Negotiation Law Blog

I talk about Ken in this blog a lot because I am lucky enough to be one of the many mediators and ADR professionals who he mentors, casually, graciously, generously and without reservation.  We all deserve at least one person like this in our professional lives.

Here is an interview with Ken in attorney Stephanie West Allen's fascinating idealawg.

A teaser of the interview with a link to idealawg below.

Legal Highlight #6: Kenneth Cloke

Kenneth Cloke is the sixth Legal Highlight. He is Director of Center for Dispute Resolution, and his newest book is The Crossroads of Conflict: A Journey into the Heart of Dispute Resolution. (Review of Cloke's book.) 

1) Think about your recent experience in the legal profession and of a specific incident or event that made you feel extremely satisfied or proud. Give a brief description of the incident or event. The reasons I felt satisfied or proud were . . .

My recent experiences have produced contradictory feelings. There are things we should all feel proud of about the legal profession and, unfortunately, things we should all be ashamed of. I think we need to be conscious of both. I am, for example, proud of the lawyers who have opposed the extra-legal proceedings and use of what can only be called torture at Guantanamo, and ashamed that there are lawyers who still attempt to justify such proceedings. 

Click here for the full interview.

 

 

The man conducting negotiations between the Palestinians and Israel for the prisoner exchange is Chief of Egyptian Intelligence Service, Omar Suleiman.  Click here for a short article from earlier in the year about Mr. Suleiman and his on-going role in Middle East Negotiations.

Why are We Unhappy?

Maybe it's Because We're Hard Wired to Cooperate

By and large, we're liberal arts majors, right? Theater, film, literature, and art history people. Political scientists, philosophers and sociologists. We like mental puzzles. Not the teasers that undid most of us in math class. No, we like problems that require us to be good at analogies and story telling. To sharpen our Hardy Boys or Nancy Drew detective skills. We're good at figuring out who killed Colonel Mustard in the drawing room. We're born litigators.

And the fighting part? Most of us complain. But it's part of the job so we roll up our sleeves and throw our natural competitive spirit at it. Still, all that good feeling about solving the complicated antitrust problem usually comes to a grinding halt just about the time the opposing brief comes in. I'll admit it if no one else will. I wince when I read these responsive briefs. I mean, I sit at my desk shaking my head and looking at the damn thing sideways as if it would be easier to take if I snuck up on it slowly. Then I pray that they've cited the wrong case, failed to shepardize their most compelling authority, been guilty of the shamelessly misleading ellipsis.

When friends ask me what it is I do during the day if I’m not giving closing arguments to a jury every week like William Shatner does on Boston Legal, I explain it this way: Every morning when I get up, someone else is also preparing for their day. And those people will be dedicating a large part of that day to making me look bad. To finding my mistakes and undermining my opinions. To suggesting that I am -- or directly accusing me of being -- a liar.

"Gee," they respond, "that sounds terrible," before I go on to assure them that I actually enjoy winning and, hey! if you want to win, you've got to suck up a fair amount of losing. At which point they understandably walk away figuring I deserve my lot.

We're Hardwired to Cooperate

So I don't know if it's good news I have to share with you or not. For those pursuing a more cooperative or collaborative legal process, I hope the news is good. Here it is. Neuropsychiatrists who have been taking MRI images of their students' brains during collaboration have discovered that the act of cooperating with another person makes the brain light up with joy. 

Sources:  Emory Brain Imaging Studies Reveal Biological Basis for Human Cooperation; Gintis, Bowles, Boyd & Fahr, Explaning Altruistic Behavior in Humans (2003) 24 Evolution and Human Behavior 153;  Stevens & Hauser,  Why Be Nice?  Psychological Constraints on the Evolution of Cooperation, Trends in Cognitive Sciences;  

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It genuinely did not occur to me until I'd been mediating full time for a year that "frivolous" claims most often arise from felt injustices (instances of unfairness in the commercial world) that the law does not recognize.

When attorneys attempt to rectify non-actionable wrongs, they so drastically "spin" their clients' stories that the resulting claims appear to be false and therefore not only frivolous, but malicious.

