Negotiation Law Blog

(above, the incomparable Charles Fincher at LawComix.com)

November 13, 2007 Winning Settlement Techniques Seminar

9-4:30 at the Wilshire Grand Downtown Los Angeles

Head's up!!  If you read this blog, you are officially a "friend or colleague of the speakers" and are entitled to a 20% discount on our day-long Winning Settlement Techniques Seminar with Judges Chaney and Williams; former Federal Magistrate John Leo Wagner, Patent Arbitrator and Mediator Les Weinstein, Arbitrator and Law School Professor Jay McCauley and, last but not least, your faithful blogger, Victoria Pynchon.

Your blog-reader coupon code is S3SETL.  Enter in the coupon code when you register on-line and receive 20% off the registration price.

Register here now.

Settlement Techniques that Give You the Winning Edge  

Novice and seasoned litigators will learn to maximize the value of their litigation positions by learning winning settlement techniques from a panel of seasoned ADR experts.

Experienced mediators and Judges teach the latest settlement techniques, such as distributive (splitting the settlement “pie”) and integrative or interest-based (expanding the settlement “pie”) bargaining. Topics also include the dynamics of conflict resolution, settlement best practices, negotiating techniques, settling complex and patent litigation cases, and international disputes. Don’t miss this chance to hear from those who truly know -- how you can best maximize your client’s settlement opportunities and outcomes.

What You Will Learn if You Attend This Seminar

• The ten social psychological insights that will minimize your own self- defeating negotiation behavior and maximize your opponents’ bargaining weaknesses

• The ten basic rules of “distributive” or “fixed sum” bargaining that will give you the “edge” in all future settlement negotiations

• The ten ways to “expand the fixed sum pie” by exploring and exploiting the client interests underlying your own and your opponents’ legal positions

• The ten ways to get your case settled to your clients’ best advantage at Mandatory Settlement Conferences for both routine and “bet the company” cases

• The Top Ten Errors Made by Parties When Attempting to Settle Disputes that their Contracts Require Them to Arbitrate

• The Ten Rules of Cross-cultural negotiation in International Arbitration

• The Ten Laws Critical to the Enforcement of Mediated Settlement Agreements

• The Ten Mediation/Settlement Conference Traps for the Unwary

Instructors

Hon. Victoria Chaney--Assistant Supervising Judge, Complex Litigation, Los Angeles Superior Court

Hon. John Leo Wagner--ADR Neutral/Hearing Officer, Judicate West

Hon. Alexander Williams, III – Judge, Los Angeles Superior Court, presiding over the full-time Settlement Court

Les J. Weinstein--AAA Arbitrator and Mediator, Patent and Antitrust Attorney

Jay McCauley--Hearing Officer, Dispute Resolution Provider, Judicate West

Victoria Pynchon--Complex Commercial Mediator, Settle it Now 


November 13, 2007 - Los Angeles

Check-in: 8:30 - 9:00 a.m.

Seminar: 9:00 a.m. - 4:30 p.m. (Lunch on your own)

Wilshire Grand Hotel

930 Wilshire Blvd.

Los Angeles , CA


Pincus Communications certifies that this seminar has been approved for 6.0 MCLE credits and ethics credits will be given.

(an image of Snoopy at his typewriter with the caption "gradually a shot rang out" graced the Shell v. Winterthur opinion holding that the term "sudden" meant "quick" and not simply "unexpected.") 

Every deal you negotiate must eventually be "reduced to writing." 

I haven't talked much about negotiated agreements here.  I usually defer the entire topic of contract drafting to the experts, particularly to the meticulous and scholarly Ken Adams over at Adams Drafting.  

Ken recently ran a hypothetical by me, however, that gave me pause.  You can find his question,  together with answers by Eric Goldman of the Technology and Marketing Law Blog and  Charles B. Craver, Fred H. Alverson Professor of Law at George Washington University Law School here. 

(Professor Craver's useful text on basic negotiation skills, by the way, can be found here). 

Although my own response to Ken's ethical question (it's not unethical until you pull the trigger) can also be found on the linked post, it's really the pragmatic question that interests me:

IS IT EVER GOOD BUSINESS OR LEGAL PRACTICE TO INCLUDE IN A NEGOTIATED AGREEMENT AMBIGUOUS TERMS THAT ONE PARTY BELIEVES THE OTHER PARTY WOULD NOT AGREE TO FOR THE PURPOSE OF EXPANDING THE CONTRACT'S REACH AT SOME LATER DATE? 

