3. The law (and your lawyer) only care about relevant facts - the most important part of your dispute may well not even be addressed, let alone resolved, by a jury verdict in your favor.
4. As your trial date nears, everyone - the judge, your lawyer, their lawyer, your spouse, your friends, and random acquaintances will urge you to negotiate a resolution with a neutral third party (a mediator).
5. Your attorney settles 90% of every case s/he litigates. S/he rarely goes to trial anymore. Ask her about the last verdict she won and then the one before that. If you have a skill (piano, golf, cooking a souffle) ask yourself how well you'd perform if you haven't used that skill recently or often.
6. Litigation is an extremely expensive board game, much of which is simply the cat and mouse exercise of discovery. Here's how it's played. I ask for documents. You object. I write you a letter demanding compliance. You write back refusing to comply and reminding me I have to "meet and confer" with you before we ask the discovery referee to intervene. We meet. We accomplish nothing. I make a motion (write a "brief") to compel you to turn over documents. You write an opposition. I write a reply. We pay the discovery referee to read our papers and listen to our oral argument. The discovery referee splits the baby in half or fourths or tenths. One of us asks the Judge not to sign off on the discovery referee's decision. More papers, more writing, more time, more of your money. The Judge, not a lion of courage, splits the baby again and refuses to award either party the costs of forcing compliance. Two months later (at least six have now elapsed) you get a stack of documents and a privilege log listing the documents that aren't being provided. I write you a letter demanding that you turn over documents on the privilege log. Rinse. Repeat.
7. As if the disrespect of the original dispute were not enough, I now get to sit you down in a conference room with a court reporter and spend a day or two asking you questions you don't want to answer. Often, the questions are asked in a disrespectful manner. When you complain to your attorney, he says "that's just the way the game is played." Focus on the word game. Are you having fun yet?
8. You get a bill for legal services rendered every month but you're no closer to resolution after receiving and paying 12 of these than you were on day one.
9. You're a business person. You negotiate business deals every day. Your lawyer does not.
10. You have given away any power you might once have possessed to resolve this dispute to a lawyer who does not understand your business, your life or the facts that drove you to seek legal advice in the first place.
Had enough? There are people out there - mediators - who are specially trained in helping you first communicate with your attorney and then helping you negotiate the resolution of your dispute with the "other side." Choose carefully. There are as many bad mediators there as there are litigators. My best advice? Negotiate the resolution of the dispute yourself even if it requires you to swallow your pride and to be the first one to say, "let's sit down and figure out how best to serve your interests and mine at the same time."
A mistake that lawyers sometimes make is failing to ask for what they want. If they do want an evaluation they can ask for it when they hire the neutral. There are processes variously known as neutral evaluation, non-binding arbitration, or early case assessment which are designed specifically for this purpose. They can be used independently or they can be combined with mediation.
I was once hired to give a neutral evaluation in a commercial real estate case. The parties told me at the outset that while they were interested in exploring settlement they were really interested in my opinion on the merits. So we conducted a mediation that included a neutral evaluation. Not only did this meet their needs, the evaluation was given in a confidential setting and could not be used as evidence if they did not settle.
The point is that both parties wanted the process to be evaluative. It was not a situation where one party was expecting the mediator to be evaluative and the other party wanted the mediator to refrain from doing so.
When parties hire a mediator, they need to be of the same mind about the process. Otherwise the result will be like splitting a steak with your partner when one of you likes it rare and the other likes it well done. Somebody is going to get indigestion!
In business and in life, it's important to strike a smart balance between naïveté and cynicism. Act too naïvely, and someone is bound to take advantage of you. Skew cynical, and you may miss out on new opportunities with good people. This paper discusses the decision errors inherent in leaning too far in either direction. Research was conducted by Chia-Jung Tsay, Lisa. L. Shu, and Max H. Bazerman of Harvard Business School. Key concepts include:
Naïveté is more than a glut of trust. More broadly, naïve behavior refers to a failure to make the best decision, due to a lack of consideration of other people's strategic and behavioral perspectives. We are likely to make naïve decisions when we don't think through the likely future decisions of other parties. A cynic, on the other hand, may avoid a business transaction due to an assumption that the seller's self-interested motives will be harmful to him or her-even if logic shows that the deal would likely benefit both parties. When people withhold from trusting others, they usually lack opportunities to learn whether their trust would have reaped rewards. But when they offer their trust and are subsequently burned, they learn hard lessons about trust. This unbalanced feedback breeds cynicism.
In laboratory studies, the best negotiators were those who had a tendency to think about the perspectives of others. However, most people lack sufficient perspective-taking ability. The researchers suggest that training mechanisms should be developed to increase that ability.
Full working paper available for download at the link above.
Much of the complex commercial litigation that I mediate requires that businesses be valued. Although we litigators tend to hire experts to do the dirty work we went to law school to avoid (math!!) we do need to understand our own consultants' valuations as well as those of our adversaries in order to perfect our strategy and prevail at trial.
The valuation of forecasted cash flows can be an inaccurate process, especially when the forecasts are created by optimists who neglect to consider worst-case scenarios. In this paper, Harvard Business School professor Richard S. Ruback has developed methods of valuating forecasted cash flow when the predictions are biased upward. Key concepts include:
Managers often recognize that their cash flow forecasts are too optimistic and boost their discount rates to account for that bias. But that only works if the optimism masks a potential permanent downside.
The common practice of increasing the discount rate to account for optimistic cash flow forecasts can lead to significant valuation errors that increase with the length of the project, the cost of the capital, and the chance of a downside.
When the optimistic cash flow forecasts omit a temporary downside, valuators should adjust the forecast by deflating it and then setting the discount rate equal to the cost of the capital. In other words, the common heuristic of boosting the discount rate to account for optimistic cash flow can lead to a substantial valuation error when the omitted downside isn't permanent.
When the optimistic cash flow forecasts omit a potential permanent downside so that, if it occurs, there is no chance of recovery, valuators should deflate the cash flow forecast and increase the discount rate so that it includes the cost of capital as well as the probability of a downside.
UNCOUPLE YOUR PRESENT VALUE FROM WHAT YOU MADE LAST YEAR
your present compensation serves as a powerful anchor of your value to your employer's advantage
the following suggestions are a way of re-anchoring that value so that your starting point is greater than what you made this year
recalibrate your value according to what you are worth in your employer's hands, i.e., what does your employer save or make based upon the work you do (this may require research on your part)
use that value in setting your desired compensation (also include the cost to your employer of replacing irreplaceable you)
ASK DIAGNOSTIC QUESTIONS
begin asking your employer and superiors diagnostic questions (questions designed to learn what your employer needs, desires and prefers and what your employer is most concerned about in regard to the continued profitability of his/her business)
"how's business" is a great open ended diagnostic question that does not assume the answer
more specific questions include "what does the company need to accomplish in the first quarter of 2011 to meet its financial goals?"; "what are the company's first quarter financial goals?" "what do you see as the primary obstacles to achieving those goals?" "what do you see as the primary drivers of success in reaching those goals" etc. etc.
don't ask these questions impromptu; write them down as a way of brainstorming the most powerful questions and those that would be easiest to ask
2009 Total Compensation: $21,340,547
Whhaaaaaatttttt? do these men have that you don't have?
Social networks with rich and powerful people who sit on their Boards of Directors and influence policy makers and Wall Street power brokers
The self-created illusion that they are "too big to fail" /1
The persuasive argument that only they, with their unique combination of experience, education, knowledge, savvy, can-do-spirit, and leadership qualities can pull these banks out of the sinkhole of the recession.
Friends in very high places.
Chutzpah and shamelessness (not that we'd want to encourage this second character flaw in our readers).
An employment history of asking for and receiving increasing levels of compensation based upon their salary negotiations at every career point possible (and every career point impossible)
the demonstrated ability to produce results (our readers do possess this strength but haven't used it to their greatest advantage yet)
the tendency to measure their market value by their value in the hands of their employer, not by what they "need" or what they are "worth" according to some internal metric that depends upon how they feel about thier accomplishments.
1/ This is where collective action comes in. When we aggregate together America's employees, small business owners and homeowners, we get a non-corporate "entity" that is waaaayyyyyy bigger than some little piss-ant bank and it is we who are too big to fail.
Architect David Denton spends much of his time on a lush tropical island, where he experiments with cutting-edge building designs and creates spaces for artists to showcase their work.
Never mind that the island only exists in the virtual-reality world of Second Life, a popular online venue where people interact via digital avatars. Denton, 62, said he purchased the island for about $700 — real money, not virtual cash — from its former owner, and considers it his property.
Here's the thought this article triggers. If 90% of all litigation involving people (I'll skip corporate litigation and litigation brought to vindicate rights such as that declaring Prop 8 unconstitutional) will end with a retired Judge telling the people that litigation is too expensive and a jury trial too uncertain for them to bear, why don't we just litigate virtually (with Linden dollars!) giving the parties the experience of litigation that will eventually drive them to settlement?
I'm sure some smart programmer can come up with an algorithm for most personal disputes, including both factual templates and the application of simple legal principles. A "ticker" could keep track of the dollars your virtual attorney is billing on your law suit's screen everyday. Continuances, discovery motions, pre-trial proceedings and depositions could all be simulated.
Then the parties return from the virtual life of Second Life Litigation and sit down in the old fashioned way to negotiate a resolution to their dispute or, if necessary, hire a village elder trained in conflict resolution, sometimes called a mediator, to help them do so.
I asked one of my consulting clients for a testimonial yesterday.
"Anything," she said, "it's genuinely changed the way I do everything. It's not just the shift in my business relationship with [BigBiz, Inc.]. I dumped a boyfriend last week because of our conversations! So, seriously, what would you like me to say?"
My client and I, like the few women commercial litigation clients I had during my twenty-five years as a lawyer (2%?) were quickly becoming friends. And I was proud of her. Truly proud. Like a parent would be.
"I'm proud of you," I finally said, even though I'd been thinking it for weeks. "You've shifted the power in your working relationship and that was difficult to do. You were persistent. You're a first class learner. And you've been brave."
She laughed, the way we women do when we're praised, wanting the moment to pass instead of savoring it a little, particularly when we know deep down we've genuinely achieved something important in our own lives and careers but don't want to appear self-satisfied.
So I said it again. "I'm really proud of you. You've done great work and you never gave up. You didn't fold to the power of BigBiz, Inc. You stood up for yourself."
The numbers below represent an unscientific poll of women in business concerning their skills, attitudes and fears about negotiation. The women were asked to rate their agreement with the statements on a 1-10 scale with 1 being the least agreement and 10 being the greatest agreement. The numbers represent the average answer.
More important than her religious background (Jewish) her Ivy League Credentials (Harvard) her progressive, liberal or conservative Democrat political leanings, is the prospect that Kagan's addition to the Supreme Court will result in the magic number of three women on the United States Supreme Court.
We’re celebrating Mothers Day by posting Blawg Review #263 at the She Negotiates Blogfor one obvious and some not so obvious reasons. The obvious reason is the word “She.” The not-so-obvious reasons are: (1) Mother’s Day was a peace and reconciliation movement before it was a holiday; and, (2) peace exists only when we have the political will to seek and the negotiation tools achieve the resolution of conflict.
So get ready to celebrate the woman who negotiate, network, resolve, succeed, and transform with a nod to mom for Blawg Review #263!
What women are saying about the Craving Balance Negotiation Course:
"I learned more during this hands-on negotiating course than in another higher priced class. Victoria and Lisa helped me make the emotional changes necessary to demand a higher value for my work, and taught a step by step process for getting the most from sales negotiations."
Today I stumbled over the post Women Deal with Conflict Differently than Men, reporting on a study done by the Program on Negotiation at Harvard in 2008. Results of the study showed the following similarities between men and women including:
Integrating, the ability to meet the needs of both parties; and,
Compromising as a strategy, except women showed a "high level of agreement that every issue has room for negotiation"
The differences included:
women's tendency to choose equal distributions when compromising which the researchers apparently ascribed to women's greater concern with fairness;
competitiveness - with men scoring 25% more competitive than their female counterparts
"smoothing," with women engaging in that behavior 20% more of the time than men - smoothing being defined as "giving in to the other party while ignoring one's own needs"
avoiding or withdrawing with women doing so 30% more than men
expressing feeling, with women apparently doing so "more" than men but no percentages are provided
We'll be working with gender differences through the end of the month of March and will likely discuss this data in more detail later.
I'm sure you've noticed that we're celebrating negotiating women here this month in honor of International Women's Day and National Women's History Month. Other than tomorrow night's free negotiating women teleseminar with super coach Lisa Gates, I'm celebrating by posting in one place all of my articles on negotiating women.
If you're entering the job market, you'll want to check out Forbes' Magazine's Tips for Negotiating Your First Salary. If you do not negotiate your first salary, you stand to lose half a million dollars over...
Practicing law, particularly litigation, is often frustrating, sometimes humiliating, and frequently simply dispiriting. On the other hand, the practice of law can be thrilling, intellectually stimulating, challenging, absorbing, and a darn good way to make a good living. When you...
(Right, women protesting, 1912. My own grandmother was 12 years old at the time this photo was taken. By the time she was old enough to vote in 1921, she could vote) Why women's voting rights and Hillary Clinton's DNC...
If you're a certain age, you'll remember women's magazines as mostly "Can This Marriage Be Saved" (The Ladies Home Journal to which PWNSC members Cathy Scott's and Cordelia Mendoza's mother was always submitting articles) or 101 Things to do with...
Yesterday, we talked about the different negotiation styles of men and women. Today, we're going to explore how men can benefit from learning women-speak and women can benefit from learning man-talk. All of the data relied upon and excerpted below...
Although I am indisputably a "woman lawyer," I have never thought of myself in those terms. I'm a lawyer. And I'm a woman. I'm also a writer, a step-mother, a wife, a daughter, a river rafter, and an aficionado of...
(and, yes, I am not only old enough to remember the "Second Wave" Women's Movement, I took a quite serious role in it, first as an unpaid volunteer and later through the federal government's "Program for Local Service" at...
Thanks again to Vicki Flaugher of SmartWomanGuides.com for inviting me to have this conversation with her about ways in which women can and do maximize their bargaining power. And yes we do talk about negotiating the purchase of an automobile...
In part two of Vicki Flaugher's interview with me, we discuss ways in which women can comfortably respond to aggressive zero-sum distributive bargainers and negotiate better business deals using their natural strengths. I'd like to once again thank Vicki Flaugher...
Video below is part I of an interview on negotiation challenges, strategies and tactics for women with Vicki Flaugher, founder of SmartWoman Guides. The full audio of the video is here along with Ms. Flaugher's kind comments about our conversation....
How to Negotiate Anything: Free Intro Thursday, Mar 18, '10 8pm EST Some researchers say that women's failure to negotiate working conditions, salary or other compensation--along with their hesitancy to seek what they're worth when they do negotiate--is one of...
Whereas American women of every race, class, and ethnic background have made historic contributions to the growth and strength of our Nation in countless recorded and unrecorded ways; Whereas American women have played and continue to play a critical...
When I posted Negotiating Gender: Why So Few Women Neutrals? I had not yet found a source for the statistical representation of women neutrals on the American Arbitration Association Panel. I've now located an article on the AAA website from...
Although most of the major providers of alternative dispute resolution services tout their commitment to diversity in the ranks of their neutrals, the coloration of nearly all ADR panels continues to be white; the nationalities European; and the gender male....
Thanks to Ed. at Blawg Review for passing along this (somewhat rambling but well worth watching) lecture at Stanford University by Deborah Kolb, the Deloitte Ellen Gabriel Professor for Women and Leadership at the Simmons College School of Management....
If you're following this blog but not Diane Levin's Blog The Mediation Channel, I have good news for you. Diane is an extremely focused, disciplined and lively writer. She's also one of the brightest and most canny negotiators, mediators and negotiation trainers I know.
With the goal of promoting clearheaded and reasoned debate and improving discourse, each month I skewer a different fallacy.
Before giving you entree to this excellent series, let me first note that these arguments do not justify any movement in your negotiation position. Remember - you need a new number and a new reason to counter that new number. If your mediator or negotiating partner expects you to give up something, he'd better have a darn good reason for you to do so. If you're a lawyer representing a party, you can feel your client figuratively or literally tugging on your sleeve when you offer more or agree to accept less in the absence of a justification that makes business sense.
The Misleading Ellipsis (to which I add this caution ~~> the quickest path from respected advocate to deceitful scoundrel is the misleading ellipsis - Judge, Arbitrator, Mediator and Opponent will all distrust your bona fides from that date forward; if you can't think of a better argument, fall on your sword on this issue and create a better one just over the next hill).
Diane adds one new fallacious argument every month. I'll endeavor to keep up with her. But more reliably, get her RSS feed, add it to your google reader and never again be without the wisdom of this brilliant mediator and negotiation trainer and consultant. That's her smiling face at top. Visit her often! at The Mediation Channel.
Conflict is in the house. The evil fairy surrounded the castle with deadly thorns. The "good" fairy put everyone in the castle to sleep. Will you be the valiant Prince in your own dispute story? Or are you the prize? The beautiful one who would prefer to remain unconscious rather than address the great battle between good and evil represented here? Did you hire a lawyer to resolve your dispute for you? Will he make it to the castle in time? Or will he spend the bulk of his energy erecting more obstacles to prevent your adversary from reaching you. By the time both champions reach the castle, will everyone be too bloodied and broke to rise from your bed and put your house back in order?
The not so secret opinion among mediators is that attorneys make settlement more difficult. Just as lawyers are heard to say that "litigation would be great if it just weren't for the clients" (a "problem" only class action plaintiffs' lawyers have actually resolved), mediators tend to say "mediation would great if it weren't for the lawyers."
Esteeming the rule of law in America as I do (especially in the recent era of its greatest peril) I have never seen lawyers as a problem in facilitating settlement of the lawsuits they have been eating, drinking, sleeping and, dating for years longer than I've spent reading their briefs and engaging in some pre-mediation telephone discussions.
I can't say lawyers are a problem because: (1) they're my job; and, (2) they're "my people" in the "tribal" sense. A few bad apples aside, lawyers are among the hardest working, most ethical, creative, multi-talented professionals I know. And they are pretty much solely responsible for fighting the battle, on every common weekday, to preserve the rule of law as a bulwark against tyranny on the right and anarchy on the left.
Let's start with this particularly widespread canard from the article:
Attorneys may delay the settlement of a dispute through mediation for financial reasons. For example, the payment of professional fees on the basis of hours worked could motivate the attorney to delay the settlement of the dispute to increase the number of hours billed to the client (citations omitted). Such non financial reasons as a desire to build or preserve a reputation for “hardball negotiating” in highly publicized cases could also motivate an attorney to delay settlement of the dispute [which the authors don't mention often results in a far better outcome for the client]. In addition, attorneys’ (or their clients’) commitment to or belief in their case based on questions of justice or other principles [which are worth, in my opinion, greater attention that purely monetary outcomes] could also delay settlement until “defending the principle becomes too costly” (citation omitted). Finally, attorneys may wish to justify both their role and their fees with unnecessary interactions./1
Are we mendacious, self-serving, parasites of the "justice system," feathering our own comfortable nests as we attempt to preserve the "outdated" notion that the justice system is capable of delivering justice? I don't believe so, but let's not get all anecdotal about these questions when we have cold, hard statistics within reach. What were the results of this study on the way in which attorneys might "get in the way of" a successful mediation?
Here's the bottom line assessment (please read the article yourself to draw your own conclusions).
The empirical data we collected in this study indicate that the presence of an attorney in a mediation does not significantly affect the settlement rate, the time needed to reach an agreement, the perceived fairness of the process, the parties’ level of satisfaction with the agreement, or the parties’ level of trust that the agreement will be honored. These results indicate that attorneys have much less impact than is claimed by those mediators who do not welcome their involvement in the mediation process.
Nevertheless, the results also demonstrate that the presence of an attorney does affect mediation outcomes in at least two ways: by reducing the parties’ level of satisfaction with the mediator’s performance and by reducing the level of reconciliation between parties.
So the Myth Busters of this study conclude that attorneys:
don't "significantly affect the settlement rate" /2
don't significantly affect "the perceived fairness of the process";
don't significantly affect "the parties' level of satisfaction with the agreement; and,
don't significantly affect the "parties' level of trust that the agreement will be honored."
This is the subjective viewpoint of the litigants, mind you, in a dynamic where the mediator often openly attributes the success of the mediation to the clients' attorney - an observation which is more deeply true than most mediators would care to admit with all their white horse hi-ho silver, magic bullet off-to the-rescue enthusiasm.
What did litigants report to the authors of this article? They indicated that attorneys adversely affected mediation outcomes in two ways: (1) they reduced the parties' "level of satisfaction with the mediator's performance"; and, (2) they "reduced the level of reconciliation between the parties."
Of all of the purported effects of attorneys' presence at mediation - without whom, it must be noted, the parties would not likely be induced to sit down and mediate at all -- the only significant perceived difference is the failure of the mediation process to reconcile the parties - something in which the legal system has little to no interest.
Please read the article for proposed solutions to the reconciliation issue. As to the remainder of the study's findings, I have this to say:
whenever two or more people are gathered together, the dynamics of the group more profoundly affect the outcome than do the contributions of any individual member of the group. Our "reality," especially as it appears in a group setting, is "co-created." See the New York Times must-read article on the Psychology of Terrorism and Retail Marketing at Google Books (the latter noting that because people live in a social world which is co-created in social interaction with others . . . . [they] can be thought of as both products and producers of the social world." Id. at 218.)
try as you may, you will never be able to untangle the threads that create the intricate tapestry of a settlement; every member contributes something invaluable without which the precise result could not possibly have been achieved.
who is therefore responsible for the good and who responsible for the purportedly bad results of mediation? That's easy: EVERYONE IS.
That being the case, we are all responsible for our outcomes - whether our contribution is "negative," i.e., resisting settlement, for instance, or "positive," i.e., problem solving the reasons given by Mr. Negative that the case simply can't settle on terms acceptable to all. Remember your University philosophy class? Thesis, Antithesis, Synthesis. We need people willing to state the negative to problem solve it positively. The relationships cause the outcome, not one member of a group unless that member is a tyrant with loyal troops at his command.
If you'll allow me a literary reference that justifies my own collegiate career and says far more eloquently than I ever could why we're all accountable, I first give you one of my favorite authors, Paul Auster (who you may remember as the screenwriter of the movie Smoke).
The world can never be assumed to exist. It comes into being only in the act of moving towards it. Ese est percipii. Nothing can be taken for granted: we do not find ourselves in the midst of an already established world, we do not, as if by preordained birthright, automatically take possession of our surroundings. Each moment,each thing, must be earned, wrested away from the confusion of inert matter, by a steadiness of gaze, a purity of perception so intense that the effort, in itself, takes on the value of a religious act. The slate has been wiped clean. It is up to [us] to write [our] own book.Paul Auster,The Decisive MomentfromThe Art of Hunger.
The second excerpt I will leave for your thoughtful consideration is by the greatest scholar of comparative religions to ever inhabit the planet - Joseph Campbell (skip the intro with the new age music).
Schopenhauer, in his splendid essay called "On an Apparent Intention in the Fate of the Individual," points out that when you reach an advanced age and look back over your lifetime, it can seem to have had a consistent order and plan, as though composed by some novelist. Events that when they occurred had seemed accidental and of little moment turn out to have been indispensable factors in the composition of a consistent plot. So who composed that plot? Schopenhauer suggests that just as your dreams are composed by an aspect of yourself of which your consciousness is unaware, so, too, your whole life is composed by the will within you. And just as people whom you will have met apparently by mere chance became leading agents in the structuring of your life, so, too, will you have served unknowingly as an agent, giving meaning to the lives of others, The whole thing gears together like one big symphony, with everything unconsciously structuring everything else. And Schopenhauer concludes that it is as though our lives were the features of the one great dream of a single dreamer in which all the dream characters dream, too; so that everything links to everything else, moved by the one will to life which is the universal will in nature.
It’s a magnificent idea – an idea that appears in India in the mythic image of the Net of Indra, which is a net of gems, where at every crossing of one thread over another there is a gem reflecting all the other reflective gems. Everything arises in mutual relation to everything else, so you can’t blame anybody for anything. It is even as though there were a single intention behind it all, which always makes some kind of sense, though none of us knows what the sense might be, or has lived the life that he quite intended.
Lawyers, mediators, clients, experts, consultants, legal assistants, and, yes, even your spouse with whom you consulted before today's mediation, every one of them is part of the "net of gems, where at every crossing of one thread over another there is a gem reflecting all the other reflective gems [so that] [e]verything arises in mutual relation to everything else, so you can't blame anybody for anything" and, by the way, we can't credit credit nor bear all the responsibility for anything. We are all capable. We are all accountable. And we all contribute something to the whole.
So we can stop pretending to be better than we are now. We can all put down the burden and shame of our own entirely human fallibility; the myth that we ever do anything without the contribution of others; and, the pretense that we don't behave as badly, or as well, as other people do. We're part of the team. We're in it together. Isn't that good news for the New Year?
And to give you a treat from having gotten this far, a scene that is all about seeing, from Paul Auster's Smoke.
1/ I'd be interested, of course, in what the authors consider to be "unnecessary interactions."
2/ This is a particularly interesting finding since mediators have also been found not to improve the settlement rate but only greater party satisfaction in several studies.
Don Philbin, the author of this must-read article (click on the image for the .pdf) on the reasons you walk away from negotiations fearing you've either left money on the table or paid too much for what you receive in exchange, is an attorney-mediator, negotiation consultant and trainer, and arbitrator.
Don is listed in The Best Lawyers in America (Dispute Resolution), The Best Lawyers in San Antonio, and the Bar Register of Preeminent Lawyers.
Don's ADR Toolbox where this article can also be found is an indispensable resource for all attorneys negotiating the settlement of a lawsuit or a business deal (wait a minute! the negotiation of a settlement is a business deal!)
And, it's not inconsequential that Don is one of the nicest guys I know. If you're going to spend a day or a week or a month with a mediator or an arbitrator, you deserve not only the brightest, most wise and best prepared arbitrator or mediator, you also deserve to have a little fun in the process because . . . you know . . . the money simply isn't worth the unhappiness that comes when dealing with . . . . the other sort too often.
Why does mediation work? For several reasons that I can think of [including] the flexibility to make a business decision. Commercial contractors and subcontractors are in a business, and they should be making business decisions. While one such decision can be to go to litigation; litigation is not always the best solution from a financial, or stress perspective. Construction professionals, with the assistance of construction attorneys, can come up with a creative way to deal with a problem and solve it.
we want rights because we are genetically programmed and culturally conditioned to be fair (remember the Capuchin monkeys who, trained to work for "money" staged a sit-down strike when others doing the same work were compensated at five times the rate as their under compensated fellows);
rights are meant to guarantee us equal treatment in the distribution of public benefits and resources; and, equal access to public and private accommodations;
remedies are meant to restore private and public resources to those who have been deprived of them because some one; group; organization or governmental entity has broken one or more rules by which we have chosen to govern ourselves; and,
moneyis a means to an end, not an end in itself and each of us desires money for the same reasons - control of our own destiny (power; self expression); access to the benefits of the social contract (1. Freedom of speech and expression 2. Freedom of religion 3. Freedom from want 4. Freedom from fear); security against an uncertain future (access to medical services and a mimimal standard of living if we become unable to care for ourselves); meaningful occupation; the opportunity to be of unique service to our fellows; love; and, joy (monetary sub-goals such as a pair of Jimmy Choo shoes are also simply a [misguided] means to achieve these ends).
I have been taken to task for being "touchy-feely" or "new age" or of insufficient value to my "market" because I say these things repeatedly in public. My "market," I'm told, would rather be right than happy; would rather someone lose so that they can win; and, believe the only thing anyone wants is money.
I don't believe it and I am committed to holding this space as a place-marker for my "people" who are suffering. Which people are those? Litigators.
The challenge of this and every year: How do we even begin to introduce the concept that we can more easily, efficiently and effectively satisfy the true interests of our fellows-in-the-social-condition than we can satisfy one individual's demand for preeminence over another?
On our least divisive, most-inclusive and thoroughly secular holiday of Thanksgiving, we can begin to alleviate the suffering caused by zero-sum games with gratitude -- the benefits of which are being studied by a team of researchers at my legal alma mater, U.C. Davis.
Gratitude is the “forgotten factor” in happiness research. We are engaged in a long-term research project designed to create and disseminate a large body of novel scientific data on the nature of gratitude, its causes, and its potential consequences for human health and well-being. Scientists are latecomers to the concept of gratitude. Religions and philosophies have long embraced gratitude as an indispensable manifestation of virtue, and an integral component of health, wholeness, and well-being. Through conducting highly focused, cutting-edge studies on the nature of gratitude, its causes, and its consequences, we hope to shed important scientific light on this important concept. This document is intended to provide a brief, introductory overview of the major findings to date of the research project. For further information, please contact Robert Emmons. This project is supported by a grant from the John Templeton Foundation.
We are engaged in two main lines of inquiry at the present time: (1) developing methods to cultivate gratitude in daily life and assess gratitude’s effect on well-being, and (2) developing a measure to reliably assess individual differences in dispositional gratefulness.
Gratitude Interventions and Psychological and Physical Well-Being
* In an experimental comparison, those who kept gratitude journals on a weekly basis exercised more regularly, reported fewer physical symptoms, felt better about their lives as a whole, and were more optimistic about the upcoming week compared to those who recorded hassles or neutral life events (Emmons & McCullough, 2003).
* A related benefit was observed in the realm of personal goal attainment: Participants who kept gratitude lists were more likely to have made progress toward important personal goals (academic, interpersonal and health-based) over a two-month period compared to subjects in the other experimental conditions.
* A daily gratitude intervention (self-guided exercises) with young adults resulted in higher reported levels of the positive states of alertness, enthusiasm, determination, attentiveness and energy compared to a focus on hassles or a downward social comparison (ways in which participants thought they were better off than others). There was no difference in levels of unpleasant emotions reported in the three groups.
* Participants in the daily gratitude condition were more likely to report having helped someone with a personal problem or having offered emotional support to another, relative to the hassles or social comparison condition.
* In a sample of adults with neuromuscular disease, a 21-day gratitude intervention resulted in greater amounts of high energy positive moods, a greater sense of feeling connected to others, more optimistic ratings of one’s life, and better sleep duration and sleep quality, relative to a control group.
* Children who practice grateful thinking have more positive attitudes toward school and their families (Froh, Sefick, & Emmons, 2008).
Because Doug, Lee Jay and I spent the entire day yesterday talking about legal rights and remedies as well as legal procedure in the context of negotiating the resolution of litigation, I was once again engaged in the soul-searching that always accompanies situations challenging my loyalty to the adversarial/rights-remedies business and stimulates my enthusiasm for the interest-based, consensus building, collaborative, problem solving negotiated resolution business.
Before giving you an excerpt that should tempt you to download the article and put it on your nightstand, I want to say this: I work on the razor's edge of my lifetime career-investment in the adversarial system, on the one hand, and my new'ish passion for collaborative, interest-based negotiated resolutions to disputes, on the other. I spent 25 years as a warrior who rightfully took advantage of my adversary's weaknesses. I was not a problem solver. I was engaged in a fight to the death on a pre-determined field with rules in which I believed for causes I knew to be just. As a result, I approach all alternatives to the adversarial process with a litigator's skepticism, wariness and world-wearyness. There is no kumbya in me. It is only my intellectual curiosity that survived the beating my heart took from the world-weary, cynical, grizzled old defense attorneys who taught me how to practice law (as adversaries testing my mettle) in Sacramento thirty years ago.
Sic transit gloria mundi.
The engine that drives litigation's morality tale is that conflict resolution is a contest between parties, one of whom necessarily represents good and the other necessarily represents bad. As a result, litigation seeks to designate who has committed moral transgressions by breaching legal norms (or, from the perspective of the defendant, who wrongfully accuses others of having done so).
The Story of Mediation subverts these norms by transforming this familiar morality tale into a story of collaboration. This subversion begins through how mediation conceives of conflict itself. Implicit in the Story of Litigation is that conflict represents a breach of the norms of conduct, thereby ripping the social fabric in some way large or small. In contrast, in mediation, conflict is a norm of conduct, a necessary byproduct of humans having distinct experiences and personalities and needs. Conflict is thus not necessarily a disruption of the moral order, and, indeed, can sometimes be productive.
Mediation's normalization of conflict, however, cannot eliminate what appears to be a deep-seated human need to understand experience in terms of struggles and strivings. Humans have great difficulty perceiving events as generated by causes beyond our control - what Amsterdam and Bruner evocatively describe as an inability to see events as "One Damn Thing After Another." We must instead "shape them into strivings and adversities, contests and rewards, vanquishings and setbacks."
The meta-narrative of litigation maps these "strivings" and "vanquishings" onto the struggle of one party against another and enlists the aid of the court to vindicate justice on behalf of the wronged party. In contrast, the meta-narrative of mediation seeks to map these "strivings" and "vanquishings" onto a collaborative struggle to resolve conflict. This narrative casts all participants as players in a process - collaboration - that is focused on reaching the common goal of successfully resolving or transforming a dispute. This story has moral entailments because collaboration is accepted as a social and moral good. Unlike litigation, however, this story does not generate a binary moral universe that divides the good from the bad, but, rather, a universe that values collaborative striving to achieve common ground and resolution.
This story places mediators in a role that is very different from the role played by decision-makers in litigation. Rather than being heroes of moral vindication to whom wronged parties appeal for justice, mediators promote and model collaborative striving to overcome conflict. This plays out in many accepted techniques in mediation. Mediators, for example, often seek "commitment" from participants to the process of mediation, although mediators are careful not to extend this commitment to a commitment to agree. This commitment to process is a proxy for a commitment to collaborate to seek to resolve conflict, thus incrementally moving participants away from contested litigation and towards collaborative problem solving. Similarly, mediators often "reframe" participants' statements in order to emphasize "common ground." This is also an effort to move parties away from a morally charged contest and into collaboration. Finally, mediators encourage and model collaboration through a positive message of optimism and progress towards resolution, even when (or, perhaps, especially when) impasse appears likely.
Moreover, mediation approaches the narrative movement from Efforts to Restoration of Steady State in a very different way than litigation. Whether the Steady State is Restored or Transformed constitutes what I have earlier characterized as a "fork in the road" in the Austere Definition of Narrative. The very language through which litigants seek redress of grievances - to "be made whole," "to pay your debt society" (with its implication that payment of the debt would return the ledger to balance), even the word "remedy" - implies Restoration. In contrast, mediation tends to reject Restoration as a state to which the parties (and society as whole) should or even can return. Rather, mediation seeks Transformation on the part of all disputants so that conflict is resolved. It does so by embracing the notion that perceptions of the world (including perceptions of the actions of others) are unstable, thus enabling parties to appreciate alternative perspectives as a way to promote resolution of conflict. Mediation, therefore, does embody a plot that adheres to the narrative movement described by the Austere Definition, albeit in ways that are utterly alien to the morality tale of the story of litigation. The story of mediation can be characterized as follows:
Steady State: Whatever Each Party Views as Pre-Conflict
Trouble: Whatever Each Party Views as Constituting Conflict
Efforts: Collaborative Striving To Overcome Conflict as Modeled and Promoted by Mediator
Transformation of Steady State: A New Relationship Among Parties
Patrick Deane of Nestlé is senior counsel to the largest food company in the world, and the disputes he runs into involve distributors, retailers, suppliers and consumers in every part of the globe. His ideal mediator combines logic and intuition; a concern for detail; and the knack of an epatheic listener. He noted that commercial disputes — even financial ones — are seldom dry, but instead involve personalities, risk of loss of face, and other human attributes just as much as more personal claims do. The question of subject-matter expertise was of little importance to Deane, compared to these essential qualities in a mediator who must be expert in a process that, at heart, is aimed at cost effectiveness. “A lack of industry expertise has never caused a failure of the mediation process.
Here's my opinion (as if you didn't already know). As Colin Powell says, the most important knowledge to have in international negotiations is the other guy's decision cycle. I imagine the great predictor, the political scientist and Hoover Institute Fellow Bruce Bueno de Mesquitas would say something along the same lines (see TED lecture below). See also the NYT piece, Can Game Theory Predict When Iran Will Get the Bomb?
What is the "other guy's" decision cycle? It is comprised of every interest he must satisfy and every person he is accountable to for the foreseeable (and probable unintended) consequences of that decision. Personal injury attorneys turned mediators are well acquainted with the decision cycles of both Plaintiff and Defense counsel as well as with the interests, needs, and desires of injured Plaintiffs, on the one hand, and insurance adjusters and their supervisors on the other. Employment attorneys turned mediators are also deeply knowledgeable about the decision cycles of counsel on both sides of the table (one usually specializing in employees and the other in employers) as well as with the interests, needs and desires of terminated, demoted, or harassed employees on the one hand and of employers - both large and small - who often feel as if the Plaintiff is little better than a highway robber. Judges turned mediators are better acquainted than anyone else of the decision cycles of juries -- a jury verdict being the alternative to a negotiated resolution.
You knew I'd come to my own "specialty" knowledge. Some of it is industry specific -- insurance and financial institutions, for instance, and the garment, manufacturing, health care, commercial real estate, construction, and technology industries. Though my experience in these fields adds some value to my commercial mediation practice, what I'm most skilled at is knowing the decision cycles of commercial litigators and their business clients. I understand, for instance, the clients' reporting relationships; the metrics against which their performance and that of their corporate superiors are measured; the impact of SEC reporting requirements in "bet the company" litigation; and, the effect settlements in nine or ten figures might have on upcoming plans for mergers or acquisitions.
I can read a financial statement.
At a minimum, I can ask the questions necessary to obtain the knowledge required to ascertain the interests that must be satisfied by both parties to transform the litigation into an opportunity to make a business deal. And I know how to make the commercial clients happy with their attorneys' final resolution of the business problem burdened with the justice issue that brought the case into court in the first instance.
I am also schooled in the "field" of conflict resolution. I understand at depth the cognitive biases -- universal tendencies in the way we think -- that inhibit rational decision making. I know how conflict escalates and, more importantly, how it can be deescalated. I understand the role emotion plays in decision making (particularly the emotion most common among business litigation clients - anger); the gentle (and not so gentle) art of persuasion and, perhaps most importantly, the optimal negotiation strategies and tactics for the business problem at hand.
And, I know in the knuckles of my spine what keeps commercial litigators awake at night, worrying about the next strategic, tactical, legal or extra-legal move to make; how to explain to the client that the case has suddenly gone south; and, how to deliver that bad news to the client in a way he or she can hear it and successfully report it to the GC, the CEO, the Board of Directors or e ven the shareholders.
I know this sounds like a lot of boastful self-promotion (it is). Please don't take my word for it. Anyone charged with finding, retaining and hiring a mediator to assist the parties in resolving a piece of hard-fought, sophisticated, complex commercial litigation would do well to check with his or her peers on any mediator's boastful self-appraisals.
This is what I recall of mediator-hunting, however. I'd send out a list to my colleagues. I'd invariably get back opinions that were all over the board. He/she is great with clients but usually ends up splitting the baby in half. He/she talks too much and listens too little. He/she marginalized the client and made me look bad. He/she charges $15,000 per day and is one of the go-to mediators for this type of case but I was unimpressed, as was the client. This guy/gal can settle anything. Brilliant. Magical.
So what's a beleaguered litigator to do? Ask people you respect both inside and outside your law firm. Ask how the mediator handles the "process dimensions" of the mediation. Does he/she simply carry numbers and rationales back and forth between separate caucus rooms. Can she give bad news to both sides. Can he go beyond positional, zero-sum bargaining and into interest-based negotiated resolutions? Is the client happy with the result and with the process? After you've done this basic research, call the mediator yourself and ask him/her about the way in which she/he might handle the mediation of the particular matter you need to have resolved. You should not only have the best information possible in making your choice, you should get a fair amount of terrific free advice and external brain-storming along the way.
I really just meant to cite the Business Conflict Blog and get back to revising The ABC's of Conflict Resolution - my second draft due on October 30.
So what's my answer to the question whether the mediator should have industry knowledge? That answer lies, as most legal problems do, in the gray zone. Industry knowledge helps. But every commercial litigator knows that we can learn any industry if we have a basic understanding of how commercial enterprises work. That's what I know -- commercial litigation -- and it is the reason I don't mediate personal injury or employment disputes with anyone below the rank of senior executive. I don't know the right questions to ask and I don't know -- at depth -- the parties' or counsel's decision cycles.
My own personal 200-year present spans the life of my maternal grandparents who were nine years old in 1909, and that of my step-children’s children, who (assuming they procreate on a reasonable schedule) should be ninety-five'ish in 2109.
My imagined grandchildren,  born sometime between today and 2014, will not be strangers to any of my grandfather’s technologies. Despite the advent of compact fluorescent light bulbs, the early lives of my step-children's children will likely pass under the glow of the same incandescent lights that brightened granddad’s one-room school house. They will be transported to school in cars with internal combustion engines, learn the same alphabet from the same cardboard and paper books (as well as from the "e" variety)  and play many of the same games he did – hop scotch, jump rope and ring-around the rosy.
Change will etch itself into the lives of my grandchildren as surely as it did my own, my parents' and my grandparents'. Hybrids will give way to fully electric (and perhaps hemp-powered) vehicles (effective or defective) and though electricity will continue to be generated by hydroelectric dams, wind farms and nuclear power plants, some new and unimaginable source of power will surely push back the nights of my grand children's children. 