By the time the parties come to mediation, the legal "story" has often become unrecognizable to all the parties -- a result of client "control" at depositions and pre-trial proceedings in which the "whole story" has been so riddled with holes that it most resembles a piece of Swiss Cheese. 

A good mediator can relocate the original story of injustice; be the agent of reality for the plaintiff's often inflated expectations of recovery; and, re-translate the "frivolous" lawsuit back into the tale of unfairness that made the client seek out counsel in the first place.  

When this is accomplished, the defendant is able to settle the lawsuit without feeling black-mailed, a term that, along with "extortion" is most frequently used by defendants who genuinely do not know what could possibly have motivated the plaintiff to sue them other than greed and malicious ill will.

When the defendant wrestles with the actual, rather the the legal, theory of injustice, the settlement becomes a way of successfully grappling with and resolving what are usually simply business communication or management failures. 

The good news?  You don't need a mediator or even a lawyer to "try this at home." If you are a business person with a legal dispute, try talking to your adversary before you bring in legal counsel.

When you do need an attorney, talk to him about business solutions to to the legal problem.

If you are an attorney with a "client control" problem, bring your client back in from the cold.

As litigators, we tend to forget that our business clients have often negotiated more deals in a single week than we do all year. Engage their creativity and together you will be the best attorney-client team on the block.

"C.E.O employment contracts have become like prenups.  Instead of specifying what the signers will deliver, they concentrate on everyone's rights if things go wrong."  Nell Minow, Editor, Corporate LIbrary.  For an in-depth look at the negotiation of CEO salaries and the forces that are changing the playing field, see today's New York Times article, Signing Up a New Chief in the Age of  Prenups.

. . . understanding cognitive biases can help the parties settle 

I've recently helped several small businesses work out the termination or renewal of business ventures in response to accusations of fraud and the usurpation of corporate opportunities. Although none of these mediations has involved Fortune 500 companies, the owners faced potential losses in the hundreds of thousands to millions of dollars.

Because the money expended on lawyers and forensic accountants hits the bottom line of small businesses faster and harder than those spent by larger companies, critical decisions must often be made in the absence of verified accounting and factual information.

When it would cost tens to hundreds of thousands of dollars to conduct the discovery necessary to truly know your best alternative to a negotiated agreement, what negotiation tools might help your beleagured and embattled commercial clients?

First the Hypothetical

With names and facts altered to protect confidentiality, consider the recent negotiated settlement of a corporate dissolution and accounting action.

The owners, Tom Jones and Bob Smith have been profitably importing restaurant equipment from Hong Kong since the early '90s. In the year prior to litigation, their business -- RSI -- began to experience difficulty in acquiring the same quality goods in a similar price range as it had in earlier years. At the same time high quality goods became scarce, Jones entered into a business venture with a restaurant supply wholesaler selling equipment similar to that imported by RSI.  Smith had also entered a new business venture with a restaurant equipment retailer. 

You don't need to understand the illusory correlation bias to see the lawsuit coming. 

The Business Dissolution Litigation

Smith sues for RSI's dissolution and seeks an accounting, accusing Jones of various business torts.  Jones files a cross-complaint accusing Smith of diverting to his new retail business imports that would have gone to RSI. The RSI warehouse is currently filled with goods imported from an inferior secondary market. Smith claims RSI will be unable to sell these goods for a profit. Jones claims they can be sold for a $500,000 and $600,000 profit.

The parties schedule an early mediation in an effort to avoid crushing legal fees.

Mediator Intervention 

At the commencement of the mediation, each party tells the mediator that he is "absolutely certain" that his valuation of the mechanise is "right." 

How do the parties calculate their potential damages (to analyze their Best Alternative to a Negotiated Agreement) or value the worth of the business for mutual buy-out offers in the face of such wildly competing claims?

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Ken Cloke once said that mediation could cure cancer.  And he wasn't kidding.  But I'll tell that story later. 

Here's an article from politics.co.uk that not only says mediation can prevent homelessness, but also that the British government is funding a pilot program to make that mediation magic happen.

The full article is quoted verbatim below. 

Relate: Mediation can prevent homelessness
Tuesday, 14 Nov 2006 10:55

Relationship organisation Relate has praised the government for announcing mediation measures aimed at helping avoid homelessness.