As is often the case, I find it easiest to answer that question with a story -- this time, with one about a word that cost American and U.K. businesses at least a billion dollars in legal fees.

Sudden. 

Does Sudden Mean Quick?

This question consumed at least half a decade of my professional life.  Why?

Because I was engaged in litigation for years concerning (among other issues) the meaning and application of the “sudden and accidental” pollution exclusion common in comprehensive general liability ("CGL") policies from the early 1970’s to the early 1980’s.

Because sudden's story is lengthy and complicated, I’m forced to reduce the tale here today to its bare essentials.  If you wish to understand its well-documented journey through the American regulatory and legal system, click here or here.  If the pragmatic question interests you, read on.  

The Word that Launched an Entire Legal Specialty 

Once upon a time, a few creative and persistent litigators of great reputation demanded insurance coverage for the environmental liabilities imposed upon their chemical and petroleum company clients by the Federal “Superfund” law (CERCLA) enacted in 1980. Many equally creative and persistent litigators of great reputation represented the insurance carriers who refused to provide coverage for many reasons, one of which was the presence of the “sudden and accidental” pollution exclusion in the “polluters’” insurance policies.  Many of the names of these attorneys are here.

That provision excluded coverage for

any liability of any insured, arising out of the discharge [etc.] . . . of . . . . . pollutants into or upon land, the atmosphere or any . . . body of water unless such discharge . . . . is sudden and accidental.

The 64 hundred million dollar question?

“Does ‘sudden’ mean ‘quick’ or only ‘unexpected’?

Because most environmental contamination took place over decades as the result of the slow seepage of chemicals and petroleum products into the land, water and air, the answer to this question was worth billions of dollars to corporate insureds and to the carriers that insured them. If “sudden” meant only “unexpected,” rather than “quick,” those billions of dollars would likely be paid by Lloyds of London or AIG – two of my clients -- rather than by Texaco or ARCO, two of my husband’s clients.

The petroleum and chemical companies accused the insurance industry of dissembling about their contractual intent when seeking approval of the "sudden and accidental" exclusion language.  The carriers, contended policy holders, had represented that the use of the word "sudden" would not narrow existing coverage -- coverage that would have excluded unexpected -- but not "quick" -- releases of pollutants into the environment.  (see here, note 5)  

Assuming that the insurance industry "gamed" regulators and policy holders by placing narrow language in a contract while simultaneously intending to interpret it broadly, and without addressing the ethical issues raised by that assumption, would it have made good business sense to have done so?

I answer with another story.  

When negotiating the settlement of a $250 million environmental insurance coverage action, the General Counsel for one petroleum company said the following to me about the cost of the looming three-month trial:

You don’t seem to understand.  We pour hundreds of millions of dollars a day into dry holes searching for oil. We are not risk averse. The expense of litigation does not deter us.

If you and your clients can say that – or something remotely like it – including ambiguous terms in a contract to take advantage of the uncertainty thereby created might make good business (if not necessarily ethical) sense.

If you cannot, I would suggest that contracts be used for the purpose they are intended – to create as much certainty as possible in your clients’ unpredictable future so that their plans today can make them profits tomorrow.

GC boasts aside, even the richest players far prefer planning that profitable future to fighting over an unprofitable past.

(photo:  Bill IV by cmiper)

We've had a lively discussion going about making agressive first offers, for which we are indebted to our regular readers Michael (da Game Man) Webster and mediators Chris Annunziata and Geoff (Coalface???) Sharp.  

Michael provided a link to his solution to the "Shubik" Dollar Auction Game that most of us have played in mediation seminars.  Because the game itself demonstrates just how irrational bargaining can be, and Michael's solution demonstrates how everyone can "win" when cooler heads prevail, I am quoting part of his post here and commending to my readers' attention the full post here.

Shubik reported [of the Dollar Auction Game described in Michael's post]:

"Experience with the game has shown that it is possible to 'sell' a dollar bill for considerably more than a dollar. A total of payments between three and five dollars is not uncommon." Possibly W. C. Fields said it best: "If at first you don't succeed, try, try again. Then quit. No use being a damn fool about it."