Law, politics, society and culture also exist in the 200-year present of conflict resolution. In my personal 200-year span, the law seems to have changed the most profoundly. Was it the law first and culture later? Or do they weave our future together?
The first U.S. woman lawyer, Myra Bradwell, was admitted to practice a mere ten years before my grandmother was born. Mrs. Bradwell’s legal career was the subject of one of the sorriest U.S. Supreme Court decisions ever handed down, in which the Court opined,
The civil law as well as nature itself, has always recognized a wide difference in the respective spheres and destinies of man and woman. Man is, or should be, woman’s protector and defender. The natural and proper timidity and delicacy which belongs to the female sex evidently unfits it for many of the occupations of civil life. The constitution of the family organization, which is founded in the divine ordinance, as well as in the nature of things, indicates the domestic sphere as that which properly belongs to the domain and functions of womanhood. The harmony, not to say the identity, of interests and views which belong, or should belong, to the family institution is repugnant to the idea for a woman adopting a distinct and independent career from that of her husband … for these reasons I think that the laws of Illinois now complained of are not obnoxious to the charge of any abridging any of the privileges and immunities of cities of the United States.
My grandparents', parents' and step-children's 20th Century was dominated by genocide on a scale and a technological precision unimaginable to our earlier forebears. Mid-century brought with it the threat of nuclear annihilation but also liberated millions of people enslaved by colonialism. We cured polio in my own lifetime with both "dead" and "live" vaccines (neither of them counterfeit) - a singular moment in scientific history during which no one took ownership of the cure and no one tried to stop others from seeking another, a problem Patently O addressed this week in Reverse Payments.
Whether god or satan, heaven or hell, war or peace "won" the twentieth century, the world's greatest peace-making body was created during it -- the United Nations. And here in the U.S., the “living room war,” Viet Nam, coupled with the largest generation of adolescents ever to grace American society, ended the forcible induction of young men into the military. 
With the recent discovery of our earliest ancestor, Ardi, our biological and social lives exist in a 4.4 million year now. Our physical bodies “evolve” in the womb along the same lines as did our species and, once born, we carry with us our earliest organs.  Most critical of these to conflict escalation and avoidance is our “fight-flight” mechanism – the amygdala. And the most pertinent biological agents to promote the collaborative resolution of conflict are our “mirror neurons” which
provide a powerful biological foundation for the evolution of culture . . . absorb[ing] it directly, with each generation teaching the next by social sharing, imitation and observation.
How we’ve manage to survive despite our tendency to misread one another’s actions, intentions and emotions, is often the subject of those who advise us how to choose and move juries -- here -- Anne Reed at Deliberations (explaining why "they" don't see things like "we" do here); and, the Jury Room (explaining why pain hurts more intensely when we believe it's been intentionally inflicted here).
The Most Effective Conflict Resolution Technology is the Oldest
One of our true original gangsters, Al Capone, is reported to have said that “you can get much further with a kind word and a gun than you can with a kind word alone” and one of our greatest Presidents, Theodore Roosevelt said “speak softly and carry a big stick.”
As Robert Wright, author of The Moral Animal explained, had Tit for Tat been tossed into the game with 50 steadfast non-cooperators, there would have been a 49-way tie for first place. But none of the players' programs failed to cooperate in at least some circumstances, leaving Tit for Tat the clear victor. According to Wright, humans, like the programs in Axelrod's competition, are evolutionarily “designed” to cooperate under at least some circumstances. The engine and benefit of cooperation is present in our neurochemistry. When scientists observed the brain activity of volunteers playing the Prisoner’s Dilemma game, for instance, they found that the participants' “reward circuits” were activated and their impulsive "me first" circuits inhibited when they cooperated. Cooperation, retaliation, forgiveness and a return to cooperation. Tit for Tat.
We don't "dis" lawyers here at the Negotiation Blog. We simply remind ourselves that our primary purpose is the promotion of justice, with a stable societal order closely behind. Most people don't understand, for instance, that Shakespeare's famous the first thing we do, let's kill all the lawyerswas not an insult. In King Henry IV, Act IV, Scene II, Shakespeare's sentiment was not his own, but that of a revolutionary who wished to destroy the social order.
The historic "present" of laws and lawyers is in the thousands, not simply the hundreds, of years. Hammurabi (make of his choice for the memorialization of his laws what you will) was the sixth king of Babylon, remembered for creating -- in his own name (and likeness?) - the first written and systematic legal code.
For the wrongful killing of another, for instance, the victim’s kin were paid according to the social status of the deceased party. Thus the ‘man price’ for killing a peasant was 200 shillings and that for a nobleman 1200 shillings. Payments were not, however, tailored to the loss, but fixed according to types of affront, a distinction we continue to make when we punish intentional torts more severely than negligent ones. >
Lawyers, litigators and trial lawyers are too often demonized by the ADR community as if you could get someone to sit down to negotiate without first pointing the gun of litigation at their heads; I salute you (and myself, for that matter!) for bringing us all to the bargaining table. See Steve Mehta's recent post at Mediation Matters, Factors When Peace Makes Sense for a note that touches upon the symbiotic relationship between litigation and mediation, litigators and mediators.
I shouldn't cite single legal blogs twice, but I cannot resist this quote of Scott Greenfield's on another pundit's view of the future lawyers have in store for them, i.e.,
shucking oysters for a living if we don't accept a future of lawyers being piece workers in factories, sending our work off to Bangalore in pdf files and complementing people on their choice of forms at Legal Zoom.
Which came first? Public civil trials or private arbitrations? You’ll be surprised, I’ll wager, to hear that arbitration was one of the earliest forms of dispute resolution, practiced by the juris consults of the Roman Empire. Roman arbitration predates the adversarial system of common law by more than a thousand years. 
Ah, the glory of Rome! The juris consulti were (like too many mediators) amateurs who dabbled in dispute resolution, raising the question whether they (and we) should be certified or regulated as Diane Levin asks at The Mediation Channel this week. The Roman hobbyists gave legal opinions (responsa) to all comers (a practice known as publice respondere). They also served the needs of Roman judges and governors would routinely consult with advisory panels of jurisconsults before rendering decisions. Thus, the Romans – god bless them! - were the first to have a class of people who spent their days thinking about legal problems (an activity some readers will recall Ralph Nader calling "mental gymnastics in an iron cage").
It was Buckminster Fuller who famously opined that the "significant problems we face cannot be solved at the same level of thinking we were at when we created them." If you keep this aphorism in mind for the remainder of this post, you'll likely have some extraordinarily innovative comments to make in the comment section below.
As the Law Guru wiki reminds us, we can trace the adversarial system to the "medieval mode of trial by combat, in which some litigants were allowed a champion to represent them." We owe our present day adversarialism, however, to the common law's use of the jury - the power of argumentation replacing the power of the sword.
The Act abolishing the infamous Star Chamber in 1641 also granted every "freeman" the right to trial by "lawful judgment of his peers" or by the "law of the land" before the Crown could "take or imprison" him or "disseis[e] [him] of his freehold or liberties, or free customs." Nor could he any longer be "outlawed or exciled or otherwise destroyed." Nor could the King "pass upon him or condemn him."
English colonies like our own adopted the jury trial system and we, of course, enshrined that system in the Fifth, Sixth, and Seventh Amendments. Whether this 17th century dispute resolution technology can be fine-tuned to keep abreast of 21st century dispute creation technology (particularly in the quickly moving area of intellectual property) remains one of the pressing questions of legal and ADR policy and practice, particularly in a week in which a Superior Court verbally punished the lawyers before it for filing The Most Oppressive Motion Ever Presented (see the Laconic Law Blog). The motion?
Defendants['] . . . motion for summary judgment/summary adjudication, seeking adjudication of 44 issues, most of which were not proper subjects of adjudication. Defendants’ separate statement was 196 pages long, setting forth hundreds of facts, many of them not material—as defendants’ own papers conceded. And the moving papers concluded with a request for judicial notice of 174 pages. All told, defendants’ moving papers were 1056 pages.
Mediator, author and activist, Ken Cloke, suggests that interest-based resolutions to conflict must replace power and rights based resolutions if we expect to create a future in which justice prevails. As Ken wrote in Conflict Revolution:
Approaching evil and injustice from an interest-based perspective means listening to the deeper truths that gave rise to them, extending compassion even to those who were responsible for evils or injustices, and seeking not merely to replace one evil or injustice with another, but to reduce their attractiveness by designing outcomes, processes, and relationships that encourage adversaries to work collaboratively to satisfy their interests.
Evil and injustice can therefore be considered byproducts of reliance on power or rights, and failures or refusals to learn and evolve.
All political systems generate chronic conflicts that reveal their internal weaknesses, external pressures, and demands for evolutionary change. Power- and rights-based systems are adversarial and unstable, and therefore avoid, deny, resist, and defend themselves against change. As a result, they suppress conflicts or treat them as purely interpersonal, leaving insiders less informed and able to adapt, and outsiders feeling they were treated unjustly and contemplating evil in response.
As pressures to change increase, these systems must either adapt, or turn reactionary and take a punitive, retaliatory attitude toward those seeking to promote change, delaying their own evolution. Only interest-based systems are fully able to seek out their weaknesses, proactively evolve, transform conflicts into sources of learning, and celebrate those who brought them to their attention.
These are the words I leave with the readers of Blawg Review #234 because they are the ones that informed my personal and professional transformation from a legal career based on rights and remedies to one based upon interests and consensus.
Whatever my own personal 200-year present was, is and will be, it is pointed in the direction of peace with justice, with an enormous and probably unwarranted optimism best expressed by the man after whom my law school was named: Martin Luther King, Jr. - the arc of history is long, but it bends toward justice.
Blawg Review has information about next week's host, and instructions how to get your blawg posts reviewed in upcoming issues. Next week's host, Counsel to Counsel, will devote its round-up of the week's best legal posts to the Great Recession.
 Earlier scientific theory posited that each human embryo (see Embryo Mix-Up at the Proud Parenting Blog) passes through a progression of abbreviated stages that resemble the main evolutionary stages of its ancestors, i.e., that the fertilized egg starts as a single cell (just like our first living evolutionary ancestor); as the egg repeatedly divides it develops into an embryo with a segmented arrangement (the “worm” stage); these segments develop into vertebrae, muscles and something that sort of looks like gills (the “fish” stage); limb buds develop with paddle-like hands and feet, and there appears to be a “tail” (the “amphibian” stage); and, by the eighth week of development, most organs are nearly complete, the limbs develop fingers and toes, and the “tail” disappears (the human stage). It turns out that this one-to-one correlation was too simplistic, but it remains safe to say that our biological development still passes through several stages that “recapitulate” the evolution of our species.
 The amygdala is a region of the brain that permits the formation and storage of memories associated with emotional events. It permits us to “read” the emotional responses of our fellows and is thought to facilitated our ability to form relationships and live and work in groups. It is also the source of our “fight or flight” response to danger.
Studies show that some mirror neurons fire when a person reaches for a glass or watches someone else reach for a glass; others fire when the person puts the glass down and still others fire when the person reaches for a toothbrush and so on. They respond when someone kicks a ball, sees a ball being kicked, hears a ball being kicked and says or hears the word "kick."
“When you see me perform an action - such as picking up a baseball - you automatically simulate the action in your own brain,” said Dr. Marco Iacoboni, a neuroscientist at the University of California, Los Angeles, who studies mirror neurons. ”Circuits in your brain, which we do not yet entirely understand, inhibit you from moving while you simulate,” he said. ”But you understand my action because you have in your brain a template for that action based on your own movements. “
 Looking toward the future, the Neuroethics and the Law Blog predicts that in the “experiential future, we will have better technologies to measure physical pain, pain relief, and emotional distress. These technologies should not only change tort law and related compensation schemes but should also change our assessments of criminal blameworthiness and punishment severity” here.
The adversarial system of medical negligence fails to satisfy the main aims of tort law, those being equitable compensation of plaintiffs, correction of mistakes and deterrence of negligence. Instead doctors experience litigation as a punishment and, in order to avoid exposure to the system, have resorted not to corrective or educational measures but to defensive medicine, a practice which the evidence indicates both decreases patient autonomy and increases iatrogenic injury.
(Iatrogenic, by the way, is a fancy term for “we have know idea whatsoever what the source of this ailment is). Chris is looking for comments so run on over there if you’ve been thinking about medical malpractice litigation during the marathon American health care debates.
From preparation to closing, some of L.A.'s most prominent mediators reveal the secrets of getting the best deal available for your clients.
Read former CAALA Trial Lawyer of the year Sandy Gage's article on Getting the Best Results in Mediation and AIM founder, mediator and trainer Lee Jay Berman'sTwelve Ways to Make Your Mediator Work Harder for You.
My ADR Services, Inc. colleagues Jan Schau, Michael Diliberto, Joan Kessler (the brains behind the entire issue!) and Leonard Levy round out the issue with Telling Lies, Telling Secrets (Schau); Opening Offers: Who's on First (Diliberto); The Defense Reveals Mistakes that Could Cost Your Client Money; and Kessler's incisive executive summary of them all.
Oh, yes, I'm here too with one of my mediation narratives, We Tell Ourselves Stories in Order to Live.
The online Advocate can be read like a magazine, complete with turning pages. It's a pretty cool online journal format in addition to being a great contribution to the growing literature on best mediation practices.
Dive in! The water is warm and the natives are friendly.
The following is the conclusion of an excellent post on the recent Pfizer-Justice Department settlement noting that it met "the People's" justice interests better than a judgment could have. The full article, Settlement and Justice for All by Robert C. Bordone & Matthew J. Smith** can be found here at the Harvard Negotiation Law Review.
More than honoring principles a court might champion, the negotiated settlement with Pfizer allows the Justice Department to secure commitments from Pfizer that would have been unlikely in a court verdict. In addition to the enormous cash payment, the settlement agreement allows for closer monitoring of Pfizer by Justice Department officials in the years ahead, ensuring corporate accountability and providing an extra measure of protection for consumers. As part of the deal, Pfizer entered into a Corporate Integrity Agreement with the Office of Inspector General of the Department of Health and Human Services and will be required to maintain a corporate compliance program for the next five years.While a judge might choose to retain judicial oversight in a particular case, federal courts typically lack the expertise or resources to provide the kind of enforcement needed to ensure a systemic and long-term remedy in a technical or highly specialized case such as this.
The Pfizer settlement represents the best kind of transparent, efficient, and wise government law enforcement. It holds Pfizer wholly accountable for its actions, sends a strong and clear message to the public that corporate malfeasance will not be tolerated, provides for ongoing enforcement, and it does it all at a fraction of the cost of trial. While many cases should proceed to trial for reasons of precedent and public policy, negotiated settlement – when approached with wisdom and aplomb – can be a most efficient and effective means of law enforcement.
Thanks to Don Philbin for being one of the best navigators of quality in the ADRosphere! "Friend" him on Facebook here.
**/ Robert C. Bordone is the Thaddeus R. Beal Clinical Professor of Law at Harvard Law School and Director of the Harvard Negotiation and Mediation Clinical Program. Matthew J. Smith is a Lecturer on Law at Harvard Law School and a Clinical Fellow at the Harvard Negotiation and Mediation Clinical Program
Today's New York Times Op-Ed piece on "diplomatic engagement" (Terms of Engagement) as a strategy for "chang[ing] [Iran's] perception of its own interests and realistic options and, hence, to modify its policies and its behavior," offers good strategic negotiation lessons for mediators and mediation advocates alike. As Crocker explains:
[E]ach case of engagement has common elements. Engagement is a process, not a destination. It involves exerting pressure, by raising questions and hypothetical possibilities, and by probing the other country’s assumptions and thinking. Above all, it involves testing how far the other country might be willing to go. Properly understood, the diplomacy of engagement means raising questions that the other country may wish to avoid or be politically unable to answer. It places the ball in the other country’s court.
Litigation is an extremely good way to "exert pressure," on your negotiation partner by burdening it with the costs of waging the adversarial contest. The litigation itself not only "rais[es] questions and hypothetical possibilities" but through the process of discovery, it also "probes [the opponent's] assumptions and thinking" and "test[s] how far [your opponent] might be willing to go" to achieve victory.
Parties disappointed with mediation and mediators are usually dissatisfied with the mediator's inability to engage in the final step of "engagement diplomacy" -- "raising questions that the [opponent] may use to avoid or be [positionally] unable to answer." A good mediator is unafraid to raise those difficult questions with each side of a dispute. But raising those difficult questions is not enough. A good mediator must also be able to deliver bad news to the parties in such a way that the parties are able to hear it.
If the goal of the negotiators -- the attorneys -- is to "change the[ir] [opponent's] perception of its own interests and realistic options and, hence, to modify its policies and its behavior," the negotiators and their clients must be prepared to:
reveal to the mediator
hidden constraints preventing them from modifying their demand or offer; and,
hidden interests that must be served in order to justify any such modification
candidly acknowledge (in separate caucus)
the weaknesses of their position; and,
any constraints on their client's willingness and ability to put their convictions to the test of a jury verdict or judgment by the court
help the mediator help their clients understand that most litigation is based upon differing subjective experiences of the same "objective" series of events so that no one must admit that the other side is "right" and their own side is "wrong"
An example of the lengths to which people will go to be "right" is unfortunately provided to us today by the obituary of the first anti-abortion advocate to be shot and killed for his beliefs. The slain activist spent years protesting outside the car dealership owned by Tony Young, who explained how the protests finally ended (from Slain Abortion Opponent Loved the Controversy)
Mr. Young said that after about three years of protesting outside his dealership, Mr. Pouillon came in and offered a truce. “ ‘Tony,’ ” Mr. Young said the exchange began, “if you would just agree that I’m right on my beliefs, I’ll stop.’
“I just told him, ‘Sure, Jim, you’re right,’ ” Mr. Young said, chuckling. After that, he said, Mr. Pouillon moved on.
Although few cases could so easily turn on the dime of a semi-sincere acknowledgement that the other side is "right," most attorneys would be surprised by how much value can be generated by acknowledging that the other side's version of the facts or the law is not crazy, evil, bizarre, intellectually dishonest or asserted in bad faith. See The Biggest Lie in the Business: It's Only About Money. As I noted there:
The social scientists who study these things say that the way in which we respond to adversity "often reflects the fact that [our] prestige or status has been threatened more than the fact that [our] purchasing power has been diminished." Miller, Disrespect and the Experience of Injustice, Annual Review of Psychology (2002). In other words, the corporate C.E.O., like any other kid on the block, will retaliate when he feels he has been disrespected.
Conversely, research shows that business people are reluctant to recommend legal action if they believe that they and their company have been treated respectfully.
By the same token that business people are reluctant to recommend legal action if they believe their company has been treated respectfully, they are often far more willing to settle litigation if they believe their positions have been heard and acknowledged as having been made in good faith. For those headed toward settlement discussions or mediation, Crocker has good advice:
[B]y far the greatest risk of [diplomatic] engagement is that it may succeed. If we succeed in changing the position of the other [side's] decision-makers, we then must decide whether we will take yes for an answer and reciprocate their moves with steps of our own. If talk is fruitful, a negotiation will begin about taking reciprocal steps down a jointly defined road. Engagement diplomacy forces us to make choices.
If litigators and their clients are aligned in the interest of settling litigation, they must prepare themselves to take "yes for an answer" by having in place a strategy of engagement that will permit them to reciprocate the other side's moves with steps of their own. A good mediator should be capable of bringing all parties to the on-ramp of the road that counsel and their commercial clients are well-placed to and highly skilled at jointly defining.
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."
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.
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.
(right, the ultimate in lame reason giving: the dog ate my homework!)
To reinforce anchoring and framing effects of first offers and offer-characterization, always state the reason you are valuing the item to be traded in the manner you are.“I’m offering to pay you $20,000 in exchange for a dismissal because (choose one or more):(a) I impeached your witness with interrogatory answers in the deposition; (b) the only case law in your favor has been questioned by the Supreme Court and hasn’t been cited since 1972; (c) your expert witness went to Ralph’s School of Law and mine went to Harvard; (d) recent jury verdicts for the theft of trade secrets of this nature have been less than the cost of doing the first round of discovery; and, (e) anything else you have.
In experiments on reason giving, researchers have found that people are far more likely to accommodate others if a reason is given even if the reason makes no sense whatsoever.In one such experiment, students were asked to cut into a line at Kinkos.One group was instructed to give no reason; another to give a good reason ("I’m late for class”) and another to give an irrational reason (“because I want to”). Those who provided no rationale were, not surprisingly, the least successful. Only sixty percent of them were allowed to "cut" into the line. Those who presented a logical rationale got what they wanted an extraordinary 94% of the time.But here's the truly remarkable part. Those students who presented a meaningless rationale such as, "I want to cut in line because I need to," racked up a ninety-three percent success rate, only one percent less than their logical peers.
Every new offer or demand provides another opportunity to influence your adversary about the value (or lack thereof) in the subject matter of the lawsuit.
There's nothing litigators do better than rationalize, justify, explain, elaborate, rebut, support, and opine. Don't leave those excellent tools at home when it comes time to negotiate the resolution of your lawsuit.
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.
Someone recently told me that you can't argue with a story, only with a position or another argument. That's why narrative is such a powerful impasse breaker and why asking diagnostic questions, which elicit stories rather than arguments, so often bridges gaps between the parties that yawn as wide as the Grand Canyon That's why I'm listing Asking Diagnostic Questions as the second most powerful means of breaking negotiation impasses.
Diagnostic questions are those that reveal your bargaining partners’ desires, fears, preferences and needs. Though your bargaining partner will never reveal its true bottom line, it may well acknowledge that it places a far lesser or higher value on the subject of litigation – real property, for instance -- than you do. And though your adversary will never acknowledge the rectitude, nor even often the good faith, of your legal or factual position, she may easily disclose that she needs the money she seeks to infuse capital into her business, to pay back debts, to put her children through college or to acquire much-needed catastrophic health insurance.
You may also find that your bargaining partner is willing to disclose whether he is risk averse or risk courting and whether his predictions for the future of an enterprise – yours perhaps – are more optimistic or pessimistic than your own. Once you learn what your opponent wants, needs and prefers, you can commence – or reconvene – a negotiation that is more tailored to your adversary’s desires; one that will increase the number and value of items both of you have to exchange with one another.
Just a few examples from my own practice:
a case concerning the repayment of over-paid health insurance benefits to physicians settled at a number the defendant said she would never pay when the Plaintiff revealed the existence of an agreement between it and a board member that no one else who was overpaid would get a better deal than he had.
a case concerning the dissolution of a partnership settled when I asked Partner A what his valuation of the enterprise's inventory was in a case to dissolve the partnership. Because he placed a far lower value on that inventory than did Partner B, Partner B (who planned to continue in the import-export business) was happy to accept A's valuation, offering to purchase it from him on the spot (and agreeing to a lower valuation of the good will of the partnership business than he'd earlier been prepared to acknowledge).
a property damage case settled when I asked the Plaintiff, in separate caucus, what he planned to do with the proceeds of the settlement. The defendant, who "knew someone in the business," was able to obtain the item Plaintiff wanted at a lower cost than Plaintiff could have procured it, bridging the gap between the parties' negotiating positions.
a patent infringement case settled when I asked the Plaintiffs what they were afraid would happen if they agreed to give the alleged infringer a license to manufacture and market the allegedly infringing product. Plaintiffs said they believed the market would "get really hot" in three years time, allowing the infringer to make a killing on their technology. When I asked the defendant what he thought about Plaintiffs' suspicions, he said he planned to phase the product out of his product line within three years. I suggested that the defendant agree to a graduated royalty which would require him to pay an unusually high percentage of its sales during the years Plaintiffs were convinced he'd be selling "their" product and at a time when Defendant swore he would not.
In a lemon law case, I asked the Plaintiffs to tell the mobile home manufacturer to explain why they'd purchased the $200,000 vehicle in the first place. Plaintiff's answer so undermined the defendant's "buyer's remorse" theory of the case that the matter settled quickly thereafter.
I asked a perplexed defendant why the Plaintiff had chosen to sue it out of the entire universe of Plaintiff's competitors. Defendant quickly responded: "because we have better people, more talent and potentially better technology. Plaintiff wants to remove us from the market" I thereafter brokered a deal involving a joint venture between the two companies using company A's talent and company B's far larger distribution network.
As you can see from these few examples, diagnostic questions break impasse on "pure money" cases, as well as in those where the parties more or less obviously have something other than money to trade. Once again, it is critical to remember that no one wants money but everyone wants something that money can buy. Ask the ultimate reporter question about your negotiating partner's fears, desires, wants and needs -- WHY? -- and you will see impasse dissolving before your very eyes.
With apologies to "staying on topic" purists, I give my Lit Major readers the literary passage that comes to mind whenever I think too long about asking questions:
try to love the questions themselves as if they were locked rooms or books written in a very foreign language. Don't search for the answers, which could not be given to you now, because you would not be able to live them. And the point is to live everything. Live the questions now. Perhaps then, someday far in the future, you will gradually, without even noticing it, live your way into the answer.
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.
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).
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,
When 50-50 partners break up, the Closed Dutch Auction is an effective way to set the buyout price. The partners exchange sealed bids stating the price at which they will sell their 50% share. The highest bidding partner "wins" and buys out the "loser" at the "loser's" price.
The price set by each partner must be realistic, because if he "loses", the partner will have to sell at the price he set. Setting too low a price has a double adverse effect; the "losing" partner will be the seller at the lower price.
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. 
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.  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.
 As the Labor Department tells us, in the year 2000, “high school dropouts were more than twice as likely as high school graduates to be counted among the 31 million American “working poor” while only 1.4% of that number possessed college degrees. See A Profile of the Working Poor – 2000, U.S. Department of Labor, Bureau of Labor Statistics at http://www.bls.gov/cps/cpswp2000.htm. One’s existing occupation – the job we have been lucky or well-placed enough to be trained to do -- is also highly correlated with financial success or failure. As the Labor Department reports, “[a]lmost 31 percent of the poor who worked during the year  were employed in [low skill] service occupations . . . .,” including “[p]rivate household workers, a subset of service workers that is made up largely of women, were the most likely to be in poverty (20 percent)”. On the other hand, those engaged in executive, administrative, managerial and professional occupations had low incidences of poverty since “[h]igh earning and full-time employment are typical in these occupations.”
I reviewed with some dismay the July 12, 2009, post titled Mediators' Proposals: the Good, the Bad and the Ugly, which seemed to endorse counsel who deceive the mediator to push the negotiations to a mediator’s proposal./* I primarily litigate, but I devote a small percentage of my practice to serving as a mediator.
A mediator’s proposal can be a very effective tool for mediators and the parties to promote settlement when the negotiations have honestly and appropriately reached an impasse. The chance of the proposal generating a settlement, however, will increase greatly if the parties and attorneys respect the mediator and his or her opinion.
If the parties and attorneys respect the mediator, then they will respect the proposal, making it more likely that they will accept the proposal. Without respect, there is nothing more than a gambler’s hope that the proposal will be in an acceptable range. Further, if the lack of respect is mutual, then there is a risk that the mediator will subconsciously tilt the proposal in favor of the other side, which certainly will not promote settlement.
Every mediation has some elements of a game, but while the gamesmanship can involve concealment and even some sleight of hand, it should not devolve into deception. One example that has worked well where there is complete trust and respect between the mediator and at least one side is for that side to divulge the final offer near the outset of the session with the understanding that the mediator will have some latitude to dole out the total authority in bits and pieces with the hope of settling at or near that final number.
This is deceptive because the mediator is telling the other side that obtaining each “concession” is a hard fought battle, but it eliminates the risk of moving too quickly to the end game against an opponent who does not care what the opening number might be, but only wants to halve it (or double it) before the end of the day. This is deceptive because each private session with the side who divulged his or her final number creates an opportunity to discuss future vacations and how the kids are doing. If, however, the goal is to reach a settlement that works for all concerned and gives all parties a sense of accomplishment, then it is a fine tactic that promotes efficient negotiations, likely avoids altogether the need for a mediator’s proposal, and minimizes the fees of the attorneys and the mediator.
Candor and respect towards a mediator has an additional benefit that may not be of advantage to the immediate clients, but will promote productive future mediations on other matters. If I can tell my client that a particular mediator is good, that I respect that person, and will seriously consider everything that that person says, then the client is more likely to listen to what could be bad news about the case. This level of respect is rarely earned in the first session with a new mediator, but only after several mediations. Without candor and respect, the attorneys and parties just want to “win” without realizing that the cost of “victory” may be dearer than the settlement obtained through a positive and respectful mediation.
* Editor's comment: I did not mean to endorse duplicity on the part of counsel or the gaming of a mediator for the purpose of obtaining a favorable mediation proposal. I only meant to emphasize the fact that many attorneys can and do "game" the system, including as much manipulation of the mediator herself in the process.
-- Gregory Nerland
Akawie & LaPietra
1981 N. Broadway, #320
Walnut Creek, CA 94596
savvy negotiators angle for an advantageous impasse rather than a settlement. Compromise is no longer the goal of the mediation exercise; instead it becomes a play to the “neutral,” whose power to craft the mediation proposal will make her the real decisionmaker:
In cases where the mediator’s proposal will be based on who will pay what, the parties — or worse yet, one party — will spend valuable time and effort constructing an impasse when, in the absence of a mediator’s proposal as a fallback, he might have actually achieved a compromise settlement; or
In cases where the mediator’s proposal will be based on the value of the case, no one has an incentive to be candid with the mediator — so positions become more important than interests; or
In cases where the parties aren’t sure what will drive the mediator’s proposal, they dig into their positions and hope for impasse — with the most likely result being a mediator’s proposal predicated on those positions.
A reluctant plaintiff will make a large jump if the money is really “on the table.” Defendants will come up with money they otherwise deny having, if it means that the case is really over. It also eliminates reactive devaluation.
For those who skipped social psychology in college, reactive devaluation is what every lawyer is taught in the first year of practice, if not earlier. "If the other side wants it," said my first mentor, "you don't, even if it seems like a good idea to you." With that admonition ringing in the ears of every litigator, the need for mediators is obvious. Given the dangers cited by DeGroote, however, the mediator's proposal may now be simply another way to "game" the mediator.
I have two short stories to illustrate the reason I re-direct the parties to bracketing when they ask me to make a mediator's proposal. But first, let me explain that I am one of those mediators who used my "proposal" option to put a number on the table I thought both parties would accept even though it would be a stretch for both of them. I usually tested these assumptions in separate caucuses by asking each side "if they came down to $X would you come up to $Y." When the numbers didn't overlap, I'd gauge how much pain there might be for both parties to bridge the gap, along with other entirely subjective opinions such as:
how invested each side was in walking away with a settlement that day
how firm each side was in their assertion that they would not go below or above a certain number
whether either attorney needed help in bringing a little more reality to their clients before the parties would be ready to accept a proposal by the mediator; and,
how much "street cred" I'd developed with the parties personally so that they'd accept my estimate of the settlement price-point even if they wouldn't accept their own attorney's advice /*
The first time I felt manipulated into making a mediator's proposal that wasn't the best both parties could do occurred at the close of a particularly fractious commercial mediation. In the presumed Zone of Potential Agreement , my proposal was high on the side of the Plaintiff because I felt that the defendant had more "give" than did Plaintiff's counsel.
I made my proposal and both sides accepted. When I walked into the defense caucus to tell counsel that he had a deal, however, I was met with a burst of laughter, the clapping of hands and the following statement: "I was prepared to take less; that's a great deal. Thanks so much."
Everyone Lies to the Mediator
That was the hardest lesson I'd had to date in the truism that EVERYONE lies to the mediator. You do not get to lie to the mediator twice, however, so I caution anyone who's feeling that she put one over on the mediator either to keep it to herself or never to hire that mediator again.
Still, I took a lesson from the attorney's merriment. I realized immediately that he was not the only, nor the first, attorney to manipulate me. He was simply the only one to let me know it. I don't like being manipulated. But that's what litigators are trained to do. We call it "persuasion." Still, I didn't like the look of my mediator's finger prints on that settlement, one that now appeared unduly influenced by my credulity.
So that's reason no. 1 -- an extremely strong reason no. 1 - why I don't' like to make mediator's proposals and why counsel might ask themselves whether they want to continue asking for them.
"If We'd Wanted a Third Party to Decide, We Would Have Arbitrated This Case"
The quote above is from an attorney who represented one of the parties in the largest and most sophisticated commercial case I've mediated to date. We were at the end of day two and the parties -- who had traveled great distances to meet in a neutral city -- were nowhere near a landing point. I was a sufficiently experienced mediator to land the case, but new enough to feel as if I'd run out of options when I suggested making a mediator's proposal.
"I didn't hire you to have a third party make my decision for me," said counsel. "If you want to get the parties closer together, why don't you suggest a bracket?" (for a explanation of bracketing, see my colleague Ralph Williams' article Introducing Deal Points - the Basics.)
I'd used brackets as a means of testing the parties' true distance before that day ("if he went to $X would you come down to $Y?") but I'd never made a mediator's proposal that was a bracket, i.e., "I suggest that the defendant put $X on the table if plaintiff will reduce its demand to $Y."
Although we didn't settle the case that day with a bracket (it took four full months of follow-up telephone negotiations to do that) I took counsel's point to heart. The parties don't hire me to make a decision for them. They're much happier when they get to make the decision themselves. Even though the parties do decide whether to accept the mediator's proposal, it hasn't come to them as the result of their own hard work. That being the case, the agreement reached is far less durable (subject to failure based upon nit-picking deal points after the agreement has been reached in principle) and far less satisfying than one achieved without the mediator's thumb on the scale.
I decided to stop making mediators' proposals more than two years ago. In all that time, however, I've never refused to make one. Rather, I've suggested alternative ways of achieving resolution, at least one of more of which settled the case in every case where the parties asked for a mediator's proposal.
I'd like to hear thoughts on these points -- manipulation and party satisfaction -- from my litigator readers as well as my mediator readers.
* I say this with the following caveat: I would never attempt to influence clients to do something other than what their attorneys advise. From time to time, however, the attorney needs to make the mediator the "bad cop" in the negotiation so that the client will not feel as if the attorney is no longer fighting for his interests. I only play "bad cop" with the attorney's advice and consent. My job is to get the settlement concluded making the attorneys look good, not bad.
When last we left Ari and Terrence negotiating Ari's compensation Terrence had ceremoniously offered Ari "NOTHING!!!"
But we're not talking only money here. We're talking power and agency in the psychological sense, i.e., agency as the capacity to control one's own future. Before the "nothing!!!" offer, Ari had told his wife he was still "afraid" of Terrence even as she attempted to prop him up by reminding him that he was Terrence's partner now. Although Ari wants control of the agency, his strength falters when Terrence comes back from a seven-year sabbatical.
Ari's discomfort in the scene below is palpable. Terrence asserts his authority ("I hope you're not planning to expense the Bat Mitzvah to the agency"); implies that Terrence's daughter had better instincts for talent at eight years old than Ari has now; and, previews his plan to take over Ari's five-year relationship with the talent of the hour -- Vincent Chase.
Ari is dealing from a position of psychological if not actual weakness. Having Terrence back on the scene is a little like going back home for the holidays after a few years at college. You feel independent but it takes only a few minutes with your parents to revert to your powerless teenage self. The final blow to Ari's self-esteem below is delivered in the form of a "gift." $50,000 for Ari's daughter's Bat Mitzvah. Ari is fifteen years old again.
Sensing Ari's weakness, Terrence moves to consolidate his power by taking over a staff meeting from which he excludes Ari. But Terrence has over-played his hand. Using Terrence's violation of the agency's folkways ("you embarrassed me in front of my troops") Ari pries an apology out of him and wins his first battle over who can summon the other's attendence by fiat.
When Ari returns to the negotiations, he has re-set the bargaining table in a way Lax and Sebenius in 3-D Negotiation would applaud. The subject of the negotiation is no longer Ari's share of the profits, but the value of the company itself and Ari's share in it. Note how Ari takes credit for the lion's share of the company's present value and emphasizes the company's vulnerability if Ari leaves.
The deal is sealed but the check unwritten and Terrence has no intention of fulfilling his promise when he learns that Ari intends to open his own agency, (tortiously) raiding Terrence's shop of its agents and clients. In a remarkable power play, Terrence brings together the "five families" Hollywood, to threaten Ari with ruin if he so much as offers CAA's mail room boy a paid position. Quick on his feet, Ari accuses Terrence of anti-Semitism (making Terrence the member of an "out group") and then promises not to touch any agency's clients other than Terrence's.
With no money to open his new agency, Terrence's agents are not inclined to follow Ari until an unlikely partner offers to fund his venture, below.
As Lax and Sebenius instruct:
3-D Negotiation involves not one, but three dimensions, all of which are in play more or less concurrently throughout an[y] effective negotiation[:] 1. Tactics 2. Deal design 3. Setup.
Deal designs, say the authors, create lasting value.
Smart people working at the drawing board can . . . discover hidden sources of economic and noneconomic value, then craft agreements -- design deals -- that unlock that value of the parties involved.
In the Entourage negotiation, Ari unlocks his own value when he finds the courage to leave the safety of Terrence's agency and open his own. By episode's end, Ari has changed the players, the subject matter of the negotiation and the balance of power in town. This is 3-D negotiation at its finest (even though it also rolls out at its most shameless).
All of that said, don't miss the opportunity to appreciate Ari's "at the table tactics" in negotiating the sale of his interest to Terrence. He enters the room confidently, refuses to permit Terrence to use his old power plays ("save a tree; say it out loud"); re-anchors Terrence's $4 million open with "my counter is $#@$ you"; explains his own value; diminishes any claim Terrence might have to the present value of the agency; signals his firm willingness to walk away; and, demonstrates his commitment to stay away in the absence of a realistic offer ("I have a rich wife who loves to spoil me"). The power shifts and the deal is done in two minutes flat.
Yes, it's Hollywood. But all good fiction, which Entourage certainly is, rests on hard facts, all of which are brought vividly to life here.
I was reading a great article in the New York Times this morning about "blue sky" transparent diplomacy in light of Obama's Cairo speech and was intrigued by the phrase "constructive ambiguity" in international diplomacy.
One is, don’t tell lies. The other is, you can say more in private than you can in public, but they have to be consistent.
This brought to mind not simply the one or two memorable instances in which I caught mediators in deception during my litigation practice, but a recent experience communicated to me by a friend about one of those $15/K a day mediators. I ask for the full 411 on these mediations because I'm intrigued by the value $15K/day buys. Here's the story.
My friend called me during a recent mediation to tell me that his mediator had just left the room after leaving this message with his "team."
Your opponents just asked me to make a mediator's proposal of $X.Y million.
Assuming that this disclosure was not a breach of confidence, I had to ask myself whether it was simply a (manipulative) hypothetical "offer" approved by the other side in form and content that the other side could safely disown. In either case, I felt it was (a) unethical - i.e., a breach of confidence; or, (b) partial (not neutral, which is also unethical).
Someone could likely talk me down off the ledge on this one but I'm having trouble seeing it as permissible mediator behavior. Assuming it wasn't a breach of confidence, it raises the question whose ox is being gored here? How much manipulation by the mediator is acceptable - is ANY manipulation acceptable and if the mediator is manipulating, is it POSSIBLE for him/her to do so without also being PARTIAL?
I have "caught" mediators in deception during my practice (and have not been quiet about my experience). In case mediators do not recall legal practice, let me remind them that counsel talk to one another and despite our differences usually trust one another more than we trust our mediator. If you lie to one of us or disclose something you shouldn't be disclosing, don't let the separate caucuses in which the mediation is taking place mislead you about the state of "play" in the litigation. If the mediator is dishonest, will be found out.
If we do not hold ourselves to the absolute HIGHEST POSSIBLE ethical standards, our credibility, and our careers, are seriously at risk.
How do we know that people are bad negotiators? For more than 30 years, theorists have been devising little bargaining puzzles. In these very simple problems, people routinely leave money on the table. Routinely fail to make the best possible deal.
Why? There are many types of answers, and my expertise is looking at how people failed to manage the process of both expanding the pie, creating value, and demanding their fair share of the pie, claiming value because they failed to comprehend their strategic position.
The process of managing or mismanaging the creating/claiming value process has been extensively studied, starting in the 60's with Walton and McKersie's A Behavioral Theory of Labor Negotiations.
One explanation of why people are bad negotiators, something Bob Mnookin stresses, is that people often look past their interests in common and go directly to undue focus on adverse interests.
We have all heard the term "win win", but what does it really mean? Bob Mnookin talks about the Program on Negotiation, an executive training program at Harvard.
O.K., times are tough. And it takes no small amount of courage to face the financial disaster that credit cards can cause to even those who feel themselves to be the most sober of financial citizens. Then it takes real courage to pick up a telephone and make a request to a disembodied and not-likely-friendly voice to ask for help bailing you out of a mess you can barely believe you find yourself in.
I have three things to say about this. First. The country's supposed financial geniuses are unable to pay their debts and are facing bankruptcy. You are not alone. Second. There's nothing to be ashamed of, though there is something to be learned from this painful experience. I know. I was there during the recession of the early '90s. Third. You are not without remedy. Take a look at "How to Negotiate with Your Creditors" at Entrepreneur Magazine this week.
Tips to help you negotiate with a creditor or collection agency:
If you make a request that is denied for whatever reason, ask to speak with a supervisor.
Don’t agree to pay more than you can afford when negotiating. Know in advance what your financial situation really is, then work within those confines. The last thing you want to do is negotiate a settlement or payment plan that you can’t adhere to.
