 of each other. Let’s say that the plaintiff’s last demand was $180,000 and the defendant’s last offer was $80,000 (a $100,000 gap). The mediator could announce a settlement if, for example, the plaintiff went down from $180,000 to $140,000 and the defendant went up from $80,000 to $110,000. Now, there is less than a $40,000 gap between the respective numbers. Since the actual gap is $30,000 ($140,000 – $110,000) the mediator splits the difference to $15,000 and announces a settlement at $125,000.
4. Next, if all else fails, you and your counterparty can agree to ask the mediator to give you an “mediator’s proposal,” the mediator’s best assessment of a proper settlement of the case based upon everything he or she has heard. This can be done privately in separate caucuses with questions and answers accepted and provided to explain the basis for the mediator’s recommendation. The parties don’t have to agree in advance to accept it, but they should and usually do carefully consider it for two important reasons: first, even though the mediator doesn’t disclose confidential discussions with your counterparty, his/her number factors in considerable information about the other side’s interests from those private conversations. And second, the mediator’s explanation or rationale for the settlement terms often reveals their own assessment of the strength of the parties’ respective cases.
As James Kerwin notes in his article, How Mediation Works When Both Parties Agree They Need Help Resolving the Dispute:
The mediator’s private conversations with each party are likely to lead him toward a settlement framework that will please everyone involved. Some mediators volunteer settlement ideas; others, who are less activist, will not. Consider asking the mediator for suggestions regarding your own settlement proposal.
Often this is the last step parties take, or mediators recommend, because it puts the mediator officially in the position of accepting one party’s argument(s) over another, compromising the mediator’s neutrality. More often than not, however, if the parties trust the mediator, this is not a problem.
5. If you’ve tried all these techniques and the parties still cannot agree on settlement terms, take a break, and address the following questions with your team:
- Have you exhausted all possible alternatives to settlement?
- Is your BATNA still better than the last proposal on the table?
- Have you learned information from your counterparty that strengthens your position on the merits?
- Is the mediator’s usefulness exhausted for now?
- Is the parties’ exhaustion or frustration producing diminishing returns in the negotiations?
If the answer to all or most of these is “yes,” it’s time to call it a day. If the answer is “no,” return to a private caucus with the mediator and work on new ideas, attend a face-to-face meeting with your counterparty to mutually assess where you are, identify the remaining gaps, and get their feedback and suggestions, and keep at it. Statistics show that the longer willing parties continue negotiating, the more likely they will settle.