Without at all diminishing my respect for W.C. Fields, I venture to suggest that there is a more reasonable way to play this game as opposed to quiting. What is it? 

First, lets update the game to the 21st century and restrict it to two players. Replace the $1 with $20 and each bid must be a multiple of $1. Each person must bid at least once, or they can agree not to play at all. What should they do? Suppose first bidder bids $1, and second bidder pays $2, what is the first bidder's reasonable response? Right now, as a collective they are paying $3 to get $20, or netting $17. He should demand that the second bidder pay his $9.50 not to bid! Alternatively, second bidder can offer first bidder $9.50 not to bid again.

Then the second bidder will the $20, paying $2 to the auctioneer, $9.50 to first bidder and so he nets $8.50. First bidder gets $9.50, pays $1 to auctioneer and nets $8.50, jointly getting $17.00. As I see it, $8.50 is better than nothing, giving lie to the claim that you cannot get something for nothing.

This is why I usually defer to Michael's greater wisdom.  He can do the math.

Recently, in response to my Power Point Presentation on Cognitive Biases (the one labeled Social Psychology Insights) I mentioned that aggressive first offers "anchor" the bargaining range in favor of the first offeror.

Our correspondent and resident blog expert on cognitive biases, Michael Webster of the BizOpNews Due Diligence Blog, responded as follows:

Hmm, anchoring to support aggressive opening bids? Doubtful, despite the academic literature -which in my opinion has little contact with real negotiation.

And nothing about coordination versus nash equilibrium reasoning? Big oversight, in my opinion.

Because I respect (and generally defer to) Michael's opinion, but because I disagree with him this time, I include here my response and open the discussion to our readers.  To help our readers, I'd like to ask Michael, if he has the time, to provide us with his thoughts about the coordination v. nash equilibrium reasoning that is absent from my Power Point Presentation (an absence I'd like to rectify before giving this presentation on the 13th of November)

Response to Michael:

 For once in my blogging-career, Michael, I'm going to differ with you but ask for help on the coordination v. Nash equilibrium reasoning. 

It's difficult to "observe" the effects of anchoring and framing outside of a controlled environment. You need to have a kind of duplicate bridge experience where the bargaining partners are all negotiating the same deal to determine the effects of framing and anchoring. Research shows we'll all deny that we've been effected.

I have, however, participated in these types of role plays with "teams" of seasoned attorney negotiators.

In fact, it was the first of these experiences, on my first day of mediation training through the Straus Institute here in Malibu (at Pepperdine where the fires were yesterday -- terrible) that I experienced the power of anchoring first hand.

All twenty attorney teams negotiated a buy-sell contract for about 45-minutes. When we returned to the classroom, we all put our negotiated deals on the blackboard together with the first offer made.

I'd been taught as a young attorney NEVER to make the first offer -- folk practice where I come from, i.e., California.  In the role play, without exception, the negotiator who made the first offer in the hypothetical bargaining session got the best deal -- often by many magnitudes.

THIS is the moment when I decided I wanted to return to school to learn more about this and everything else having to do with negotiation -- rules of persuasion, the effect of cognitive biases, etc.

Since that time, what I've read in the academic literature on controlled negotiation studies, not only on students but on judges and attorneys and business people, has concluded that he who makes the first offer sets the bargaining range and gets the best deal.

As to Personal Bargaining Experience.

Since I've been mediating full time, I've helped lawyers negotiate hundreds of deals. Still, it's difficult for me to say whether the first offer had a substantial anchoring effect because I don't know how the negotiation would have turned out had the other side made the first offer or if the first offer had not been more or less aggressive.

More importantly, a REAL negotiation to settle a REAL dispute is so multi-determined that I can't imagine being able to opine on which of the many factors was determinative (assuming one factor could ever be determinative) of the final deal.  

Every deal in my business results from a combination of the vitality of the parties' legal and factual positions; their financial and personal or business interests; the personalities of the attorneys and the disputants; the willingness of the disputants to share information that will increase the number of options available; the negotiation and "people" skills of the mediator; and, numerous other factors that I often am never advised of, i.e., at the end of one difficult negotiation session, I learned for the first time that two of the three parties had been negotiating the sale of one of their businesses while I was negotiating the settlement of an unfair competition lawsuit.