During your negotiating process, figure out what the creditor is willing to accept as a settlement. What’s their absolute bottom line? If you’re looking for a settlement, offering between 50 and 70 percent of what’s owed, either as a lump sum payment or through a payment plan, isn’t unreasonable. Achieving this settlement might take several rounds of negotiation, however.
Avoid becoming intimidated by the person you’re negotiating with, even if they make threats about lawsuits.
Most successful negotiations require several rounds going back and forth with offers and counter offers. The process could take days or weeks.
If you can afford to settle an account by paying one lump sum (as opposed to using a payment plan), you’ll have more negotiating leverage.
The person you’re negotiating with does this for a living and is a trained professional when it comes to debt collections. For them to use legal terminology during a conversation or in writing is a common tactic to confuse or intimidate you. Listen carefully to what’s being said and make sure you understand exactly what you’re committing to. Consult with a lawyer or credit counselor if you have questions.
Make sure everything you ultimately agree to is put in writing, signed, and dated by both parties.
What to Negotiate for When Dealing with Creditors, Lenders, or Collection Agencies
a lower interest rate
the interest accrued to be waived
the late fees, penalties, and/or legal fees to be waived
the loan to be extended or restructured, allowing you to skip one or more payments with no penalty
a payment plan that would allow you to pay off the amount currently owed, but with no added interest or fees added in the future
a settlement that would include a significantly lower balance due (such as 50 to 75 percent of the total)
favorable reporting to the credit reporting agencies or the removal of negative information from your credit report pertaining that to that account
My statistics page tells me that lawyers are not the only people searching for information about likely outcomes at trial. The clients land here too. For their benefit, here's a report from the Accident and Injury Lawyer Blog, penned last Spring but likely to reflect current trends as well.
California Personal Injury Verdicts
California personal injury plaintiffs are among the best compensated injury victims in the country but that California juries need convincing that the defendant is liable. California’s median compensatory award in personal injury cases is 149,000, dwarfing the national median of $34,550. But California juries only award damages in 44 percent of personal injury case that go to verdict. Nationally, plaintiffs prevail in 52% of personal injury cases.
These California personal injury verdict numbers, not median or average settlements in personal injury cases. But settlement values largely reflect the median verdicts.
I don't know if anyone has yet studied the effect of the economic downturn on juries' willingness to compensate injured plaintiffs (Anne Reed?) I'd suspect that actions against insurance carriers - particularly health insurance carriers - would "sell" to jurors and stimulate their empathy given everyone's fear of losing their jobs and the insurance that often goes along with employment.
I wonder, however, if today's jurors might not turn a cold eye on anyone they believe to be "gaming" the system or seeking compensation for injuries that they too are suffering but about which suffering they have no one individual or entity to "name, claim and blame."
I'd be interested in hearing from my litigation colleagues about the current atmosphere in jury deliberation rooms. The best jury blog, hands down, by the way, is attorney and jury consultant Anne Reed's Deliberations.
As every lawyer knows and most students of high school geometry must learn in mastering "proofs," the answer often comes first, the rationale later. I used to say, "I'm a litigator, I can rationalize anything." As a mediator, my rationalizations have turned from the way in which facts can be shoe-horned into causes of action or affirmative defenses to the way in which harm arising from a dispute (including, most assuredly, the moral harm of injustice) can be monetized.
Now David Brooks in the New York Times (which appears to have disabled the "copy" function/1) tells us that philosophy has been sacrificed on the alter of emotion in his column The End of Philosophy.
As Brooks explains, reasoning comes after moral judgment and "is often guided by the emotions that preceded it." The good news is that those emotions are not merely competitive. Brooks again:
Like bees, humans have long lived or died based on their ability to divide labor, help each other, and stand together in the face of common threats. Many of our moral emotions and intuitions reflect that history. We don't just care about our individual rights, or even the rights of other individuals. We also care about loyalty, respect, traditions, religions. We are all the descendents of successful cooperators.
My mediation experience teaches me that the "soft" arts of influence, empathy, community-building, and prejudice reduction, are as important (and often more important) to the successful (i.e., satisfying) resolution of a lawsuit than our prized ability to parse the evidence, rationalize away the bad and privilege the good to sell our "proof" to judge or jury.
Most importantly, I find that when attorneys' clients leave a mediation with the belief that a certain rough justice has been obtained, they are more satisfied with the outcome, and with their attorneys' representation of their interests, than they might have been had they left with 10% more change jingling in their pockets.
The experts who study mediation tell us that "neutrals" don't make the difference between settling or not settling. The cases will settle with or without us. The difference mediators make is not settlement, but client satisfaction. Satisfied clients are an absolute necessity for a successful legal practice at any time. In these hard times, legal practices may fail in the absence of resolutions addressing the justice issues your client sought out a lawyer to resolve in the first place.
Money is the instrument. But justice is the issue.
Challenges to good faith settlements that cut off the rights of non-settling defendants to seek indemnification and contribution from settling defendants are nearly always doomed to failure. Trial courts are understandably eager to clear their dockets and there's no docket-clean-up pitcher like the first defendant to settle. Deny the motion and bring a settled defendant and his trial-ready resources back in to the litigation when the first defendant-domino has just successfully toppled over? Not likely, my friend. Not in the trial court at any rate.
These motions are so difficult to oppose that I've seen a target defendant threaten a marginal player (my client) with sanctions just for challenging the target's very low six-figure settlement in an eight-figure antitrust action.
Best quotation: "The hospital contends that the physicians‟ $200,000 settlement -- representing 2 percent of plaintiffs‟ $10 million damages estimate -- was so far out of the “ballpark” it was not even in the parking lot." With a first runner-up to "If section 877.6 is to serve the ends of justice, it must prevent a party from purchasing protection from its indemnification obligation at bargain-basement prices."
The Court of Appeal relied upon the following "facts" in finding that the trial court abused its considerable discretion in granting a good faith motion to defendant physicians in light of defendant hospital's opposition.
payment of $200,000 in settlement for a $10 million claim, which the appellate court found to be "wholly disproportionate." As the Court opined "[e]ven a slight probability of liability on [the settling doctor's] part would warrant a contribution more significant than 2 percent."
the "evidence" supporting the court's finding that the settling physician's probable fault was "not de minimis," which appears to have been based upon Plaintiff's attorney's fault analysis (not generally known for its unbiased nature) and the physicians' counsel's candid (?) suggestion that his clients' contribution to a global settlement might be in the range of $1.5 million;
the availability of $2 million in coverage, which "militated against a good faith determination" because the settlement constituted only 10% of available policy limits [carrier alert here!];
the non-settling Hospital's contention that the physicians and their attorneys engaged in "bad faith tactics" during two mediation sessions -- a factor the appellate court acknowledged it was barred by mediation confidentiality from considering -- but which it neatly avoided by concentrating on post-mediation negotiations; /*
the timing of the physicians' settlement offer, which suggested to the appellate court that their "reason for entering into the settlement with plaintiffs was to cut off the hospital's . . . right to indemnity from the physicians" (I thought that was a legitimate reason to settle litigation but see the Court's citation to Mattco Forge, stating that when a defendant “enters into a disproportionately low settlement with the plaintiff solely to obtain immunity from the cross-complaint, the inference that the settlement was not made in good faith is difficult to avoid.” Mattco, supra (emphasis added); and,
a consideration I've never seen defeat a good faith motion before - that a settlment "dictated by the tactical advantage of removing a deep-pocket defendant . . . is not made in 'good faith' consideration of the relevant liability of all parties. . . ." (leading to the question whether we're now required to consider the interests of clients other than our own in entering into a settlement agreement on a contested claim)
If this case isn't depublished (an unfortunate California practice) or taken up for review, it will bear re-reading and deeper thinking about the stategy and tactics of breaking away from the mob to cut a separate deal beneficial to one's own client without "consider[ing] . . the relevant liability of all parties . . . "
*/ This is a good place to note the importance of either indicating in the parties' post-mediation written negotiations that the mediation is continuing (hence the communications remain absolutely protected) or that the mediation has concluded (hence bringing those post-mediation settlement negotiations outside the scope of the strictly enforced mediation confidentiality restrictions).
I've scaled my MCLE way back this year, including any continuing education that requires travel unless, of course, it's something I'm speaking at to continue growing my business. Some MCLE courses, however, stay on my radar -- particularly those that don't require me to leave the office and that teach me skills to help me thrive in hard times. This IP settlement webinar is one of those continuing education courses I'd attend unless I thought I was already the best settlement attorney I could be. So seriously consider joining me and Chicago-IP lawyer extraordinaire R. David Donoghue of Holland + Knight for Hard Times? Learn How to Negotiate the Best IP Litigation Resolution
In a difficult economy, intellectual property protection and assertion is more important than ever. The combined stressors of a poor fiscal climate and shrinking legal budgets place a significant strain on any business dependent upon IP assets. as companies face difficult economic decisions, it is increasingly difficult to fit the expense and extended uncertainty of copyright, patent and trademark litigation into a forward looking business plan. This one-hour seminar explores the use of alternative dispute resolution as a means of protecting intellectual property and business activity, while minimizing the expense and devotion of time related to traditional IP litigation.
What You Will Learn
This program examines how to move an IP dispute toward alternative dispute resolution; best practices for controlling the expense and length of the process; and best practices for successful alternative dispute resolution. Whether you are an experienced IP practitioner or simply one grappling with IP issues in your general commercial practice, knowing how to offer your clients a wide array of ADR options might make the difference between a practice that survives and one that thrives. The seminar will cover the following topics:
How to choose between litigation and ADR.
The most successful strategies for guiding your dispute into the best ADR forum at the most productive time.
The five basic rules of “distributive” or “fixed sum” bargaining that will give you the “edge” in all future settlement negotiations.
The five ways to “expand the fixed sum pie” by exploring and exploiting the client interests underlying your own and your opponents’ legal positions.
The Ten Mediation/Settlement Conference Traps for the Unwary.
Invest just 60 minutes at your home or office to learn about alternative dispute resolution in the IP field from this duo of experts. This audio program comes to you live on Wednesday, February 18, 2009, 1:00-2:00 pm EST, via your phone or your computer. Materials corresponding to the course may be downloaded or viewed online.
From today's Wall Street Journal, Don't Buckle in Layoff -- timely advice for one of life's worst case scenarios - being made "redundant."
First piece of layoff wisdom:
Negotiate Your Severance
While not required to do so by law, many employers offer severance packages to laid-off employees. The package's size is usually based on the employee's length of service -- some are entitled to two weeks of pay, while more seasoned employees may receive as much as a year's worth.
If you've been working at your company for only a year or two, there are ways to wring a little more pay from your employer. First, ask that any unused vacation days get tacked on to your final paycheck. (You can also try to do this with sick days, but it's often a long shot.) If you have a stellar record with the company, it's also worth asking for more severance pay or an extension of your health coverage.
Watch for undue pressure to sign release of claims when handed a severance package. "You must be given at least 21 days to think about the package," Milne states, "when you're terminated but not part of a group."
You must be given the option to revoke the waiver within seven days after you sign it. "This must be set out, in writing, in the release of claims," Milne notes.
You also have rights if severance accompanies a group layoff or early retirement program, he indicates. The ADEA stipulates a period of 45 days or more to make your decision, along with the seven-day revocation provision.
Milne says these requirements alone, unmet, won't give you enough to sue. However, if you have evidence of age discrimination, a signed release that doesn't follow ADEA guidelines won't block you from a bias claim.
Because these parties couldn't agree on what year it is, however, no one balks at my suggestion that we write up the entire deal -- settlement agreement with mutual general releases; the Stipulation for the Entry of Judgment; and, the proposed Stipulated Judgment itself.
The first problem is everyone's failure to bring a form Settlement Agreement and Mutual Release, let alone one that included enforceable terms for the entry of a Stipulated Judgment in event of default.
ADVICE??? Carry these documents on a "flash" or "jump" drive whenever you're going to a settlement conference or mediation. Heck, carry them with you to the first day of trial where you might be startled to learn that your adversary is prepared to settle the case right now!
Fortunately, I had access to my own files which contained detailed forms for everything we needed, forms I offered to counsel as guides. I did so only with the express understanding that I did not recommend my own forms as adequate, complete or enforceable.
I'm just the mediator, not the legal representative of the deal in loco parentis.
It's a good thing we made the effort to fully document the deal because it threatened to fall apart over all of the following terms:
the dismissal of ancillary proceedings
forbearance from inducing future actions by non-parties
liquidated damage clauses for the breach of certain critical deal points
indemnification for future actions if induced by certain of the parties
Each of these items required separate negotiation and compromise and as to each I helped the parties calculate the degree of possible misbehavior by their adversaries and the protections that might "fit" the probable harm. I do not believe the parties would have been able to resolve these terms (as well as others too confidential to mention) without third party assistance. One was so difficult to predict both the series of possible events and potential remedies that we provided for arbitration of that term alone in the event of alleged default.
When we all finally left the building at one in the morning, we had fully completed paperwork, signed by all parties in hand.
And yes, I was the only one present who could type.
The anger, suspicion and ill will that has characterized the first eight hours of this mutli-party, eight-figure antitrust mediation is about to heightened as I deliver Defendants' terms: they will pay the settlement agreed upon in six equal yearly installments over three full years without any security to back it up.
Are you wondering what your mediator is thinking at times like this?
That "thought" is momentary, however, like the cry you squelch when the trial judge does something like, say, grant the other side's motion to disqualify your expert witness during the second week of trial.
I don't have a plan, but I do have ideas. Just as my suggestion that we use a bracketed offer to break impasse had eventually done just that, I'm already thinking of ways that the parties' most intractable and conflicting positions might move them toward agreement.
"They can wait," defense counsel is saying, "or they can try the case in February and see if they can collect it," to which a principal adds, "this puts them on our side for a change. If we make the money we believe we can, they'll benefit too."
"I thought you said you knew you could," I say, laying groundwork for the contingency ahead.
"Yes, absolutely. We know we can."
Back in the Plaintiffs' caucus room, the parties and their counsel aren't simply angry; they're flabbergasted.
"They sand-bagged us," says Plaintiffs' counsel. "We'll report this to the Judge. They didn't come here in good faith. They're deliberately wasting our time."
After some calming discussion about why the cash-poor defense would deliberately pay their own attorney and one-half of my daily fee in bad faith . . . a question to which no answer ever eventuated . . . Plaintiffs and their counsel begin to confidently predict the defense's inability to make a single installment payment. Plaintiffs believe the defendants have resources - secreted away somewhere - but will never use them to settle this case.
When the temperature of the room has diminished to that of the sun's surface rather than its core, I ask about the possibility of a stipulated judgment in the event of default.
"In a sum you hope the jury will award you at trial," I proffer. "If you're right; if they have no intention, nor any ability, to pay even the first installment, you'll be in the same position on default that you'd be in if you prevailed at trial. And if they're capable of paying, they're much more likely to do so if the alternative is a mutl-million dollar judgment against them."
Though the total sum of the Stipulated Judgment is the main topic of discussion over the following two hours, the parties' insistent conflicting predictions for the future make it all but inevitable they will eventually reach agreement. If the defense never pays, the Plaintiffs will have their judgment more or less immediately, without the burden of proving it up. And if the defendants are good for their word that they can service the "debt" the settlement agreement creates, they never have to worry about this potential judgment becoming a reality.
Often, a major obstacle to reaching negotiated agreements concerns negotiators' beliefs about some future event or outcome. Impasses often result from conflicting beliefs that are difficult to surmount, especially when each side is confident about the accuracy of his or her prediction and consequently uspicious of the other side's forecasts. Often, compromise is not a viable solution, and each party may be reluctant to change his or her point of view.
Fortunately, contingent contracts can provide a way out of the mire. With a contingency . . . differences of opinion among negotiators concerning future events do not have to be bridged; they become the core of the agreement. . . . [Parties] can bet on the future rather than argue about it.
Here, the agreement calling for a Stipulated Judgment of sufficient size to deter default, allowed the parties to:
bet on rather than argue about their different forecasts for the future;
As you'll recall, we're in hour nine of the mediation. The parties have finally agreed to settle the antitrust litigation the Court ordered them to mediate ("we won't settle; we'll only be here for an hour").
Defense counsel wants to write up the "deal points" and make a quick getaway. Before she does so, we have the following conversation.
"We'll need three years to pay it."
I fake calm.
"Your security?" I ask, my mind racing to the other room where an already unhappy set of plaintiffs are sitting.
"We don't have security. I told you my clients are broke. I also told you we'd need terms but you didn't want to talk about them."
This is true. From hour one the defense insisted they'd need to pay over time and the Plaintiffs wanted to know what terms the defense was thinking of. Throughout the day I'd told them both the same thing: "let's see if we can agree on a number before we start talking terms."
I have reasons for this. They are as follows:
once people have agreed upon a number, it's far more difficult for them to walk away from a deal; the Plaintiffs have already begun to think about what the money will mean to them and the defense has begun to imagine life without the litigation;
people are risk averse. So long as there is no (or only minimal) money on the table, it's easy to refuse to engage in the often difficult process of readjusting their expectations and compromising their desires. When there's enough money on the table to make both parties want to settle, walking away involves loss.
This is often the trickiest part of the mediation. The three-year time table and absence of security is, I know, enough to blow up this deal. I'm going to take heat from the Plaintiffs' side, for resisting their efforts to learn the Defendants' terms before they spent an entire day agreeing upon the price. I don't, however, regret my decision. If these terms cause the negotiation to break down now, they certainly would have done so in hour one.
How I help the parties negotiate what is poised to become a rancorous impasse in the next post.
It's 8 p.m. and you've just spent nine straight hours negotiating the settlement of complex commercial litigation with multiple parties that was filed before George Bush first took office. The case has been up on appeal twice and is now scheudled for trial in February. All defendants but the final three standing have settled. Three of the principals have flown in from out of state and two of the attorneys have driven a few hundred miles to Los Angeles from their home towns.
"Let's just write up the deal points," says Lawyer No. 1, yawning. "We can write up the full agreement over the long weekend."
Lawyer No. 2 turns to me and says "Judicate West has a form, right? Let's use that."
IT IS HEREBY STIPULATED by and between the parties through the respective counsel or representative of each that the above-referenced case has been settled according to the terms memorialized herein below. This document is binding on the parties and is admissible in court pursuant to Evidence code section 1123 and enforceable by motion of any party hereto pursuant to CCP section 664.6.
In order to facilitate the above specified terms of settlement, the parties further agree that on or before the day of they will execute or change the following:
Settlement / Release Agreement Prepared by _____plaintiff_____defendant
Request for Dismissal Prepared by _____plaintiff_____defendant
All relevant parties must sign below. Copies are acceptable in lieu of originals.
I know. You didn't expect the case to settle. At least that's what I've been hearing you all tell me since hour one of the mediation. But now we're in hour nine and the basic deal points have been reached. It's January 15. Trial is in 30 days. You have all the parties present and the mediator who has by now sussed out the BS; developed a good working relationship with all sides of the dispute; knows how hard the parties worked to get here; and, is unlikely to let the "devil" in the details sink the settlement ship.
Anyone who's been living in outer Mongolia for the past couple of years should head on over to Adams Drafting straight away. Why? Because once you negotiate the best deal you can, you have to write it up on the best terms you can. Hence the need -- yes need -- for Adams' Drafting.
This gives Ken Adams an opportunity to address the question whether it's ever beneficial to purposely include ambiguity in your contracts -- a question I'd answer after nearly a quarter century of contract litigation practice with this -- sure, if you'd like to put my husband's and my grandchildren through prep school and college. Otherwise, not so much.
But don't take it from me. Go see what the master of contract drafting says.
FORUM (FORUM & FOCUS) • Jan. 08, 2009 Every Case Is a Winding Road
By Victoria Pynchon
I have a confession to make. I am about to become embroiled in litigation. Though I preach the religion of negotiated resolution, I've nevertheless hired litigation counsel to assert my rights and pursue my remedies.
This is one of those moments when the rubber of our ideology meets the road of personal circumstance, the moment we are called upon to decide to walk our talk or take the more familiar road.
For more than 30 years - first as paralegal, then as a law student and finally as a commercial litigator - I'd been swimming in the waters of legal rights and remedies. The adversarial ocean had become so familiar a habitat that it rarely occurred to me that I was under the surface. One day toward the end of my first year of mediation practice, a much more experienced friend hooked me by the cheek and threw me on the deck of his ship, where I was gasping for air.
He'd asked me to co-mediate a will contest without the benefit on my clergy - lawyers with experience in the field. The "fish out of water" conversation that ensued went something like this:
Joe Mediator: "The family doesn't want to hire a lawyer. They just want to mediate."
Vickie: "But I know absolutely nothing about wills, trusts and estates. The parties need to talk to a lawyer first to learn their rights and remedies."
Joe: "You still don't get it, do you?"
Vickie: "Get what?"
Joe: "It's not about rights and remedies. It's about interests."
Vickie: "But how can they evaluate their interests without knowing their rights and remedies?"
Joe: "Because they're not interested in what the law says - they want to do what they believe is right for them as a family under the circumstances."
These people wanted to resolve a legal dispute without knowing their legal rights? Were they nuts? I understood "interests" - they were all the rage in ADR circles - the desires, fears and needs of the parties that drove them to take legal positions. Sometimes those interests were non-economic - the need for revenge, the desire to be personally accountable, the fear of failure, the hope for forgiveness and reconciliation. Others, though economic, could not be remedied by way of damages - better access to foreign markets, for instance, or wider distribution chains; the acquisition of better manufacturing processes; or, the retention of executives with "pull" in Washington. But all of those matters were secondary to legal rights and remedies, weren't they? You had to know what your rights were.
the economists David Hemenway and Sara Solnick demonstrated in a study at Harvard, many people would prefer to receive an annual salary of $50,000 when others are making $25,000 than to earn $100,000 a year when others are making $200,000.
Why? Because we "care more about social comparison, status and rank than about the absolute value of our bank accounts or reputations." In other words, we're more concerned with justice (fairness) than we are about the money. Which is why our clients have sought out our help with their personal, financial and commercial problems -- because we're in the justice business. When we understand this, the negotiation of financial settlements becomes a whole lot easier because there are many more ways to deliver justice than by throwing money at it.
Are mediators being hook-winked by clients who create artificial impasses for the purpose of procuring a favorable mediator's proposal? Does the mediator's recommendation carry so much weight that the parties are subject to a manipulated mediator's proffer? Does the mediator become just a tool of a party bent on flim-flam? Or is all distributive bargaining flim-flam?
I understand some lawyers are settling all their cases with mediators' proposals. Why is that? Are they savvier than their colleagues? Or do they just need the authority of the mediator to "sell" settlement to their clients?
Jump in here or over at John's place. Whether you're a mediator, a litigator, or a client, we'd both appreciate your fresh ideas.
Psychologists tell us that we are not only "meaning making" beings, but that we are all born conspiracy theorists. Viewing a field of nonsensical, unrelated data, we naturally begin to "connect the dots" - to organize the information into a coherent, and often compelling, narrative.
Pattern making or conspiracy theorizing is a human survival mechanism. We have never been the fastest or the biggest creatures on the planet. We don't have the sharpest teeth or blend in all that well with the scenery. Our soft, easily punctured skin is not covered with a protective shell. In a pinch, we can't take a running leap and fly away from land-bound carnivores who might make us their prey.
We are, however, the canniest creatures on the planet. To avoid the tiger who made lunch of our best comrade, we surveyed the scene and committed the pattern of otherwise unrelated details to memory. Five banyan trees, a narrow stream, and, a pile of rubble left by a recent avalanche means "there are tigers here."
Couple this with Fundamental Attribution Error and you have all of the ingredients necessary to blame inadvertently caused harm on elaborate conspiracies cooked up by our untrustworthy companions - Fundamental Attribution Error being our universal tendency to over-emphasize the role of others' negative personality traits to explain why harm befell us.
So it is with our legal adversaries. Once the channels of communication have been severed by the filing of a lawsuit, attorneys and clients alike begin to make up "what really happened" based on predispositions, scattered conversations, faulty memories and scraps of documentation.
More than 360 Connecticut homeowners have avoided foreclosure in the past five months thanks to a new mediation program established by the state, but some think it’s still being underutilized.
The program, which was part of comprehensive mortgage relief legislation passed earlier this year, allows borrowers to meet their lender face-to-face to try to reach a settlement on an overdue mortgage.
If the borrower chooses mediation, lenders are required to participate and the process can delay foreclosure by 60 days or more.
Some lawmakers have touted the program as the first of its kind in the country.
About 28 percent of the estimated 5,513 homeowners who are eligible for the program have applied for mediation, and 361 people have reached a settlement that allowed them to keep their home. Another 116 homeowners decided to leave their home but were able to reach an agreement with their lender to pay off the balance of their mortgage. Mediation remains unsettled in 203 cases.
“All of us familiar with the program would like to see more people participate,” said Ann Parent, an attorney for the Connecticut Fair Housing Authority. “We don’t know why more homeowners aren’t requesting mediation, but we feel like more should.”
Parent said she supports the program and agrees that it is serving an important purpose, especially for homeowners who can’t afford a lawyer to guide them through the foreclosure process. At the same time, however, she said it’s unfortunate that less than 30 percent of eligible homeowners are using it.
If you’re a beginning female entrepreneur or a women who is thinking about starting in business for herself, you have found your tribe. You have arrived at a safe place to talk about business. Especially if you are 35-55 years old, you are going to love this site because that’s a magic age time. You really discover who you are during those years and finally decide to do what you love instead of just what you’re “supposed” to do. The spirit of that revelation and all the promise it holds is why this site was created.
So let us begin anew -- remembering on both sides that civility is not a sign of weakness, and sincerity is always subject to proof. Let us never negotiate out of fear, but let us never fear to negotiate. Let both sides explore what problems unite us instead of belaboring those problems which divide us.
Let both sides, for the first time, formulate serious and precise proposals for the inspection and control of arms, and bring the absolute power to destroy other nations under the absolute control of all nations.
Let both sides seek to invoke the wonders of science instead of its terrors. Together let us explore the stars, conquer the deserts, eradicate disease, tap the ocean depths, and encourage the arts and commerce.
Let both sides unite to heed, in all corners of the earth, the command of Isaiah -- to "undo the heavy burdens, and [to] let the oppressed go free."
And, if a beachhead of cooperation may push back the jungle of suspicion, let both sides join in creating a new endeavor -- not a new balance of power, but a new world of law -- where the strong are just, and the weak secure, and the peace preserved.
All this will not be finished in the first one hundred days. Nor will it be finished in the first one thousand days; nor in the life of this Administration; nor even perhaps in our lifetime on this planet. But let us begin.
Still active is Molski's case in the Eastern District of California which was recently permitted to go forward by the same Ninth Circuit Court of Appeal. As the Ninth Circuit explained the factual background of Mr. Molski's "serial litigation,"
[Plaintiff] Molski and his lawyer Thomas Frankovich (“Frankovich”) were purportedly in the business of tracking down public accommodations with ADA violations and extorting settlements out of them. On cross examination, Molski acknowledged that: he did not complain to any of [the defendant's] employees about his access problems; he had filed 374 similar ADA lawsuits as of October 8, 2004; Frankovich had filed 232 of the 374 lawsuits; even more lawsuits had been filed since that date; Molski and Frankovich averaged $4,000 for each case that settled; Molski did not pay any fees to Frankovich; Molski maintained no employment besides prosecuting ADA cases, despite his possession of a law degree; Molski’s projected annual income from settlements was $800,000;2 Molski executed blank verification forms for Frankovich to submit with responses to interrogatories; they had also filed lawsuits against two other restaurants owned by Cable’s; they had filed a lawsuit against a nearby restaurant; and Sarantschin obtained up to 95% of his income from Frankovich’s firm for performing investigations for ADA lawsuits.
Despite these apparently damning facts, in its 2007 affirmance of the vexatious litigant finding, the Ninth Circuit noted some of the reasons why Molski and his lawyer could not be condemned for their pursuit of serial ADA litigation. The ADA, noted the Court,
does not permit private plaintiffs to seek damages, and limits the relief they may seek to injunctions and attorneys’ fees. We recognize that the unavailability of damages reduces or removes the incentive for most disabled persons who are injured by inaccessible places of public accommodation to bring suit under the ADA. See Samuel R. Bagenstos, The Perversity of Limited Civil Rights Remedies: The Case of “Abusive” ADA Litigation, 54 U.C.L.A. L. Rev. 1, 5 (2006).
As a result, most ADA suits are brought by a small number of private plaintiffs who view themselves as champions of the disabled. District courts should not condemn such serial litigation as vexatious as a matter of course. See De Long, 912 F.2d at 1148 n.3. For the ADA to yield its promise of equal access for the disabled, it may indeed be necessary and desirable for committed individ- uals to bring serial litigation advancing the time when public accommodations will be compliant with the ADA.
But as important as this goal is to disabled individuals and to the public, serial litigation can become vexatious when, as here, a large number of nearly-identical complaints contain factual allegations that are contrived, exaggerated, and defy common sense. False or grossly exaggerated claims of injury, especially when made with the intent to coerce settlement, are at odds with our system of justice, and Molski’s history of litigation warrants the need for a pre-filing review of his claims. We acknowledge that Molski’s numerous suits were probably meritorious in part—many of the establishments he sued were likely not in compliance with the ADA.
On the other hand, the district court had ample basis to conclude that Molski trumped up his claims of injury. The district court could permissibly conclude that Molski used these lawsuits and their false and exaggerated allegations as a harassing device to extract cash settlements from the targeted defendants because of their noncompliance with the ADA. In light of these conflicting considerations and the relevant standard of review, we cannot say that the district court abused its discretion in declaring Molski a vexatious litigant and in imposing a pre-filing order against him.
In other words, when the legislature puts the enforcement of the ADA in the hands of disabled individuals without permitting them to recover damages, you can't blame private attorneys for working the market created for the private enforcement of public laws even if you can blame them for the manner in which the market is worked.
So what does this have to do with the settlement of litigation and, in particular ADA Litigation?
Because these accessibility cases always cost more to defend than to settle and because they're often indefensible, the rational business decision is simply to settle the darn things.
No one, however, wants to be extorted. And in the few ADA cases I've mediated, it's the principled refusal to pay money at the point of a gun that interferes with a business establishment's willingness to do the economically "rational" thing rather than, say, try it; appeal it to the Ninth Circuit; and, pursue it to the Supreme Court of the United States.
For those representing defendants who are feeling extorted, I offer my own (previously posted) ADA mediated settlement story below.
I have recently been asked by several lawyers to write a few posts on mediation and negotiation terminology not only because some attorneys are unfamiliar with these terms, but also because different mediators and negotiators use them to mean different things.
Mediators, lawyers and negotiators who read this post are invited to add, correct, object, or suggest further refinements and to add their thoughts on further strategic and tactical uses and perils of the impasse-busters we discuss today - the bracketed offer and the mediator's proposal.
And because my readers may find this post as dry as bones, I once again offer the X-rated "Negotiation Table" as pretty #%$@ true and funny (think Ari Gold).
Bracketed Offer: Party A makes an offer to bargain in the zone he wishes to see the negotiation move to. This is often used when neither party wishes to step up to the line of probable impasse and it can also be used to re-anchor the bargaining zone. Quite simply, Party A offers to bargain in the range of, say, $2 million and $3 million. He offers to put $2 million on the table if party B is willing to put $3 million on the table, i.e., "I'll offer to pay you $2 million if you'll offer to accept $3 million to dismiss your suit."
If party B does not accept the bracket, party A will not be "stuck" with having actually placed $2 million on the table when the next exchange of offers and counter-offers begins.
Responding to a Bracketed Offer: Party B can: 1. respond with a counter-bracket, i.e., I'll make an offer to accept $3.5 million in settlement if you'll put $2.5 million on the table; or, 2. refuse the bracket and ask for an unbracketed counter.
The basics: the mediator chooses a number for the parties, making an "offer" to settle for, say $2.3 million which the parties are free to accept or reject. It is a double-blind "offer." If either party rejects the "offer" neither party knows whether the other accepted or rejected. Acceptances are communicated only if both parties accept, in which case they have a deal.
The circumstances: The parties should seek a mediator's proposal only when they have reached a hard impasse. A hard impasse exists when both parties have actually put their true bottom line on the table or their next to the bottom line and they see no hope of it closing the deal.
The purpose: Both parties believe they could convince their principal to accept a deal that is more than they wanted to pay or less than they wanted to accept, but they cannot convince their principals to put $X on the table or accept $Y. They hope to use the authority of the mediator to sell the deal to their principals. If they are the principals, they are willing to settle for a number lower or greater than planned but not willing to close the bargaining session having made such a concession, which would have the effect of setting the floor or establishing the ceiling of all future bargaining sessions.
The Mediator's number: I do not know whether there is a general practice among mediators about how they choose the number proffered. When parties ask me to make a mediator's proposal (I rarely recommend one in the first instance) I explain my practice as follows: When I make a proposal I am not acting as a non-binding arbitrator or early neutral evaluator. In other words, my proposal is not a reflection of the value of the case. The number I propose will be a number that I believe the Plaintiff is likely to accept and the Defendant is likely to pay.
In rare instances, the parties wish to continue bargaining in the event a mediator's proposal is not accepted by both parties. I have permitted this in a few circumstances after explaining to the negotiating parties that it often causes resentment on the other side because they feel as if the party who wishes to continue negotiating is unfairly attempting to use the mediator's number as a new bench-mark from which to bargain.
I highly recommend against continued bargaining after the rejection of a mediator's proposal on the day of the mediation. It should serve as a hard stop because the parties respond to it as an ultimatum. That's part of its power. Take it or leave it.
Just as you would not continue bargaining after indicating that you were putting your last dollar on the table, you should not continue bargaining (during that session) after the mediator has, in effect, put both parties' anticipated bottom lines on the table for them.
First she's all about the election and now she's back to post-mid-Century America's gender wars? Say it ain't so, Vickie!
These are just statistics from an extremely limited sample that tells more about this particular program in this particular place concerning the particular types of cases being mediated than they are about the relative abilities of male and female mediators.
I'm unaware, however, of any controlled studies on gender differences in mediation results. I do know that there's a gender imbalance in the profession and have had panel administrators acknowledge on the QT that even when they're choosing mediators or settlement officers pro bono lawyers tend to choose men most of the time.
So for women struggling in the profession, here's your moment of zen.
Examining the graphical representation of mediator gender and settlement rates, one can see that there are male mediators who settle cases at higher than average rates, as well as female mediators who settle cases are lower than average rates. Nevertheless, it appears that most of the popular mediators who settle cases at higher than average rates are women, while the majority of popular mediators who settle cases at lower than average rates are men.
Some may object to this “battle of the sexes” analysis on the grounds that men and women should be treated as equals. Based on our data, however, male and female mediators are not statistically equal with respect to the rate at which they settle cases. Whether this “good” or “bad” is more a matter of philosophy than statistics.
In her book In a Different Voice, Carol Gilligan described how men and women think about moral conflicts differently. Her research suggests that men tend to consider conflict in terms of rights while women generally view conflicts in terms of dynamic relationships. Accordingly, a “female” approach to conflict resolution may be better suited to the process of facilitating mediated settlements than a “male” approach to conflict.
When I think of my own experience as a neutral for the past four years and compare it to my experience as an attorney in the first four years of my practice 1980-1984, I can only say that it is somewhat similar.
What made the difference in the years that followed? Women flooding the profession. As women litigators and bench officers begin to retire, I suspect that we'll begin to see greater use of women neutrals. And no, I do not believe that the paucity of women on commercial mediation panels nor what I believe to be their greater struggle to build a thriving practice there is based upon conscious sexism.
Like the tendency to prefer judges over attorney mediators (a preference I believe to be waning) I believe that the sub-conscious preference for male over female mediators arises from a continuing misunderstanding among members of the bar about what settles cases. Too many attorneys continue to believe that they need a mediator who can overpower the will of their adversary. And if you're looking for raw power (particularly the power of authority) in American commerce and law, you will naturally choose the judge over the attorney and the man over the woman.
I haven't written about this in the past because it is a topic that tends to divide people and it is not my intention to start a tiny gender war in the tiny world of mediation.
But when these statistics started pouring into my in-box, I couldn't ignore the topic any longer.
The mediation of litigated cases involving personal or economic injury should mainly be about money. Unless the issues of law and fact have been fully fleshed out, mediation sessions get bogged down in contentions about ultimate facts and conclusions of law that neither side can "win."
Let’s take a drug case in which the drug causes a signature disease that only has 3-4 causal connections. Until the defendant knows my client’s medical history and definitively understands that the only causal connection present in my client’s case is the drug at issue, the defendant cannot fully appreciate the strengths of the plaintiff's case, leading to an unbridgeable divergence in the two sides' valuation. On the other hand, if I’ve not yet conducted adequate discovery to learn that the drug didn’t contain the offending agent until after my client quit taking the drug, then I’m going to waste my time – and everyone else’s – by asking for 7 figures.
If the attorneys are making arguments that sound like summary judgment motions during a mediation, both parties are wasting their time. No one should proceed to mediate before they know what they agree on and what they disagree. Ideally, the parties should agree upon as many facts and legal issues as possible before sitting down to negotiate settlement.
Make Sure The Money Person Is There
I will no longer attend a mediation unless the individual authorized to write the settlement check is present. None of this, “We have to get on the phone and see what corporate says” for me. You do not want to mediate with defense counsel only. It’s much easier for an adjuster or other money person to hold tight at a number when he/she doesn’t have a plane to catch. In fact, one of the first things I ask the corporate representative at a mediation is, What time is your flight? This information usually tells me volumes.
Make Sure The Mediator Knows Who to Talk to Before the Mediation Begins
Assuming there’s only one plaintiff and one defendant, there are no less than four parties that the mediator may need to direct his/her attention to: (1) defense counsel (2) the corporate representative of the defendant (3) plaintiff’s counsel and (4) the plaintiff. In any given litigation, one or more of these parties could be the source of impasse. Usually my clients are very well-oriented on where we need to be money-wise heading into mediation. The occasion does arise, however, when I need the mediator to help me help my client understand that his or her expectations of recovery are unrealistic. On those occasions, I instruct the mediator confidentially that my client needs a little reality testing if the case is going to settle.
All of us sometimes have unrealistic expectations. I certainly can, as can defense counsel or the corporate representatives. The point is the mediator needs to know who needs to be talked to a little more than the others. I encourage any mediator with whom I work to accept confidential settlement letters. In these letters, I mention which parties I think might be barriers to settlement.
If you have a mediator who only talks to the lawyers, you’re probably in for a long and unsuccessful day. Or, given the situation, it may be the clients who are being hard-headed. In these instances, the mediator needs to talk right past the lawyers and speak directly to the clients. As a plaintiff’s lawyer, I won’t deal with a mediator who won’t talk directly to my client or the corporate representative.
The lawyers' job is to represent their clients and the mediators job is to bring the lawyers together. If the lawyers are in the way, the mediator needs to ignore them for a while and deal directly with the clients. Ensure that the mediator you’ve agreed to will do this.
Before The Mediation Set A Time Limit For Real Progress
This last point is something that I’ve only started employing in the last few years, and it’s worked wonders. In a courteous and professional tone, I inform defense counsel that if we’ve not made sufficient progress by a certain time or within a certain number of hours – usually 2-3 – then I will leave. What constitutes “sufficient progress” is case-specific, and you’ll know it when you see it. I give this caveat to defense counsel so that there’s no misunderstanding at the mediation. If, by all reasonable measures, my case is worth 7 figures, I’m not going to spend 6 hours trying to get to 6 figures. I simply will not let that happen to me anymore.
By informing defense counsel ahead of time that I won’t stay more than a couple of hours unless I see real progress, I’ve managed to avoid many of the lowball offers that usually start the defense side of the mediation. Or, if I get a lowball offer, the numbers start increasing once I remind the mediator and defense counsel that I will leave if substantial progress isn’t made.
Of course, this point applies equally to plaintiff’s counsel. I can’t start off at $10 billion dollars like Dr. Evil with a law degree. I make sure that my offers are within reason so that I can be justifiably indignant if defense counsel starts playing games with the offers.
One Size Does Not Fit All
As I said at the beginning, there is no foolproof way for the plaintiff lawyer to approach mediation. There are numerous approaches and many depend on the parties involved. These are some of the broad categorical approaches that I take and they’ve worked for me. I hope that you find them useful as well. Happy mediating.
About The Author
Brian Herrington is the founding partner of Herrington Law, PA in Jackson, Mississippi. Licensed in Mississippi and Tennessee, Brian litigates consumer class actions, cases involving defective drugs and medical devices, and personal injury cases all over the country.
Earlier this week I was asked the following question by a concerned General Counsel: how can we help our employees grapple with on-the-job justice issues without leading them to believe that our proposed solutions are untrustworthy.
Our company spends an inordinate amount of time explaining disability, workers comp and federal employment law to employees who misunderstand what their rights are, or do not give us the right information to help them get the help they need.
Of course, we are the big bad employer, so any information we give them is suspect. I have considered hiring a social worker as a case manager/advocate for these people, but that position would just be interpreted as another tool of the evil employer out to keep them out of work/make them go back to work in violation of their best interests, so it would be a waste.
We would LOVE if there was an independent agency that would assign a case worker, not to work as an attorney for the employees, but as an advocate to help them understand their rights and access the system correctly. I would gladly pay to fund this service.
Then I realized, if the employer, or a group of employers, funded this employee advocacy agency, employees would think the advocates were biased toward the employers and were just in a sham relationship to deprive them of their rights to serve the interest of the employer.
Now, I do not believe this would be the case. I trust in the professionalism and ethics of mediators, but I do believe that uneducated and single users would form that opinion. Professor Murray's opinion reinforces that conclusion, even though at first glance, he would seem to be "educated."
