Negotiation Law Blog

The last time I trained an in-house legal department, I asked every group manager this question:  if I could leave a silver bullet behind, what would it be? 

The response was unanimous from this well-run Fortune 500 Company:  fix our relationship with the __________ Department:  it chronically undermines our negotiations with outsiders.  The  _________ Department was the only one sending none of its people to the two-day negotiation training.  An executive friend of mine said, "that's not surprising - no one can see a black hole."

This month's Harvard Business Review sees the black hole in every negotiation team in its September '09 must-read article, How to Manage Your Negotiating Team by Jeanne M. Brett, Ray Friedman, and  Kristin Behfar.

Despite the _________ Department's absence, I created groups of in-house attendees who represented each internal department and asked them to generate a list of the interests of their negotiating teams, including the _________ department, which is one of the recommendations made by Brett, Friedman and Behfar.

There's an executive summary at the link above but I'd shell out the money for a copy of the print magazine to have the full text of this article.  Here are the recommendations of the experts:

• Plot out the conflicts
• Work with constituents
• Mediate conflicts of interest
• Persuade with data
• simulate the negotiation
• assign roles to capitalize on team members strengths and interests
• establish a plan for intrateam communication

I'll write a post a day about each of these strategies when I return from vacation.  In the meantime, litigators who work with teams inside the firm; who defend complex litigation with joint defense groups; and, who must bargain with others with very different interests (construction litigation comes to mind) should be thinking of the ways in which integrated negotiation planning could maximize the settlement benefits to be gained by strategic partners.

Know and Use the Rules of Influence

Nearly all negotiators know Robert Cialdini’s six “rules” of influence: reciprocation, commitment and consistency, social proof, liking, authority and scarcity. They are easy to remember because we are all influenced by them every day.

Reciprocation: When your waiter puts a mint on the table or your local charity sends you free mailing labels, both benefit from the power of reciprocity. Not only do we feel uncomfortable unless we reciprocate this generous behavior, we will reward it in kind. Waiters' tips go up and donations increase – however modestly -- when these benefits are bestowed on us. In the negotiation of a dispute, an acknowledgement that you’ve heard and understood your opponent’s position; or that you are sorry he was harmed by the activities you continue to believe were benign, does in fact motivate your adversary to respond in kind – often by revealing otherwise hidden interests or concealed fears that can break impasse.

Authority: I’ve never been a Judge, but I am a “settlement officer” with the United States District Court for the Central District of California. I’ve also tried cases to a jury and have twenty-five years of complex commercial litigation experience. Each one of these credentials gives me a different kind of authority, but all of them make what I say to a litigant considering settlement more persuasive.

The District Court gives me a little lapel pin to wear and I always wear it when I'm doing the federal court's "settlement officer" work.  I have a badge!  To my peers, “settlement officer” means nothing other than a volunteer for the Court. To the parties, however, being an “officer” of a federal court sounds impressive; authoritative. Difficult mediations often have dead time in them in which the parties engage in small talk. When clients ask me about the lapel pin, I modestly explain my role as a “settlement officer” for the District Court. The parties invariably treat me with greater deference after this conversation. I know it sounds like a small point, but sometimes all you need is one extra little push to get the parties past impasse.

Liking: I do not believe it’s possible to be a skillful negotiator unless you are likeable. This trait is especially important for a mediator who must garner the trust of a complete stranger with lightening speed. You do not have to possess rock star likeability to accomplish this. All you need do is to find something to like about the others. We all want approval and we all wish to be admired and desired. The good news is that all of us have some trait or characteristic that is desirable and admirable. If you look for those traits in another and casually remark on them, the cycle of liking and being liked is commenced.

The cycle is speeded if you couple your liking with something similarly likeable in yourself. "You’re a musician! I’ve always wished I’d taken music classes. My husband (or sister, or aunt, or best friend) is a pianist with a small chamber group locally."  Now you're not only more likable, you're like "one of us" and you get the benefit of relatedness, an easier "fit" and an automatic feeling of trust and confidence.  See Conspiracy Theories and Granfalloons for the full story on the way "liking" and affiliation work.  If you’re not serving as a neutral but simply a negotiator, you can couple this “liking” and musical affiliation with reciprocity: “do let me give you my sister's chamber music  schedule; during the summer they give free concerts in the park.”  A trifecta of influencers.