Communities secretary Ruth Kelly will today announce measures – including mediation between families – to help get vulnerably housed young people back on their feet.

Relate's head of public policy, Jenny North, noted family breakdown was the major cause of homelessness for young people – government figures show this accounts for nearly a quarter of the 94,000 cases accepted by local authorities last year.

She said the government's commitment to the issue was clear from the backing Relate had received in developing a homelessness mediation service, and a standards framework.

"By working with families to reduce conflict and build bridges, we can help young people stay in the family home, and avoid homelessness," Ms North added.

Relate today launches a pilot mediation service across 16 Relate centres nationwide to coincide with the 40th anniversary of seminal television drama Cathy Come Home.

I was once a plaintiff's personal injury attorney.  I don't talk about this much.  Everyone I knew in law school, most particularly my professors, were aghast when I told them that I'd be joining a two-man plaintiff's personal injury firm after law school.  I had the resume of a student who could have gone to a "big" firm with the accompanying "big" salary and "big" status. 

But I wanted to try cases.  I was terrified of trying cases.  Which was, I think, my number one motivation to simply be handed the file on the slip 'n fall at the local Ralph's and pushed into the courtroom.  Sink or swim.  I also believed in the cause.

There are a lot of reasons why I left that practice after three years and joined what passed for a "big" law firm in the town I was then practicing in  -- Sacramento (the still great Weintraub Genshlea law firm).  But I never lost the "edge" I developed representing injured plaintiffs.  Nor have I lost my deep respect for (and, okay, I'll admit it) attraction to, trial lawyers.

Confessional out of the way, one of my blogging buddies turned me on to this FABULOUS trial lawyer's blog -- Trial Lawyer Resource Center. 

If you want to get into the mind of your opponent, you couldn't go wrong by doing so in the the systematic analytic fashion recommended by trial attorney John Romano of West Palm Beach in Predicting Your Opponent's Strategy -- the O.S.P.A. Model.

Last year, mediating an age discrimination case, I asked defendant's in-house counsel (who seemed plenty bright and fiercely competitive) to craft a closing argument for the Plaintiff while I was in separate caucus with her opponent.  I did this because I didn't seem to be making any progress in getting her to see the risks her company was facing if the case went to trial.  

I'd love to say that this resulted in settlement (mediators and trial lawyers love to publically talk about their successes, rarely their failures).  It didn't.  Defense counsel did make one hell of a closing argument for the Plaintiff, however.  At least I knew she understood the risks and I was able to move on to discuss the real reasons the case wasn't settling.  

I've followed up that case but the defense remains intransigent.  They must know something I don't.

In any event, I highly recommend John's article on a systematic analysis of your opponent's strategy.  I can think of a couple of my own cases -- one's where I repeatedly asked myself -- "what can they possibly be thinking?" -- that could have benefited from this process.

Because it's Sunday, a day often set aside for reflection, I'm posting verbatim without comment Geoff Sharp's "Fight with my Father" and recommending his mediator blah blah blog as a way to stay sane in a conflict-ridden world.

 

A fight with my father: a mediator reflects

Dear Diary
[15 November 06]

Listen mate, if - and more likely when - you're in conflict again, don't think like a mediator.

Next time take a moment to feel that gut wrenching anger that was like hatred in there somewhere for a split second, but quickly turned to a slow-burn and overtime, to sadness then dull sorrow.

Then explore that knot in your stomach as you stewed, having walked away from the fight. Feel the angst at having said stuff now regretted, but not able to be apologised for just yet.

Dwell in the experience of those around you who don't understand that you're so upset or are too busy with their own lives to notice.

Know that time is precious now.

Then later feel that extraordinary dawning of distance, when perspective imposes itself.

And a loving life resumes...

And reflect that every week you sit with people in this same space.

Don't ever forget that.

"Tough" or competitive bargaining techniques include making high initial demands; maintaining those high level demands throughout the course of the negotiation; making few (and small) concessions; and, adhering to a high level of aspiration for your own side.

Competitive negotiators gather as much information from their competitors as they can; give as little information about their own position as possible; bluff, mislead; and threaten retaliation if the other side does not comply.