But, is bigger government the answer. My experience with the EEOC is that they want employers to do MORE than is required by law. We have had success with mediators after complaints are filed, but my goal is to get the employees what they need when they need it, not have a mediator help us fix it after time has run out.
What are your thoughts on this?
The Problem as Cognitive Bias
I've highlighted the sections of the GC's email that raise the problem of reactive devaluation -- our tendency to devalue and resist anything our "opponent" offers to us. Most attorneys were taught reactive devaluation as first year associates -- "if opposing counsel wants it, you don't."
One can be led to conclude that any proposal offered by the “other side”—
especially if that other side has long been perceived as an enemy—must be
to our side’s disadvantage, or else it would not have been offered. Such an
inferential process, however, assumes a perfect opposition of interests, or in
other words, a true "zero-Sum" game, when such is rarely the case in real-
world negotiations between parties whose needs, goals, and opportunities
are inevitably complex and varied.
Combatting Reactive Devaluation in the Workforce
Cognitive biases such as reactive devaluation are not random artifacts of an irrelevant evolutionary past. They are built-in protections against deception by our friends as well as by our adversaries. There is only one lasting protection against this bias -- to engage in clear communication with your work force on a daily basis concerning the mutual and complementary interests of employer and employee; to express your belief in your interdependence in word and deed, i.e., by engaging in dialogue and activities demonstrating benevolent intent; and to willingly listen to one another's complaints, understanding that one man's benevolence is another's bondage.
What's a diagnostic question? One that would reveal our bargaining partners' needs, desires, priorities, preferences and motivations. I'm no employment expert, but I have participated in the management of law firm personnel as a partner and have been managed by others throughout my professional life. As a full-time mediator for more than four years, I have also asked hundreds if not thousands of diagnostic questions to help litigation adversaries understand one another's motivations, to reframe those motivations as non-threatening, or, at a minimum, the result of ordinary human fallibility, and to explore the parties' mutual and complementary interests. I also remind my parties and myself as often as possible that you cannot drill a hole in the other guy's side of the boat without making your own side sink to the bottom of the lake as well.
Empowerment, according to [the fathers of the transformative paradigm] Bush and Folger, means enabling the parties to define their own issues and to seek solutions on their own. Recognition means enabling the parties to see and understand the other person's point of view--to understand how they define the problem and why they seek the solution that they do.
(Seeing and understanding, it should be noted, do not constitute agreement with those views.)
Often, empowerment and recognition pave the way for a mutually agreeable settlement, but that is only a secondary effect. The primary goal of transformative medition is to foster the parties' empowerment and recognition, thereby enabling them to approach their current problem, as well as later problems, with a stronger, yet more open view. This approach, according to Bush and Folger, avoids the problem of mediator directiveness which so often occurs in problem-solving mediation, putting responsibility for all outcomes squarely on the disputants.
Rights and Remedies vs. Interests
It's not surprising that employees just don't seem to "get" the legal rights and remedies company HR departments keep trying to explain to them. They don't make any sense absent legal training.
People who are not lawyers simply don't understand why there is a legal remedy for one type of injustice but none for another that feels just as unfair. Let's take our patchwork of Constitutional protections for employees. As an life-long ACLU member, I'd be the last to denigrate them. But we have to understand that we've created a "fair" workplace for only some of our citizens, not all of them.
Women, people over 40, under-represented minorities and the like, can take the square peg of their unfair work treatment and cram it into the round hole of a viable cause of action. If an employee does not want to cry "gender discrimination" even though she's being treated badly on the job, or if he has no bundle of legal rights to assert, there is no remedy for a termination that feels (yes, feels) wrongful. Remember, it took us lawyers quite some time for the legal worldview to "click" and we were immersed in it, drilled in it and eager to learn it. Employees just want someone to listen to their problem and to help them resolve it. They don't want to know the wage-hour laws, the need to exhaust administrative remedies with the EEOC and the like.
Employees and employers have people problems with justice issues, not legal problems with "irrelevant" emotional responses that get in the way of resolution.
Expressed emotion is the key, not the lock.
It is we -- the lawyers -- who legalize and monetize injustice, shutting our clients down when they try to explain what the problem really is because it's irrelevant to the legal solution.
If you're old enough to remember the lingering moment in United States history when our educational institutions went from white, on the one hand, to multi-hued, on the other, you'll know intimately how you deal with reactive devaluation. You get to know one another. Do this andKaneesha is not "black" or "African American" but a well-known acquaintance or dear friend. The same is true for employers and employees. Create activities in which (alleged) oppressor and (purported) oppressed come together to engage in mutually productive (Habitat for Humanity springs to mind) and mutually enjoyable (basketball? girls nights out?) activities. At the holiday party, don't relegate the "underlings" to their own table. Walk your talk. Destroy the hierarchy everywhere except where it's actually necessary to get work done.
I can't describe the benefits of interest-based resolutions over rights-based solutions any better than does my mentor and friend, Ken Cloke, in his brilliant new book -- Conflict Revolution.
[r]ights-based processes . . . generate winners and losers, undermine relationships, and result in collateral damage, . . . Since rights rely on rules, change is discouraged, though not prevented, and conflicts are settled rather than prevented or resolved.
This is not easy work. As a mediator, I know how elusive Cloke’s “outcomes” can be
-- outcomes [in which] both sides win and no one loses, when former adversaries en-
gage in meaningful dialogue and reach satisfying agreements, and when power is exercised with and for each other by jointly solving common problems.
I have, I am afraid, given my GC a problem rather than a solution. More accurately, I've suggested an altered way of looking at the problem without a great deal of detail about crafting a solution. Not only could people better versed in employee relations write books on this topic, they have. Therefore, I'm asking my good ADR blogging buddies to please chime in here for you.
See Marginal Revolution's post today The problem is that both of you are right citing David Brooks for the proposition that the "failure to pass the bailout represents a massive failure of American governance and leadership, most of all at the Congressional level. That's true even if you think, for other reasons, that the bailout was a bad idea. (Can any hero be cited in this debacle?)"
There are no heroes in this crisis -- only leaders and representatives of the people, many of whom are now being seriously burned, most particularly in their retirement accounts.
We need in Congress what every negotiation requires: preparation, communication, collaborative problem solving and, in this particular bargaining session -- courage, which Webster's defines as
"the attitude of facing and dealing with anything recognized as dangerous, difficult or painful instead of withdrawing from it; quality of being fearless or brave; valor. The courage of one's convictions or the courage to do what one thinks is right."
Come to think of it, all negotiations require courage.
So get back up on the donkey, Congress; be prepared; be principled; be brave. We're counting on you.
And for those who aren't afraid to admit that they don't know the difference between a strategy and a tactic, here's a brief tutorial.
If ever there was a time for resonant leadership, it's now. We need to rise above panic. Panic kills. Really, it does. If you're caught in a riptide (which we are) and you freak out, flail, fight it, you will die. If you smell smoke in the house and run wildly around gathering things you will die. If you freeze in your bed and hope the smoke is outside, not inside, you'll die.
This is not a time to give in to panic. Of course we are scared. It would be stupid not to acknowledge that the economic world as we know it -- knew it -- has changed fundamentally and forever. Actually it probably changed a while ago. We just ignored it, covered it up. So we are justifiably terrified. Now what?
Let's do something with our feelings, rather than let our emotions do something to us. Fear has its place -- it gets our attention. But we can't let it paralyze us. This is a time to breathe deeply. To think about what is most important -- family, life, health, love, purpose. And for my countrymen and women -- let's think about who we are as Americans. We can move beyond fear. What's beyond fear? Hope. Creativity. Resilience. Compassion. Courage.
Back to my daughter Sarah for a minute. She's at work today, in good spirits and having fun helping to create an awesome TV special about an inspiring American hero. My brother --also at work, creating. That's what he does--he creates new solutions for new problems. And me? I'm at work too. I spent the day with my team, a group of incredible people who dedicate their lives to others.
No, it won't be easy. But yes, we can make it, and we can make a better world too. That is not a noble goal, it is a necessary goal.
A final word. Common wisdom, backed up by research: hope, optimism, good humor and compassion (among other positive emotions and experiences) can literally free us from the deadly psychological traps of panic and anger. It takes tremendous self-management. But we can do it.
It is not the critic who counts, not the man who points out how the strong man stumbled, or where the doer of deeds could have done better. The credit belongs to the man who is actually in the arena, whose face is marred by dust and sweat and blood, who strives valiantly, who errs and comes short again and again, who knows the great enthusiasms, the great devotions, and spends himself in a worthy cause, who at best knows achievement and who at the worst if he fails at least fails while daring greatly so that his place shall never be with those cold and timid souls who know neither victory nor defeat.
Moral cowardice that keeps us from speaking our minds is as dangerous to this country as irresponsible talk. The right way is not always the popular and easy way. Standing for right when it is unpopular is a true test of moral character.
As California's longest budget stalemate in state history ground to a close, six professional mediators met with The Bee's Capitol Bureau last week to offer their thoughts on building a more functional state budget process.
Their advice in a nutshell: Improve lawmakers' communication skills, train them and their aides in mediation techniques, set up a structured negotiation process long before budget deadlines approach, agree on common goals, build trust by reaching incremental agreements – and don't expect perfection.
California Federal Court: Insured Plaintiff Can Seek Treble Punitive Damages For Insurer’s Alleged Bad Faith
The U.S. District Court for the Central District of California recently denied a motion to strike and allowed a plaintiff to pursue treble punitive damages against his insurer for the insurer’s alleged bad faith. Novick v. UNUM Life Insurance Co. of America, C.A. No. 08-02830-DDP-PJW (Aug. 7, 2008).
The insurer issued a long term disability benefits policy to the plaintiff in 1976, providing benefits should the plaintiff become totally disabled due to an accident sustained during the course of his career as a surgeon. In June 1992, the plaintiff filed a disability claim with his insurer after sustaining a spinal injury that allegedly prevented him from performing surgery. The insurer initially paid benefits to the plaintiff, but discontinued making the benefits payments on January 18, 2007. Shortly thereafter, the plaintiff filed suit against its insurer alleging breach of contact and breach of the covenant of good faith and fair dealing.
In his complaint, plaintiff seeks punitive damages pursuant to California Civil Code §3294, which allows an award of punitive damages for conduct that constitutes malice, fraud or oppression. The plaintiff also seeks treble punitive damages pursuant to California Civil Code §3345, which provides for an award of treble damages “in actions brought by, on behalf of, or for the benefit of senior citizens or disabled persons . . . to redress unfair and deceptive acts or practices or unfair methods of competition . . . [when] a trier of fact is authorized by statute to impose either a fine, or a civil penalty or other penalty, or any other remedy for the purpose or effect of which is to punish or deter . . . .”
The insurer argued that §3345 does not provide for the trebling of damages for insurance bad faith claims. The court reviewed the legislative intent behind the statute and determined that the legislature did not intend for the statute to be limited to actions that specifically mention unfair business practices. The court noted that, as bad faith claims redress unfair practices, §3345 applies to insurance bad faith claims. Accordingly, as the plaintiff alleges that the insurer acted in bad faith, the court held that the plaintiff is entitled to pursue his request for treble punitive damages.
DE FACTO couples disputing about property after splitting up, and siblings fighting over their parents' wills, are increasingly using mediation rather than dragging their battles through the court system.
The latest figures show that NSW Supreme Court registrars had done as many mediations in the first half of this year as they had done in total last year as people realised they could sort out their disputes on their own terms, in privacy, rather than in front of a judge, the Attorney-General, John Hatzistergos, said.
Most disputes were resolved without going any further, freeing up courts and judges for other matters, he said. "It is very encouraging that so far this year 59 per cent of the mediation sessions have concluded with the litigants resolving their dispute," Mr Hatzistergos said.
Tom noted that while most of the article addresses the management of client and adversary expectations, it concludes with these paragraphs:
Once you know who the mediator will be, always contact him or her and try to meet in advance of the mediation. If that is not possible, have a pre-mediation telephone conference. Focus only on the strengths of your case: If you represent a plaintiff, talk about the clear liability evidence, significant damages, your client's expectations of a big award, problems with the credibility of the defendant, and your willingness to try the case. Set the bar high. If you represent a defendant, focus on the strengths of your defense, including technical defenses, any persuasive evidence, and any credibility issues the plaintiff might have. Set the bar low. From both perspectives, provide the mediator with everything that serves your interests. [emphasis in the original]
At the mediation, continue this effort and work even harder at it. If the other side convinces the mediator that you will accept a lesser result than advertised, your chance of success will plummet (and you may end up facing a very unhappy client). On the other hand, if you convince the mediator that your adversary is willing to give more to settle than is on the table, you may well be on the way to having a successful outcome and a satisfied client.
This is how you know I'm still as much a lawyer as I am a mediator.
The answer is yes and no.
But you can help change the "no" to a yes.
That's the hope part.
Here's the dispiriting part --The answer will not become "yes" if the parties continue to primarily engage in position-based distributive bargaining sessions in separate caucuses.
My own professional experience (and the behavioral research of which I'm aware) suggests that Mr. Kennerly's Unicorn will only come into a room in which an interest-based negotiation is taking place, one in which there is at least one joint session among the baragaining parties.
But first a story.
This very morning I failed to settle a very small case that is poised to become a very big case with cross-actions for legal malpractice and malicious prosecution.
The delta between the Plaintiff's final demand and the defendant's final offer?
And I offered to throw in half the delta myself by making a contribution to the presidential candidate/s of the parties' choice. Shock value.
The parties' failure to achieve settlement couldn't have been about money could it?
Why not? Because it was economically irrational not to settle. Which is not unusual. Because there is no rational economic man.Because we are incapable of making a decision in the absence of emotion. /**
Although some economic decisions are made outside a social context, they are a minority. Social dynamics, many economists believe, are at the core of economic decision making—that is, decision-making about resource acquisition and expense allocation. What I decide affects you, what you decide affects me, and, even more to the point, I care how I fare economically compared with how you fare.
I send a client a bill for $15,000. He pays $9,000, refusing to pay the additional six because he believes I didn't earn it or that I did my job badly or that I didn't communicate to him all of the items I would naturually include in my bill. There is a written agreement but no attorney fee clause. It will cost me at least $3,000 in attorney fees to collect the six. My client offers to pay me half of what is owed.
Do you have the hypothetical in mind? What would the rational economic man do?
The rational economic man would take the $3,000 because he cannot do better at trial.
Did rational economic man appear at the mediation this morning? Of course not. Because he is a Unicorn! He doesn't make decisions based upon numeric calculations or emotionless cost-benefit analyses -- which is why I knew the parties would not accept my gap-closing political contribution suggestion (whew!)
Why Rational Economic Man is a Unicorn
In a social-economic experiment known as the Ultimatum Game, many researchers have found that when one party offered less than half the money subject of the game, "the other player often rejected it, even though by doing so he end[ed] up with nothing." Id. Dugatkin describes the results of one research project involving this Ultimatum Game as follows:
Alan Sanfey, Ph.D., and his colleagues at Princeton University examined the Ultimatum Game with 19 subjects in the role of responder and . . . observe[d] their brain activity. They found that when unfair offers (deﬁned as those of less than half the resource) were made, responders often rejected them. As they did so, the area of their brains associated with negative emotional states (in this case, the bilateral anterior insula), rather than those associated with complex cognition (in this case, the dorsolateral prefrontal cortex) were most active. The more the offer deviated from fair, the more active was the bilateral anterior insula when such an offer was rejected. Anger at being treated unfairly by other players appeared to override rational economic reasoning. In the minority of cases when the offer was accepted, the dorsolateral prefrontal cortex was most active.
We, like the capuchin monkeys mentioned yesterday, will deprive ourselves of thousands, tens of thousands, even millions of dollars if we believe the compensation being offered is so little related to our value or our loss that it seems unfair. We will not pay money at the point of a gun nor accept money offered to us by villains or cheapskates.
Mediation, Money and Justice
In today's semi-hypothetical mediation, the $3,000 offered felt too unfair to the plaintiff and the hypothetical $6,000 demanded felt too unjust to the defendant for the parties to reach a rational economic deal. The parties' potential to achieve settlement was also seriously undermined by the degree of anger they expressed toward one another and the way in which they had villified one another - "rich deadbeat" on one side and "dishonest fiduciary" on the other.
I am neither magician nor miracle worker. Nor am I in the social work or therapy business. I do, however, know that when parties to a lawsuit are hopping mad and believe that the opposition behaved immorally, money is unlikely to change hands.
In an effort to defuse the anger and de-demonize the parties, I held two joint sessions -- one that was not coached and one that was. Then I separated the parties for the purpose of conducting a distributive bargaining session (she offered x; he counters with y, etc.)
In both the joint session and in the separate caucuses, I strove to humanize the parties for one another; attempted to reframe their behavior in a less villianous light; and, assisted them in conducting as rational a cost-benefit analysis as possible. I also helped the parties reality test their beliefs about the likely outcome at trial and to evaluate the likelihood that the strength of their feelings today would translate into a hearty appetite for further, higher-stakes litigation two years down the line.
So What Can You Do?
I would love to deliver a stirring tale of a heroic mediator helping parties settle their dispute in the early stages before the threatened action and cross-actions were even filed. But I can't. This is more art than science and compared to my 25 years of experience as a litigator, I'm still a little green as a mediator after four years of full-time neutral practice.
Let me just say this. Mediating settlements in the early stages works more often than it fails, particularly if you do one or more of the following:
hire a mediator who can rock and roll with the process rather than one who is a one-trick pony -- head-banger, or evaluator, or prophet of doom; peacemaker, or rabble-rouser or King of the Distributive Bargain -- your mediator should be able to play all or any of these roles as the situation demands;
if you're angry and if you have villified opposing counsel or the opposition party, take a deep breath, sit down at your computer and write down the best, the mid- and the worst-case scenarios (I know you've done it already; but take a fresh look again right before the settlement conference)
share these evaluations with your client
if a trustworthy mediator with whom you've worked before suggests that it would be useful in joint session for your client to express his irritation, disappointment, anger or any other feeling that might interfere with his ability to make a rational decision, don't reject it out of hand
help your client de-demonize the opposition, reminding him that the "other side" is human and therefore fallible and is rarely downright evil
remind your client that many disputes that seem to arise from malicious conduct actually stem from faulty communication
know your bottom line and stick to it unless you genuinely learn something that makes you see the entire dispute in a different light, remembering that "a foolish consistency is the hobgoblin of little minds"
despite everything I've now said about litigants behaving irrationally, as I've written elsewhere in greater detail, Harvard negotiation gurus Deepak Malhotra and Max H. Bazerman suggest that negotiators too often confuse hidden interests and constraints with irrationality. The mistakes and solutions when this is the case?
Mistake No. 1: They are Not Irrational; They Have Hidden Interests -- find out what they are and you may well be able to resolve the dispute and settle the litigation without putting any more money on the table or making any further concessions;
Mistake No. 2: They are Not Irrational; They Have Hidden Constraints -- keep one ear to the ground for hidden constraints, explore them with the mediator, opposing counsel or the opposing party; often those constraints can be problem-solved away;
Mistake No. 3: They are Not Irrational; They Are Uninformed -- listen and respond; respond and listen. You will find that EACH of you is uninformed about something that will likely make a genuine difference in the manner in which the litigation is resolved.
If your opponent cannot or will not see reason, there's always the joy of just trying the darn thing.
Max Kennerly over at Litigation and Trial has graciously and profusely responded to our call for comments about the road-blocks to achieving optimal negotiated resolutions to litigated disputes.
Because Max and I are straining toward the same goal every litigant does when the burdens of a lawsuit begin to outweigh its anticipated benefits, I'm going to include my readers in the conversation.
Our Interests are Adverse, Not Mutual or Intertwined
Max suggests that the hypothetical "business school" negotiated resolution doesn't provide litigators with much guidance in resolving litigated disputes because the buyer-seller-mutual-or-intertwined-interest template cannot be comfortably laid over a conflict between parties whose interests are entirely adverse. As Max explains:
The parties to a lawsuit do not have intertwined interests: they have directly adverse interests. Unless there's some possibility of a future relationship, the defendant doesn't want to resolve the conflict: they want the plaintiff to drop their frivolous claim. In their mind, their best alternative to a negotiated agreement ("BATNA") is for the plaintiff to crawl in a hole and die.
Same with the plaintiff. Unlike buyers and sellers, who usually don't get much joy out of their 'conflict' as a conflict, the plaintiff usually prefers imposing a conflict on the defendant (who the plaintiff believes cast the first stone) in pursuit of justice, an imposition they will only relieve for at least "full" compensation.
The problem is that most parties don't consider their claims to be assets; the problem isn't that there's emotional baggage around the economic understanding, it's that the parties interpret their dispute as fundamentally non-economic.
Before moving on to adverse/intertwined/mutual interests, I want to emphasize that what the parties "interpret . . . as fundamentally non-economic" is the key to the settlement of litigated disputes -- not a roadblock.
Nor can the feelings that accompany litigation be called "emotional baggage" unless we interpret the desire for justice as pathology.
People seek out lawyers rather than therapists to resolve the emotional issues that accompany conflict -- because they believe themselves to be victims of injustice and lawyers are in the justice business. Our clients have not simply suffered an injury (tripped over their own feet) but have a wrong (stumbled over a trip wire placed in their path by a malicious or careless actor). We can explain until we're blue in the face that money is the only remedy the law can provide. Our clients will continue to seek justice and will not easily settle for money alone.
"The Unicorn Settlement"
Max asks that I acquaint him with the Unicorn -- the state "where two hostile parties on the verge of a lawsuit get lawyers, almost file suit, and then, through deft representation, settle their differences peacefully and move on" Unicorns. Excluding business disputes where the parties have an existing and potentially mutually beneficial on-going relationship, this type of settlement, says Max, is a myth. He explains:
I entered the law expecting The Unicorn to be rare but real; by this point, I have been trained by defense lawyers not to bother to check for it. I still usually do, throwing out what I think is a perfectly reasonable offer early on, which is routinely ignored or dismissed by a letter that gratuitously refers to my claims as baseless, frivolous, or made in bad faith.
So that's my biggest question to you: how do you suggest I get defendants, prior to the courthouse steps, to even enter the mindset that there's a valid claim and mediation / settlement should be considered? Reframed in words closer to your post: what can I do to (a) get the joint session to happen and (b) ensure everyone's in the right mindset?
The Conditions in Which Unicorns Flourish
When I started practice -- in 1980 -- I did so in a small community -- Sacramento -- where everyone was a "repeat player" with everyone else. Perhaps more importantly, you could file a suit in year one and try it to a jury in year two. Not only defense counsel, but insurance adjusters, knew which plaintiffs' attorneys would try cases and which would not. They also knew which ones could persuade a jury to bring back a hefty award.
Though I only handled personal injury litigation for my first two years of practice (after which I changed firms and moved on to commercial litigation) I saw dozens of "unicorns" in my first few months of practice. As the junior-most attorney in a small P.I. practice, I settled hundreds of cases without ever filing a lawsuit -- on the telephone with insurance adjusters. (A really, really good reason to leave PI practice, but that's another story).
I settled these cases in the world of "three times specials" at a time when and in a place where everyone knew one another and used a common metric to evaluate potential liability and damages. In that environment, Unicorns flourished.
Unicorn Hunting in the 21st Century
Max isn't asking me to shoot ducks in a barrell here. He's asking me to deliver the holy grail of mediation -- how to convene an early settlement conference in which the parties (and their attorneys) are united in a desire to settle litigation without protracted discovery or pre-trial procedural wrangling.
I hate to keep leaving my readers on the edge of a satisfactory resolution, but I DO have work to do and will return to this -- and Max's further observations -- soon, really soon. Stay tuned. And join the conversation by leaving your own comments here.
most . . . plaintiffs who decided to pass up a settlement offer and went to trial ended up getting less money than if they had taken that offer . . .
Plaintiffs, however, are not the only ones who made the "wrong" decision -- defendants were mistaken in 24% of the cases. Defense errors, however, were far more costly.
getting it wrong cost plaintiffs . . . about $43,000 . . . For defendants, who were less often wrong about going to trial, the cost was . . . . $1.1 million.
What to do?
It's no answer to say " take the last best settlement offer," though one party or the other will 80 to 90 percent of the time and often on the courthouse steps, i.e., at the point of a gun when decision-making is at its most flawed.
Nor, I must concede, is the answer simply mediation, which is, after all, pretty much a pig in a poke. Why? Because mediation practice ranges all the way from
to a mediator who knows only how to repeat "trial is expensive and the result uncertain"
to a settlement officer who does nothing more than shuttle numbers back and forth between two rooms
to a "transformative" mediator who allows the parties free reign to "vent" their "feelings" without helping them get a grip on the very real and serious consequences of the negotiated resolution that has been proposed to them.
A friend of mine who is a psychoanalyst once told me that patients get better in therapy despite their analysts' "technique." It's the relationship that's curative, she told me. A patient in need will find the water of healing in the desert of a therapist's theory. If the same can be said of mediation -- that it's the relationship that's curative -- the question that naturally arises is whose relationship?
fundamental attribution error -- the tendency to over-emphasize personality-based explanations for behaviors observed in others while under-emphasizing the role and power of situational influences and reversing this error when the behavior at issue is our own.
Just-world phenomenon — the tendency for people to believe that the world is "just" and therefore people "get what they deserve"
We get so stuck in our positions that we fail to ask diagnostic questions that have been proven to result in significantly better negotiated outcomes for both parties.
My friend Judge Alexander Williams -- the soon to retire full-time settlement Judge in the downtown Los Angeles Superior Court -- has the following poster hanging in his jury room.
The surface is what the lawyers know.
The depth and breath; the texture and particularity; the details of the dispute and the desire for justice that exists on both sides, is known only to the litigants. And they haven't (and won't) tell you what they know or want.
Why you should never leave a mediation or settlement conference without letting a skilled mediator facilitate a joint session in which the litigants can explore their joint interests and conflicting goals will be the subject of my next post.
I have alot more to say about this but for the moment am simply linking you to an article at Cognitive daily demonstrating the known fact that you are far more likely to persuade another if you are making eye contact with him.
And still opposing parties resist sitting in the same room with one another when attempting to settle litigation!
There is a considerable body of research showing that eye contact is a key component of social interaction. Not only are people more aroused when they are looked at directly, but if you consistently look at the person you speak to, you will have much more social influence over that person than you would if you averted your gaze.
So why would the S[pecial Litigation Committee] release [Wilson Sonsini] and Larry Sonsini? The SLC wrote that it weighed the opinion of a legal ethics expert as well as testimony and documents related to Sonsini and the firm’s roles at Brocade. It also listened to Sonsini and his firm’s “contentions that Brocade employees misled WSGR about stock-option grants” and that the firm had negotiated a good settlement with the SEC and helped avoid DOJ action against Brocade. The committee also considered the firm’s longstanding relationship with Brocade and the firm’s “willingness” to help the company resolve any “outstanding questions” about the backdating.
A decade ago, there were only a handful of mediation programs in bankruptcy courts.
Long associated with family law disputes, mediation programs were slow to catch on in complex business litigation, including bankruptcy cases.
But that's changing.
More than two-thirds of the 90 bankruptcy courts have mediation available, according to Robert Niemic, senior attorney at the Federal Judicial Center. Even more offer some other form of alternative dispute resolution, such as judicial settlement conferences.
In the U.S. Bankruptcy Court for the Central District of California, more than 3,800 cases have been referred to mediation since 1995. About 64 percent of those cases were resolved through settlements.
To keep costs down, the first day of mediation is free. Parties choose from a list of 200 attorneys and non-attorneys, such as accountants and financial experts, who volunteer as mediators.
Chief Bankruptcy Court Judge Barry Russell, who launched the mediation program in 1995, said that most cases settle in a day, producing major cost savings for both the court and the parties involved.
The standard residential purchase contract in California is produced by the California Association of Realtors® (CAR). It contains two sections that are easy to overlook or to take as “boilerplate”, but that can be very important if things go awry between the parties. One of those sections deals with attorney fees, providing that, in the event of any proceeding between buyer and seller, the prevailing party shall be entitled to attorney fees and costs from the non-prevailing party. The attorney fee section contains an exception, however, and that exception is spelled out in the portion of the contract referring to mediation. There it is said that, if either party initiates an action “without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees… .” [my emphasis] /*
When Mr. Thrifty and I purchased our house in '02, we were presented with one of these form contracts. I'm a lazy form contract signator myself. Negotiation training or not, I generally assume these contracts are "take it or leave it" and I sign them accordingly. /**
Not Mr. Thrifty.
"What's the procedure?" I recall him pressing our real estate agent. "When is the demand for mediation supposed to be made and how are the parties supposed to conduct it and what happens if the parties can't reach agreement on the mediator to conduct the process?"
He was having none of it.
"I'm crossing it out," he said, as blue ink flowed over the mediation provision and our agent let out of small gasp of dismay.
By that time, everyone was so "bought in" to the sale, that Mr. Thrifty's effort to strike the form language prevailed. No mediation necessary in this household!
Beware of Form Contract Language
As Bob Hunt explains, the Lange Court gave the back of its hand to the contention that it was "too difficult" to make the required demand for mediation.
“If the [sellers] could be found and served with a lawsuit by mail, they could have been sent a mediation demand by mail[,]” [held the Court] All that the plaintiff had to do was attempt to mediate before he filed suit; and he didn't. Quoting a related case, the court noted that the mediation provision “means what it says and will be enforced.”
Though it's not surprising to find bare bones ADR provisions in industry form contracts -- bones so bear that their meaning must be litigated -- defeating the purpose of the summary proceedings provided for -- it is surprising to find attorneys continuing to paste form contract language into their client's negotiated agreements. This is particularly troublesome when what's at stake -- the attorneys' fees -- makes the difference between bringing litigation or not or settling litigation or not.
If it's worth putting a clause into your contract, it's worth spending the time to imagine what might happen if circumstances triggering that clause arise. If you're practicing in a firm with both transactional and litigation attorneys, I highly recommend that the wordsmiths run the "standard" ADR, attorney fee, choice of law, and venue provisions by the litigators who have undoubtedly already tested these provisions in the fire of conflict. You won't be sorry you did.
*/ The case -- Lange v. Schilling -- was originally ordered not not to be published. Had that Order stood, the case would not create precedent under California law. As the reader of the linked opinion can see, however, it was subsequently ordered published and can be cited as authority.
**/ The form contract language at issue reads as follows:
Buyer and Seller agree to mediate any dispute or claim arising between them out of this Agreement, or any resulting transaction, before resorting to arbitration or court action. . . . If, for any dispute or claim to which this paragraph applies, any party commences an action without first attempting to resolve the matter through mediation, or refuses to mediate after a request has been made, then that party shall not be entitled to recover attorney fees, even if they would otherwise be available to that party in any such action.
POPULAR ADR BLOGGER GETS SOME FACE TIME IN LOS ANGELES
By Greg Katz
Daily Journal Staff Writer
SANTA MONICA - Nearly everybody in the Southern California mediation community knows the face of mediator Geoff Sharp but not too many have met him.
That's because the New Zealand-based mediator's scruffy mug sits atop his popular ADR blog, Mediator Blah ... Blah ..., at mediatorblahblah.blogspot.com.
Sitting down for coffee at a beachfront hotel with Los Angeles mediator and fellow ADR blogger Victoria Pynchon, Sharp said his blog is what got him his ticket for this trip to Southern California.
He was in town at the request of the Pepperdine University School of Law, giving a lecture at the Straus Institute for Dispute Resolution's annual summer dispute resolution conference last week.
"For someone like me to get to Pepperdine - why would you ask a farm boy like me?" Sharp said, laughing. "The blog's the only way that I talk to these people."
Sharp's witty and concise blog helps chart the course of the online mediation conversation. There are about 150 ADR blogs worldwide, according to one blogger, and many of them link back to Sharp's.
He blogs a potpourri of ADR links, anecdotes and opinions on a wide range of mediation topics, most of them relevant to both local and international audiences.
In one recent post, he chided some "lazy" neutrals who have given parties the impression that mediation is "a process where you show up at a downtown building but never speak to, or even meet, the room full of people with whom you have your problem and whose cooperation you require to solve it."
In another post, Sharp described a mediation in which a lawyer asked him to calculate the hypotenuse of a right triangle.
Sharp said he initially was worried that he couldn't do it.
"But I am pleased to report dear reader, that I was equal to the task," he wrote.
Sharp also broaches sensitive subjects, writing at length about how difficult it is for mediators to build their practices.
But whether the difficulties of mediation are financial or mathematical, he wouldn't think about going back to litigating.
In the late 1990s, Sharp left his litigation practice at Bell Gully, a large New Zealand law firm, to start mediating.
Sharp is now a member of the advanced mediation panels for both of New Zealand's widely recognized mediation training organizations, LEADR and the Arbitration and Mediation Institute of New Zealand.
He also is consulting with the International Mediation Institute on its proposed mediator qualifications standards. Mediator standards are a frequent subject of his blog posts, as well.
He said he relishes the freedom he gained from leaving a big firm, though mediating often proves lonely.
"If you ask why [mediators] blog, it's because we're so solitary," Sharp said.
Becoming an ADR blogger, he said, was like making friends "on the same block in a new town," even though most other bloggers are in other countries.
Sharp said that blogging about mediations, with their strict confidentiality rules, can be complicated.
At first, he would post about specific events in mediations, such as one lawyer who wore his Bluetooth headset throughout a mediation, even when he "went to the john," Sharp said.
Was it blinking?" Pynchon chimed in.
But now, with a wider audience, Sharp focuses on the more philosophical and legal issues in mediation. When he wants to tell a particular story, he embellishes the events that happened in mediation so no one feels their confidential conduct is being publicized.
"I haven't let the facts get in the way of a good story," says the disclaimer on his blog.
Pynchon, who writes the popular ADR blog Settle It Now, at negotiationlawblog.com, said that even when bloggers are careful, mediator blogs can disturb parties. One party recently came to Pynchon asking whether a post referred to that party's case.
Another post, about the California Supreme Court mediation confidentiality case, Simmons v. Ghaderi, provoked the defendant to call Pynchon personally.
"It's like having a cartoon character come to life," Pynchon said of being contacted by someone she only knew through reading briefs and opinions. Simmons v. Ghaderi, 143 Cal.App.4th 410 49 Cal.Rptr.3d 342 (2006).
But despite the occasional hassle, blogging has become a way of life for the two mediators.
"For me, blogging and dispute resolution rest on the same principles: collaboration and reciprocity," Pynchon said.
Sharp nodded his agreement.
"I don't do this profit," he said with a smile. "I do it for ego."
Whatever the political, historic and legal consequences of money's reduction to a pure symbol, it's good to be reminded again that there is both every and no relationship between money and value.
As a mediator, I experience this paradox on the daily basis. When two defendants are defending the same law suit, for example, one defendant almost invariably refuses to pay more than the other no matter what the absolute number at issue might be. Defendants who are willing to pay, say, $250,000 to settle a case, will often refuse to pay anything unless their co-defendant matches or exceeds their offer.
If you're interested in the ways in which money developed meaing, and the historic path the greenback has taken through American history, you couldn't do better than picking up Professor Chung's article.
This just in from the Met News for California practitioners.
Where minor entered a settlement agreement with a third party tortfeasor by and through a guardian ad litem, and court made an allocation of the medical expenses portion of the settlement in the order approving plaintiff’s compromise, trial court did not err in rejecting plaintiff's later motion to reduce the amount of Medi-Cal lien against settlement proceeds by the same percentage that the settlement bore to the overall value of plaintiff’s case.
Question: how do you determine the "overall value" of the plaintiff's case in order to reduce the lien by the same percentage that the settlement bears to that value? Declaration by the Plaintiff's attorney? Anyone who's actually read this case, do let my readers know!
In a down American economy, litigation tends to increase. More suits are filed. And in my view clients and their plaintiff's lawyers file more questionable suits, i.e., ranging from Rule 11 violations and frivolous to iffy and wasteful. Employee and business nuisance cases are a big chunk of those filings.
A good arbitration panel or mediator will cut to the quality of the suit and its likelihood of success quicker than even the best American judges, who often feel obligated to give bad and iffy cases a wide berth. And good judges understand the problems of the business community and the utility of arbitration and mediation.
Get jurists on your side in your attempt to drive iffy cases into ADR.
Happens all the time; the parties come together to mediate their dispute and find that they haven't really understood their differences or the areas of agreement .
"Your client didn't care about the first shipment of goods?"
"No, it was the second that was the problem."
"What was wrong with the second?"
"They were plaster of Paris."
"What are you claiming as damages .. .. . "
Forget ADR. Pick up the telephone and talk to opposing counsel.
our best reasons for some choices we make are understood only by our cells. The findings lend credence to researchers who argue that many important decisions may be best made by going with our gut -- not by thinking about them too much.
Mom always said I thought too much. And Dutch researchers are proving her right (another one for you, mom!)
Dutch researchers . . . recently found that people struggling to make relatively complicated consumer choices -- which car to buy, apartment to rent or vacation to take -- appeared to make sounder decisions when they were distracted and unable to focus consciously on the problem.
Moreover, the more factors to be considered in a decision, the more likely the unconscious brain handled it all better, they reported in the peer-reviewed journal Science in 2006. "The idea that conscious deliberation before making a decision is always good is simply one of those illusions consciousness creates for us," Dr. Dijksterhuis said.
Here's another lesson I learned nearly thirty years ago in law school that the researchers are only now proving -- you just have to feed your brain the information and then, literally or figuratively go to sleep. Start writing and you will write your way into the solution that your brain already knew.
(I also used this technique preparing the depositions of technical expert witnesses -- petrochemical engineers, statisticians and the like)
The Take Away for Negotiators?
Prepare. Ask questions. Have a firm bottom line (or, better yet, fool yourself into believing your bottom line is less or more than it already is).
Then rock and roll!
The more you negotiate (try it at your local retail store) the better your mind will become at improvising the moves necessary -- in the commpletely unpredictable present -- to get what your brain already knows you really want.
Before you run over to Gini's site to read Lande's excellent post or his great article, I'd like to simply bullet-point some observations based upon my four-years of full-time mediation and arbitration practice.
when I co-arbitrate with some of the best commercial arbitrators in the business -- these are Ivy League lawyers with many decades of experience representing Fortune 50 Companies in AmLaw 100 Law Firms, the ultimate decision changes many times during the course of deliberations and almost always could go either way.
having spent a considerable time in the Los Angeles Complex Court as an experienced commercial litigator "externing" for credit to earn my LL.M in '06, I can tell you that the deliberations in chambers of these highly respected jurists is not much different that those in which I have engaged when sitting on an arbitration panel
The take away? No matter who is hearing your case, your chances of winning are 50-50. Flip a coin. Think this doesn't apply to you? I have arbitrated cases being handled by the top ten law firms in the country. I have seen those same type of firms litigate and try cases in the Complex Court. It's 50-50 friends.
Below -- observations on how you and your mediator can be "happy together." (And the Turtles from 1967 so that you can have a little musical accompaniment to this post)
Observations of End-Game Litigation from a Mediator's and Settlement Consultant's Perspective.
Despite years of inquiry and the review of millions of documents, sophisticated parties (Fortune 50) represented by dynamite law firms (AmLaw 50) haven't yet learned the most fundamental information about the following matters -- most of which are more important to the settlement of the case than the cost-detriment-benefit-position-driven-chance-of-victory settlement posture:
what are the hidden interests that your opponent must satisfy before accepting a settlement that is below the number he once told his client should never under any circumstances be accepted?
what are the hidden constraints upon your opponent's authority that must be removed before he can pay more money than he once told his client should never under any circumstances be paid?
why was this litigation initiated in the first instance?
who gave the litigation the "green light"?
what are the probable consequences to the continued financial security of the person who gave the litigation the "green light" in the first place or who has authorized the defense bills for the last 5, 10, or 15 years?
is the person who green-lighted the litigation in the first place still employed by your client?
what are the probable consequences to the financial well-being of the corporation who must pay more than it wishes to pay or accept less than it wishes to recover?
Who is the most frightened person in the room, i.e., whose hide might be sacrificed if the litigation settles for more/less than predicted, or, often worse, actually goes to trial.
There are so many of these settlement-driving and -inhibiting questions that only my own personal time contraints -- I must start my day's work -- make me stop listing them.
Let me conclude with this however. Never underestimate your client's reluctance to settle the case on terms that seem unjust to it. This is the most important function a mediator can play on the day of settlement -- explaining justice issues to the clients and helping the clients de-demonize their opponent -- which occurs most easily in JOINT SESSION yet which most litigators would rather have their teeth drilled than attend.
O.K. I can't conclude without saying this. If you have the courage to try a case, you possess the cajones to participate in at least one joint session to help the parties come to terms with the justice issues -- which are often driven by the conclusion, affirmed over and over again in the course of the litigation, that their opponent is an evil, mendacious, grasping, greedy, malicious, duplicious lying liar with his pants on fire.
This is almost never true. The parties on both sides almost always possess equal parts of good and bad, just like the rest of us.
Let your parties re-adjust their perception of "the enemy" in joint session. I can almost guarantee you that a conversation will ensue in which the parties spontaneously tell each other what interests they really need to satisfy to settle and what constraints they are really working under. And I don't guarantee a lot of things.
Why can't I do this for the parties?
Because often neither side will disclose these matters to me because they don't trust that I won't use that information to help settle the case and because the parties won't believe what I say about their opposition in the first place (obviously, they've pulled the wool over my eyes).