We weren't even negotiating the same matter!

Insights?

There are two entry ways to the Museum of Tolerance here in Los Angeles.  One of the doors is labeled “prejudice” and the other “unprejudiced.” How chagrined is the museum-goer who attempts to walk through the “unprejudiced” door.  It is firmly locked.  We are all guilty. 

If you cannot visit the spectacular Museum of Tolerance, you can visit the Tolerance.org web site to find all of the resources you're ever likely to need to deepen your understanding of the prejudices we all carry with us about those who are not from the same race, religion, nation, political party, or socio-economic class as are we.

To give you a very small taste of what tolerance.org has to offer, I provide twenty of the 101 "Tools for Tolerance" on the site.  There are hundreds of other resources.  Feel free to browse them and provide them to others who share your concern that a lack of tolerance for other peoples and cultures will be the undoing of us all.

101 Tools for Tolerance

Here are twenty aimed at helping ourselves to be more tolerant.

1. Attend a play, listen to music or go to a dance performance by artists whose race or ethnicity is different from your own. 
2. Volunteer at a local social services organization. 
3. Attend services at a variety of churches, synagogues, mosques and temples to learn about different faiths. 
4. Visit a local senior citizens center and collect oral histories. Donate large-print reading materials and books on tape. Offer to help with a craft project. 
5. Shop at ethnic grocery stores and specialty markets. Get to know the owners. Ask about their family histories. 
6. Participate in a diversity program. 
7. Ask a person of another cultural heritage to teach you how to perform a traditional dance or cook a traditional meal. 
8. Learn sign language. 
9. Take a conversation course in another language that is spoken in your community. 
10. Teach an adult to read. 
11. Speak up when you hear slurs. Let people know that bias speech is always unacceptable. 
12. Imagine what your life might be like if you were a person of another race, gender or sexual orientation. How might "today" have been different? 
13. Take the How Tolerant are You? A Test of Hidden Bias. Enlist some friends to take this "hidden bias" test with you and discuss the results. 
14. Take a Civil Rights history vacation. Tour key sites and museums. 
15. Research your family history. Share information about your heritage in talks with others. 
16.  List all the stereotypes you can — positive and negative — about a particular group. Are these stereotypes reflected in your actions? 
17. Think about how you appear to others. List personality traits that are compatible with tolerance (e.g., compassion, curiosity, openness). List those that seem incompatible with tolerance (e.g., jealousy, bossiness, perfectionism). 
18. Create a "diversity profile" of your friends, co-workers and acquaintances. Set the goal of expanding it by next year. 
19. Sign the Declaration of Tolerance and return it to: the National Campaign for Tolerance
    400 Washington Avenue Montgomery, AL 36104 
20. Read a book or watch a movie about another culture.
    
    
    

this is what happens when you piss off a jury . . . .

A jury awarded $6 million Thursday to a couple who accused a substitute teacher at a day care center of striking their toddler son, causing marks on the boy's buttocks and legs.

For the full article, click here. 

Bottom, Gene Hackman in Runaway Jury.

TIME:  Friday, October 19, 4 PM Eastern (20 GMT)

CALL IN NUMBER:  The Highspeed audio bridge conference room number is 5650382 and is available by phone at **New Access Numbers (10/16/07) 1-605-475-8590 and by Skype at +990008275650382. The audio conference is required for participation.

THE PANEL:  Gini Nelson, Vickie Pynchon, Colm Brannigan and Diane Levin.

THE DISCUSSION:  Conflict resolution specialists Nelson, Pynchon, Brannigan and Levin will join in conversation with three non-conflict specialists who reach the public directly and effectively:

• Michael Skoler, Executive Director, Center for Innovation in Journalism, Minnesota Public Radio at American Public Media
• Sandra Blakeslee, a regular contributor to The New York Times who specializes in the brain sciences
• Ben Stokes, Program Officer in the Digital Learning and Media area at The John D. and Catherine T. MacArthur Foundation, previously a co-founder of Games For Change, a spin-off from the Serious Games Initiative that concentrates on advancing the use of digital games for positive societal change.

QUESTIONS TO BE CONSIDERED:  Some of questions to be considered: "Why aren't people beating down the doors of peacemakers, whether mediators, facilitators or negotiators? and, "How can the internet engage people online in ways that facilitate and promote peacemaking?"