We'll discuss why you might not want to bargain competitively in later posts. The purpose of this short post is to help the more cooperative bargainer deal with a tough guy.

Competitive negotiators:

1. sub-divide concessions by dividing issues into their smallest possible parts,
offering concessions only on the sub-parts;
2. make ambiguous or hypothetical offers that they can later disown;
3. demand principled justifications for the competitive bargainer's positions; and,
4. respond to intransigence with intransigence, cooperation with cooperation. 

Once you've worn the competitive bargainer down, the following questions will help you turn the negotiation into a more cooperative endeavor:

• what does your opponent think a "fair" solution to the problem might be
• which issues are most important to your opponent and which less or unimportant
• how would your opponent react to his own proposal if he were on your side of the table
• what are the intangible costs and hidden business costs of continuing the dispute or failing to close the deal
• what would a future without the dispute or with the deal in place look like

The greatest mistake of every young negotiator is to respond to competitive bargaining moves by offering concessions. The "tit for tat" games we engaged in on the playground are reflexively played out in every negotiation. You must respond to challenge with strength and resolve. The competitive bargainer will always out-negotiate his cooperative opponent unless the cooperative negotiator is prepared to push back when pushed.

The secret of the successful negotiator is her refusal to walk out of the room until the deal is done. Push back if need be, but do not cut and run.

For more on competitive and distributive bargaining, see Beyond Intractability's Knowledge Based Essay on the topic here.

I'm providing this legal update without myself reading the opinion, for which I've provided a link.  I must admit that the summary sent to me is perplexing.  I will read this case when I have the time and will update this post at that time.  If anyone wants to beat me to it and explain the holding in a comment, please do feel free to do so.  That said, here's the summary:  

California Code of Civil Procedure Sec. 410.42 renders null and void any provision in a construction contract "which purports to require any dispute between the parties to be litigated, arbitrated, or otherwise determined outside this state" where the construction project is located in California.

In the recent case of Templeton Development Corporation v. Superior Court (Dick Emard Electric, Inc.) (2006 SOS 5560) the Third District Court of Appeal held that section 410.42 nullifies a contractual provision requiring that parties to a construction dispute mediate outside California as a prerequisite to arbitration or litigation over their dispute.

Where defendant contractor refused to mediate in California, plaintiff subcontractor was not precluded from suing subject to stay so that action could be mediated or arbitrated in this state.

In his book Blink, Malcolm Gladwell uses the term "rapid cognition" in reference to what most of us think of as intuition. Gladwell avoids the "i" word because he does not want his readers thinking he's referring to emotional responses. Rapid cognition, he stresses, refers to our rational thoughts and impressions. Though one suspects that Gladwell steers clear of emotion so he won't be called a "girlie man," he does in fact have a more serious purpose in mind.

Gladwell explains:

I think that what goes on in that first two seconds [of thought] is perfectly rational. It's thinking -- its just thinking that moves a little faster and operates a little more mysteriously than the kind of deliberate, conscious decision-making that we usually associate with "thinking."

According to Gladwell, our rapid cognition often produces far better results than our painstaking analytic analyses of the vast amounts of information we professionals routinely gather.

Diagnosing Heart Attacks with "Incomplete" Information

To demonstrate his point, Gladwell tells the story of one hospital's attempt to encourage its physicians to use their RC in diagnosing heart attacks. The hospital instructed its entire staff of emergency room physicians to gather less information concerning their patients' condition before attempting to diagnose a heart attack.

This information-limiting scheme, allowed the doctors to zero in on just a few critical pieces of information -- like blood pressure and the EKG -- while ignoring everything else, like the patient's age and weight and medical history. 

The physicians resisted of course, because they were committed to the idea that more information is always better.   When forced to rely upon limited information however, the accuracy of diagnoses in the ER increased dramatically.  

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I won $200 at Morongo recently, accompanying my husband to one of his law firm's business development events. I always think gambling (excuse me, gaming) outings are good for lawyers and business people -- the litigation risk- taking analogies being so plentiful.

The lesson from this trip, however, was not about sunk costs or risk aversion. It was about my own subjective experience of money.

"Don't worry," I was saying to Mr. Thrifty, as I pulled three twenties from my wallet to pay for an afternoon gourmet picnic in Griffith Park. "I'm paying for it with the casino's money."