"How do you know he's not lying?" is a question mediators are asked on a regular basis. My answer is "I have no idea." But if you let your client talk to the opposition -- with any constraints, restrictions and control you wish to retain -- which I can orchestrate for you -- your client will be able to elicit the details that give any story a ring of truth (or falsity) while at the same time watching the body language that constitutes between 60 and 80% of all communication.
Would you try a case without 80% of the information you need? Of course not! And yet you're content to avoid a joint session when that session could provide you with between 60 and 80% more information than you had when you arrived on the morning of the mediation or settlement conference?
Suspend your disbelief in the mediator ("who-will-do-anything-to-settle-the-case") for just a couple of minutes. Remember that we're in possession of confidential information we cannot divulge to you.
Take our lead. And if you don't trust us to do so, for heaven's sake find a mediator you can trust!
Collaboration may be most amenable in areas where there is a need for ongoing relationships, like dissolving marriages that produced children, said Pauline Noe of Cambridge, a past president of the Massachusetts Collaborative Law Council. Noe suggested that discovery is often more fruitful in collaborations than in litigation, since collaboration requires full, prompt, honest and open disclosure of all relevant information, and vigorous good faith negotiation with full participation of all parties in an open forum.
Taking the long view as I'm now prone to do (by virtue of age and the fact that I generally only see litigation's end game) I continue to say that we're all involved in on-going relationships -- not just those people whose disputes are more personal than commercial.
Schopenhauer, in his splendid essay called "On an Apparent Intention in the Fate of the Individual," points out that when you reach an advanced age and look back over your lifetime, it can seem to have had a consistent order and plan, as though composed by some novelist. Events that when they occurred had seemed accidental and of little moment turn out to have been indispensable factors in the composition of a consistent plot. So who composed that plot? Schopenhauer suggests that just as your dreams are composed by an aspect of yourself of which your consciousness is unaware, so, too, your whole life is composed by the will within you. And just as people whom you will have met apparently by mere chance became leading agents in the structuring of your life, so, too, will you have served unknowingly as an agent, giving meaning to the lives of others, The whole thing gears together like one big symphony, with everything unconsciously structuring everything else. And Schopenhauer concludes that it is as though our lives were the features of the one great dream of a single dreamer in which all the dream characters dream, too; so that everything links to everything else, moved by the one will to life which is the universal will in nature.
It’s a magnificent idea – an idea that appears in India in the mythic image of the Net of Indra, which is a net of gems, where at every crossing of one thread over another there is a gem reflecting all the other reflective gems. Everything arises in mutual relation to everything else, so you can’t blame anybody for anything. It is even as though there were a single intention behind it all, which always makes some kind of sense, though none of us knows what the sense might be, or has lived the life that he quite intended.
A classic example of combative litigation -- YOU ARE NOT THE BOSS OF ME!
I take these criticisms very very seriously, repeating throughout any mediation session my opening assertion that my role is to present the parties with choices and to faciliate a settlement if they believe it may be better alternative to continued litigation, not to hustle them away from their right to a jury trial.
I would be far more successful in being "neutral" about proceeding to a jury trial if there were an easier, less costly, and speedier way to bring a dispute before a jury. We have, lamentably, permitted our cherished rule of law to become so procedurally encrusted that it sometimes seems like no option at all -- at least not an option available to all but the wealthy or those represented by lawyers willing to accept a contingent fee.
All of this troubles me. I invite comment at the same time that I provide the thoughts of some of our greatest statesmen and jurists about the right to trial by jury.
"There was not a member of the Constitutional Convention who had the least objection to what is contended for by the advocates for a Bill of Rights and trial by jury." (1788)
"Representative government and trial by jury are the heart and lungs of liberty. Without them we have no other fortification against being ridden like horses, fleeced like sheep, worked like cattle and fed and clothed like swine and hounds." (1774)
"I consider trial by jury as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution." (1788)
"Trial by jury is part of that bright constellation which has gone before us and guided our steps through an age of revolution and reformation." (1801)
"The wisdom of our sages and the blood of our heroes has been devoted to the attainment of trial by jury. It should be the creed of our political faith." (1801)
"Trial by jury in civil cases is as essential to secure the liberty of the people as any one of the pre-existent rights of nature." (1789)
John Quincy Adams
"The struggle for American independence was for chartered rights, for English liberties, for trial by jury, habeas corpus and Magna Carta." (1839)
Patrick Henry of Virginia [Patriot who said "Give me liberty or give me death!"]
"Trial by jury is the best appendage of freedom by which our ancestors have secured their lives and property. I hope we shall never be induced to part with that excellent mode of trial." (1788)
"The friends and adversaries of the plan of the convention, if they agree in nothing else, concur at least in the value they set upon the trial by jury; the former regard it as a valuable safeguard to liberty; the latter represent it as the very palladium of free government." (1788)
"The protection of life and property, habeas corpus, trial by jury, the right of an open trial, these are principles of public liberty existing in the best form in the republican institutions of this country." (1848)
Judge Stephen Reinhardt
"Our constitutional right to trial by jury does not turn on the political mood of the moment, the outcome of cost/benefit analyses or the results of economic or fiscal calculations. There is no price tag on the continued existence of the civil jury system, or any other constitutionally-provided right." (1986)
"Trial by jury is the best institution calculated for the preservation of liberty and the administration of justice that was ever devised by the wit of man." (1762)
Judge William Bryant [First African-American federal district court judge in D.C]
"If it weren't for lawyers, I'd still be three-fifths of a man." (2004)
Justice William O. Douglas
"The Massachusetts Body of Liberties was a new Magna Carta. It contained many of the seeds of the civil liberties which today distinguish us from the totalitarian systems, including the right to trial by jury." (1954)
Justice Hugo Black
"Our duty to preserve the Seventh Amendment is a matter of high Constitutional importance. The founders of our country thought that trial by civil jury was an essential bulwark of civil liberty and it must be scrupulously safeguarded." (1939, 1943)
Justice Ward Hunt
"Twelve jurors know more of the common affairs of life than does one man, and they can draw wiser and safer conclusions than a single judge." (1873)
The cost of a thing is the amount of life that you must exchange for it -- now or in the long run (Thoreau)
if you have an on-going relationship -- even as limited as a note payable -- squeezing the last nickel out of the deal may impair your bargaining partner's ability to perform
what goes up, must come down, i.e., squeezing out the last nickel creates enemies who none of us can afford when times are good, let alone when times are bad
taking advantage of another's weaknesses tears at the social fabric
it makes us all more watchful and less productive
it doesn't actually feel good to line your pockets with the misery of others
sometimes the downtrodden rise up -- every couple of centuries or so, creating an entirely new order -- the generous man and woman will not be on the wrong side of that revolution
global warming -- think about it -- the order will change as will the countries who will be asking for favors
you reap what you sow (I'm pretty sure I learned this in Sunday School)
social relations do not exist "out there" -- they are co-created by one person's relationship with every other person -- the society you inhabit is the one you create -- if you don't want your neighbor taking your last dime, don't take his
collaborative effort results in greater progress than individual activity -- if you decrease trust, you impede advancement in business, the arts and science
Readers! Can I count on you to give us all more reasons?
Here I am again hectoring litigators about their obligations to determine whether or not their clients have insurance, to decide whether that insurance might cover the claim or suit against them; and, make a timely demand for coverage, particularly under E& O claims made policies.
Professionals and business people hesitate before tendering "claims" to their insurance carrier because the no. 1 response to conflict is denial. This is particularly true where a professional's or business person's competence has been called into question. You don't want to admit that you might have committed malpractice to yourself let alone to your insurance carrier.
This is a particular problem for professionals because Errors and Omissions insurance generally requires claims to be both made and reported during the policy period. Often, litigators don't see clients until after they've been sued and clients generally don't get sued unless there's a previous demand letter (i.e., a claim).
So what's the very first thing litigation counsel must do? Get a copy of the E&O policy and the first demand letter. Tender the defense and indemnity of the action to the carrier immediately.
You might get a little fudge room by reporting the claim when suit is filed, but if your insured doesn't report the claim in its application for coverage the following year, the carrier will deny coverage on the ground of non-disclosure.
Come to think of it -- transactional attorneys should remind their clients of their obligations to report claims when made, no matter how feeble the claim may look. Take a look at yesterday's ruling on what constitutes a claim with thanks to the Met News for the summary and LACBA for the daily email summaries.
Where policy defined a "claim" as a written demand for civil damages or other relief commenced by the insured’s receipt of such demand, a letter from a third-party claimant’s attorney to insured informing insured that the third-party claimant had been subjected to discrimination and received a right-to-sue letter and suggesting a settlement constituted a claim. Although the letter did not expressly demand payment or refer to any specific amount, the meaning was clear that, absent some form of negotiated compensation, the claimant would sue. Where policy stated that all claims arising from the same events or series of related facts could be deemed a single claim, and third-party claimant filed litigation authorized by the right-to-sue notice mentioned in the letter, the lawsuit was part of the same claim as the letter under the policy. Where insured did not notify insurer of the claim until after the lawsuit was filed, insurer’s notification was untimely, and insurer was not required to tender a defense.
I'm tempted to just import Geoff Sharp's entire post on joint session vs. separate caucus mediation or, as Joe McMahon positions the split in current mediation practice in Moving Mediation Back to Its Historic Roots, "dialogue-based" v. "separation-based" practice.
I will give you a few excerpts, though, both Geoff's own thoughts and those of McMahon quoted by him (thanks to our mutual friend Stephanie West Allen at Idealawg).
If denial and avoidance are thought to be the most universal responses to conflict, it is important to consider whether separation-based mediation merely plays into and enables such a response to conflict. If so, it is time to evaluate whether mediation and facilitation were really intended to provide support for such denial...
Support for the market model of mediation ("the market knows what it needs and what it needs is the settlement conference") is claimed in the high settlement rates in commercial settlement conferences. However, a high percentage of civil cases always have settled, even long before mediation was in vogue...
McMahon asks of mediators; 'are you fully satisfied with the quality of dialogue among conflicting parties in the mediations in which you participate?'
What a wonderful question! In my case however, only occasionally.
As McMahon says, 'By broadly considering conflict and mediation, it may be possible... to move these processes back toward their historic roots—that being processes based on parties telling their stories in face-to-face dialogue aided by a mediator who can guide them to more effective communications.'
And though it is, as Geoff says, about the "timbre and tone of resolution," it is also about obtaining more satisfactory resolutions -- resolutions that not only satisfy more party needs, interests and desires but which invariably leave less value lying unused on the table when all parties leave the room.
I'll grill Geoff about this over dinner tomorrow night and get back to you on all of this.
Here, then, is the weakness of shuttle negotiation. The parties' attention is fixated on money. A fixation that neuroscientists tell us makes us ungenerous and anti-social -- the worst possible context for a successful settlement.
The next time you're facing a difficult negotiation or mediation, remember the salutary effect of small talk in helping yourself and your opponent focus on the commercial and human situation that has brought you to the table so that you can more easily resolve the business and the people problem at the heart of the litigation.
Whether justice and fairness are, at some level, hard-wired into us (see Brain reacts to fairness as it does to money and chocolate) or culturally controlled, it seems that Rawls' conception of "justice and fairness" based upon reasonableness and enlightened self-interest might flow more or less naturally from a mediated dispute resolution forum where the parties, rather than the mediator, are in control.
Emotions in litigation -- and at the negotiation table -- often run extremely high. It is for this reason that so many lawyers want to avoid joint sessions altogether and conduct their entire bargaining session in separate caucus with a "shuttle" mediator.
What I can tell you from three years of full-time mediation practice, however, is this -- when business people -- properly coached -- are finally willing to sit down and speak to one another, to explain their circumstances rather than their legal and factual position -- cases get settled rather quickly. (See Geoff Sharp's In Praise of Joint Sessions here)
Because they have more in common with one another -- including most particularly the dispute -- than with anyone else.
If you serve a 998 offer on the Plaintiff, say $5,000, and Plaintiff's judgment is reduced to zero after set-off for settlements, is the Defendant entitled to recover the costs permitted by 998 if the judgment against it is reduced to zero after the court deducts from the jury verdict the amount of pre-trial settlements paid by others?
Well, yes and no.
If the Plaintiff's recovery at trial would have netted it more at the time of the 998 offer than the 998 offer itself, 998 does not shift post-998 fees to the Plaintiff. If the 998 offer was $5,000, the jury verdict is $10,000, and no settlements had been paid to Plaintiff at the time the 998 was served, Plaintiff's failure to accept the 998 does not shift post-998 costs to it. If, however, the Plaintiff had already received $10,000 in settlement at the time the $5,000 998 was made and the jury renders a $10,000 verdict that is reduced to zero, 998 will shift the post-998 costs to the Plaintiff.
I get stuck in position-based negotiations as well. It remains a challenge for me, after 25 years of litigation practice, not to be sucked into the attorneys' arguments about why they are right. To help all of us in the mediation room . . .
[h]ere is a list of 8 questions you can ask yourself when you suddenly realize that you have to prepare for a negotiation. Use these to generate quick preparation for any negotiation.
1. What are my intended outcomes and interests?
This is about having your goal in mind but also about thinking about the bigger picture at the same time - if you're goal is to get to work on time, speeding to get there might seem like the right choice until the cop pulls you over.
2. What are their possible interests and outcomes?
Look at the negotiaion from their point of view. What do they really want from this?
3. What are some of the options of agreement?
Where are the points of agreement? Focusing on this beforehand will set a tone of reaching agreement rather than a tone of conflict.
4. What is my Plan B?
Once you've thought through the first three questions, what's your fall back position? Having your Plan B in mind gives you a feeling of options so if the deal goes to far against you, you are comfortable with your option B.
5. What is my worst case scenario?
Answering this question sets your "don't cross" line. You've predetermined what you're willing to give up and more than that is a deal breaker… that means you can negotiate confidently, since you know your direction.
6. What are some possible external standards?
External standard are outside measures that can move the negotiation away from personal stakes to measures from an outside authority. Examples might be interest rates, rate of exchange or time frame.
7. What is or are my reserve price / terms / limits?
Knowing what your limits are and then not not going past them results in more useful and enjoyable negotiation.
8. What is my game plan?
Map it out. What do you want and how are you going to get there?
It happened at a settlement conference again just last week. Defense counsel said there was "no insurance" for the defense orindemnity of a professional malpractice claim.
This naturally surprises me. Some professionals are required to have coverage or disclose its non-existence to their clients. No such disclosure had been made in this case.
"No insurance policy?"
"She has an insurance policy; there's just no coverage."
"Why did the carrier deny coverage?"
"The carrier said there was no coverage."
"I don't know. I'm not coverage counsel."
"Is there coverage counsel?"
"No. I told you there's no coverage. Let's get back to negotiating the settlement."
After obtaining (via fax) the policy, the demand and the denial, it turned out that there was a good reason for the carrier to deny coverage for the plaintiff's claim. But the denial letter expressly withheld comment on the existence of coverage for the defendant's principal, who had not failed to make a timely claim for coverage, and who had not yet been sued.
Call me an activist or a "fund raising" mediator if you will, but when there's not enough money to settle a case and the parties continue to wish it could be settled, I start asking questions about sources of available funds.
And, listen. Every litigator must be enough of a "coverage lawyer" to evaluate the likelihood that any existing insurance policy might provide defense or indemnity for the law suit you are defending.
So, if you are a commercial litigator -- or any type of litigator who defends your clients against claims -- you must
ask your clients for all of their insurance policies, even those that seem unlikely to provide coverage;
carefully review the precise wording of the policy's insuring agreements, paying particular attention to the language concerning the defense of claims and the deadlines for submitting those claims to the carrier;
research the case law in the relevant jurisdiction(s) to determine how the courts have interpreted the insuring agreements and other pertinent policy provisions contained in your clients' policies under facts similar to those alleged in the lawsuit you've been asked to defend;
except for some narrow additional protections provided to insureds, be aware that there is no such thing as "the law" of coverage under any particular type of policy -- all coverage flows directly from the precise language of the insuring agreement;
remember that in most jurisdictions, that language -- if ambiguous -- will be interpreted in favor of the insured's objectively reasonable expectations -- that means the law of coverage always favors your client's claim for coverage;
understand that in most jurisdictions the rule of contra proferendum will require a court to construe any ambiguity in an insurance policy against the insurance carrier, once again meaning that the law of coverage will favor your client's claim for coverage;
never accept the carrier's refusal to provide a defense without asking yourself -- or a coverage specialist -- why in the heck you should accept the carrier's word for it when you were born to contradict everything from "good morning" to "let's have lunch";
never conclude your client doesn't have coverage before tendering the claim; the response to the tender will outline the pertinent policy provisions in stark enough detail -- not to mention 12-point type -- and the denial in sufficiently weasley words to activate your B.S. meter;
if you finally accept the fact that your client's policy won't cover the defense of the litigation or indemnify your client in the event of a judgment, continue to keep the carrier informed of the litigation's progress in any event, inviting the carrier to attend all mediations and settlement conferences and to respond to all settlement demands;
remember that the law of coverage changes on a daily basis; read those coverage decisions sent down by your local appellate courts and subscribe to Mealey's on coverage remembering that a really good reason for a client to sue a lawyer for malpractice is your failure to give it reasonably informed legal advice about the availability of insurance coverage; and,
retain coverage counsel If the cost of the lawsuit is beyond your client's means or will deprive it of capital necessary to meet its business goals for the next few years.
The Defendants filed a motion to enforce the mediated settlement agreement [Guess why! Good guess!]. The Plaintiff argued that a “mutual mistake” allowed him to avoid the parties’ mediated settlement agreement.
Not so fast . . . .
Continue reading here. There are two solutions to this problem in any jurisdiction: (1) know your policy limits; or, (2) make your agreement to settle contingent on verifying them.
"Inordinancy" is not, I think, a matter of time but of focus. One's sexual interests might be classfied as prurient if they are stirred by a single act, item or physical characteristic and disregard the humanity of the object of one's desire. In feminist terms, pornography objectifies people, elevating their parts above the sum of their parts and using them to satisfy our own -- but not their -- desires.
And how is pornography like litigation, Ms. Pynchon?
After more than 10 years as a judge of this [Ninth Circuit Court of Appeal] I find that the flow of cases begins to resemble a moving train, with each window revealing a still life of an individual human drama. The sheer volume of cases, and the fact that we rarely see the faces of the participants--just written words on paper and, sometimes, the arguments of lawyers--makes it difficult to remember that there are human beings somewhere looking to us with hope and yearning for a decision in their favor. The law, too, is quite complex. Cases often turn on legal technicalities that bear only a tangential relationship to concepts such as fairness and equity. Justice, we tell ourselves--and I do believe this--is done if the law is applied without regard to the outcome in a particular case.
The artifacts of litigation -- usually called "briefs" and sometimes sprung into life as depositions or trial testimony -- make a fetish of one or more aspects of a complex human drama. Litigation sucks the people out of the play, requiring both litigants and attorneys to objectify and demonize one another. By the time the "case" is ready to be "mediated" or "settled," the people with the problem often feel as if they long ago watched the litigation train leave with someone else's story in it -- that the "still-life" Kozinski observes at a glance through the moving window has little to do with the people and a lot to do with process.
Are we interested in knowing one another? Would a genuine interest in the man Kozinski be more satisfying, finally, than the briefly titillating party joke we might wish to make of him? Do we privilege the prurient or the personal?
If you do this, you will no longer be capable of reducing Kozinski to a ribald joke or reveling in his public embarassment. You will recognize the humanity in him, which is the necessary pre-requisite to recognizing and forgiving the fallible humanity in all of us.
And litigation? Here's my unsolicited advice: Let your clients tell their stories to one another in a joint mediation session. Neither you nor they will thereafter be capable of reducing the "opposition" to a single demonic character trait.
I will say it again. Litigation is not about money. It is about justice.
The defense balks at paying Plaintiff at the point of a gun. The Plaintiff resists releasing the defendant from liability until satisfied that a wrong has been righted or never really existed in the first place.
You can accomplish justice with money. But you can accomplish it far more easily, and with far greater satisfaction for your clients, if you allow them to once again share the depth and dimensionality of their dispute with one another; harmonizing their mutual stories of injustice and betrayal.
In the meantime, I suggest we let Kozinski -- and ourselves -- off the hook by recognizing that the sum of the parts is greater -- and in the end far more interesting -- than the temporary public revelation of the smallest part of any man.
Cyberspace is weird and obscure to many people. So let's translate all this a bit: Imagine the Kozinski's have a den in their house. In the den is a bunch of stuff deposited by anyone in the family -- pictures, books, videos, whatever. And imagine the den has a window, with a lock. But imagine finally the lock is badly installed, so anyone with 30 seconds of jiggling could open the window, climb into the den, and see what the judge keeps in his house. Now imagine finally some disgruntled litigant jiggers the lock, climbs into the window, and starts going through the family's stuff. He finds some stuff that he knows the local puritans won't like. He takes it, and then starts shopping it around to newspapers and the like: "Hey look," he says, "look at the sort of stuff the judge keeps in his house."
Susan Estrich's 'take" in her post Good Humor, excerpt below:
If everyone who ever viewed or shared pornography were disqualified from judging the line between protected speech and criminal obscenity, we all would be in trouble. The problem facing Judge Kozinski illustrates what's wrong with the prosecution, not with the judge.
Which brings us to the broader point. Judge Kozinski's actions affect the reputation of the judiciary, on which rest foundations of the state, like public respect for the rule of law. To the extent that this public disclosure undermines public confidence in the judiciary or the rule of law, it's a very bad thing. There's a reason for the outrage that's expressed when the public hears about judges' bad behavior. As Stephen Gillers told the LAT, "The phrase 'sober as a judge' resonates with the American public."
The National Law Journal's compilation of Expert Opinionon the matter including legal ethics professor Ronald Rotunda's opinion that the material on Kosinzki's site was "demeaning, infantile, pornographic, [and] offensive," which just makes me want to see what type of internet porn the good Professor prefers.
One of the reasons I began this series was to explore the type of professional behavior that tends to trigger professional malpractice litigation -- and how that litigation might be avoided.
As you may recall, my first post cited a study finding that the top three reasons for filing litigation against a medical provider were:
so that it would not happen to anyone else . . . 91%
I wanted an explanation . . . 91%
I wanted the doctors to realize what they’d done . . . 90%
In that same study, only 66% of respondents said they'd brought suit because they wanted money.
Other studies have found that the failure to health care professionals to effectively communicate with patients and their families give rise to more litigation than negligence or bad results in treatment. As reported in the March/April issue of Patient Safety and Quality Healthcare
ineffective communication with patients and families, rather than quality of care, was the underlying cause of patients' and families' decisions to file suit against their caregivers (Vincent et al., 1994; Hickson et al., 1992). Other researchers found that most patients would be less angry and less likely to sue if physicians honestly and compassionately disclosed medical errors that occurred, admitted responsibility, took steps to reduce the chances of repeat errors in the future, and offered sincere apologies for the suffering that may have resulted because of the bad outcomes (Gallagher et al., 2003). Similarly, research on apologies suggests that individuals receiving a full apology that both expresses sympathy and takes responsibility by the person who wronged them are more likely to accept settlement offers and negotiate towards a resolution rather than going to trial (Robbennolt, 2003).
Someone once told me that a divorce is a hologram of the marriage -- that all of the marital dynamics that have never been resolved -- or even surfaced -- by the divorcing couple -- take shape and form in one way or another in the course of the divorce. Not surprisingly, the "weapons" of marital dissolution are its most precious assets -- relationship and children -- and its most symbolic -- money. /*
So it is that historic family dynamics (rife with unresolved conflict) will more or less naturally play themselves out around the bed of a loved one who is -- or may be -- dying.
MAIN RESULTS: At least 1 health care provider in 78% of the cases described a situation coded as conflict. Conflict occurred between the staff and family members in 48% of the cases, among staff members in 48%, and among family members in 24%. In 63% of the cases, conflict arose over the decision about life-sustaining treatment itself. In 45% of the cases, conflict occurred over other tasks such as communication and pain control. Social issues caused conflict in 19% of the cases.
CONCLUSIONS: Conflict is more prevalent in the setting of intensive care decision making than has previously been demonstrated. While conflict over the treatment decision itself is most common, conflict over other issues, including social issues, is also significant. By identifying conflict and by recognizing that the treatment decision may not be the only conflict present, or even the main one, clinicians may address conflict more constructively.
It's Not About Money But it Will Become About Money if Conflict is Not Treated at the Source
I have much more to say about this but I need to get out to the Valley to see my dad who is -- amazingly (to me at any rate) -- surviving without food or water into Day Nine.
For now, I will simply remind my readers of the following:
Why the Coming Crisis and Likelihood of Litigation?
The parents' of the baby-boom are dying. Extraordinarily high levels of conflict in health care settings are associated with dying. Hospitals and health care professionals are not yet up to par in resolving conflict at its source. In the absence of programs to assist the families of the dying negotiate their way through this traumatic experience, people will seek out attorneys; attorneys will, as the law does, monetize pain, suffering, and injustice.
The research is in. The solutions are available.
It's up to us.
*/ Money is symbolic? Yes it is. As my longer article on the many meanings people give to money notes:
It is money’s nearly infinite plasticity that makes exchange of unlike things not only possible, but nearly effortless. Unlike barter, which famously requires a “double coincidence of wants,” money creates a bridge to the future; permits trade at a distance; allows the exchange of durable objects for perishable goods; and, is capable of reducing nearly every human activity into a quantitative monetary value.
Although contemporary money seems to have shed all of its qualities except its quantity, “its oneness or fiveness or fiftyness,” we do not in fact use money as if it were fungible. We experience the value of a dollar earned differently from the way we experience one that is stolen or given to us as a gift and we spend it differently as well.
Take a page from theBarbie- Bratz litigation which the AmLaw Daily reports was partially settled with the assistance of Pierre-Richard Prosper, a former ambassador-at-large for war crimes issues in the Bush administration.
The AmLaw Daily reports that Prosper was "brought into the case by federal district court Judge Stephen Larson to oversee settlement negotiations among all three parties because (according to Prosper) the "judge and the parties thought [his] international experience mediating and negotiating armed conflicts would translate here." See Barbie and Bratz Head to Trial here (emphasis mine).
announced Monday a bipartisan agreement on the broad elements of a plan to avoid foreclosures and speed the refinancing of mortgages for roughly 500,000 troubled homeowners without taxpayers footing the bill.
Political deal making showcases high-level bargaining skills at the intersection of interest- value- and rights-based negotiation paradigms. No one files lawsuits against their Senators (well, no sane person). But in the midst of an economic crisis, political representatives might just as well be defendants. As Reynolds explains, the forclosure legislation "deal" reached in the U.S. Senate reflects the election-year pressure that lawmakers feel to find common ground on one of the most pressing issues facing the country.
Some theorists define conflict as a "crisis in human interaction" which the parties need help to overcome for the purpose of restoring constructive interaction.
A stakeholder in a conflict is anyone who might be positively or negatively impacted by the crisis and its potential resolution. In this case, the L.A. Times identifies the entire economy as a "stakeholder." As Ms. Reynolds explains, the "housing collapse"
has inflicted pain on thousands of families, dealt the economy a major blow and ignited a fierce controversy over what -- if anything -- the government should do about it.
The stakeholders to whom elected representatives must answer are, of course, those who elect them -- voters and taxpayers -- as well as those corporate and individual contributors who fill their election coffers. When selling a public good, however, it is best to acknowledge your allegiance to "the people." As one Senator explained:
My primary consideration during negotiations on this package has been to protect the American taxpayer, and I believe we've made significant progress toward that goal.
National Resolution to Public Problems Must Reflect the Voters' Interests and Values
Unlike a lawsuit, where the parties are fighting over existing (or hoped for) rights and obligations, in economic, social or political crises the "fight" is not about "rights" but interests and values. The right to declare bankruptcy aside, no one has a legal right to be "bailed out" of a financial crisis. Nevertheless, a bail out may be necessary if elected officials are to serve the "interests" of their constituents according to those voters' "values."
As Reynolds explains, the lead Republican on the Senate Banking Committee, Sen. Richard C. Shelby, suggested that consensus among law makers could not be achieved if the proposed solution to the foreclosure crisis were seen as a "bail out" of "speculators" or of "borrowers and lenders who made bad decisions out of carelessness or greed." These are the "value" concerns that are part and parcel of any potential resolution of a community-wide conflict.
Because we perceive money to be a scarce resource, we presume that its delivery to Interest Group A will deprive Interest Group B of funds necessary to serve Group B's needs or desires. This is a "zero sum" view of economics. For individuals and many businesses, however, this is often not only perceived reality, but the actual fact of the matter.
If mom and dad bail Billy out of jail for drunk driving, they may not have sufficient resources to pay his brother's room and board at Ivy League U. Not wishing to "reward" bad behavior (a "value" metric) may be only part of the calculus, however. If the family is capable of satisfying both brothers' interests, they may or may not decide to be guided by their "values." They could act out of helpless parental love or simply compassion. If the parents do not have sufficient resources to satisfy both brothers' needs at the same time, their decision about who to benefit will almost always reflect family values (little "F" little "V").
How national problems should be solved within federal budgetary constraints is not so different from the family drama hypothesized above.
The foreclosure crisis is not only about American values such as independence, thriftiness, caution, and hard work. It is also about stakeholder interests. As Reynolds reports:
Some Republicans have supported other versions of the legislation, citing the severity of the housing crisis and the escalating number of foreclosures in some regions of the country, including parts of California. They argued that the foreclosure crisis would damage entire communities and pull the economy toward recession.
If larger societal interests -- like the economy itself /** -- are at risk, a "bail out" plan that "rewards" even the careless and greedy may be palatable to voters, particularly when, as Reynolds reports, "at the luxury end, home prices are falling." In other words -- if this crisis is not addressed by our elected representatives (who are also stakeholders in this crisis) not only voters, but contributors to political campaigns might retaliate against them.
In acknowledging the need for action, Senator Shelby positively "frames" the crisis as one affecting "struggling homeowners" who "should" be assisted so long as "American tax payers" don't have to foot the bill. Others appeal to market and voter fears that the foreclosure crisis might "pull the economy toward recession" (if it has not already arrived there). In all events, a majority of stakeholders in any democracy must feel satisfied that legislation addresses both their needs and their fears.
The Proposed "Deal"
The proposed Senate "deal" to aid borrowers, lenders, and "the economy" is described by the Times as follows:
The Senate plan announced by Shelby and Banking Committee Chairman Sen. Christopher J. Dodd (D-Conn.) is similar to the House-passed bill in that the centerpiece of each is an expansion of government mortgage insurance. Under both proposals, a borrower facing foreclosure could refinance into a government-guaranteed mortgage under certain conditions, including that the home is the owner's primary residence and that the holder of the existing mortgage accepts 85% of the home's current appraised value as payment in full.
The House bill calls for using about $1.7 billion from the federal budget to set up the program, which would be administered by the Federal Housing Administration.
Under the Senate deal, the start-up funds would come instead from an affordable-housing fund capitalized by mortgage giants Fannie Mae and Freddie Mac, which were created by the government but are owned by public stockholders.
This plan satisfies American "self-help" values by requiring borrowers to refinance. It attempts to exclude "speculators" from the benefit created by requiring recipients of the government-guaranteed mortgages to affirm that the home is their primary residence. And it "punishes" imprudent lenders by requiring them to accept 85% of the home's current appraised value as payment in full. Finally, whereas the House would spend $1.7 billion in federal funds, the Senate hopes to tap the resources of Fannie Mae and Freddie-Mac, government created but privately owned lenders.
Selling the Deal
Whatever deal is crafted to address a national financial crisis or to settle a piece of commercial litigation, it must be sold to all stakeholders. Here's a classic "win-win" pitch based on interests and values.
"This legislation is good news for both the markets and homeowners," [Senator] Dodd said. "The bill addresses the root of our current economic problems -- the foreclosure crisis -- by creating a voluntary initiative at no estimated cost to taxpayers, which will help Americans keep their homes." Dodd told reporters the measure would speed the correction of housing prices to return stability to the market as soon as possible and prevent further damage to the broader economy. "Obviously, we want to keep as many people as possible in their homes. But the second goal, as important as the first, is to get to the floor" of the housing correction, Dodd said in a conference call. "Until we get to the floor, none of this is going to get better." "We have a lot of confidence that this is what the market is waiting for," Dodd said.
Deconstructing consensus-building in the political arena should help anyone who is making an effort to settle commercial litigation -- or simply a family dispute over the deployment of family resources.
We thank Times staff writer Maura Reynolds for the depth and breadth of her reporting on this issue.
Agree with Fiss, Ellinghausen, Laura Nader and Carrie Menkel-Meadow or not, there shouldn't be a mediator practicing who is unaware of these serious criticisms of the mediation process. If we're not aware of them, we can't avoid the potential for "muscle" mediation to prevent even the aspirational goal of delivering justice without regard to gender, color, power, social status, wealth and all the rest of the social markers the law has been so careful to avoid paying obeisance to.
My readers will recognize many of the tips included in this article published last week in the Los Angeles Daily Journal -- Bullying, Rigidity Are Surefire Negotiation Deal Breakers. Read it by clicking on the link above or below -- to enlarge page on the document embedded below, click on right-hand arrow and scroll down to
Malhotra and colleagues suggest that an adrenaline-fueled emotional state [which they] call competitive arousal, often leads to bad decisions.
Negotiating litigators may want to note that all of the conditions giving rise to "competitive arousal" are the day-to-day conditions in which litigation is conducted, i.e., intense rivalry, especially in the form of one-on-one competitions; time pressure . . . ; and being in the spotlight—that is, working in the presence of an audience.
Sound familiar? Take a look at the consequences and the potential solutions below.
Individually, these factors can seriously impair managerial decision making; together, their consequences can be dire, as evidenced by many high-profile business disasters. It's not possible to avoid destructive competitions and bidding wars completely.
But managers can help prevent competitive arousal by anticipating potentially harmful competitive dynamics and then restructuring the deal-making process. They can also stop irrational competitive behavior from escalating by addressing the causes of competitive arousal.
When rivalry is intense, for instance, managers can
limit the roles of those who feel it most
reduce time pressure by extending or eliminating arbitrary deadlines
deflect the spotlight by spreading the responsibility for critical competitive decisions among team members.
Decision makers will be most successful when they focus on winning contests in which they have a real advantage—and take a step back from those in which winning exacts too high a cost.
Recently, I excerpted the expressed concerns of in-house counsel about ineffective mediators. Among the complaints was some mediators' refusal to see or acknowledge the other side's "irrationality" As Where's the Magic from the U.K. online Mediator Magazine noted:
It can be frustrating where they [the mediator] can see the irrationality of the other party, how their claims and positions are unsubstantiated, and choose to ignore it,' says Frank Aghovia, legal adviser at Exel Plc. He continues, 'It's like saying, "I know he's talking out of his backside, but can you give him what he wants anyway." He concludes that 'steadfast neutrality is irritating and wastes time.'
Helping litigants and their attorneys reassess their case is one of the mediator's greatest challenges. The mediator intervenes only after the parties' dispute has reached stalemate. Each party to a stalemate has negative attitudes about his adversary that are maintained and prolonged by three psychological mechanisms: selective perception, self-fulfilling prophecy, and autistic hostility.
Selective perception: people tend to select those perceptions that tend to confirm their existing attitudes, and ignore or discount information that would disconfirm their existing attitudes.
Self-fulfilling prophecies: people with negative attitudes about their adversary engage in conduct that provokes the adversary's "expected" response, which confirms the party's original expectation, and a vicious cycle ensues.
Autistic hostility: Parties in litigation have stopped talking with one another about their dispute, communicating only through their attorneys. The social scientists would say that such people are "stuck in autistic hostility, that is, their hostility is perpetuated by their refusal to communicate."
Robinson answers his own rhetorical question in this fashion:
When talking to the UFO-guy, I am totally with him. Listening, asking questions, trying to understand whether his delusion actually has some hidden meaningthat might suggest a way to resolve the dispute without asking the other party to "buy in" to the UFO story.
After giving Mr. UFO an opportunity to have his say and to experience -- perhaps for the first time ever -- another human being's willingness to temporarily suspend his disbelief -- I begin to gently "reality test." To do so, I do not have to doubt Mr. UFO's story. I can suggest, however, that not everyone is as understanding as I am.
"Have you told this story to many people?" I might ask. "And what has their response been?" Do you have any reason to believe that a judge or jury might be more likely to believe this narrative of events more than, say, your mother, sister, cousin, wife, best friend, etc. were?
Robinson's suggested action between the rock of understanding and the hard place of consensual reality is shrewd and effective. It neatly avoids the problem recently raised by my friend and colleague Jeff Kichaven who has likened piling rationales atop one another for the purpose of changing another's mind to raising your voice for the purpose of communicating with a deaf man.
Harvard Business School professors Deepak Malhotra and Max H. Bazerman address the irrationality problem in another fashion in their tremendously useful book Negotiation Genius.
"Whenever our students or clients tell us about their 'irrational' or 'crazy' counterparts," they write, "we work with them to carefully consider whether the other side is truly irrational. Almost always, the answer is no."
Malhotra and Bazerman list the mistakes that lead us to call our negotiating partners "nuts," "delusional" or "evil" as follows:
Mistake No. 1: They are Not Delusional, They are Uninformed.
If you can educate or inform your bargaining partner, say Malhotra and Bazerman
about their true interests, the consequences of their actions, the strength of your BATNA, and so on - there is a strong likelihood they will make better decisions . . . [I]f someone says "no" to an offer that you know is in her best interest, do not assume she is irrational. Instead, work to ensure that she understands why the offer is in her best interest. She may simply have misunderstood or ignored a crucial piece of information.
Mistake No. 2: They are Not Irrational; They Have Hidden Constraints
In negotiation, a wide variety of possible constraints exist. The other side may be constrained by advice from her lawyers, by the fear of setting a dangerous precedent, by promises she has made to other parties [this is a particularly common constraint in IP infringement actions] by time pressure and so on. [D]iscover these constraints . . . and . . help other parties overcome them . . . rather than dismissing others as irrational.
Mistake No. 3: They are Not Irrational; They Have Hidden Interests
[P]eople will sometimes reject your offer because they think it is unfair, because they don't like you [or are tired of feeling as if you don't like them] or for other reasons that have nothing to do with the obvious merits of your proposal. These people are not irrational; they are simply fulfilling needs and interests that you may not fully appreciate. . . [I]nvestigate: "What might be motivating her to act this way? What are all of her interests?"
But What if They Really Are Irrational
If your counterpart truly is irrational -- in other words, he is determined to work against what is in his best interest -- then your options will be fewer. You can try to push through an agreement despite his irrationality, you can try to "go around him" by negotiating with someone else with authority who seems more willing to listen to reasons . . . or you may decide to pursue your BATNA because his irrationality has eliminated all hope of creating value.
I have a friend who is, literally, a rocket scientist. He says that there are no problems which cannot be solved -- only problems that we don't yet understand. This is as true in negotiation as it is in rocket science. In both cases, the wisest course is to assume you know nothing and begin asking the type of questions that would help learn something.
Thanks to Geoff Sharp at mediator blah blah for directing us to this great U.K. Mediation resource, The Mediator Magazine which is great to poke around in a little when you're home for mother's day and mom's gone off to bed. Here, for instance, are some well taken criticisms of mediation practice by in-house counsel from the article Where's the Magic?
Top of the list of issues which invite scorn is perceived weakness on the part of the mediator. Giving palpable nonsense and well documented fact equal air-time in the interests of appearing open-minded has backfired for a number of mediators. 'It can be frustrating where they [the mediator] can see the irrationality of the other party, how their claims and positions are unsubstantiated, and choose to ignore it,' says Frank Aghovia, legal adviser at Exel Plc. He continues, 'It's like saying, "I know he's talking out of his backside, but can you give him what he wants anyway." He concludes that 'steadfast neutrality is irritating and wastes time.'
One public sector lawyer, though generally more favourably disposed towards mediation, shares a sense of frustration with the purely facilitative model: 'If a mediator is too passive,' he says, 'there isn't going to be any realignment of expectations, there isn't going to be the refocusing of the parties on the strengths and weaknesses of their own and the other party's case. It's simply not going to happen. You're not going to facilitate the movement.'
Naturally it is all a question of degree, but frustration with a style perceived to be 'slow', 'wet', 'namby-pamby', or worse, 'like therapy' is real, and stands in the way of mediation increasing its meagre market share.
It is also evident that some mediators have failed to manage the process with sufficient vigour, fuelling comments like 'I've been at quite a few [mediations] and question what the mediator actually does.' No doubt they've had to spend all their time working with the other side, but if so, this needs to be communicated.
This lack of robustness which for many is synonymous with mediation has bred the widespread belief that mediation only works when both sides want to mediate. And where that's the case, without prejudice discussions will do the job. Until mediation's image hardens to the point where people realise that great mediators can deal with the shirty, dismissive and gratuitously rude types, mediation will remain in the shadows. . . .
These criticisms are real and require attention. I'm uncertain of the state of "professional" mediation in the U.K., but here in California, its all over the board. For the mediation advocate and his client, finding the right mediator for the right case at the right time is not only more art than science, it's often more guesswork than art.
I'll be dealing with the issues raised by this U.K. article in the coming weeks. For the full article, click on the link above.
The BFNetwork has not only introduced me to many business blogs that otherwise wouldn't have come to my attention, my narcissistic perusal of my own posts listed there have drawn me into abundant Forbes.com resources that benefit my readers.
I urge my fellow Forbes BFN Bloggers to poke around Forbe's pages to unearth riches that can benefit their readers there.