Social Proof : “Yes, mom, if I see my friends jumping off a cliff I’m pretty inclined to do so as well.” Our tendency to "monkey see, monkey do" may begin in Middle or High School, but it does not end there. You don’t have to live in Los Angeles to feel the effect of this tendency to do what others do – you only need to be in a traffic jam caused by “rubber-necking” once to remember that we’re primates. This is part of the value of market valuations and jury verdict reports. They not only provide “authority” for your position on price, but they carry the weight of other people’s valuation. This is social proof.

Scarcity: the effect of scarcity on value is something we see every day in store windows and newspaper ads: “limited offer” and “one time only sale” are recycled over and over again by the same stores for the same items and yet we’re moved to feel an urgency that brings us into the store and makes us purchase an item we don’t need and didn’t desire. Litigators often use the principle of scarcity to “sell” the resolution of litigation. “After we commence discovery, this offer will no longer be on the table.” Or. “We’ll be picking a jury in thirty days. Don’t expect to see a demand this low ever again if we don’t settle by day’s end. Scarcity.

Commitment and Consistency: Many neutrals like to begin a mediation in joint session for the purpose of obtaining the parties’ commitment to settling the case today if reasonable terms are offered. It’s almost impossible to resist signing on to this principle and it's common for people to feel bound by it even if circumstances change. At some point during the negotiation, the parties will begin to feel committed to the resolution of the litigation. They can picture themselves free of its many burdens or receiving money rather than spending it on their attorneys. Seeking and making commitments holds our feet to the fire of our intention. Ask anyone who’s ever made public her decision to lose weight or exercise at least three days a week. If we act inconsistently with the promise we’ve made to friends, family or community, we fear a loss of “face.”

If you apply the five principles subject of this series to your negotiations, you will get the better part of the bargain on nearly every occasion. Remember – simply asking diagnostic questions will make you a better negotiator than all but seven percent of your bargaining partners. Add to this the ability to deftly frame the negotiation favorably to you; to anchor the bargaining range to your liking and to be influential in your dealings and I guarantee you success in most of your business affairs.
 

In that most famous of sales movies,David Mamet's Glengarry Glen Ross, the under-appreciated Alec Baldwin gave his sorry group of cold-callers the prime directive of sales:  Always Be Closing.  You close when you convene the negotiation, close when you open it, close when you ask diagnostic questions, close when you offer your bargaining partner coffee, and close by MAKING THE FIRST OFFER.

In an environment of uncertainty where the value of one or more items to be traded is not fixed, the negotiator who makes the first offer will “anchor” the bargaining session in her favor throughout the bargaining session. Even when we know that someone else is trying to influence us by framing an issue or valuing the subject matter of a dispute, we will be influenced. We can’t help it. Our brains just work that way. To encourage your opponent’s vulnerable mind to be influenced with your valuation, it is best to state the reasons for your bargaining position. Researchers have noted that low valuations draw our attentions to the weaknesses of the item to be traded – a car for instance – and that high valuations draw our attentions to its strengths. You should take advantage of this by coupling your first offer with the reasons why the item you are buying or the thing you are selling should be valued low for a buyer or high for a seller.  

And now a little something from the man who tore the sheets off the world of the cold call; off of the men working on a draw against commissions; off the guys who came around my house before I turned ten years old to talk dirty, make me paper airplanes, and perfect the lies that would get tomorrow's prospects to sign on the dotted line:  David Mamet.

I begin a series today on what I believe are the five most effective ways to break impasse.  This morning's impasse-breaker will aid business people negotiating the settlement of a commercial dispute the most because it requires the generation of hitherto unseen business advantages to sweeten the pot.

Transform the dispute into an opportunity to make a business deal

Google’s CEO Eric Schmidt famously said that “litigation is just a business negotiation being conducted in the Courts.” If you look at litigated disputes in that light, the settlement option landscape immediately broadens. There are only certain remedies available in court or arbitration and those remedies may not be exactly what the parties are looking for.

If we remember that money is simply the means to obtain something else the parties desire – better distribution networks; insurance against future calamity; the security of knowing one’s intellectual property has not fallen in a competitor’s hands; health care; a college fund; even the acknowledgement that we have heard and understand our opponent’s point of view – we can add value to our negotiations before attempting to distribute it in a way that seems fair and just under the circumstances.

Often more important than finding commonalities between bargaining partners is locating those items that the parties value differently. A dollar may just be a dollar, but one company’s inventory, trade secrets or present pool of talent will seldom be worth the same in our competitor’s hands as it is in ours. In some cases our assets may be more valuable to another than they are to us, in which case we can choose the higher value as the central rationale for our proposal, remembering that where value is uncertain, the first party to put a price tag on it will “anchor” the bargaining range in his favor throughout the course of the negotiation.