Thrifty gently reminded me that this was the third time I'd spent my winnings --the first on that spa visit before I hit the gaming floor; the second on a few Crate and Barrel essentials we picked up at the outlet stores so conveniently located next to the hotel; and, the third for our picnic in the park. Actually, by the time we were collecting our food tickets, I'd also "spent" my unexpected windfall on the gift I'd planned to buy for my father's birthday the following week. 

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The Southern California Mediation Association recently presented the Public Conversations Project with an award for its work in promoting public dialogue on divisive issues.  If you turn from CNN in disgust or if FOX News sends you running for the Daily Show, now's the time to check out PRC.     

Have we ever been this divided? How do we identify ourselves? Democrat and Republican? Red State or Blue? Men and Women? White and Black? Rich, poor, "comfortable," working or middle class? Christian, Muslim and Jew? Mediators, lawyers, social workers, therapists, academics. 

The 13th century Muslim mystic, Rumi (translated here by Coleman Barks) wrote:

I, you, he, she, we
In the garden of mystic lovers,
these are not true distinctions.

Rumi got it right 800 years ago. These superficial differences among us are "not true distinctions." That being said, here are PCP's "Eleven Tips for Making a Hard Conversation Work.

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Nature gives you the face you have at 20; it is up to you to merit the face you have at 50. -- Coco Chanel

A local judge who has four beautiful young law students working for him this summer asks me how to deal with inappropriate attorney comments about their youth and beauty. For those men over 35 reading this column, young women lawyers do not appreciate being told they are young or beautiful in a professional setting. And they particularly dislike being called girls.

More important is the whole question of beauty -- what it is and what magic it can perform. For negotiation purposes, we ask whether attractive attorneys and their clients can get a better deal than their less attractive peers. At least some of the answers to that question can be found in Coco Chanel's famous comment about beauty quoted above. But first the research.

Beauty is a Powerful Tool of Persuasion

Assuming that the "hits" a quality-describing word elicits from a search engine indicate the relative importance the quality described, I googled "beauty" and "intelligence" this morning. Beauty edged out intelligence by only a slight margin -- garnering 697 million to the 652 million hits generated by intelligence. For what it's worth, people apparently aren't so interested in coupling these two qualities. Searching both beauty and intelligence offered up only 26 million hits.

Because the young women law clerks I spoke to last week assumed that men fascinated by their beauty would not respect their intelligence, this morning's blog should cheer them up.

The Research

In the early 1980's, social science researchers found that physically attractive people are not only considered more intelligent and competent than their less fetching peers, but are presumed more competent in fields completely unrelated to physical attractiveness -- such as piloting an airplane. Other research studies followed, showing that we also expect physically attractive men and women to be more trustworthy, reliable and charitable than their less attractive peers, as well as better educated, stronger, and wiser.

Studies on electoral habits have shown that attractive candidates receive as many as two and a half times the number of votes as unattractive candidates and that voters do not realize their bias. Whether this confirms or disproves the adage that politics is show business for ugly people is up to you.

The influence of beauty does not stop at the political choices we make. Our judicial process is also susceptible to the influences of body dimension and bone structure. Researchers have found that attractive male criminal defendants are twice as likely to avoid jail time as unattractive miscreants. The relative good looks of civil litigants also influences juries, which award twice the damages when plaintiff is better looking than the defendant and half the compensation when the defendant is more physically attractive than the plaintiff.

As Robert Cialdini wrote:

Good looking people enjoy an enormous social advantage in our culture. They are better liked, more persuasive, more frequently assisted, and seen as possessing more desirable personality traits and greater intellectual capacities. It appears that the social benefits of good looks begin to accumulate quite early. Research on elementary school children show that adults view aggressive acts as less naughty when performed by an attractive child and that teachers presume good-looking children to be more intelligent that their less attractive classmates.

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I was thinking immodestly about what a great deal my own mediation fees were the other day.  A deposition transcript alone, I was thinking, must cost only a little less than my half day fee.  Casting about the internet for a good source on the cost of a deposition, I ran across attorney-mediator Thomas A. Cohen's article, Anatomy of a Lawsuit, which he has graciously given me permission to re-print for you here.