(right: Forbes.com staff writer Tara Weiss)
That ridiculously lengthy introduction out of the way, here's a great article on how to negotiate a higher salary during a recession from Forbes.com staff writer Tara Weiss -- How to Ask For A Raise When Times Are Hard. Summary below:
find out what people in your market and your position are making.
once you know your market value, request a conversation with your manager about salary
remind your manager of the strong contributions you've made.
during an economic downturn, highlight new clients you've brought to the firm and cost-saving measures you've enacted. Include the key projects you've completed and goals you've met.
prove you're vital to getting the company through a recession
present your manager with the research you collected on what others in your market are making.
consider perks outside of salary such as vacation time, health benefits, or reimbursement for commuting and professional training in a job-related skill.
if you're rejected, ask what you can do in the next six months to make this conversation successful the next time.
A friend and former legal partner was fond of saying that the biggest lie in the business was I don't take it personally. After four years of full-time mediation, I have another "Big Lie" to add – it’s only about money.
The social scientists who sutdy these things say that the way in which we respond to adversity "often reflects the fact that [our] prestige or status has been threatened more than the fact that [our] purchasing power has been diminished." Miller, Disrespect and the Experience of Injustice, Annual Review of Psychology (2002). In other words, the corporate C.E.O., like any other kid on the block, will retaliate when he feels he has been disrespected.
Conversely, research shows that business people are reluctant to recommend legal action if they believe that they and their company have been treated respectfully. Although this is particularly true of fiduciary and special relationships such as lawyer-client and business partnerships of all kinds, it also applies to arm's length business transactions.
Every commercial interaction, we are told, "represents a social exchange and every form of social behavior represents a resource." Id. People's satisfaction with the outcome of a commercial transaction therefore "depends highly, and often primarily, on their perception of the fairness of those outcomes." Id.
When we, as litigators and counsellors, actively listen to what our clients and our adversaries are saying about the rights and responsibilities of all participants in an ethical business community, we stand the best chance of engendering mutual trust and respect among the parties. In that atmosphere, the probability of becoming embroiled in litigation decreases precipitously. When the parties believe that their concerns are being heard and respected, losses that might otherwise become lawsuits, are far more likely to be addressed as the understandable consequence of the inevitable mistakes and miscommunications that attend all human enterprises.
As much as we'd like to believe that we don't take it personally or that it's only about money, the good news for all of us is that we do and it's not.
As Alley reports, David Eun, VP in charge of Google content partnerships told Dow Jones Newswires ``we're going all the way to the Supreme Court. We're very clear about it.''
In the law biz we call this "posturing," and that "all the way to the Supreme Court" comment we call laughable posturing. Alley says:
Call us dreamers, but we still think both sides could kiss and make up before this gets to the Supremes. After all, the two sides were negotiating for months before going hostile. And Sumner Redstone's other media company -- CBS -- seems quite happy with YouTube. So while both sides can argue that there are important principles at play here, we're pretty sure they can get resolved with an appropriately sized check.
Of course it might well not be the size of a check but some other set of commercial exchanges, concessions, or synergies that will eventually settle the thing.
These are business people for goodness sakes. And never was a business person born who wants to establish Supreme Court precedent. Talk about giving away your power and control.
We welcome comments from more knowledgeable readers!
Here's a teaser to get you to the Business Growth post:
Remember that classic scene in "Erin Brokovich" where the high powered, electric utility law team shows up in force to negotiate with the small town law firm? Ed Masry sees them coming in and gets all his staff to file into the board room so they have more "lawyers" on their side of the table… and overpowers the power brokers.
Would you like to have a system that helps you think on your feet like that?
Here is a list of 8 questions you can ask yourself when you suddenly realize that you have to prepare for a negotiation. Use these to generate quick preparation for any negotiation.
Life is one negotiation after another, though too few of us are equipped for battle. Formidable dealmakers like Warren Buffett, Bill Clinton and sports agent Scott Boras tend to be born, not made.
Yet talk to negotiating pros from the worlds of government, finance and media and they'll admit there is at least some science to this art. Winning every point is rarely an option, of course, but if you keep a few principles in mind, you can tilt things in your favor--whether you're signing a peace treaty or just angling for a raise.
If you remember one thing about negotiating, it should be this: It's not the maneuvering once you're in the trenches, but rather the preparation before sitting down at the table that counts.
That means taking the time to define what you want, what you are willing to accept and at what point you will walk away. It also means doing enough research to know what the other side wants--and how far they are willing to go to get it.
My first day of mediation training progressed in somewhat the same fashion as my first few weeks in Civil Procedure. I remember struggling with the theoretical bases of jurisdiction in Pennoyer v. Neff one day only to be told the following week that Pennoyer was no longer the law. “Why,” I remember thinking, “did we even bother with Pennoyer when this Buckeye case about an exploding boiler now seems to be the law? Or would it be replaced next week as well?”
Law school, which taught me to “think like a lawyer,” was the precise opposite of my new mediation studies. Now, it seemed, I was being trained to stop “thinking like a lawyer.” Still, mediation, like the law, was full of conflicting ideologies from which it appeared I was required to choose.
It was easy for me to be evaluative: I had 25 years of legal practice in my backpack. I learned Dr. Cialdini’s “Principles of Ethical Influence”—Reciprocation, Scarcity (the rule of the rare), Authority, Commitment, Empathy, and, Consensus. These power principles helped the mediator to “make the other side see reason” when called upon to do so.
But the evaluative style was not the only prescribed route to mediation mastery. There were many who favored facilitation. The facilitative mediator first creates an atmosphere of hope and safety before helping the parties locate areas of agreement and mutual benefit. Here, the mediator is a follower or helper on the path to resolution, like the protective figures who appear early in a hero’s journey to enlightenment.
You can’t immerse yourself in mediation for long before you hear the clamor of the transformative crowd. Facilitative mediators, say the transformative folks, too often present themselves as wizards who intrude upon the parties’ conflict with their own agenda—usually “resolution be damned, let’s settle this darn thing!” The transformative mediator lets the session wheel out of control if that is where it is eager to go. Conflict is not seen as a state to be avoided or suppressed. Like a loving mother following the course of her child’s flu, the transformative mediator provides the parties with encouragement, opportunities to rest, lots of fluids and a metaphoric place to lay their heads as the conflict runs its natural course.
When I first brought this tangle of methodologies to the few master mediators I know, they all made short work of it with the scalpel of experience. “You are the technique,” they instructed. “Just stay in the process. Don’t guess. Ask questions. Listen. Don’t give up before the miracle of mediation happens.”
Now, four years into a full-time ADR practice, I am still struggling to embrace the entire dispute—the business or people problem that found its way to an attorney because of the justice issues with which it was burdened. I often feel that I’m walking a razor’s edge. I will never stop “thinking like a lawyer.” Nor will I stop pursuing this new way of thinking—one that looks for the opportunity to finesse the legal impasse by using the problem itself as an opportunity to broker a deal.
Why mediation? For me, it’s simply a broader canvass on which to paint a new picture. How mediation? In baby steps, one after the other, in just the same way I learned to be a litigator and trial attorney. How can the Human Factor help with your own life and legal practice? Stick around. Miracles are common here. We think you’ll enjoy the ride.
I could write an entire book on why law students should study negotiation as well as an entire chapter on why they should study texts written for MBA students rather than law students. The latter topic I will cover in a future post. The former has already been written succinctly as an article -- link and excerpts below.
Cathy Cronin-Harrisis Co-Chair of the Advocacy Committee of the ABA Section of Dispute Resolution. She's a Senior Consultant to the International Institute for Conflict Prevention & Resolution (CPR) and teaches Negotiation at Columbia Law School. She has taught at Georgetown and Fordham Law Schools, and has been an Administrative Law Judge and litigator. She can be reached at firstname.lastname@example.org.
Familiarity with Negotiation Approaches
[N]egotiation is a . . . . complicated process and demands a . . . . mind set that recognizes the inherent tension in negotiation: you must engage the other side in order to get to agreement while both sides are in a seeming struggle to achieve apparently conflicting objectives. That tension demands more subtlety than pushing [your opponent] into submission.
[E]xposure to negotiation theory and practice will help you understand "when to hold 'em," "when to fold 'em" and when and how to develop other feasible options and approaches beyond just holding out or giving in.
[Negotiation] courses stress the collaborative mode of negotiation or mutual gains bargaining popularized by Fisher and Ury in Getting to Yes. Its fundamental concepts stress objective standards, creativity, option development, respect for opponents and satisfying parties - genuine underlying interests rather than their positions.
Such exposure will expand your repertoire and allow you to negotiate with agility. You'll appreciate varying approaches people take to negotiation, discover ways to lessen competitive tendencies, become more conscious of options you can use rather than relying on raw intuition, appreciate the significant human elements impacting negotiation success, and learn the value of planning. As you become familiar with the broad brush approaches, you'll be enhancing the key skills below.
a. Expanded Communication Skills
In adversarial settings, assertion skills dominate: lawyers use logic, well-developed statement and presentation skills, tightly orchestrated cross-examination questions, and tools to connect with the trier-of-fact, such as compelling language, analogies and themes, to win the day. But when you negotiate, an additional set of communication tools comes into play along with asserting. Those skills focus on enhancing dialogue to solve the problem.
It's usually a challenge for lawyers to move from assertive statements to a wider band of communication skills. So negotiators learn to use better listening skills which includes confirming understanding of the other side's statements. They use open-ended questioning rather than restricted cross-examination formats to understand and dig out relevant information. They focus on body language and other signals embedded in communications that can provide information indirectly. They also refine assertion skills by ratcheting down the tone and format of statements to express needs compellingly without rancor. So negotiation will complement any communication skills learned in adversarial settings.
But beyond improving your negotiating ability in disputes, these skills will assist you in conducting your daily practice interactions including interviewing clients, unearthing their real needs and interests, advising them of your evaluations, enlarging their view of solution potential, calming them down, and in a host of other ways both professionally and personally.
b. Enhanced Persuasive Skills
The persuasion studied in most courses emphasizes logical rational analysis. Appellate judges apply it in every case based on the lawyers' logical presentations. Needed in negotiation? By all means. But persuasion to induce another to make a deal requires more. It includes your credibility, command of the subject, astute use of reasonable demands, varied questioning, and relationship building with the other side. We also persuade by showing our willingness to be persuaded: by meeting the other's needs and concerns and exploring a variety of options that might satisfy both entities rather than only pushing our agenda. And some psychological insights come into play about framing our requirements and anticipating likely reactions so we can make our offers more acceptable. While adversarial persuasion involves many of these tools, they are used to convince an outsider that you're right. Negotiation persuasion seeks to embrace your opponent, from whom you want something for yourself, and requires persuasive approaches we ordinarily don't consider. c. Appreciation of the Role of Perceptions
Every trial lawyer knows that perception plays a role in the court room: it's not just about facts. Trial advocacy aims, in part, to shift the judge or juries' perceptions in your favor. In negotiation, we also deal with perception change efforts since negotiators, like everyone else, bring misperceptions to the negotiation table. They make assumptions, they suffer from partial or selective perception, and they tend to view the opposing side with suspicion. So, we seek to amplify those perceptions to remove the negative conclusions the other side draws from their misperceptions which impede willingness to find solutions. We clarify our intent that may have been misperceived; we demonstrate we're not just competing which they might have assumed; and, we suggest solutions to demonstrate regard for their concerns as well as our own. We explore hypothetical outcomes to induce a broader view of settlement potential. Even in making offers, we account for perception barriers in the way we state offers and use rationales to caste new light on their justifiability. We recognize that the way we use actual leverage or power can alter the other's perceptions toward or against us. Exploring these concepts underscores the important role that perceptual awareness plays in negotiation success.
d. Appreciation of the Human Dynamic
One can't effectively negotiate or help orchestrate it as a mediator without recognizing the human emotions at play in disputes. Emotions greatly affect receptivity to settlement proposals. Anger at past events, negative reactions to offers deemed insulting, absence of control over a situation or perceived lack of respect, attention or appreciation can derail deals. On the other hand, creating a positive emotional environment by building trust, building relationships across the table, and acknowledging the other's emotional state can alleviate some of the negative feelings in negotiation. These courses will highlight the need to consider the human element whenever you deal with clients or others in conflict.
e. Expanded Problem Solving Ability
Many lawyers went to law school to help people solve problems. Then, the adversarial adjudicatory system gets ingrained in their blood. That system and the rule of law it's built upon are still the best route to justice I know, when you can't settle matters. But, to function well as a twenty-first century lawyer, you need to complement your adversarial skills with problem solving abilities that support the mutual search for solutions when conflict exists. The negotiation skills you'll garner in the consensual ADR courses will prepare you to engage in collaborative problem-solving whenever possible and apply many of its tenets and skills even in extremely competitive situations.
While I've only touched on the key benefits of gaining negotiation training by enrolling in one of the consensual ADR courses, I hope I've helped you appreciate the need to treat those elective courses as part of your personnel core curriculum. Rounding out adversarial advocacy courses with vital settlement skills will pay vast dividends in every area of law practice despite your chosen field. You'll be more confident and prepared for the challenges ahead and more successful as you join us in the near future.
In this part of the new series on getting the parties to the bargaining table, I interview former in-house Chrysler counsel and former Hogan & Hartson partner, Lew Goldfarb, who now has his own full-time outside settlement counsel firm.
what's the difference between outside settlement counsel and a mediator?
Settlement counsel is an advocate for one side, in my case, that's usually the defense. While the mediator is a neutral who tries to facilitate a compromise, settlement counsel attempts to achieve better outcomes for his clients for two reasons: (a) I have a complete understanding of the full range of my clients' interests, many of which are often not communicated to litigation counsel; and, (b) it is easier for me to learn the true motivations (if not the bottom line) of plaintiffs' counsel than it is for litigation counsel to do so.
In class actions, which are my specialty, I strive to craft a solution that responds to plaintiffs' counsel's needs while imposing minimal costs on my client. There are numerous, creative ways to settle class actions that accomplish both objectives effectively.
I sometimes find that the parties for whom I mediate have not confided in the litigation team all of the corporate interests that are propelling the client toward settlement. I found this to be true in litigation practice and as a mediator. Do you encounter this as outside settlement counsel and, if so, how do you serve the client's interests without stepping on the toes of litigation counsel and vice verse.
There's always a bit of a communication gap between litigation counsel and the client. When clients hire me as settlement counsel it's in their interest to provide me with complete information in order to get them the best possible outcome, so they rarely withhold any important information fro me. In a recent case, I was not only invited to speak at several client board meetings, I was also asked to spend several days in the field on sales trucks to observe the client's franchisees that were the subject of the lawsuit. As a mediator, I usually only see the information that the litigation counsel provides as part of his client's submission, which is probably much more selective.
Now that I've been mediating full time for four years, I find I'm much more prone to ask the parties interest-based questions than I was as a litigator. When I say "interest based," I mean corporate realities such as chain of command; upcoming mergers or acquisitions; a new management team; quarter- or year-end financial planning; divisional loss history; and, the like. If you find that to be true as outside settlement counsel, what do you think accounts for corporate counsel keeping their litigation team largely in the dark about issues that might have a substantial impact on the ultimate resolution of the matter?
Since I have always approached litigation with a view toward early resolution, either as in house counsel, outside litigator or mediator, I would usually make the same inquiries regarding the client interests that you do as a mediator. My only explanation as to why corporate counsel may withhold such information from their litigators may be that they are not seeking a negotiated outcome. In that case, they may believe that their litigators will be more effective and focused without being encumbered with "interest-based" information.
My peers in the mediation world are fond of saying that litigators have to "churn" cases before settling them. I find that a shockingly cynical attitude. I often found that clients were more settlement averse than their litigation counsel. What is your experience in that regard?
I have to admit that I am more on the side of the cynics. I've had this longstanding belief that the legal profession imposes enormous economic costs on society without a commensurate benefit to the public, all in the name of providing access to the legal process. (See Goldfarb v. Virginia State Bar, 423 U.S.886 ) I believe that litigators tell themselves that they were hired to litigate not settle the case. I think it's less a matter of "churning" than it is the litigators' belief believe that "early" resolution means winning a dispositive motion, even if it takes a year or more to get an outcome. (See my article "Litigate it or End it" which discusses this issue.)
While there are always legitimate corporate reasons for not settling a case, litigators are reluctant to discuss early settlement with their clients for two reasons: (1) loss of fees; and, (2) fear of showing any lack of resolve to win the case. My experience is not that clients are settlement averse, rather that litigation counsel convince their clients to hold off on settlement for one more dispositive motion.
How did you come to champion the use of settlement counsel?
I honed my skills as settlement counsel while serving for 16 years in house at Chrysler. When I arrived at Chrysler in 1985, the company was engaged in costly litigation with GM over a GM/Toyota joint manufacturing venture in Calif. The General Counsel asked me to look for alternatives to the litigation, which is when I found an article by Roger Fisher of Harvard promoting the use of separate settlement counsel. Chrysler did so and settled the case within a few months. I was then placed in the role of overseeing all class action litigation and serving as settlement counsel as well. Most in house counsel are not sufficiently immersed in the litigation, however, to serve as settlement counsel or simply do not have the time.
As a former litigation partner in an AmLaw 100 law firm, do you wish you'd had inside settlement attorneys working side by side the litigation team?
Because of my experience as in house counsel settling cases, I was always the partner urging my fellow litigators to evaluate settlement possibilities. For all the reasons set forth in my answers above, most large law firms do not embrace the idea of institutionalizing an in-firm settlement section. One exception was Wilmer Cutler in DC which did set up an ADR group within the firm with the idea that clients would make use of it. I don't know whether it still exists. I still think it is a great idea, although not as effective as the hiring of a completely separate firm or individual to explore settlement.
Doesn't it take outside settlement counsel an unnecessarily long time to "get up to speed" on a major piece of litigation -- thereby making it less cost effective than simply hiring a mediator to help the litigators settle their own cases?
Not at all. When I take on an assignment as settlement counsel I provide the client with a budget that includes a separate breakdown for "up to speed" time. While I need to understand the merits of the client's defense I do not need to read all the briefs since I generally am not called on to argue the merits of the case. Most importantly, I must fully understand what the client's interests are and what it is willing to offer up in settlement. For better or worse, what I offer is a very low cost, low risk means of exploring and settling complex litigation.
Thanks Lew! I can think of a couple of complex anti-trust, securities and IP cases I could have used your services for. I hope this interview gets the word out to attorneys feeling pressured to settle a difficult case but unable to get the other side to the bargaining table.
If you aren't using writs of attachment in contract cases where the amount due is certain, you aren't using the most powerful means of increasing your bargaining power in litigation.
Attend LACBA's Brown Bag Lunch with Judge James Chalfant at the Stanley Mosk Courthouse 111 N. Hill Street, Los Angeles on May 15, 2008. Program Description:
Writs and Receivers: Practice tips for those who are rarely there. Judge James Chalfant will host a brown bag lunch highlighting tips and tricks for those who may not have much experience in this area. There is no cost to attend, but participation is limited to the first 12 attorneys who register. The program will be held in the judge's chambers at Stanley Mosk Courthouse, Dept 85. Please note, there is no CLE credit for this program.
When you have a problem, when there's something you engage in with Wal-Mart that requires agreement so that it becomes a negotiation, the first advice is to think in partnership terms, really focus on a common goal, of getting costs out, for example, and ask questions. Don't make demands or statements ... you know, can we do this better and so forth. If the relationship with Wal-Mart is truly a partnership, negotiating to resolve differences should not endanger the tenor of the partnership.
Don't spend time griping. Be problem solvers instead. Approach Wal-Mart by saying, "Let's work together and drive costs down and produce it so much cheaper you don't have to replace me, because if you work with me I could do it better."
Learn from and lobby with people and their partners who have credibility, and with people having problems in the field.
Don't ignore small issues or let things fester.
Do not let Wal-Mart become more than 20 percent of your company's business. It's hard to negotiate with a company that controls yours.
Never go into a meeting without a clear agenda. Make good use of the buyers' face time. Leave with answers. Don't make small talk. Get to the point; their time is valuable. Bring underlying issues to the surface. Attack them head on and find resolution face to face.
Trying to bluff Wal-Mart is never a good idea. There is always someone willing to do it cheaper to gain the business. You have to treat the relationship as a marriage.
ommunication and compromise is key.
Don't take for granted that just because the buyer is young they don't know what they are talking about or that it will be an easy sell. Most young buyers are very ambitious to move up within the company and can be some of the toughest, most educated buyers you will encounter. Know your product all the way from the production standpoint to the end use.
Chances are your buyer does, and will expect you to be even more knowledgeable.
Any good negotiator knows that you have to practice. Plan what you want to say and how you want to say it. Have mock negotiations with your friends or your career advisor. Practice negotiating at the drycleaner, with your cable company and with any other service you purchase. Eventually negotiating will feel natural, and you’ll appear more comfortable while you’re doing it. This is important, because you don’t want to come off as nervous or aggressive.
Penelope suggests the weakest strategy available -- exchange power for sympathy. "If one person has a great BATNA," writes Penelope, "and the other has a terrible one, it’s not really negotiations; it’s trying to get a little something extra. It’s asking for a favor. If you approach negotiations from this perspective then you are much more likely to get a little bit of what you want."
Two of the savviest negotiators around Deepak Malhotra and Max Bazerman in their tremendously practical book Negotiation Genius have devoted an entire chapter to Penelope's problem called, not surprisingly, Negotiating from a Position of Weakness. Their recommended strategies include the following:
Don't Reveal that You Are Weak
[H]aving a weak BATNA is not terribly problematic if the other side does not know that your BATNA is weak. If you have a weak BATNA, don't advertise it!
Overcome Your Weakness by Leveraging Their Weakness
[W]hen both parties have a weak BATNA, it means that the [Zone of Potential Agreement] is large. In other words, a lot of value is created when the two sides reach an agreement. Who claims more of this value? . . . [T]he one who fares better is the one who makes the other side's weakness more salient throughout the negotiation.
Identify and Leverage Your Distinct Value Proposition
[V]ery often, you do bring something to the table that distinguishes you from your competitors. This is your distinct value proposition (DVP), and it need not be a lower price. You may have a better product,, a higher-quality service, a good reputation, a strong brand, or a host of other assets that your [bargaining partner] values and that you can provide more effectively or cheaply than your competitors.
If Your Position is Very Weak, Consider Relinquishing What Little Power You Do Have (This was Penelope's strategyin the Yahoo negotiation subject of her post).
[I]f you can't out muscle the other side in a negotiation, you may want to stop flexing our muscles and, instead, simply ask them to help you. When negotiators try to leverage their power, others reciprocate. This pattern can be disastrous when you are the weaker party. But when you make it clear that you have no intention of fighting or negotiating aggressively, others also may soften their stance.
Strategize on the Basis of Your Entire Negotiation Portfolio
[A]udit the implicit assumptions you make when formulating your negotiation strategy. You may perceive yourself as being "weak" if you only measure strength as the ability to push hard in any given negotiation without losing the deal. But you may discover that you are actually quite "strong" once you begin to think about your ability to withstand losing some deals because you are maximizing the value of your entire negotiation portfolio.
Increase Your Strength by Building Coalitions with Other Weak Parties
In the realm of international relations, a vivid example of the power of coalitions surfaced during the 2003 World Trade Organization negotiations in Cancun, Mexico. Disgruntled by the continued lack of attention paid to the issues of concern to developing nations . . . twenty-one "weak" countries banded together to create the Group of 21. This group is now in a much stronger position to negotiate for the interests of its members than any member nation would have been on its own.
Leverage the Power of Your Extreme Weakness-They May Need You to Survive
[I]t is often useful to tell the negotiation "bully" that an overly strong show of force can be counterproductive: "If you push me too hard, you'll destroy me -- and lose a value-creating partner."
Understand -- and Attack -- the Source of Their Power
A number of Planned Parenthood clinics around the country have adopted a particularly creative strategy for fighting back [against protesters], usually referred to as the "Pledge-a-Picket" Program. Here's how it works: The clinic asks its supporters to pledge donations to the clinic on a per protester basis. The more protesters that show up to picket the clinic, the more money the clinic raises in donations! . . . The Planned Parenthood of Central Texas in Waco has even posted a sign outside its clinic that read: "Even Our Protesters Support Planned Parenthood."
Once the Planned Parenthood clinics understood that the source of their opponents' power was the ability to draw large numbers of protesters outside the clinic, they were able to think of a novel way of diminishing the benefits of doing so.
Malhotra and Bazerman conclude their chapter on Negotiating from a Position of Weakness by noting that
while being in a position of weakness is sometimes unavoidable, you will negotiate most effectively when you leverage the fundamentals -- systematic preparation and careful strategy formulation.
The provocative comment we're following is Jay Welsh's remark that to settle most cases the Plaintiff has to accept a lot less than he wanted to recover and the defendant has to pay a lot more than he ever imagined paying. And the response we're replying to is Canadian lawyer Michael Webster's:
When the issues have been crystallized into legal ones so well, you are in a lose/lose situation. The manager's dilemma then becomes counsel's dilemma: how do I manage to convince my client to lose more than I ever predicted and still maintain my own credibility.
The reason litigators settle law suits is because the outcome of litigation is uncertain and its pursuit expensive. But that just states the problem. How do you "tell" a client in the midst of expensive litigation that he's going to have to pay way more or accept way less than his attorney predicted (with appropriate disclaimers) long, long ago?
First, let me provide a checklist for success in commercial mediation:
Bring the real deal-makers to the mediation or settlement conference for it is they -- not their attorneys -- who will make the decision to pay way more or to accept way less than they had previously imagined.
Bring the parties back into the conflict as participants in its resolution again. Businesses have commercial problems that have business solutions. Litigation is often just the stick to force the continuation of commercial negotiations that broke down in so spectacular a way that the parties stopped talking to one another, hired lawyers, and began to fight over legal issues the parties neither care about nor understand. The parties have now experienced how surreal their negotiation becomes when it's conducted in the courts. They're probably ready to deal again. Let them.
Permit the parties to discuss all aspects of the conflict whether they are relevant to the legal issues or not. The reason one party initiated litigation against the other party is not because he wanted to create precedent. And if precedent is what a party wants, money might but often cannot settle the matter.
Bring the experts along and let them talk to one another about the ways in which the matter might be resolved or even why their expert opinions are diametrically opposed.
Address the parties' justice issues. People seek out lawyers for one reason and one reason only. Because they believe themselves to be the victims of an injustice. And if its the defendant you represent, the injustice visited upon it is the litigation itself. I spend a significant amount of time during a mediation discussing justice issues with the parties.
they're being extorted
they're being low-balled
they were defrauded
their trust and confidence was betrayed
their competitor's market tactics have been unfair and violative of any number of state or federal laws
their intellectual property was stolen
etc., etc., etc.
Let the mediator talk with the parties about what the justice system can do, what it should do, what it most likely cannot or will not do. Most parties will not be happy with their attorneys if their justice issues are not addressed at the time of settlement. And its my job to make clients happy with their attorneys.
Let the mediator help the parties understand that their case has -- with no one's fault -- gotten worse rather than better over time and why.
When all else fails, blame the "system."
Why Parties Pay More or Accept Less than They Want To
Jay Welsh is right. If the parties have hired a mediator to settle complex commercial or mass tort litigation, they have done so because they need to pay more and accept less than they are prepared to do. Otherwise, they'd settle without the assistance of a mediator.
This does not mean that the mediator bangs heads or twists arms. There are hundreds of reasons why parties do not continue to trial and thousands of good excuses for corporate counsel to stop the bleeding. They include:
the witnesses on the other side performed better in pre-trial testimony than expected
the Judge made pre-trial rulings that cut the heart out of your case
the Supreme Court (state or federal) just over-turned a hundred years of precedent making one party's legal case far worse and the other's far better than expected
it's the economy, stupid
the client realizes during the course of the mediation that there's more than one way to organize the facts and apply the law -- something lawyers are trained to do and even sophisticated clients find hard to swallow. Having had an "aha" experience during the mediation, the client realizes there's more (or less) at risk than he's been thinking and the offer/demand now on the table looks pretty darn good after all
the other side becomes un-demonized during the course of the mediation, making it easier to part with money for the purpose of resolving the one thing both sides have in common -- a difficult, uncertain, expensive, dangerous lawsuit.
one side simply out-negotiates the other (it happens)
one or both sides lose heart for the battle when they see that the delta between the their bottom lines is not as great as they expected it to be
the parties manage to "expand the pie" (more about this later) such that the plaintiff does not have to accept that much less nor the defendant pay all that much more than each anticipated (it happens)
one party genuinely develops an understanding of and empathy for the other side's position and changes a hard line attitude against settlement as a result (it happens)
Canadian Lawyer Michael Webster asks about Jay Welsh's comment (see videos) that "in a mediation the plaintiff has to settle for far less than they thought and the the defendant has to pay far more than they ever thought."
"So," asks Webster, "this would be the lose/lose theory of mediation?"
I know when Michael's being sarcastic but decided to respond seriously by noting that Jay himself used the phrase "lose-lose."
I went on to say that the most valuable service I can often perform is to "break through confirmation and other biases/ ** that have interfered with case analysis and caused impasse."
Michael's reply was important:
When the issues have been crystallized into legal ones so well, you are in a lose/lose situation. The manager's dilemma then becomes counsel's dilemma: how do I manage to convince my client to lose more than I ever predicted and still maintain my own credibility.
Though I'm a little tempted to be flip ("this is why they pay me the big bucks") Michael's question nails one of the most difficult issue attorneys must deal with in settlement negotiations. It is certainly one of the most delicate tasks a mediator is called upon to perform.
First Let's Re-Visit Interest-Based vs. Distributive Settlement Negotiations, Asking Ourselves Whether There's Really Such a Thing as a "Pure" Money Case
My husband, with 35-years of complex commercial litigation practice under his belt is my attorney-mediator-communication weather-vane. So I asked him over pancakes this morning, "Honey, do you think there's any such thing as a 'pure' money case?"
Two months ago, he would have said "yes," and given me that "you've changed too much" look. I don't know why he said "no" this morning. But here was the gist of his response.
"Every case involves someone's interests, whether it's the GC or a company executive, or even a 'little guy' down the management chain who made a decision that impacted the course of the dispute four or five years ago. So of course there are innumerable non-monetary concerns that impact why the case is settled and when and for how much. Then again, maybe I've just been living with you for too long."
So let me first say that there is no such thing as a non-interest based negotiation. There are only negotiations in which we ignore the fact that party interests are at play.
This is one of those nature/nurture mind/body duality questions. Yes, it's "just" about money. And yes, the money represents party interests. It's nature and nurture, mind and body, budgetary constraints and party goals and relationships.
Here's another thing. Although the disputing parties may never again be in relationship with one another, the people on each side of the conflict-fence are not only in daily contact, their well-being, livelihoods, self-respect, reputation, promotions, demotions, and salaries depend upon their on-going relationships with one another, which are all in play in every negotiation of every commercial dispute.
And one more thing. Conflict cannot arise in the absence of a relationship. Even though the disputing parties may never again be in relationship, they're sure the heck in relationship now. And the relationship of the disputing parties from the moment conflict arises to the minute it settles has everything to do with its resolution.
There is no "zero-sum" game outside the realm of the virtual or the hypothetical. There is no "rational" man. People -- messy, conflicted, emotion- and interest-driven people -- are the necessary pre-requisite to conflict. How we deal with apparent lose-lose conflicts, "manage" party expectations and deliver bad news in a way our clients can hear it in the next post. Immediately hereafter.
It is a truism that litigation tends to get worse rather than better over time. This is as true in the law as it is in physics -- things fall apart. Your client's clean and righteous narrative tarnishes over time; grows more complex and filled with contradictions. It's a little like a political campaign. Barack's ground-breaking race relations speech and Hillary's single tear aside, Clinton and Obama tend to look worse, not better, over time. We all do.
Whether the value of your legal "case" is up today or down tomorrow turns not only upon the most recent documents produced, pre-trial motion won or witness deposed, it also turns on those things that fall apart over time -- including currency exchange rates.
The micro-economics of settlement timing include corporate events such as quarterly and year-end financial reporting requirements; potential mergers and acquisitions; and, how much financial bleeding your client's divisional president can take this year before worrying about demotion.
In international disputes, currency exchange rates loom large in the macro-economics of settlement timing. My own last really "big" case before I left practice was potentially worth a quarter billion dollars in "hard" damages -- the total projected clean-up costs for 500 toxic waste sites in every Canadian province.
The Canadian dollar was not only weak at the time, it was weakening. Though the question of whose currency would control was contested, my client was confident that Canadian dollars would eventually govern since clean-up costs by the American plaintiff would be paid in Canadian dollars. I remember a time when the Canadian dollar was tumbling in value so rapidly that every time I saw opposing counsel in court I'd remind him of the day's exchange rate with a warning that "your case isn't getting any better over time."
Settlement timing in that case was motion-driven, however, and the matter did not settle until after the entry of a pre-trial judgment in my client's favor pending appeal.
Though I was (and would continue to be) driven by pre-trial losses and victories, savvy settlement counsel would be keeping an eye on macro-economics -- which would, in any international litigation, require someone to be tracking currency exchange rates.
I promised you a series of posts on mediating complex and sophisticated commercial mediation.
Here's what I'm really most interested in doing -- starting a high level conversation among commercial litigators and commercial mediators about the best way in which we can help one another help your clients to achieve the best resolution possible to their commercial dispute and the legal problem/solution associated with it.
I'm always looking for the smartest guy or gal in the room because. I'm just a geek who really enjoys spending time with people who are savvy, astute, original well-read, and, well-spoken. These people tend to see things more clearly than I do and that clarity of vision often results in a way of approaching problems that generates better results in a shorter amount of time than is the norm.
One of the smartest guys in any room is AAA arbitrator and Judicate West mediator, Jay McCauley. O.K., he's Harvard Law and I'm just a state university girl. But pedigree doesn't matter to me. Brilliance and creativity does. Jay and I have recently spent a lot of time talking about the way we feel that we're sometimes talking past our attorney clients and they us. So we have plans to write some really interesting articles that we hope will help both mediators and attorneys achieve better results more consistently when they decide to settle, rather than to try, a case.
Jay's written a lot already. And because I'm now getting around 11,000 hits/month (!!yay!!) I've decided to simply pull up his existing articles on mediating particular commercial disputes before launching our jointly written posts. If any of those 11,000 monthly "hits" come from commercial litigators, we'd LOVE to hear back from you on this series.
That said, here's Jay's article on Wage and Hour Class Action Mediation.
There is no such thing as a "cookie cutter" mediation. Nonetheless, most mediations have, among other things, the following general characteristics:
At least four participants whose interests are not naturally aligned - Plaintiff, Plaintiff's counsel, Defendant and Defendant's counsel.
Little or no genuine concern that a settlement will foster future claims.
Some prospect of integrative, or "value adding," resolutions.
A rich body of applicable case law to serve as the empirical basis for risk-based claims valuation analysis.
A virtually unrestricted free market where almost any resolution agreeable to the parties can be turned into a contract fully enforceable by the courts.
Wage & hour class action mediation, by contrast, has none of these characteristics.
Mediating with Only Three Participants
All fictions aside, there are three, not four, interested participants in a wage & hour mediation. They are the defendant, its counsel, and the counsel for the class. Plaintiffs themselves (including the named representatives) are literally absent from the negotiation altogether, and are typically absent physically from the mediation sessions.
Any imbalance resulting from the absence of plaintiffs themselves is, in theory, "corrected" by an institutional device unique to class actions: the fairness hearing, in which a court imposes outside boundaries on the settlement for the protection of the plaintiffs.
Nonetheless, the absence of the plaintiffs themselves is significant. The court is not, in any sense, a substitute negotiator for the plaintiffs. It simply either approves or rejects the settlement agreement, in accordance with reasonably well-established standards, after the settlement has been negotiated by plaintiffs' counsel and the defense team.
The actual negotiators have a common interest in avoiding agreements so extreme that they will be either rejected by the court, or undermined by excessive "opt-outs" from the plaintiffs themselves. But subject to these outside limits, the three players at the negotiating table have an interest in maximizing two things: the portion of the settlement funds that goes to plaintiffs' counsel as approved fees; and the portion of the settlement funds available to be returned or otherwise used by the defendants.
The upshot is this: Plaintiff's counsel seek, and usually get, one third of the settlement funds as fees; amounts unclaimed by class members revert to the defendant to the extent the court permits ; and the stated settlement amounts include the resulting social security and FICA charges the company will have to bear as a consequence of the settlement - an amount that turns out to be 13.85% of the total paid to the class members. These terms are easily arrived at because those at the negotiating table can "give" each other these benefits, without cost to themselves.
The absence of the plaintiff also eliminates one of the most common challenges a mediator has to face in "ordinary" litigation - the challenge of plaintiffs resisting economically advantageous proposals because of a desire to use the courts to obtain perceived benefits that go beyond economics: retribution for perceived wrongs; public vindication; and principled refuge in the Rule of Law.
This not to say that the issues addressed in wage & hour class action mediations are entirely economic. But the non-economic issues characteristically arise from the defense side, and tend to break down into two categories. The first category is the common "principled" resistance to a fairly rigid statutory scheme that typically strikes defendants as entirely inconsistent with the statutory purpose and with common sense. Specifically, those rationally thought to be managers cannot be treated as exempt in California if the time they spend in identified categories of non-exempt functions (e.g. sales) happens to take up more than half their time. The "player-manager" may be thought of as a manager, but there will be exposure if he is paid like a manager, and that fact is a hard-to-swallow surprise for many companies.
The Defendant's Need to Deter Future Claims
Then there is the second form of defendant resistance to otherwise attractive settlement opportunities. This one is born of a genuine dilemma: the company concludes it cannot "turn managers into foremen" without losing the critical work incentives or esprit-de-corps or "company culture" that it concludes comes with classifying class members as exempt; but to "buy off" the class action claim through settlement without also turning class members into non-exempt workers for the future would be to inspire, by that act, endless waves, every three or four years, of new wage and hour claims.
These claims would come from new employees who are not collaterally estopped or otherwise bound by the class action judgment supporting the settlement. It would also come from its current employees, class members, who have a basis to argue their release can only apply to past "wrongs," but cannot release the continuing "wrongs" that take place after the release is entered into. Such companies are sorely tested take their chances at trial to escape the dilemma. The prominence of that question is an unusual hallmark of wage & hour mediations. And much of the focus of mediations I have handled has involved finding creative solutions to this very dilemma.
The Absence of Integrative Bargaining Opportunities
While there is a need to find creative techniques to subdue extraordinary needs for deterrence that wage & hour defendants will often have, there is a curious absence of opportunity to employ another form of creativity - that of finding integrative (rather than purely distributive) resolutions to the dispute. With one obvious exception , the "Jack Sprat" non-monetary exchanges that are the special joy of mediators - where parties give what's cheap to get what's dear, and thereby optimize the likelihood, as well as the quality, of the resolution - are not to be found in this arena.
The reason is not that negotiators in this specialty are not creative, but simply that the inherent nature of class actions virtually eliminates any prospect that the form of any exchange will be anything other than money. Specifically, one stricture of class actions is that similarly situated class members be treated uniformly, and the only uniform needs the members will have is the presumptively universal need for money. As a result, the nature of class action bargaining is heavily distributive, not integrative.
The Absence of a Rich Body of Case Law to Support Risk-Based Claims Valuation Analysis
It is a bit of an irony that a field which is so tilted toward distributive bargaining is also one in which mediators are essentially deprived of a major tool used to facilitate such bargaining - a substantial body of actual outcomes at trial in analogous cases to provide a realistic assessment of the actual risk of trial, and therefore the reasonable settlement value of a release. Because the large volume of wage & hour class actions is historically new, and because so few that do exist go to trial, little such evidence of likely outcomes in fact exists.
What girds the negotiation in the absence of that evidence? It is four things. First, the statutory scheme in this area is fairly administrable, and results are arguably more predictable for this reason even in the absence of extensive actual results.
Second, there is an extensive and ever increasing body of evidence of actual class certification decisions, and the factors relevant to class certification decisions in wage & hour actions are more closely related to the ultimate issues at trial than they are in other actions (compare, for example, securities fraud class actions, where the class certification issues have almost nothing to do with the significant issues at trial).
Third, some narrowing of the range of potential settlement is achieved by the fact that extreme low ball offers typically are not made, even preliminarily, because both sides know (or can be reminded) that there is a certain threshold that will not survive a fairness hearing, nor sustain the plaintiff's counsels basic need to preserve reputation in the context of a settlement record that (unlike the settlement of individual claims) is always public.
Finally, and perhaps most importantly, parties tend to be guided by a kind of "market price" for these claims - settlements tend to fall within a fairly well defined band established by publicly available information of what other cases have settled for relative to the total potential exposure in the case.
What is notable is that, given the fairly strict and administrable standards of liability set forth in the statutes, the market price of the claims is probably materially below the amounts that a standard risk-based discounted claims valuation analysis would yield. This probably makes sense in light of the various incentives of the participants. Defendants need attractive offers (relative to exposure) to overcome both non-economic resistance factors as well as the lack of extensive palpable evidence of trial results. Defense counsel, paid hourly, have, if anything, an economic advantage to honor the client's resistance, as well as reputational and self-fulfillment benefits to keeping at least some quota of cases to try.