Therefore, a savvy negotiator searches for both common and divergent interests in an attempt to put as many different options on the bargaining table as possible. Generating such options can melt impasse over hard “bottom line” dollar and legal position conflicts and transform a distributive negotiation session ("what I lose, you win and what you lose I win") into a business opportunity that will leave both parties better off than they could have imagined.

For similar advice to those who believe themselves to be bargaining from a position of weakness, click here.

(right:  Bueno de Mesquita's "Logic of Political Survival")

The book at right was brought to my attention for the first time by this highlighted text in Good Magazine: 

In the foreboding world view of rational choice, everyone is a raging dirtbag.

What makes the Logic of Political Survival Relevant to negotiators is Bruce Bueno de Mesquita's application of game theory to international political problems such as the reduction of conflict between Israel and Palestine (quoted below).   

I'll have to admit that his claim to "produce a settlement [in litigation] that is 40 percent better than what the attorneys think is the best that can be achieved” -- also caught my attention and should draw my attorney readers into de Mesquita's world, first from Good Magazine's article The New Nostradamus and (at the end of this post, today's article in the Sunday New York Times).

First, de Mesquita's own words on the Middle East.

In my view, it is a mistake to look for [peacemaking] strategies that build mutual trust [between the Israelis and the Palestinians] because it ain’t going to happen. Neither side has any reason to trust the other, for good reason. . . . 

Land for peace is an inherently flawed concept because it has a fundamental commitment problem. If I give you land on your promise of peace in the future, after you have the land, as the Israelis well know, it is very costly to take it back if you renege. You have an incentive to say, ‘You made a good step, it’s a gesture in the right direction, but I thought you were giving me more than this. I can’t give you peace just for this, it’s not enough.’

Conversely, if we have peace for land—you disarm, put down your weapons, and get rid of the threats to me and I will then give you the land—the reverse is true: I have no commitment to follow through. Once you’ve laid down your weapons, you have no threat. 

The "rational" solution?

 In a peaceful world, what do the Palestinians anticipate will be their main source of economic viability? Tourism. This is what their own documents say. And, of course, the Israelis make a lot of money from tourism, and that revenue is very easy to track. As a starting point requiring no trust, no mutual cooperation, I would suggest that all tourist revenue be [divided by] a fixed formula based on the current population of the region, which is roughly 40 percent Palestinian, 60 percent Israeli. The money would go automatically to each side. Now, when there is violence, tourists don’t come. So the tourist revenue is automatically responsive to the level of violence on either side for both sides. You have an accounting firm that both sides agree to, you let the U.N. do it, whatever. It’s completely self-enforcing, it requires no cooperation except the initial agreement by the Israelis that they are going to turn this part of the revenue over, on a fixed formula based on population, to some international agency, and that’s that.

It actually gets much more controversial and interesting than this -- the "kicker" to the headline in Good Magazine reads:

Can a fringe branch of mathematics forecast the future? A special adviser to the CIA, Fortune 500 companies, and the U.S. Department of Defense certainly thinks so

If that intrigues you, you'll want to read the entire article here.  And you'll also want to read today's New York Times article on de Mesquita,

From Indexed -- In Theory at Least.

And this is all I'll have to say about universal health care.

The way in which this Index Card wisdom applies to legal practice was addressed by me in the sadly defunct complete lawyer article Savvy Lawyers Value Their Human Capital

These are hard times and none of us is immune. I’ve been here before. In the early 1990s, my law firm announced we would ride out the economic crisis by henceforth buying legal pads without our firm name embossed on the binding. Layoffs of partners, associates and staff quickly followed. Some caught life rafts to other law firms; some were not so lucky. Those who stepped on others going up the compensation ladder were not treated well on their way back down. The water was cold and filled with sharks.

 

It seemed then, and seems now, that the entire profession has forgotten two critical principles of legal practice: clients, not profits, come first; and, partners see one another through the tough years in the same manner in which they share the profitable ones. Because people (our clients, our colleagues and our staff) are our only assets, I have five people-centered tips for surviving, perhaps even flourishing, in this challenging economic environment.

Continue reading here.

A friend recently reminded me of a book review I wrote for one of those "get rich" books The Go Giver (below) for the sorely-missed Complete Lawyer.   I reprint it here in the Negotiation Blog because I talk a lot about the power of reciprocity in bargaining.  I'd summarize my response here, but I can't say it any better than I did below. 