Even the most savvy business executive could benefit from reading this step-by-step guide to the great American pass time, litigation.  

ANATOMY OF A LAWSUIT

by Thomas A. Cohen

So. You want your piece of the American dream. You want to do the dance sensation that is sweeping the nation. You want your ship to come in. In short, you want to file a lawsuit. Here’s what you can expect: the steps involved, the costs, and the likely result.

We will assume that you have cleared the first hurdles: you are aggrieved; the law can furnish relief; and there appears to be some reasonable chance of winning and collecting the judgment. We will also assume that you can assert jurisdiction over the defendant in either State or Federal court.

A lawsuit begins when your attorney drafts a complaint. This is a written pleading which identifies the legal and factual contentions involved, and sets forth what a party proposes to prove at trial so that his opponent will know what contentions he must be prepared to meet. The complexity of the complaint varies with the complexity of the issues to be tried. At the simplest level, certain disputes are so run of the mill that a Judicial Council form complaint may be filled out by checking certain boxes and filling in a few sentences of narrative. For example, a form complaint may be used for the collection of a written promissory note. In contrast, a class action alleging that Hollywood studios have conspired to deprive writers of profits from feature films (an actual pending suit) requires significant detail covering many pages.

The complaint is filed with the court and then served with a summons on the defendant. The filing fee in California Superior Court is $185; in federal court it is $120. The summons and complaint generally must be served by personal delivery to the defendant. Simple local service of process costs from $25 to $50. A summons is a one page form which is completed and signed by the attorney, and filed with the court. When properly served, it requires the defendant to file a written response within a given number of days. In California a defendant has 30 days to file a written response. Failure to file a response results in a default judgment against the defendant. If unchallenged, this default judgment is as valid as a jury verdict. Thus, the penalty for failing to respond to a lawsuit can be severe, and it is the rare solvent defendant who ignores a properly served complaint.

Generally, a defendant responds to a complaint with a pleading called an answer. This document, which must be filed with the court, can often be very simple. While not available in all cases, a general denial of all allegations will often suffice. Each defendant must pay a filing fee in the same amount as the plaintiff’s fee. The defendant is not limited to filing an answer. Instead, or in addition, he may file a motion to dismiss/demurrer, or a cross complaint/counterclaim. Different terms are used in state and federal court, but the essence of the pleading is the same.

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Negotiating with a Full Deck

As we all know, negotiating isn't like gambling, negotiating is gambling. All negotiations require the bargainers to evaluate the potential risks and likely benefits of any offered deal -- whether it be a million dollar demand to settle a lawsuit or a $20 offer to try out a new internet service. Since we can can never truly know the mind of another nor predict the future, we should, at a minimum, know our own propensities in regard to risk as well as our best alternatives to a negotiated agreement ("BATNA").

Recent Research on Loss Aversion

Fellow legal blogger, law professor and commercial litigator Michael Webster reports on the most recent research on loss aversion as follows:

Over at the Neuroeconomics blog, they ask are we bad forecasters of loss? In the economic literature, loss aversion is described as turning down risks or gambles with large chance of loss, but with a positive expected value. For example, consider wagering $50 on a bet that returns $200 30% of the time and 70% of the time nothing. Even though the bet has an expected value of $60, which is greater than $50, most people will not play this bet. What is the basis for risk aversion?

Here is Neuroeconomics' conclusion:

Predications of emotional impact weigh heavily on decisions. In fact, people avoid risk even when faced with the prospect of large gain, predicting loss will hurt them much more than an equal gain will please them. If that is true, this phenomenon (termed loss aversion) is simply a rational product of accurate affective forecasting. Currently, research seems split on this question. Studies have indicated that loss induces more intense neural activity, indicating that our forecasting may be valid. However, behavioral economics generally proposes that we are bad forecasters, and studies show that we consistently overestimate the intensity of emotion from life tragedy.

In a new study, participants effectively minimized impact of loss after a game of luck using various coping mechanisms, such as dissonance reduction,self-affirmation, motivated reasoning, and positive illusions. Researchers found that "there was no evidence that losing actually had a greater emotional impact than winning," showing we are indeed poor loss forecasters".

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