Plaintiffs' counsel, particularly specialists in demand, reach a certain threshold where the economically optimal course is to declare the offered amount to be enough and free up their time to fry another fish. And that threshold, in turn, need be no greater than a respectable outcome as compared only to the settlement market price itself. The Court, for its part, is institutionally loath to second-guess the norm, and institutionally dependant on most large cases settling in any event. Finally plaintiffs, themselves, are, for all practical purposes, absent from the process. They can opt out, and thereby preserve the right to bring claims on an individual basis, but the value of individual claims is rarely enough to warrant the transaction costs.
Role of the Mediator
It helps immensely for the mediator to have substantive familiarity with the rhythms and restrictions of class actions generally, and specific familiarity with the rights and duties of employers regarding wage and hour matters. That is the environment in which the mediator is applying his or her skills. But the mediator's primary contributions come from the use of more general "process skills" to anticipate, analyze and avert impasse in the negotiation process. Those skills are not unique to wage & hour mediations.
Some taste of the actual process of analyzing and averting impasse may be provided by an actual example of an email I sent to defendant's counsel to overcome an impasse in a wage & hour class action I was mediating. The text - attached as "Attachment 1" - has been left in its raw form, with one exception: all names appearing in the original have been made generic so as to fully protect confidentiality. The case settled shortly after the email was sent.
John (Jay) McCauley is a mediator who also serves as an arbitrator on the Complex Commercial Panel of the American Arbitration Association and an Adjunct Professor at the Straus Institute for Dispute Resolution at Pepperdine University School of Law. He is also a hearing officer for the ADR firm Judicate West.
It Pays refers to recent work done by Kellogg School of Management Professor Adam Galinsky, who has demonstrated (with colleagues William Maddux -- (INSEAD -- Debra Gilin -- St. Mary's U. -- and Judith White -- Dartmouth) that success in negotiations depends on focusing on the head and not the heart. In other words, it is better to take the perspective of negotiation opponents rather than to empathize with them. (You may remember Galinsky as the academic responsible for demonstrating that the person who makes the first offer will (nearly) always get the larger share of the delta between the two parties' "bottom lines." See Making the First Offer here).
Now Galinksy and friends inform us that we are far more likely to reach a negotiated resolution to a conflict if we use our heads rather than our hearts. As It Pays reports:
Perspective-taking, according to the study published in the April 2008 issue of Psychological Science, a publication of the Association for Psychological Science, involves understanding and anticipating an opponent's interests, thoughts, and likely behaviors, whereas empathy focuses mostly on sympathy and compassion for another.
"Perspective takers are able to step outside the constraints of their own immediate, biased frames of reference," wrote the authors. "Empathy, however, leads individuals to violate norms of equity and equality and to provide preferential treatments."
The researchers performed a total of three studies designed to assess the relationship between successful negotiations and perspective-taking and empathy tendencies. In two of the studies, the participants negotiated the sale of a gas station where a deal based solely on price was impossible: the seller's asking price was higher than the buyer's limit. However, both parties' underlying interests were compatible, and so creative deals were possible. In the first study, those participants who scored highly on the perspective-taking portion of a personality inventory were more likely to successfully reach a deal. In contrast, higher scores on empathy led dyads to be less successful at reaching a creative deal.
Why Enlightened Self-Interest Trumps Sympathy
Just when you were about to stereotype "negotiated resolutions" as commie-pinko limp-wristed new age aquarian left-of-liberal kum-by-ya marshmellow toaster solutions to the problems of (excuse me fellas) real men -- along comes new research once again demonstrating that negotiation requires hard heads rather than soft hearts.
Because our competitive natures ("I need my stuff to survive") will almost always trump our collaborative inclinations ("we need each other to survive"). If this weren't so, the world wouldn't be divided into its current "pie pieces" -- the first, second and third worlds for instance.
More particularly, because distributive non-interest based bargaining is all about getting "our share" of a fixed pie while interest-based or integrative negotiations require the parties to: (1) learn about and attempt to satisfy their bargaining partners' often non-apparent needs and desires; and, (2) to collaborate in an effort to find ways to satisfy those needs and desires in novel and creative ways, reaching an integrative agreement becomes much more likely than reaching a purely distributive one.
Because the integrative deal will -- by its very nature -- serve more of both parties' interests than would its distributive counter-part.
Perspective-Taking, Sympathy and Foreclosure
I don't know my neighbors well. They have a small family with very young children and keep pretty much to themselves. I understand from the local grapevine, however, that they're selling their house because one of them lost their job and they can't make the mortgage payments.
If we lived in another country or if the neighborhood belonged to certain religious sects that make it their business to take care of their own, we might all come together to help the neighbors save their house. But we don't.
We have and express a lot of sympathy when we discuss our neighbors' plight. "Must be hard for the kids," we say, "and the parents have worked so hard to improve the property. It would be a shame if they lost their equity."
Our sympathy, however, does not lead us to trump our self-interest (which includes simply "keeping to ourselves") in favor of the interests of the neighbors.
If, however, we learned that the neighbors were about to sell the house to a local fraternity, you can put easy money on the neighborhood mobilizing into action to find a solution. And once the neighborhood starts looking for an affordable solution to a neighborhood problem, the chances that the interests of the distressed family and their (temporarily) better-off neighbors will intersect and that new resources will be brought to the table ("hey, George, I know a lawyer who specializes in these things" or a banker or a politician or a journalist for the L.A. Times) increase exponentially.
Heck, instead of hiring lawyers to stop the sale to the fraternity, we might put together an emergency neighborhood loan-fund. Or simply help find the unemployed neighbor a new job. There are a lot of resources in my neighborhood. And many good-hearted people. But I'm afraid modern American folk-ways just don't allow for a neighborhood solution to one of its member's problems. Until, that is, our own self-interests are threatened.
So it might seem counter-intuitive to say that mentally putting ourselves into another's shoes to ascertain their interests needs and desires (perspective-taking)is more likely to create a "deal" between people than simple sympathy.
But we didn't survive as a species because we're particularly loving. We survived as a species because its in our best interest -- our only interest -- to cooperate with one another.
As I promised last week, we'll be providing our readers with a series of posts about the use of settlement counsel in sophisticated and complex commercial litigation.
While searching the internet for pertinent articles, I came upon an interview with a New York attorney, Lew Goldfarb, whose entire practice is devoted to settling cases for clients already represented in litigation by other law firms. Mr. Goldfarb's credentials are impressive, his observations shrewd and his opinions about the use of settlement counsel closely match those of our colleague Jay McCauley whose article we published earlier today here.
Typically, I am retained by the defense side as part of a dual-track approach. The litigation continues on one track, while I advise the plaintiffs' lawyers that I have been retained by the defense to take a look at the possibility of settlement. At the outset, I make it clear that I have been given only a 30 day window to attempt settlement and that my involvement should not be construed as a lack of resolve to litigate the case.
Following this initial dialog, I review the strengths and weaknesses of defendant's position. Class action litigation often produces a contentious dynamic that polarizes positions based more on emotion than factual disagreements. One of my most important tasks is to identify the true elements of disagreement. When I have a good understanding of these factors, I make recommendations to my client and obtain parameters for my discussions with plaintiffs' counsel.
I then meet with the plaintiffs' counsel, preferably one who is not involved in the litigation, to focus on ways to settle the case. Plaintiffs' lawyers are usually receptive to this approach, because they are looking for ways to get relief for their clients and to get their legal fees without the costs and risks of further litigation.
In some cases I am first approached by plaintiffs' counsel who are interested in settling a case and who know me from years of litigating class actions. I will then take this overture to the corporate defendant who will decide whether to retain me to attempt a settlement. I have resolved a number of cases in this manner.
I have also found success in ending class actions by combining the resolution of a government investigation with additional relief to class members. Very often class actions follow on the heels of a government investigation. In negotiating a settlement with a government agency, it is often possible to synchronize the remedies that the government wants with those that plaintiffs' counsel is seeking and put them all into one package. This serves not only to end the government's involvement, but also to satisfy the claims of the plaintiffs, and provide a compelling argument for ending the class action. I would then go back to the plaintiffs' lawyers, demonstrate how their clients' claims have been fully satisfied, and offer them appropriate attorneys' fees.
In some cases plaintiffs' counsel demand greater relief for the class, in part, to justify higher attorneys' fees. If agreement is not reached, the client can attempt to persuade the court that the relief to the class is adequate. If the court agrees, the lawsuit becomes a catalyst case where the only issue is whether the plaintiffs' lawyers are entitled to attorneys' fees for achieving results for the class. The defendant often is in a much stronger position arguing this issue rather than the merits of the case.
At bottom, virtually all litigation is a tool of negotiation. The numbers say it all: Ninety-five percent of all filed lawsuits in fact settle before trial, and upwards of ninety-nine percent perhaps should. Nonetheless, the specialized and challenging task of negotiation is normally left to the “trial lawyer” – a person whose training and orientation are focused on trial preparation, and whose efforts at negotiation are almost always secondary and often ineffectual.
The problem is not that trial lawyers don’t settle lawsuits; they almost always do. But when the mission of settlement is left to the trial lawyer, opportunities for early and optimal settlements are lost.
The solution for clients is not simply to engage trial lawyers who are sensitive to the task of negotiation and skilled in that art. Regardless of such lawyers’ negotiating skills, the reality is their task cannot be optimally accomplished while they are otherwise burdened with the "role” of being the trial lawyer.
The reason for this is basic: negotiation, by its nature, is driven by an inescapable tension – the tension between cooperation and competition. To display enough cooperation to promote early settlement, a trial lawyer almost inevitably must risk the client’s competitive position in the bargain. When a trial lawyer extends a proposed resolution to the adversary, the adversary will focus not only on the advantages of the proposal, but also on the firmness of the trial lawyers’ resolve. When a proposal is attractive enough to be tempting in itself, the fact that it is offered at all undermines the trial lawyer’s apparent resolve to fight, thereby tempting the adversary to do the wrong thing: defer or avoid serious settlement discussion.
Trial lawyers know this. And a vicious cycle therefore develops – to protect against the risk of appearing to lack resolve, they naturally tend to make their opening bids extreme. As a consequence, their adversary is characteristically left with nothing but two bad options: either to respond in kind (with an equally extreme and polarizing counter-offer) or not respond at all. Further negotiation is thereby sidetracked, while each party spends more time and treasure on “trial preparation” – i.e., extensive and expensive discovery exercises – to show further resolve and thereby bring the other side to its (apparently missing) senses.
Repeated experience tells us this vicious cycle is rampant in litigation. And an extensive body of literature from the fields of game theory and cognitive psychology tells us why: litigants are playing out the consequences of reactive devaluation – the dynamic wherein an otherwise attractive proposal becomes unattractive by virtue of its being presented by the adversary. See Lee Ross, “Reactive Devaluation in Negotiation and Conflict Resolution,” in Barriers to the Negotiated Resolution of Conflict (Kenneth Arrow et al, eds., 1995).
What, then, is the solution? Police departments bargaining for a confession from the suspect really do separate the “good cop” role from the “bad cop” role. Clients exposed to major lawsuits would do well to separate the roles as well – by engaging a specialized settlement counsel in addition to the needed trial lawyer, and commissioning the settlement counsel to bring his or her skills to bear on a single critical objective: early and optimal resolution of the dispute.
Who are settlement counsel? They are, by background, experienced trial lawyers capable quickly to become intimately familiar with the subject matter of the dispute at hand. They are also more than this: specialists in the methodology of risk-based claims valuation analysis and in the science and art of interest-based negotiation. Ideally, they are also experienced in the techniques of mediation advocacy, and familiar enough with the mediators in their community to advise and represent the client in achieving mediated resolutions in cases that warrant that treatment.
But they are not the trial lawyers for the case. By design, their mission is a short one. If they do not achieve a settlement quickly, they pass the baton to the trial lawyer, along with the full benefit of their early analysis. Their role is revealed to the adversary from the outset. It is because they are nothing more and nothing less than settlement counsel that they can afford to use some needed cooperative techniques to foster early resolution. No lack of resolve is conveyed by that effort. They can demand and measure a response in kind from the adversary, and exact a unique penalty if that response is not forthcoming: their own departure. The adversary knows from the outset that if, through recalcitrance, the mission of early settlement is not achieved, a new lawyer will appear – one who is single-mindedly focused on an entirely different mission: victory at trial.
If the point of litigation is winning what is the point of settlement negotiations? Winning, right?
Wrong. The point of settlement negotiations is to create durable agreements that sufficiently serve the parties' interests so that they will either stop bothering one another -- for which the LawGod created iron-clad releases -- or flourish in their mutual business venture.
I mention The Google Story in this post because it contains a small narrative about a business deal that killed its host.
In Google years, this story arises at the beginning of time -- the year 2000. Back then, Google was renting space by the square foot in the air-conditioned warehouses that store online company "servers." Google's stripped-down, high-powered hardware was so small (took up so few square feet) and so powerful (used so much electricity) that its lessor's electric bills drove the warehouse out of business. The narrative doesn't suggest that Google intentionally negotiated this deal to "get the better of" its bargaining partner. Nevertheless, a truly competitive negotiator, on hearing this story, would likely experience a little adrenalin rush -- the agreement being quite literally a "killer deal."
I tell this story because I want to begin a series of posts about competitive and collaborative negotiation in the context of "bet the company" commercial litigation. At the same time, I want to suggest the need for specially designated 'settlement' counsel to work alongside of (but not with) the litigation team. The Google story will have relevance to those issues as we proceed.
If I can free up a little of the time of my friend and colleague, AAA arbitrator and Judicate West mediator Jay McCauley to help me out, you'll be hearing from him on these topics during the next several weeks as well.
Competitive negotiation yields winners and losers and reduces the likelihood that losing parties will be fully committed to the resulting agreement. If the agreement falls apart, the negotiation must be deemed a failure. If parties are compelled to fulfill their part of the agreement but end up with a bad taste in their mouths, they will approach future negotiations with the winner with reluctance, paranoia, and distrust. The long-term consequences of competitive negotiation are unfavorable, yielding reduced enthusiasm and commitment as well as damaged relationships. Negotiation is about how the parties are going to bring about added value from having worked together. It is not a competitive sport.
we assimilate information based on our existing biases (remember the OJ verdict);
even when told we're doing so, we continue to organize information in such a way that it supports our existing opinions;
the receipt of additional information, without more, will simply "confirm" existing biases; and,
to make a difference in the parties' views of the merits of their case, mediation practices must include techniques for de-biasing the parties.
Research subjects were given the identical "case" materials and randomly assigned roles as "Plaintiff" or "Defendant." The subjects were put into bargaining pairs and asked to: (1) estimate a "fair" award by a Court to the Plaintiff; and, (2) to attempt to settle the dispute.
The experimental results and their implications were reported as follows:
Plaintiffs' predictions of the [probable award] were, on average, $14,527 higher than defendants'.
Mean plaintiffs' fair settlement values were $17,709 higher than defendants'.
Not surprisingly, the settling parties' assessments of what a fair settlement would be and what a judge would likely award were closer together than were those who did not settle.
Among the 59 pairs who settled, the mean difference between the plaintiffs' and defendants' predictions of the judge's award was $9,050.
For the 21 pairs who did not settle, the average difference was $29,917.
The strong correlation between the magnitude of the bias in a bargaining pair and non- settlement supports the conclusion that the self-serving bias often prevents parties from settling disputes at the most advantageous time and for optimal mutual benefit.
Even when asked to tell the "other side's" story in an essay before predicting possible awards or when told about the existence of the bias, the subjects continued to evaluate the case according to their own material interests.
Only in one experimental setting where subjects were both informed of the bias and made to write an essay substantiating the other side's case was the effect of the bias mitigated.
That subjects were unable to rid themselves of the bias when informed of its existence demonstrates that it is not a deliberate strategy.
Other findings of the experiments point to biased assimilation of information as the likely psychological mechanism underlying the self-serving bias.
When subjects were presented with eight arguments favoring the side they had been assigned (plaintiff or defendant) and eight arguments favoring the other side and were asked to rate the importance of the arguments as perceived by a neutral third party, there was a strong tendency to view the arguments supporting one's own position as more convincing than those supporting the other side, suggesting that the bias operates by distorting one's interpretation of evidence.
This study suggests that litigants may not be seeking to maximize their own payoff, but are rather trying to obtain what they deem to be fair.
Conclusions from the Experimental Data
The application of the self-serving bias to bargaining behavior led the authors of the study to tentatively conclude that
exchanges of information are not in themselves necessarily conducive to settlement, i.e., obtaining more discovery before the dispute is "ripe" for settlement may be neither cost-efficient nor an effective settlement strategy;
the importance of information exchanges to the settlement of a dispute can only be analyzed in terms of how that information may effect preexisting biases, which suggests that attorneys pay greater attention to their opposition's case theories when analyzing information obtained during discovery; and,
to act as an effective counter to the self-serving bias of both "sides," mediation practices should be, at least in part, directed at de-biasing parties rather than simply facilitating information exchange.
This post was originally meant to highlight Allstate's (or its consultant's) unfortunate use of the term "Zero Sum Game," when discussing claims handling procedures. My original comment was that "those who continue to play it often get their . . . uh . . . soft parts caught in a wringer."
The Slabbed post highlights the damage done to an admitted "Zero Sum Game Player" who is engaged in a human-harm-cost-benefit analysis. The Pinto punitive damages award came readily to mind because the case was decided while I was in law school learning about negligence.
For my non-attorney readers, I need to stress that it's not wrong to engage in a cost-benefit analysis for the compensation of injury under a negligence system. In fact, this is what the law itself (and injured Plaintiff's attorneys) do, i.e., "calculate" the risk of harm + the potential severity of the injury against the cost of avoiding that harm.
People react badly when they see that type of calculation being applied to human injury or the loss of human life because those losses are considered to be "incommensurable," i.e., no amount of money can recompense someone for, say, the loss of a child. For an excerpt from my own article discussing the concept of incommensurability -- The Cost of a Thing is Your Life, click here.
I'm hoping my non-attorney readers will understand that these formal monetary calculations are routinely made by businesses and governments when making decisions about how much risk to human life is worth taking when they engage in potentially dangerous activities for the purpose of creating a significant benefit for many.
In a previous post that received a notice in the Silicon Investor BB I spoke of insurers and their lawyers using the court system as instruments of institutionalized bad faith. Indeed Allstate has taken much criticism for ignoring lawful subpoenas over these documents as well as substantial fines as noted by Ms St John. This brings me to the beginning of the main story.
For more than a decade, Allstate Insurance Co. kept a secret from its auto policyholders — a national strategy to force customers to accept reduced cash payouts or face years in court.
Thousands of pages of Allstate documents reviewed by the Herald-Tribune detail how the nation’s second-largest insurer systematically cut payments to customers as a way to boost profits.
The documents describe a two-pronged strategy.
First, the company evaluates claims with a computer program designed to reduce payouts by as much as 20 percent of what the company once paid for the same injuries.
Second, Allstate pushes policyholders to accept quick settlements without the help of lawyers. Policyholders who try to fight for more money face Allstate attorneys coached to refuse to negotiate and to drag out litigation.
The approach often forces car accident victims to take what Allstate offers right away or spend years in court while their bills go unpaid — a strategy Allstate spelled out in guidelines for claims adjusters that “forces the claimant and attorney to think about the obstacles they must overcome …”
Indeed it appears we have a road map of how tort reform is being used against us. Limits on damages only make it easier for these large insurers to get away with outrageous behavior. The story continues:
It was a “Zero Sum Economic Game. Allstate gains … others must lose,” declared a consultant’s PowerPoint slide from a 1994 presentation to executives.
During the next five years of Allstate’s claims overhaul, the same consultant, New York-based McKinsey & Co., chose confrontational words to describe the new system. In PowerPoint presentations and discussion papers drawn up for Allstate executives, McKinsey used “boxing gloves” to characterize how Allstate should treat policyholders who balk at settlements. For customers who hired lawyers, McKinsey urged, “align alligators,” adding these instructions: “sit and wait.”
The documents also show:
Allstate removed much of the discretion of local claims agents to set payouts, requiring them to base their recommendations on a computer program called Colossus. Under that program, average payouts for bodily injuries dropped more than 20 percent in the first few years, internal documents show, a big step toward reaching McKinsey’s goal of “establishing a new fair market value” of such injuries.
Allstate recognized that when an injured driver hired a lawyer, the insurer lost money. In repeated presentations to Allstate executives, McKinsey coached tougher and increased legal action. By 1996, Allstate had doubled its legal force, hiring 225 more lawyers. “The bottom line is that Allstate is trying more cases than ever before,” a corporate newsletter said . . .
Allstate Corp., the second-biggest U.S. home and auto insurer, released 150,000 pages of documents sought by opposition lawyers and company critics related to McKinsey & Co.'s review of claims-handling practices.
McKinsey suggested strategies for the company to become more profitable by paying less in claims, according to videotaped evidence presented in Fayette Circuit Court in Lexington, Kentucky, in a civil case involving a 1997 car accident. Lawyers for policyholders said Allstate's previous refusal to release the documents showed the company wasn't treating its customers fairly. The insurer has said the documents include trade secrets.
``Public criticisms by people with a vested interest in creating an inaccurate picture of the company's claim practices have been based unfairly on only snippets from the documents taken out of context,'' the Northbrook, Illinois-based insurer said in a statement today. ``Because of the need to address misunderstandings resulting from the growing misplaced focus by our critics on very small pieces of the whole, we have decided to make the documents public.''
One slide the consultant prepared for Allstate was entitled ``Good Hands or Boxing Gloves,'' and recommended the insurer put on ``boxing gloves'' to deter about 10 percent of claims deemed to be exaggerated, padded, or fraudulent, according to portions of the report shown to the Kentucky jury. For more than 50 years, Allstate has advertised its employees as the ``Good Hands People,'' telling customers they will be well cared for in times of need.
The strategy proposed by McKinsey would ``send a message to the attorneys of our proactive defense stance'' in cases dealing with minor impact soft tissue injuries, the consultant said in the document. Lawyers would have to ``think about the obstacles they must overcome to recover significant settlement or the benefits of a smaller, walk-away settlement.''
Allstate implemented the plan in the 1990s because studies showed more people were submitting claims even though accident rates were declining and cars were safer, Allstate lawyer Floyd Bienstock told the Kentucky jury. The McKinsey report found Allstate was overpaying bodily injury claims by 16 percent, Bienstock said.
``It was never a plan to intimidate people,'' he said.
Here are the statistics from Women Don't Ask that should make every woman who reads this blog sharpen her negotiation skills by picking up Ask for It today.
Women report salary expectations up to 24% lower than men for the same jobs
Women will pay over $1,000 more to avoid negotiating the price of a car.
20% of adult women (22 million people) say they never negotiate at all.
2.5 times more women than men say they fear negotiation.
As the handout from Bantam Books on Women Don't Ask reports:
By neglecting to negotiate her starting salary for her first job, a woman may sacrifice over half a million dollars in earnings by the end of her career. Yet, as research reveals, men are four times more likely than women with the same qualifications to ask for higher pay. From career promotions to help with child care, studies show time and again that women don't ask -- and frequently don't even realize they can.
So let's equip ourselves for the 21st century friends because Harvard studies have also shown that women negotiate every bit as well as men when they're negotiating for someone else. This means bringing a negotiation partner with you or simply pretending that you're negotiating for a friend when asking for what you deserve yourself!
Phase One teaches women to recognize that “Everything Is Negotiable”. As anyone knows, the toughest negotiation can be with yourself, and the authors help readers begin by asking questions of themselves to identify and clarify their professional and personal goals. Phase Two teaches readers how to “Lay the Groundwork”, reviewing the skills and concepts of basic negotiation strategy. Among the most important lessons? Information is power — and the authors explain how and where to get it to strengthen your bargaining position.
Phase Three, “Get Ready”, pushes women to aim high when it comes to negotiating. It covers cooperative bargaining; ascertaining your worth; using logrolling or trade-offs to get past jams and build value; and how to make the first offer. Best of all, it even comes equipped with a “Negotiation Gym” — a six-week program of increasingly difficult negotiation exercises that will help women build negotiation muscles and develop stamina and strength in preparation for tougher negotiation challenges. No one will ever kick sand in your face again.
Phase Four shows how women can “Put It All Together” — to practice in advance by role playing with a friend, to avoid making concessions prematurely, to create the right impression to influence your counterpart at the table, and, finally, to close the deal.
What makes this book a must-read for men, too, and not just for women are its unpleasant revelations about the realities of hidden bias against women at the negotiation table. The authors exhort readers to take responsibility themselves for combating gender bias, not just that of others but particularly their own. They remind readers that all of us regardless of gender possess assumptions and unexamined beliefs about women in negotiation. They point to studies that indicate that while aggression earns men points at the negotiation table, it punishes women with backlash and disapproval. And, while the authors fiercely advocate for women at the negotiation table, the chapter on “Likability” with its insistence that women avoid aggressive tactics and “be nice” while bargaining, will no doubt leave some readers bristling. However, until the world changes how it views women in negotiation, it’s hard to argue with the studies the authors cite.
When we're exposed to a famous logo for even a microsecond, [researchers have] concluded [that] we act out the qualities we've learned to associate with that picture. . .
[R]esearchers [asked] subjects [to] watch a screen explaining what they were supposed to do -- but also on the screen, too fast for them to notice, corporate logos flashed momentarily. When subjects turned to the assigned task, which logo they'd seen made a difference:
Subjects who saw the Apple logo, symbol of creativity, thought of more possible unusual uses for a brick than did subjects who saw the IBM logo, symbol of corporate sameness.
Subjects who saw the Disney logo, which we associate with earnestly pure things like Mickey Mouse and Snow White, confessed to more bad behavior (like calling in sick) than did subjects who saw the E! network logo, which we associate with celebrity gossip, honest or not.
What it means in real trials
Can lawyers use this? I say yes, but maybe not in the way you think.
There are trial lawyers out there who can use priming to underscore ideas and themes in trial, while still keeping track of where their cross-examination outlines are and whether the client understands what's going on and who's doing the jury instruction argument and whether they brought enough matching socks. . . .
For the rest, here's a message from priming research we can all use. Jurors make decisions without knowing why.
And here's what in means to mediation advocates
Attorneys' initial contacts with the mediator are more important than many realize.As are mediation briefs. But not to persuade the mediator of the rectitude of your position. To "prime" the mediator to be more part of your negotiation team than your adversary's. Of course we're neutral. But, like research subjects and jurors, we make decisions (and form alliances) without knowing why.
What are your mediator's interests? To settle the case, of course. But to do so in a way that makes all parties and all attorneys satisfied with the result and with the mediator's services. So what subliminal messages do you want to send to the mediator before negotiations begin?
I'm reasonable, as is my negotiation strategy
I understand that there are weaknesses in my case, which I'll admit to you, Ms. Mediator, for the purpose of attempting to resolve this lawsuit
I'm bringing my client, who is prepared to re-engage in the conflict, understanding that defensiveness and self-righteousness are not attitudes calculated to achieve peace in the Middle East nor to settle commercial litigation.
I'm having trouble with my client (for a pre-mediation telephone conference only) and would like you to help me coach him/her/it on any of the following:
the merits of the case
the dangers of proceeding to trial
the unredeemably evil nature of the opposition
the art of haggling
the genuine interests -- needs, desires, fears, etc. -- underlying the client's negotiation position
I understand a little bit about my adversary's
position and would like to help you work with him/her/it effectively.
I'll be prepared to make the negotiation moves necessary to settle the matter without fruitless bargaining in the nano- or strato-spheres.
I recognize that a handshake, a conciliatory manner and the expression of genuine empathy by my client for the party on the other side can dramatically effect negotiations and have alerted my client to the benefits of setting aside rancor, suspicion and judgment for at least a few hours on the day of the mediation.
If you're interested in what shame and guilt have to do with moral development as a preclude to recognizing the difference between guilt-ridden and shame-infused apologies, read on. (and yes Janis, I'm working on it!)
A SHORT PRIMER ON SHAME, GUILT AND MORAL EDUCATION
A. The Origins and Effects of Shame.
The word shame is derived from the Indo-European skem which means "to hide." Shame makes us want to hide - from ourselves, our God and our peers - making shame an existentially isolating state of mind. Feeling shame makes a person "dejection-based, passive, or helpless," causing the "ashamed person [to focus] more on devaluing or condemning his entire self" than upon his behavior. He sees himself "as fundamentally flawed, feels self-conscious about the visibility of his actions, fears scorn, and thus avoids or hides from others."
The shamed individual wants "to undo aspects of the self" whereas the guilt-ridden one wishes to undo aspects of his behavior. It is therefore not surprising that guilt tends to motivate restitution, confession, and apology, whereas shame tends to result in avoidance or anger.
The psycho-biology of the constellation of emotions we call "shame" is innate. It produces a sudden loss of muscle tone in the neck and upper body; increases skin temperature on the face, frequently resulting in a blush and causes a brief period of incoordination and apparent disorganization. No matter what behavior is in progress when shame affect is triggered, it will be made momentarily impossible. Shame interrupts, halts, takes over, inconveniences, trips up, makes incompetent anything that had previously been interesting or enjoyable.
A state of cognitive shame follows this initial cluster of feelings. After the painful jolt of shame, we begin to search our "life scripts" for some way to integrate the shameful experience with our prior experiences, to make sense of the pain and disorientation caused by the sudden upset of a positive emotional state.
Because our earliest experiences of helplessness relate to our size, strength and intelligence, only anger and its explosive cousin, rage, allow us to prove to ourselves and others that we are powerful instead of weak, competent rather than stupid, large rather than small. Thus do many shame-suffused individuals respond to chronic shame in an attack mode, particularly those who feel "endangered" by the depths to which their self-esteem has been reduced. Such individuals experience shame as a threat to their physical well-being and lack the ability to trust and rely upon others.
Shame thus serves as a barrier to one's capacity to achieve empathy and develop conscience.
Using Your Case Management Order or ADR Panel to Convene Your Mediation
There are many reasons you may not wish to initiate mediation. Many lawyers justifiably do not wish to appear overly desirous of settlement. Others are discouraged because their opponents
long ago indicated their client would not consider paying/accepting anything less/or more than $X, which is a non-starter;
say they won’t consider settlement until after some key event; or,
insist their client will “pay millions for defense but not a penny in tribute.”
The best way to encourage settlement discussions without any loss of face is to agree upon a mediator (or mediation services provider such as Southern California’s Judicate West) at the commencement of the case, authorizing the neutral to suggest mediation at any time without prompting by the parties. This is the general practice in most multi-party construction defect cases and there's no good reason to limit the benefits of this practice to complex litigators.
This strategy permits one party to suggest mediation to the neutral who can then initiate a negotiation session without divulging who, if anyone, sought the mediator’s assistance.
Any mediator worth her salt will be trained in and skilled at convening mediations without party pressure.
Some, but not all, mediation service providers also possess these skills. Judicate West’s case managers, for instance, are all skilled professionals with a minimum of five-year’s experience convening mediations for the parties.
At the commencement of your action, ascertain whether a neutral or ADR service provider in your locale specializes in the art of convening. A service provider like Judicate West will often know more about your opposition than you do, particularly in large legal markets like Southern California where you may well not “do business” with your opponent on more than one occasion.
How important is insurance coverage to your clients' decision to bring or defend or negotiate the resolution of a commercial dispute? It's usually the difference between having options and being entirely out of luck.
And when that decision concerns catastrophic losses? Unless you are an insurance coverage specialist, you make coverage decisions at your peril.
Daily Journal article announcing that Steve Goldberg (yes, Mr. Thrifty himself!) has left Heller Ehrman and joined Dickstein Shapiro below.
LOS ANGELES - Longtime Heller Ehrman attorney Stephen N. Goldberg has left the firm for Dickstein Shapiro in Los Angeles, the latest in a string of departures from San Francisco-based Heller Ehrman. . . . . Goldberg . . . . had been with Heller since 1973 and was a partner in its Los Angeles office. . . . .
Goldberg, who practices insurance recovery and complex commercial litigation, was part of Heller Los Angeles managing partner Nancy Cohen's successful insurance practice, an area of focus for the firm, according to firmwide managing partner Robert Hubbell. . . . .
Goldberg has handled insurance coverage in areas such as product liability claims, asbestos liability, environmental damage, first-party property and business interruption losses, director and officer liability and insurer bad-faith claims. His clients have included Texaco, Johns-Manville Corp., Atlantic Richfield Corp., Millennium Hotels and GMAC Commercial Mortgage Corp., according to Heller's Web site.
Goldberg's practice is well-suited to fit with Dickstein Shapiro's strong insurance coverage practice. Dickstein opened its Los Angeles office in 2005, when it acquired insurance recovery firm Pasich & Kornfeld. Linda D. Kornfeld is now managing partner of Dickstein Shapiro's Los Angeles office, and Kirk A. Pasich serves on the firm's executive committee.
Take a look at Geoff Sharp'sMediator Blah Blah post today about mediation coaching. Here are five different ways in which a mediator can coach a party to achieve more from the negotiation than he might otherwise be able to achieve without assistance:
1. Talk to [the] parties about who is the best person in the group to make the offer to the other side and . . . . [which of their negotiating partners] they might want to look at when they do...
2. [P]resent a worst-case settlement offer first then contrast that with their present, and more favourable, offer.
3. [Make] their suggestion as if] they were planning . . . .
4. Point out the hot buttons for the other side and assist a party to make symbolic offers that will have a favourable psychological impact . . . .
5. Suggest and then assist one party to restate all the interests that have been identified in the mediation so far (with the other party's first) - then present a proposal and identify how it meets those interests [in a manner that is] mutually beneficial for all.
Sometimes reading my statistics page is the best way I have of taking the pulse of my readers and diagnosing the current actual rather than the aspirational state of settlement and mediation practice.
Listen. Only the squeakiest client or party wheel will tell you that he is feeling coerced into settling the litigation that has become a millstone around your neck.
I'm talking to attorneys here -- but settlement officers, judges and mediators should pay attention as well. Whether you're representing the CEO of a Fortune 500 Company or the 60-year old man who slipped on the iconic darkened bananna peel in the produce section of the local Ralphs, at some point during settlement negotiations your clients are going to suspect one or more of the following:
you're tired of his case and want to get rid of him
you're in cahoots with opposing counsel, with whom, frankly, you have a far more enduring if not affectionate relationship than with your client
you and your old buddy the mediator or settlement judge/officer have joined forces to to compel him to give up his legal rights in exchange for less money than you, his attorney, told him he was likely to recover two years ago
despite his protests, you, the mediator and opposing counsel keep saying the fact most important to his case is "irrelevant" to his chances of recovery
when you talk to opposing counsel or the mediator about the case, he doesn't even recognize what you're talking about -- this is not the same case he brought to you to try two years ago
he feels extorted and no one is paying any attention to that
he feels like he's being sold down the river and no one is paying any attention to that
he paid his you and your law firm tens of thousands, hundreds of thousands, millions or tens of millions of dollars in attorneys fees and he thinks he could have settled the case for the sum that's being offered/demanded now before he paid you to litigate this case to the settlement conference.
he's really really irritated now -- angry even -- though he doesn't get angry; he gets even, and he'll have no trouble spending another few million on attorneys fees so show that lying, cheating so and so in the other caucus room a thing or two
he's a successful business man and he's never been treated with so little respect before.
Now let me tell you something else. If these thoughts are some of those which race through your clients' minds during settlement conferences, your mediator should be sufficiently alert to the changing temperatures in the room to address them.
Because the mediator's job is not to settle the case.
The mediator's job is to:
assist you in helping your client understand the options available to him
assist you in delivering bad news to your client in a way your client can hear it
assist you in negotiating as good a settlement as possible for your client without making your client feel as if he has no other options
assist you in resolving for your client the justice issues that your client originally brought to you to resolve
assist you in helping your client recognize and set aside the emotional experience of the settlement conference for the purpose of doing a sober cost-benefit analysis
assist you in helping your client recognize that legal cases change over time; sometimes getting better and sometimes getting worse, usually both in the discovery process -- this is not the case your client originally brought to you -- untarnished by the harsh adversarial systems but puts "facts" to a more exacting test than any other process in business, political or social life
assist you in helping your client recognize his own fallibility, potential for error, and accountability for his part of the harm for which he is seeking recompense
assist you in helping your client recognize that the other side -- evil, destructive and hateful as it may well be -- also has a few items of "truth" and "justice" on its side of the balance sheet
assist you in helping your client make an informed decision without pressure from anyone whether he wishes to accept less than he wants to or would like to take his chances at trial
assist you in walking away from the mediation or settlement conference with your client clapping you on the back and saying, "great work, John. If I'm ever in need of a litigator again, rest assured it's to you I will come. I'll tell my friends on the block or on the Board of Directors that you're the man.
How do we accomplish these ten aspirational goals together -- attorney and mediator and client? Stay tuned.
The Jerry McGuire video above is for our clients -- with whom we do not share just how hard we are working and what a toll it takes upon us because that's what they've paid us to do -- and paid us handsomely I might add.
Two short-short stories. Both to acquaint you with who I was as a litigator and how I can help you as a mediator.
A Born Moralist
I was on the telephone with my client talking about a Rand Corp. statistical study that was originally prepared as answers to contention interrogatories (!!) but eventually became the centerpiece of Plaintiff's proof that my client had engaged in a massive conspiracy to drive the Plaintiff out of business. Claimed damages soaking wet: $250 million.
I was talking about how wrong the opposition was on so many levels -- evidentiarily, practically, legally and, yes, morally.
My client said, "I've finally figured out what you are."
"You, Vickie, are a born moralist."
And I took that to be a compliment.
Anything You Can Get Away With
Toward the end of my career all my cases seemed to hover around the quarter-billion dollar mark. This one was an environmental coverage suit for a major petroleum company's potential liablities for 500 + toxic waste sites in every Canadian province. This is one of the few cases in which the insurance carrier can wear a "white hat." My client -- Lloyds of London.
This stuff is complicated. It involves coverage across a couple of decades and up the ladder of excess policies to the billion dollar mark. We use "coverage charts" -- often color coded -- to understand the policy profile at a glance.
At every oral argument in the trial court -- up to the winning summary judgment motion -- I arrived with a clutch of color-coded coverage charts that supported my client's position. On every occasion, plaintiff's counsel complained about the charts. But he never brought competing charts with him. The Judge -- one of the best on the Superior Court bench -- really wanted to understand the issues and get it right. So she spent each oral argument listening to both parties while scrutinizing my coverage charts.
I genuninely believe that this is why I won.
What Does This Have to Do with Mediation Advocacy?
First, if you believe in the very depths of your soul that your client is right -- as I always did -- your mediation advocacy will improve if you begin to understand the principles of mediation advocacy. It's banal, already, to say that these principles are non-adversarial. Yet few litigators are able to shift from a litigation to a mediation model in circumstances in which making the shift would dramatically improve their mediation outcome.
Most attorneys are likely to settle this case at the mediation if they've brought the right stakeholders, properly prepared their strategic and tactical moves, and counseled their clients appropriately. Yet they take their summary judgment briefs or demurrers or complaints, change the title to "Confidential Mediation Brief," make a few editorial changes -- primarily by removing references to the Judge granting their motion or providing them with relief -- send these briefs to the mediator, arrive with one (or more) bottom lines and, too often, a "prove you can settle this case" attitude toward the mediator.
This is not an indictment of the litigation bar nor even a complaint from a mediator. This is the beginning of a series of posts about helping me help you help your client help you win the mediation.
Stay tuned. Really. Your mediation practice is about to go thermo-nuclear. Take it from the "born moralist" who did whatever was (ethically) necessary to win. Usually with pretty darn good results.
I often find myself explaining lawyers to their clients and clients to their attorneys. Here are some typical client complaints I hear about their litigator attorneys:
he tells me to forget about the most important losses I've suffered
she keeps editing my story
I don't understand why I can't . . . i.e., recover my attorneys' fees or cross-complain, etc.
he wouldn't let me tell the mediator everything I wanted to
she didn't let me talk to the other side
And here are the typical litigator complaints I hear about clients:
his expectations of success or recovery are commpletely unrealistic
if I tell her the weaknesses of her case, she says I've become the enemy
I've explained the limitations of the case to him, but he just doesn't seem to understand
Translating the Law into Justice -- An Explanation for Clients
The chart above and photos below are simple ways to explain to clients the gap between the law and justice. Sample explanation --
The dispute you're having exists in the world of injustice.
Picture the earth.
Now picture a grain of rice somewhere on the earth.
The grain of rice represents the injustices the law will remedy.
The earth represents the injustices the law will not.
Square Pegs in Round Holes -- An Explanation of the "Legal Story" for Clients
It feels like your attorney is "editing" or shaping or "spinning" your story of injustice because she is. The yellow square represents the facts necessary to obtain relief in court (damages, an injunction, etc.). It also represents the facts necessary to defeat your opponent's claim for relief.
The entire dispute -- everything that happened inside the green circle -- is generally what you, the client, want to resolve.
IT OFTEN INCLUDES FACTS THAT WOULD BE HARMFUL TO YOUR CASE.
That's why your attorney doesn't let you talk in the presence of the "other side" and asks you not to discuss the dispute with your opponent anymore. Because you might reveal something in the green area that's bad for proving your case in the yellow area.
THE MEDIATION ZONE -- AN EXPLANATION FOR ATTORNEYS AND THEIR CLIENTS
Mediators work in the green area. Clients almost always want to resolve all of the issues raised by the dispute, not simply the "legal" ones. Perhaps more importantly, there are many opportunities for resolution in the green mediation zone that no one has yet seriously explored because the green zone is not the focus of the legal action. Only the yellow legal zone is.
Mediation restores the dispute to the people who have it. They are the only ones who know and understand that dispute in all its detail, texture, dimension and meaning. Party interests -- their hopes, fears, desires, needs, etc. -- exist in both zones. The good news of mediation is that the party interests outside the legal zone can often be traded for concessions that are in or out of it.