The Go-Giver, A Guide to a Life Lived Richly

American business people have been writing self-help guides to financial success since Benjamin Franklin penned Advice to a Young Tradesman and Poor Richard’s Almanac. Business consultants Bob Burg and John Davis Mann add to this tradition a new parable -- The Go-Giver, A Little Story About a Powerful Business Idea.              

As the title suggests, Burg and Mann recommend that we discard “go getting” -- hard work focused on individual success -- in favor of “go giving” – authentically passionate work focused on the success of others. To demonstrate how material wealth follows generous action, Burg and Mann create an elusive but legendary business consultant “Pindar,” who shares his Five Laws of Stratospheric Success with anyone who promises to practice these principles in all their affairs.    

The pilgrim in this progress is “Joe,” an earnest and hard-working salesman on the brink of a third failed quarter. After promising to follow the laws Pindar teaches him, Joe meets a handful of spectacularly successful givers. These include former hot dog vendor Ernesto, who credits his restaurant and real estate empire to giving more than you take; Nicole, who owes her rise from school teacher to educational software titan to giving much to many; former insurance salesman Sam, whose many philanthropies thrive on giving without expectation of return; and, Debra, who learns to succeed in business by giving of her true self. Having quickly learned each lesson, Joe himself exemplifies Law No. 5 – the willingness to receive the bounty that flows from giving.  

Unfortunately, as a guide to financial success, The Go-Giver is more fairy tale than instruction manual. All of the business icons Joe visits ascribe their riches to acts of authentic generosity. It is apparent from the context in which these stories arise, however, that the key here is neither virtue nor the inherent satisfaction to be found in giving. The key is choosing the right people to give to – those with wealth, monied connections or the power to create economic opportunities for others.   

If we are moved to visit shut-ins; bring recovery meetings to incarcerated felons; or make micro-loans to third-world entrepreneurs, this book is not for us. This is focused giving and the focus is on the “haves,” not the “have nots.”  If we are among the unemployed; the sick; or, the elderly, we’ll need another set   of “Laws” for success  – chief among them laws guaranteeing the education; training; and, health care necessary to enable us to make use of the opportunities created by the Go-Givers’ generosity.  [1]

Walking the Razor’s Edge

Most Complete Lawyer readers are, however, the type of business people for whom The Go-Giver is written.   No matter where we appear on the legal economic ladder, as educated people with access to the justice system, we are well poised to engage in random acts of kindness for, and reap rewards from, those who are well situated to spread a little green.  [2]   So long as we successfully negotiate the razor’s edge between opportunism and genuine acts of generosity, Burg and Mann’s advice will likely redound not only to our emotional and spiritual well-being, but also to our financial success.    

Most readers will, of course, recognize Joe’s spectacular rise from failing salesman to coffee-bean multi-millionaire as the fairy tale the The Go-Giver all but announces itself to be. There is value here, however, in the quotidian acts of kindness in which Joe engages to satisfy Pindar’s requirement that he promptly practice the “Laws” conveyed.     

The most credible results of Joe’s baby steps on the road to becoming a generous human being are his improved relationships with his fellows. Practicing “not keeping track,” Joe foregoes telling his wife his own work-a-day worries, focusing his entire attention upon the challenges of her day. His reward? An entirely believable note of love and gratitude on her pillow the following morning. Practicing “giving more value” than he receives, Joe serves coffee to his workmates as they struggle to meet a collective quarter-end deadline. Though Joe reports “feeling like an idiot” in doing so, it is clear that the warmth and bemused surprise expressed by is co-workers is its own reward.     

The true lesson of The Go-Giver is not so much that material reward follows an expansive spirit, but that one’s daily pleasure increases with the size of one’s own heart. After all, when financial success eludes us – or crashes with the national economy – what we have to rely upon is not numbers on a ledger sheet, but the family, friends and neighbors who will see us through. If we give authentically without expectation of reward – because we “love to . . . as a way of life” – what we will reap is a life richly lived even if we do not thereby “get rich” in the process.

 This new video just in from Mediate.com.  No, it won't inspire attorneys to mediate sooner than they already do nor drive any attorney to your mediation door.  But it will introduce mediation to young people as a dispute resolution method that is in tune with the times - collaborative, reciprocal, fast, flat and flexible.

This is particularly timely for me as I sent my British law intern to the complex court to observe a status conference in an environmental coverage case that has been pending longer than she's been alive!