Yes, we did talk mediation marketing and who should make the first offer over a wonderful lunch today at the London Law Society, but we also covered childcare, American politics (oh, do let's change the subject) and the dreadful exchange rate (oh, do let's change the subject).

Thank you to commercial attorney and mediator Justin Patten of Human Law for escorting us about and giving good advice about visiting the Royal Hall of Justice, which we did, peaking in on what appeared to be a criminal appellate argument (3 red-robed Justices & prisoner in the "dock") and one final argument in a civil case (one red-robed judge).  

Unfortunately, I failed to catch Jeremy Phillips of IP Kat or Andrew Mills of Freeth Cartwright and the IMPACT blog on camera after a day-long seminar on Intellectual Property Litigation and Dispute Resolution, about which more later.

Off to see Spamalot. 

(photo:  Amanda Graham's Outlier)

I have Christina Doucet at the National Arbitration Forum to thank for summarizing some of the most recent statistical literature available on differences between procedure, cost, duration, outcome and party satisfaction of litigated and arbitrated consumer and employee disputes.

Time and Cost Differences Between Arbitration and Litigation

• Employment claims take 650 to 720 days to be resolved in court, according to the National Center for State Courts. 
• The median time to resolve an employee dispute by arbitration is 104 days 
• the median cost of resolving employment disputes by arbitration is $870.

Sources: Consumer and Employment Arbitration in California: A Review of Website Data Posted Pursuant to Section 1281.96 of the Code of Civil Procedure California Dispute Resolution Institute, August 2004 http://www.mediate.com/cdri/cdri_print_Aug_6.pdf   and Examining the Work of State Courts, (1999-2000) National Center for State Courts http://www.ncsconline.org/D_Research/csp/1999-2000_Files/1999-2000_Tort-Contract_Section.pdf

Outcome Differences Between Arbitration and Litigation:  Arbitration & litigation final awards are essentially the same as court judgments

• median monetary awards for successful claimants are greater in arbitration than in court—$100,000 in arbitration compared with $95,554 in court.

Continue Reading

Negotiation is marketing is sales is negotiation is marketing . . . 

So what's Radiohead got to do with it?  According to the Church of the Customer, greater access to consumer information and, of course, generating demand. 

See excerpt below and link to full article here.

Of more benefit to them now is building a database of buyers, bypassing the information black hole of so many retail channels. That's the value exchange.

And in a few months, Radiohead will partner with a label, which will manufacture a CD of the album. If the album is great (always a non-quantitative variable when it comes to art), it will have already created demand for the totem version of the album.

If scarcity isn't your primary method for generating demand, then getting your product or service into as many hands, mouths and minds possible is. The ideas, products or services that spread the most usually win.

Today and more so tomorrow, that means letting go of the control you're accustomed to.

 

One of the first lessons we learn in mediation school is that Americans become impatient after the third negotiation move.  Why?  Because we buy retail.  We're just not a bargaining culture.  Most Americans negotiate the price of a new (or used) car and real estate.  Period.  And you won't find many who will tell you how much fun that was.  In fact, we dislike bargaining so much that some of us are willing to pay a professional "haggler" to do it for us!

So do we have to go to foreign lands to sharpen our haggling skills?  Not according to a news item in today's Reuters -- Looking to pay a lower price?  Just try asking . . .  Turns out, when Americans negotiate for a discount, they generally get it.

NEW YORK (Reuters) - Looking for a lower price on that DVD player at Sears or that refrigerator at Lowe's Cos Inc? Ask for one and you just might get it.

More than 90 percent of shoppers who tried to negotiate a discount on furniture, electronics and appliances, floor and demonstration models, and medical bills got one on at least one purchase in the past three years, according to a new survey conducted by the Consumer Reports National Research Center.

"It's a wake-up call to consumers to realize that the price isn't always the price," said Consumer Reports Senior Editor Tod Marks in an interview.

The survey, which included 2,167 U.S. households, found that of those who negotiated for lower prices on furniture, 94 percent were successful in scoring a lower price at least once in the past three years.

For the remainder of the article, click here.

Tips for the negotiation-averse tomorrow.  In the meantime, enjoy the famous Monty Python Life of Brian Haggling Scene here!