When you have only one currency to negotiate with -- dollars -- you often reach impasse. Why? Because it seems so unfair to both parties that they should give in, compromise, split the baby in half, etc. just because the cost and aggravation of getting to trial is so high.
When you have more than one currency to negotiate with, however, like dollars and "face" or dollars and unexplored business opportunities or dollars and apology, or dollars and an explanation for the dispute's events that has the ring of truth, you can trump legal impasse with party interests.
Writing on a Grain of Rice
Vendors who line beach boardwalks or the sidewalks of tourist towns often include the guy who will write your name on a grain of rice. HERE!!!
Sometimes I feel as if my entire career as a litigator was written on a grain of rice -- that's how small the legal zone sometimes looks from here. It's O.K., though. Litigation isn't just a job or even just a career. It's a calling, this business of rights and remedies, of following a rule of law instead of a strong arm or the snake-oil's charm.
As the poet Lao Tzu wrote,
whether a man dispassionately
Sees to the core of life
Sees the surface,
The core and the surface
Are essentially the same,
Words make them seem different
Only to express appearance.
If name be needed, wonder names them both:
From wonder into wonder
I was a commercial, antitrust, IP and securities litigator long before I devoted nearly a decade of my practice to environmental coverage litigation. In the process, I learned enough about Comprehensive General Liability ("CGL") coverage to make me worry about how well I'd served my commercial clients in regard to the insurance coverage potentially available to them.
If you are a commercial litigator -- or any type of litigator who defends your clients against claims for damages or for injunctive or other equitable relief -- you must
ask your clients for all of their insurance policies, even those that seem unlikely to provide coverage;
carefully review the precise wording of the insuring agreements and research the case law in the relevant jurisdiction to determine how the courts have interpreted those insuring agreements under facts similar to those your client's case presents;
except for some narrow additional protections provided to insureds, be aware that there is no such thing as "the law" of coverage under any particular type of policy -- all coverage flows directly from the precise language of the insuring agreement
in most jurisdictions, that language -- if ambiguous -- is interpreted in favor of the insured's objectively reasonable expectations; and,
in most jurisdictions the rule of contra proferendum will require a court to construe any ambiguity in an insurance policy against the insurance carrier
carefully review the exclusions contained in those policies and research the relevant state's case law (as well as federal cases applying state laws) interpreting those exclusions;
before concluding that there is no coverage, read available treatises as well as recent law review articles that may well suggest creative ways of distinguishing adverse authority or extending existing principles to bring your client's claims within the terms of the policy or outside of pertinent exclusions;
if you have any doubt whatsoever about the existence of coverage, tender the claim to your client's carrier and let the carrier do the analysis;
if the carrier denies coverage, read the reasons for denial critically and respond with any reasonable interpretation of the policy that will support a claim of coverage;
if the carrier continues to deny coverage, keep the carrier informed of the progress of the litigation and invite the carrier to respond to all settlement demands and to attend all mediations and settlement conferences.
If the cost of the lawsuit is beyond your client's means or will deprive it of capital necessary to meet its business goals for the next few years, retain coverage counsel for a second opinion.
Have I mentioned that my beloved husband is one of the best coverage attorneys in the country -- having litigated the World Trade Center coverage action on behalf of Larry Silverstein's lender GMAC? And that I formed my opinion about his brilliance while I was representing the London Market Insurance Carriers and he was representing the policy holder? Even if your case does not justify hiring someone like my husband to give you a second opinion, there are lots of good coverage attorneys out there who can so that you can complete your coverage "due diligence" for your client.
At last, to the 2007 Fifty State Environment Coverage Analysis
If your clients have been hit with demands to clean up toxic waste, this is an invaluable resource. A specialist in the field, however, should be consulted to maximize the chances that coverage will be provided.
Have I mentioned that I'm on the Insurance Coverage Mediation Panel of Neutrals with the International Institute of Conflict Prevention and Resolution ("CPR")?And since I'm a former defense coverage attorney currently married to policy holder counsel, you're unlikely to find many other mediators who are both extremely knowledgeable about the law of coverage and deeply neutral!
Evaluative mediators provide the parties with an evaluation of the strength and weaknesses of their legal positions, usually in separate caucus. If asked, the evaluative mediator will give his/her opinion about what verdict a jury would likely deliver. Though I've co-mediated with sitting Judges quite a lot (the paradigm of evaluative settlement officers or mediators) I rarely see them tell the parties what to do -- see DIRECTIVE MEDIATION below.
Evaluative mediators often end a session with a mediator's proposal, i.e., the mediator chooses a number he/she believes would be acceptable to all parties (not necessarily what he/she believes the case is "worth") and tells the parties. If both parties accept, the deal is done. If either rejects, neither will know if the other party accepted.
I rarely make a mediator's proposal -- preferring to help the parties move toward resolution so long as no one is walking out. They really do feel better making their own decisions. That's why they've come to mediation and not arbitration. So long as I believe the parties' differing "bottom lines" might overlap, I encourage continued discussion even when the parties are feeling exhausted and cranky. Persistence and optimism about resolution in equal measure. Sometimes the process just needs a cheerleader.
Faciliatative mediators assist the parties, again often in separate caucus, to decide how the bargaining session will proceed, i.e., how high a first offer or demand should be; which party might benefit the most from making the initial offer; how many concessions the parties should consider making during the course of the negotiation; and, what reasoning might spur their opponent to make another concession. Once again, I rarely see the mediator, settlement officer or Judge tell the parties what to do. But see DIRECTIVE MEDIATION.
Transformative mediators strive to empower the parties to express their true needs and desires; to shift from self-concern to understanding of the other and to move from entitlement and blame to accountability. Transformative mediators do not direct the process of the mediation, which is always held in joint session.
Transformative mediators encourage the parties to set their own ground rules; state what their own desires and interests are; and, express themselves as fully as they wish, even if that includes persisting through angry outbursts, tears, recriminations, and the like.
In its pure form, the mediator acts something like a therapist. Uh, huh, uh huh, anything else? Have you said everything to Jim or Julie that you want to say? Uh, huh, uh huh? Jim/Julie, what do you want to say back to Julie/Jim about that? The purpose of transformational mediation is to resolve the conflict completely to the parties' mutual satisfaction even if that does not settle the actual dispute. See Bush and Folger, The Promise of Mediation.
DIRECTIVE MEDIATION -- Once again, I've never see Judge or mediator tell the parties to do anything other than to bring all the stakeholders and their insurance carrier representatives. I have, however, seen and done the following:
I need $X from you to settle the case -- $Y is not going to do it. Please talk to you client/carrier and bring me back that number if you want to settle the case today.
This directive usually occurs very late in the proceeding and most often in a multi-party mediation in which a dozen or more defendants are contributing to the settlement. I also call this type of mediation FUND RAISING MEDIATION. I've never seen anyone do this better than Judge Victoria Chaney in the Complex Court in Central Civil West, Los Angeles.
My own "directive" suggestions to the parties generally concern the need for at least one party to step up to the line of impasse. If I believe the parties are bargaining in the nano-and stratospheres and are not getting within a hundred yards of where they'd really settle the case, I'll generally tell them so -- i.e.,
someone needs to step up to the line of impasse for this case to settle. If you don't do it, you'll likely lose your opportunity to resolve the matter today.
That's about as "directive" as I get, although I have been known to say I need $5,000 or $500,000 or $1 million more NOW. Or, I need you to drop your demand by $10K or $500K or $50 million NOW.
You can only do this if you have established a strong relationship of trust and confidence with both sides. Each side needs to know that you are not simply carrying the other side's bluff to them with your extra weight behind it. So directive and evaluative techniques -- I don't know their bottom line but I believe we're getting pretty close to it -- go hand-in-glove.
Ideologies aside, here's the real reason to probe party interests -- i.e., their genuine desires, expectations, fears, business needs, financial situation, lines of authority, reserves, reporting relationships, etc. -- it's the only way you can offer, with any credibility, your opinion about the "temperature" in the "other room" and the likelihood that party A might settle the case somewhere in the range of $X and party B somewhere in the range of $Y.
get the Plaintiff to concretize his monetary expectations, i.e., what he might do with the money to take the Court-as-Gambling-Casino element out of the process;
ask the Plaintiff to imagine the offered sum sitting on the table before him -- to see it as a stack of cash or a thing or services or an improved quality of life he might purchase with it -- this makes the money real and more difficult to literally "leave on the table;"
assist the defendant to:
subtract "sunk costs" from his/her/its calculations when considering the "body blow" that paying money to their opponent will be;
brain-storm about business interests that could be satisfied by using the litigation as an opportunity to make a business deal;
come to grips with the loss that settling the litigation will inevitably entail, dealing directly and honestly about the issues of unfairness and injustice that must often be accepted to justify paying even a reasonable sum.
don't let the parties leave until they've had principal-to-principal discussions -- the parties are often able to resolve a matter that their lawyers cannot because their lawyers are acting on instruction (I don't have the authority to settle for that) whereas the principals have more flexibility on often arbitrary "bottom lines" -- this also helps humanize the opponent who has been thoroughly demonized by the process of adversarial litigation (see autistic hostility)
Make sure it is worth your time. Generally that means only bargain on big-ticket items.
Don’t fall in love with anything you’re trying to buy — you should care, but not too much.
Do your homework on comparable prices.
Offer cash rather than a credit card.
Remember — you have the power. Money talks, but money can also walk.
Also, keep in mind that the more time a sales representative has invested in a sale, the more he will want to give you a bargain. Mr. Cohen gives the example of trying on three or four suits and deciding on the fifth one.
“They bring in the tailor and the salesman is gleefully writing up the bill. Then I turn to the salesman and say, ‘What kind of tie will you throw in for free?’ ”
You don't have to be an expert in this -- your mediator is.
To the degree you "get" this, you will form a far better negotiation team with your mediator to obtain the best deal possible for your client in any settlement or commercial negotiation.
Principled negotiation is the name given to the interest-based approach to negotiation set out in the best-known conflict resolution book, Getting to Yes, first published in 1981 by Roger Fisher and William Ury.
The book advocates four fundamental principles of negotiation: 1) separate the people from the problem; 2) focus on interests, not positions; 3) invent options for mutual gain; and 4) insist on objective criteria.
Separating the people from the problem means separating relationship issues (or "people problems") from substantive issues, and dealing with them independently. People problems, Fisher, Ury and Patton observe, tend to involve problems of perception, emotion, and communication.
Perceptions are important because they define the problem and the solution. While there is an "objective reality," that reality is interpreted differently by different people in different situations. When different parties have different understandings of their dispute effective negotiation may be very difficult to achieve. (This is what we have been calling framing problems.) Fisher, Ury and Patton suggest seven basic strategies for handling problems of perception. [go to linked article for further explanation]
People problems also often involve difficult emotions — fear, anger, distrust and anxiety for example. These emotions get intertwined with the substantive issues in the dispute and make both harder to deal with. Fisher, Ury and Patton suggest five tactics for disentangling and defusing emotional problems in the negotiation process. [Click on the link for further explanation]
Fisher, Ury and Patton consider communication problems to be "people problems" as well. They list three types of communication problems.
First, disputants may not be talking to each other. While their comments are formally addressed to the opponent, they are actually addressing some outside audience. They are grandstanding, or playing to the crowd.
A second communication problem arises when parties are not listening to each other. Rather than listening attentively to the opponent, parties may instead be planning their own response, or listening to their own constituency.
Finally, even when parties are both listening and talking to each other, misunderstandings and misinterpretations may occur. Fisher, Ury and Patton suggest techniques for minimizing communication problems. [Click on the link for a description of these techniques.]
Negotiating about interests means negotiating about things that people really want and need, not what they say that want or need. Often, these are not the same. People tend to take extreme positions that are designed to counter their opponents’ positions. If asked why they are taking that position, it often turns out that the underlying reasons--their true interests and needs--are actually compatible, not mutually exclusive.
By focusing on interests, disputing parties can more easily fulfill the third principle--invent options for mutual gain. This means negotiators should look for new solutions to the problem that will allow both sides to win, not just fight over the original positions which assume that for one side to win, the other side must lose.
The fourth rule is to insist on objective criteria for decisions. While not always available, if some outside, objective criteria for fairness can be found, this can greatly simplify the negotiation process. If union and management are struggling over a contract, they can look to see what other similar companies have agreed to use as an outside objective criteria. If people are negotiating over the price of a car or a house, they can look at what similar houses or cars have sold for. This gives both sides more guidance as to what is "fair," and makes it hard to oppose offers in this range.
We will continue with this series: What Mediators Wish Lawyers Knew in subsequent posts and encourage our lawyer-readers to please let us know what they wish mediators knew.
First, if you are making $67,000 per year, you are the 52,428,447 richest person in the world and are in the top .87% of the wealthiest people worldwide. See Global Rich List to end your week on a note of gratitude with a donation to the charity of your choice.
But you don't compare yourself to half the world's population. You compare yourself to attorneys -- a profession you chose not to pursue or that you left to be happier.
The median salary for attorneys who have been in practice between one and four years is -- oh my goodness!! -- just a couple grand less than the median income for mediators!
And remember, an attorney who has practiced between one and four years has been devoting him/herself to the law for between four and seven years -- the first three of which s/he was spending tens of thousands of dollars for a law degree and earning either precisely -- or next to -- nothing.
So. If you've been mediating for between four and seven years and are making something between $50,000 and $100,000 per year, you are doing every bit as well as the median attorney.
Now that the DGA has reached a tentative agreement with the AMPTP, the terms of the deal will be carefully analyzed and evaluated by the WGA, the WGA's Negotiating Committee, the WGAW Board of Directors, and the WGAE Council. We will work with the full membership of both Guilds to discuss our strategies for our own negotiations and contract goals and how they may be affected by such a deal.
For over a month, we have been urging the conglomerates to return to the table and bargain in good faith. They have chosen to negotiate with the DGA instead. Now that those negotiations are completed, the AMPTP must return to the process of bargaining with the WGA. We hope that the DGA's tentative agreement will be a step forward in our effort to negotiate an agreement that is in the best interests of all writers.
LOS ANGELES - The Directors Guild of America (DGA) announced today that it has concluded a tentative agreement on the terms of a new 3-year collective bargaining agreement with the Alliance of Motion Picture and Television Producers (AMPTP).
Highlights of the new agreement include:
Increases both wages and residual bases for each year of the contract.
Establishes DGA jurisdiction over programs produced for distribution on the Internet.
Establishes new residuals formula for paid Internet downloads (electronic sell-through) that essentially doubles the rate currently paid by employers.
Establishes residual rates for ad-supported streaming and use of clips on the Internet.
“Two words describe this agreement - groundbreaking and substantial,” said Gil Cates, chair of the DGA's Negotiations Committee, in announcing the terms of the new agreement.
“The gains in this contract for directors and their teams are extraordinary – and there are no rollbacks of any kind.”
Formal negotiations between the DGA’s 50-member Negotiations Committee and the AMPTP began Saturday, January 12, and were concluded today. Talks were led by Cates and DGA National Executive Director Jay D. Roth. They were preceded by months of informal discussions and nearly two years of preparation and research by Guild staff and consultants.
“This was a very difficult negotiation that required real give and take on both sides,” said DGA president Michael Apted. “Nonetheless, we managed to produce an agreement that enshrines the two fundamental principles we regard as absolutely crucial to any employment and compensation agreement in this digital age:
First, jurisdiction is essential. Without secure jurisdiction over new-media production—both derivative and original—compensation formulas are meaningless.
Second, the Internet is not free. We must receive fair compensation for the use and reuse of our work on the Internet, whether it was originally created for other media platforms or expressly for online distribution.”
The agreement includes the following gains in New Media:
Jurisdiction: The new agreement ensures that programming produced for the Internet (both original and derivative) will be directed by DGA members and their teams. The only exceptions are low-budget original shows on which production costs are less than $15,000 per minute, $300,000 per program, or $500,000 per series—whichever is lowest.
Electronic Sell-Through: EST is the paid download of features and TV programming. The agreement more than doubles the EST residual for television and increases the feature film residual by 80% over the rate currently paid by the employers.
Specifically, the EST residual rates will be
70% for television downloads and
65% for film downloads, above a certain number of units downloaded. Below that, residuals will be based on formula employers currently pay.
Payments for EST will be based on distributor’s gross, which is the amount received by the entity responsible for distributing the film or television program on the Internet. Having distributor’s gross as the residuals basis was a key point in our negotiations.
The companies are now contractually obligated to give us unfettered access to their deals and data. This access is new and unprecedented and creates a transparency that has never existed before. Additionally, if the exhibitor or retailer is part of the producer’s corporate family, we have improved provisions for challenging any suspect transactions.
Ad-Supported Streaming: After an initial 17-day window for free promotional streaming of Internet programs, companies must pay 3% of the residual base (approximately $600 for network prime time 1-hour drama) for 26 weeks of streaming. They can continue to stream for an additional 26-week period by paying an additional 3% -- or a total of $1,200 for one year’s worth of streaming. (During a program's first season, the 17-day window is expanded to 24 days to help build audience.)
Sunset Provision: Allows both sides to revisit new media when agreement expires.
“Our fundamental goal in these negotiations was to protect our interests in the present while laying the groundwork for a future whose outlines are not yet clear,” said Cates. “We knew that gaining jurisdiction over new-media production and winning fair compensation for the reuse of our work on the Internet were the key issues for setting a framework for the future, but we also had to secure real gains for our members in today’s world.”
The new tentative agreement includes the following:
Annual wage increases of 3% for primetime dramatic shows and daytime serials and 3.5% for all other covered programming.
Outsized increase in director’s compensation on high-budget basic cable for series in the second and subsequent seasons.
Annual residual increases of 3% for primetime shows and 3.5% for all other covered programming.
Specific advances that pertain to members of the director’s team.
Details of the new agreement will be submitted to the Guild's National Board for approval at its regularly scheduled meeting on Saturday, January 26, 2008. The DGA’s current contracts expire on June 30, 2008.
At some point, someone has to have the nerve to step up to the top or bottom of that zone. When you finally enter the realm of reasonable possibility (not necessarily a "reasonable" settlement) you'll get a "sounding" back from the other room. Once that happens, as in battleships, you'll have a pretty good idea of the direction in which you'll need to move to achieve agreement in the "game" of distributive bargaining.
I make every effort not to let the parties conclude a mediation session until I am absolutely convinced that their "bottom lines" do not overlap as shown in the beyondintractability.org chart above.
Remember, however, that I never want to know either party's bottom line because: (1) it will effect their negotiation strategy, i.e., potentially box them in; and, (2) it will effect me andI don't want to sub-consciously drive the negotiation deep into anyone's actual flotilla. (reasons one and two here)
Is THIS All You Do All Day, Ms. Pynchon?
That would be so boring!
Facilitating a distributive bargaining session to resolve litigation is not actually a game of ping-pong or battleships. Remember, nothing is ever only about money. Lawyers translate injustice into money for their clients because it is all we generally have to work with to make a bad situation right again. Mediators translate money back into justice, fairness, or, in some cases, stark, raw, unjust reality -- take it or leave it.
I do not drive the process as a mediator. I nurse it. And because the process is hard on people, it did not surprise me yesterday to hear one of the attorneys tell me that he "didn't want to be sexist" but thought he might just start retaining women mediators because lately they'd been the only ones who'd been getting the job done for him.
Patience. Persistence. And just a little bit of tenderness for everyone involved. It's a tough business and all the parties and their counsel can use a kinder touch -- male or female.
This is the dialogue I often have when attorneys (and some mediators!) suggest to me that the settlement of litigation is "only" about money.
V[ickie]: "Why do people seek out your services?"
A[ttorney]: "Because [i.e.,] they've been ripped off or injured or sued; someone used their intellectual property without permission, interfered with their business; lied to them about the scope of the software license; refused to pay their covered claims . . . . etc. etc. etc."
V: "But why did they seek you out? Why do people hire lawyers? Why do people turn to the justice system?
A: "Because they want justice?"
V: "Yes! they are looking for fairness; not money."
Still, the skeptics fix me with a suspicious eye and say, "well let's just see about that."
Listen, all too often the people who monetize justice -- who translate what is unfair into a monetary sum -- are the very people who seek me out to help them depress their clients' unrealistic monetary expectations. Part of my business is to re-translate money back into fairness.
So it is always with pleasure that I point my readers to that which confirms my existing world-view (a cognitive bias that I will not resist this morning).
The executive summary? It's not about money -- it's about fairness. Excerpt below:
Consider one more experimental example to prove the point: the ultimatum game. You are given $100 to split between yourself and your game partner. Whatever division of the money you propose, if your partner accepts it, you each get to keep your share. If, however, your partner rejects it, neither of you gets any money.
How much should you offer? Why not suggest a $90-$10 split? If your game partner is a rational, self-interested money-maximizer -- the very embodiment of Homo economicus -- he isn't going to turn down a free 10 bucks, is he? He is. Research shows that proposals that offer much less than a $70-$30 split are usually rejected.
Why? Because they aren't fair. Says who? Says the moral emotion of "reciprocal altruism," which evolved over the Paleolithic eons to demand fairness on the part of our potential exchange partners. "I'll scratch your back if you'll scratch mine" only works if I know you will respond with something approaching parity. The moral sense of fairness is hard-wired into our brains and is an emotion shared by most people and primates tested for it, including people from non-Western cultures and those living close to how our Paleolithic ancestors lived.
When it comes to money, as in most other aspects of life, reason and rationality are trumped by emotions and feelings.
For reporters who are following this story at depth, the video includes a sophisticated presentation by Jones Day attorney Mark Herrmann about settlement strategy from Merck's point of view; a provocative presentation by Professor George M. Cohen -- who calls the settlement proposal an illegal antitrust conspiracy -- and a scholarly presentation by Professor Nagareda on the public policy issues raised by the settlement of mass tort claims.
For attorneys who have been retained to provide their clients with a second opinion, Professor Cohen's presentation will be a useful addition to their own research and independent conclusions. Attorney Andy Birchfield -- the only forum speaker with first hand knowledge of the negotiations leading to the settlement proposal -- may be of the greatest interest as he walks counsel for Plaintiffs through the structure, purpose and effect of the proposed settlement program.
Professor Cohen not only concludes that attorneys recommending this proposal to their clients are violating professional ethics, but asserts that it constitutes an illegal antitrust "conspiracy" as well.
Professor Nagareda discusses the settlement from a dispute resolution public policy standpoint.
As a contract between Merck on the one hand and the "lawyers who have a large market share" on the other, Professor Nagareda suggests that the settlement proposal is more an artifact of the law flowing from the Supreme Court's AmChem opinion than of any legal "connivance" among the Plaintiffs' attorneys or between them and Merck.
This settlement proposal, he says, is a valuable and creative peace-making transaction for mass claims.
Andrew Birchfield, an attorney at Beasley Allen and co-lead counsel on the Plaintiffs’ Steering Committee for the federal Vioxx litigation addresses the negotiations themselves and the structure of the settlement.
Andy says that in approaching settlement Merck required global peace -- that there couldn't be a "second round" because Merck had seen how disastrous open-ended liabilities could be for a corporation.
The plaintiffs' attorneys, says Birchfield, negotiated a settlement agreement designed to serve the best interests of each individual client no matter how strong or weak each of their cases might be.
Attorney Ted Frank of the American Enterprise Institute who once represented Merck in the Vioxx litgation.
Frank talks about the law and economics of the settlement proposal, focusing on the weakest link of Plaintiffs' cases -- causation.
This is a topic about which there should be an on-going conversation between lawyers and mediators. We have the identical goal -- to maximize the value available to all parties to settle intractable litigation. Collaborating on the best ways to reach that goal is in all of our best interests. Let's keep the conversation going and thanks to Colm for beginning the new year in this fashion.
First, a good mediator will be tenacious in pursuit of a final settlement. Such tenacity entails thorough preparation, spending sufficient time during mediation (even going over if necessary) and scheduling follow up if the case does not settle during the mediation session. I had a mediation once that started in the morning, lasted all night and ended (successfully) the next morning.
Second, a good mediator must be intelligent and able to learn. Technical knowledge may be needed in certain cases, but it is not essential in most cases. I assume that whatever knowledge the mediator needs I can provide. So, another quality is that I need a mediator who is intelligent and able to adapt to new information.
Third, a good mediator must have significant experience with the litigation and settlement process. Such real world experience enables the mediator to read people in terms of what is driving the litigation. But, there is no substitute for understanding that the settlement process is a little like the grieving process (denial, anger, bargaining, depression and acceptance). The process must play out for both sides and a good mediator will steward the parties through that process. There is nothing worse than having a mediator try to short circuit the process by jumping to a discussion of money. I have found that former judges often have the experience needed to be successful mediators.
Fourth, the mediator must be honest. I do not appreciate having the mediator regurgitate the other side's position if it is patently ridiculous. By the time I get to mediation, I will understand the strengths and weaknesses in my case. But, I need to trust the mediator. My clients will not trust a mediator who does not give an honest or intelligent evaluation. Also, a mediator must be careful not to give an evaluation either too soon or which is overly negative. By the time the mediator actually expresses an opinion (if at all), the mediator should fully understand the mood of the room and how that opinion will be received. The only point of giving an evaluation is to facilitate settlement.
Finally, the main advantage of mediation is that it allows the attorney to preserve his or her integrity and relationship with his client while the client makes a decision to settle. A good mediator will not embarass either counsel, will not undermine the attorney-client relationship and will work with counsel to get a final result (since that is the whole point of participating in mediation in the first place). Joint meetings and opening statements are rarely productive and often make settlement more difficult.
Thanks for taking the time to share these insights with Colm and the rest of the LinkedIn legal community Jim!
In 2006, The New York Times® reported that only 17% of partners at major law firms nationwide were women—and according to a National Association for Law Placement study, less than 5% were managing partners. In a recent survey, less than 15% of general counsel at Fortune 500 companies were women, according to the ABA. These statistics raise the question: Is the glass ceiling giving way in the legal industry?
At the LexisNexis Women in the Legal Profession Summit: Rainmaking, Negotiating and Collaborative Development, you’ll hear about the techniques and approaches that successful female attorneys have employed to overcome the odds and achieve equal status in their firms or legal departments. And you’ll hear from in-house speakers from Chevron, The Clorox Company, Starbucks Coffee, LexisNexis Examen and Union Bank of California. You’ll get:
Techniques for overcoming gender bias and improving the inclusion of women in practice
Strategies for leveraging your strengths to create leadership and rainmaking opportunities
A better understanding of what work/life balance is and ways to achieve it
Insight into how others perceive your communication style and what you can do to translate it into effective negotiating skills
Strategies for attaining partnership and for succeeding once you get there
Insight from a corporate roundtable on how the panelists got where they are today
And much more
From impressive speakers, including:
Linda Marks, director of training and consulting, Center for WorkLife Law University of California, Hastings College of Law
This blog follows insurance coverage issues from time to time because insurance reimburses us for losses; litigation presumes loss; and, the negotiated resolution of litigation requires the parties to understand the benefits and limitations of everyone's insurance policies.
We also talk a lot about ethics here because people and businesses embroiled in litigation are -- contrary to popular belief -- seeking a just or equitable or fair or ethical resolution.
I cannot say this enough -- IT IS NEVER ONLY ABOUT MONEY.
I also have to tell you that I never once, not on a single occasion, in 25 years of legal practice, a decade of which was spent concentrating on insurance coverage issues, did I ever hear anyone ask whether any underwriting or claims practice was ethical!
Before weighing in, I'm going to just let this question percolate in my consciousness for awhile. If you go to the linked article, you'll see some thoughtful answers. Aside from a little predictable judge-bashing, the readers who paused to answer this question -- both from an underwriting and a claims perspective -- did so with a depth of understanding of the issues involved and the history of the clause at issue -- the one that is at the heart of the hurricane damage claims.
If I were allowed to give only two pieces of gratuitous advice to every lawyer and business person in 2008, they would have to be as follows:
1. if you think an insurance policy * will not indemnify you or your client against a particular loss or provide a defense to a legal action, you haven't thought deeply enough unless you have, at a minimum:
researched the law pertaining to the pertinent policy language in the jurisdiction in which the loss occurred or suit was brought;
painstakingly compared the law in that jurisdiction to the precise language contained in the insurance policy;
consulted with a policy holder insurance recovery specialist -- I understand that this attorney -- Stephen N. Goldberg of Heller Ehrman -- who represented GMAC in the World Trade Center coverage action is one of the best in the country.
2. treat others as you would expect to be treated yourself (this is the conflict avoidance part)
Two points worth noting for the health of any small city's fisc.
First, as Kingman resident and Plaintiff Travin Pennington is reported to have said, "communication and accountability, could have prevented a bill for  attorneys' fees that exceeded $40,000 following a seven-month battle with the city for e-mail records."
The Back Story?
In June, Pennington filed public records requests for thousands of pages of e-mail from then-City Manager Paul Beecher and two other employees. He said Beecher took him into the city hall parking lot, and instead of asking how to resolve the issue, Beecher allegedly made some comments that pushed Pennington to "the tipping point."
"I said, 'this guy's out of control. I'm going to take this guy to task,'" Pennington told the Miner. And he did. After the city failed to disclose more than 8,000 pages of e-mail whose contents the city claimed were personal, Pennington filed a lawsuit in the Mohave County Superior Court.
The Conflict Avoidance Point? Be civil; be responsible; be accountable; and if you fail, be willing to course correct.
But when civility, responsibility and accountability haven't worked, check your insurance coverage.
The Kingman story continues:
The city's insurance policy will cover much of the costs of the lawsuit, including the city's own attorneys' fees, which topped $32,000, according to City Attorney Carl Cooper.
Good work on the City's part in tracking down the necessary insurance coverage!
Resolution: Cutting the baby in half.
Pennington's attorneys offered $48,337.65 - 75 percent of the $64,448.50 in the plaintiff's total fees. The city came back with a $32,225 offer, and the two parties settled in the middle, at $40,281.30.
We mediators do try to generate solutions other than the one arising from the descriptive (not prescriptive) rule that any zero-sum negotiation will resolve half way between the first two reasonable offers.
The good news: you don't need a mediator to achieve this result. Even your fifth grader is capable of adding two numbers and dividing them by two. _________________________
Types of insurance include Automobile; Aviation; Boiler; Builder's risk; Business; Casualty; Credit; Mortgage; Crime; Crop; Workers'compensation; Directors and Officers Liability; Disability; Errors and Omissions; Expatriate; Fraternal; Financial loss; Fire; Hazard; Health; Kidnap and Ransom; Homeowners; Renters; Environmental Liability; Professional Liability; Locked Funds; Marine; Nuclear Incident; Pet; Political risk; Pollution; Prize Indemnity; Property; Protected Self-Insurance; Purchase Insurance; Stop-loss; Surety Bond; Terrorism; Title; Travel; Volcano; and, Workers' Compensation.
When you've got several to hundreds of bargaining partners, there is always a moment where the optimal negotiating move is to cut separate deals with those who are weaker (less well-equipped to continue the battle); stronger (better equipped to take a negotiating loss); more favorably disposed to your position or less fixed in their bargaining posture than other members of the opposition coalition.
No one wants to be the last man standing.
In this town of hyphenates (actor-producer-director) it makes sense for the embattled WGA to cut separate deals with those whose hyphenated descriptions include the word "writer." So it is that Forbes.com reports via Reuters in Striking writers union reaches deal with Letterman -- and the New York Times reports in Letterman and Writers Guild Reach Agreement -- that Letterman's "writer-friendly" company gave the writers "what they are asking for [because] they deserve it, and we’re happy to give it to them.” (quote from NYT)
Negotiations between the WGA and major studios on a new contract covering 10,500 striking film and TV writers broke down Dec. 7, but the union has been pursuing separate talks with smaller, independent production companies.
The WGA's Hermanson told Reuters that talks between the union and Letterman's company had produced a "full, binding, independent agreement" that includes provisions for paying writers for work distributed over the Internet.
Compensation for Internet content has been the main sticking point in talks aimed at ending the WGA strike, now in its eighth week.
Several other late-night television hosts, including Jay Leno and Conan O'Brien of NBC and Jimmy Kimmel of ABC, are planning to resume broadcasts of new episodes on Jan. 2 without their writers.
It is the last Friday before the New Year and the Mediation is entering Hour Five. I amcajoling, wheedling, blandishing, coaxing. Mr. Lee's attorney is doing a little begging himself. But we are unconvincing.
Mr. Lee wants to settle the case. Every smoke signal he has sent up during the day indicates that he has sufficient resources -- and more importantly -- the committed desire, to settle this troublesome lawsuit for a figure that is very close to that which the Plaintiffs have signaled they would be willing to accept.
And yet . . . . . . Mr. Lee is back-sliding. We importune and he gives us less authority than we had an hour ago.
We are failing to persuade. And we are out of arguments. The settlement proposal now on the table makes economic sense. It's good for business. Trial is approaching. The chances are less than even. Everyone is taking a loss. If it's wrong or unfair, it's no worse than a random car wreck. One of life's bad accidents, best left in the past. Trial is worse than uncertain, it portends a bad -- and avoidable -- result.
Still. The money is coming off the table. I am missing something.
"I'm missing something," I say.
Mr. Lee looks at me with interest for the first time in hours.
"What are you missing?" he asks.
"I don't know. I only know you want to settle the case and that I'm not helping you do that right now. Can you tell me what I can do differently or better?"
Mr. Lee returns to an old theme -- a horse I'd assumed we'd beaten to death several hours ago -- the reason his co-defendant should be contributing more than it has resolutely refused to do.
Finally it occurs to me that Mr. Lee does not believe I am negotiating hard enough for him.
"Do you think I'm not negotiating hard enough with your co-defendant?"
He lights up. "Yes."
"O.K. If you give me a counter, I'll work harder to get more money from Mr. Co-Defendant," I say, realizing that I haven't been pressing Co-Defendant as hard as I could be.
My mediator friends are cringing. "Don't press!!" I hear them saying, "explore."
Back to Plaintiffs' caucus. "We're at impasse because Mr. Lee insists his his Co-Defendant knew the facts that all the documents show it didn't."
Plaintiff lights up. "That's true," he says, offering a detailed and credible account that contradicts the written record but dovetails with Mr. Lee's account.
Hour Six. Case settled with another small, but significant contribution by Co-Defendant.
"[L]eft to their own devices, negotiators fail to ask diagnostic questions. For example, only about 7 percent of negotiators seek information about the other party's preferences during negotiation, when it would be dramatically helpful to know such information."
What were Mr. Lee's "preferences" here? That I press his co-defendant to put more money of its own on the table. Did Mr. Lee need more money? No. But his preference that I exert a greater effort on his behalf was so strong that my failure to do so caused him to retaliate -- against me -- by giving me less authority in hour five than he'd given me in hour four. I genuinely believed I'd done the best I could do. I was wrong. By how much? Not much. The point is, there was more value to be gained and I had given up.
The moment we use the term 'help', a kind of egocentric idea enters into us. If we help someone, that means we are in a superior position. When we help, we feel that we are one step ahead or one step higher than the ones that we are helping. But if we serve someone, then we offer our capacity with humility, on the strength of our loving concern and oneness. So let us use the proper term, 'service'.
In a mediation. . . [w]e're not playing to jurors. We’re playing to the person who holds the purse strings. The insurance adjuster. Does an insurance adjuster care that your young client was Phi Beta Kappa? Not likely. Is an insurance adjuster emotionally affected because your client’s legs were burned off him while he sat half in and half out of the SUV that had just rolled over on him? Doubtful.
Insurance adjusters have seen the worst of the worst. They see horrific injuries every day. They see “perfect” plaintiffs every day. It doesn’t move them. What do insurance adjusters care about?
Insurance adjusters care about one thing more than anything in the world, even more than money.
When an insurance adjuster is listening to and watching a mediation presentation by a plaintiff, she is asking herself, “What is my downside here? What is my risk level?” And she is constantly weighing the risks of going to trial versus the costs of settling with money that the insurance company would prefer to hold on to for a little longer.
YOUR OBJECTIVE: COMMUNICATE THE RISK
When you start putting together your mediation presentation, instead of asking, “What’s great about my case?” ask yourself, “If I were the adjuster, what about this case would freak me out?”
THE ELEMENTS OF THE SPHINCTER-TIGHTENING PRESENTATION
Their Witnesses and Documents
The first answer is bad defense witnesses. . . . As much as possible, tell the story using defense witnesses. Pull out the parts of depositions that show blazing incompetence, indifference or best yet, bad motive. As much as possible, include documents generated by the defense to bolster your case.
Adjusters don’t typically see witness testimony before trial. If they’ve got some awful witnesses, make the adjuster painfully aware of it. Start and end with their horrible witnesses.
* * *
WHAT ABOUT MY PLAINTIFF?
[T]he plaintiff should be a coda, just a quick notice to the defense that they won’t be able to score big on “your guy.”
The big dollars don’t lie in the beauty of your plaintiff’s life and the tragedy of his loss. The big dollars lie in the adjuster’s uneasiness about the risk. And if you can get the adjuster’s sphincter to tighten, her hands may well loosen.
If the generation of $7.8 billion in settlement monies for Enron's fleeced investors doesn't give you a deep sense of year-end justice being done, you haven't seen the documentary chronicling the rise and fall of one of the most arrogant corporate economic criminals in American history -- ENRON -- The Smartest Guys in the Room. (see the trailer here)
These monies were not, however, torn from the entrails of ENRON's corpse nor taken from the pockets of its principals. These funds, as Forbes.com reports in Judge Mulls $7.8B Enron Settlement Plan, "come mostly from such financial institutions as Bank of America, JPMorgan Chase & Co., Citigroup and Canadian Imperial Bank of Commerce," companies that lawsuits allege "worked with Enron [and] participated in the accounting fraud that led to the bankruptcy of the once-mighty energy company."
The Settlement Plan?
According to the AP article carried by Forbes.com,
Most of the money will be distributed to investors and shareholders who lost money on securities directly issued by Enron or its predecessor companies. A small portion will go to those who got securities from Enron-related entities.
In general, the plan is calculating shares of the settlement fund based on a formula that factors in such things as when a security was bought or sold, the purchase price paid and the type of stock that was bought.
To be eligible for the settlement, investors and shareholders needed to have bought Enron or Enron-related securities between Sept. 9, 1997 and Dec. 2, 2001.
With this much money at stake and so much damage done to investors, you can imagine that there is not simply one dispute but many.
Robert Finkel, for instance, an attorney representing investors who have already won between $60 and $80 million from financial firms in securities suits was quoted as saying
It's our money. . . There should be no commingling of money."
And Stephen Neuwirth, representing another group of investors, has objected that the plan prevents shareholders who received their Enron stock as gifts from filing claims.
For a copy of the plan and other explanatory materials for Enron Shareholder Class members, click here.
If you come out guns blazing, the other side is probably going to respond in kind. Which means that you’re setting the stage for an aggressive negotiation and will be fighting for things along the way. On the other hand, too soft, and you’ll give up everything. This is where some of the experts obviously advise differently. One camp says “play stupid” and seek what you can get through self-depreciating behavior. Another camp (pardon the pun, but it’s actually Jim Camp) says that you should always “Start with No” as a way to encourage discussion.
The net result of Strategic Thinking is an ability to not only see what your path could be, but to also see where your opponent is going to move. For if you play a win-win strategy against someone with a win-lose strategy, who do you think is most likely going to lose? If you’ve considered your various options and thought Strategically, you’ll know how to respond.
make the first offer, having in mind making 3 to 5 concessions to reach my "bottom line" or "reservation price."
I also recognize and attempt to guard against my weaknesses which are:
discomfort when the negotiation appears to be but rarely has actually has reached impasse
Strategic Planning: Setting Ones Reservation Price; Planning the Number and Timing of Concessions; and Deciding Which Information Will Be Strategically Deployed
My own pre-game strategic planning primarily consists of setting my "reservation price" (the number I will not go below); projecting the planned timing and number of concessions; and, deciding on the nature and timing of information disclosures that I believe will enhance my bargaining position. I also make a decision, in a case like this, whether I wish to aggregate or divide the several items subject of the bargain.
So What Was the Actual Plan?
We were lucky to have both several items to negotiate and several preferences for each negotiated item. What were they?
the television itself;
the $100 HD cable;
the furniture on which to place the television; and,
sales tax, which for reasons I'm not entirely clear about, sales people generally are happy to "cut" as part of any retail purchase.
We decided that I would be the primary negotiator with Mr. Thrifty as my back up.
I knew there was a lot of "fat" in the furniture. The purported "retail" price for the "wood veneer" television stand was $598, "reduced" to a "sales" price of $398. Having checked online prices for this piece if furniture, I knew that at least one online store claimed that its "retail price" was $349 -- $50 more than the Ken Crane's claimed "sale" price and that we could purchase it online for $285, $110 less than the store was offering.
Though we were unable to obtain comparables for the Toshiba -- tagged at $2598 -- we knew we could buy a comparable Samsung for $2300 over at Fry's Electronics in Burbank.
Mr. Thrifty and I decided that our reservation price (or bottom line) was $3,000.00 for all of the items listed above, which would be $366 less than "retail."
Although I firmly believe we could have negotiated a deal at that price, we concluded the deal $150 short of our "reservation price." I'll explain why that happened when we cover time management and perception of power in our final post on negotiating consumer purchases.
What is that advertisement at the top of Victoria Pynchon's Negotiation Law Blog?
It's the first of several ads to be delivered on this site by Forbes.com.
Why is she junking up her blog with advertising; does she need the $$$ that badly? .
It's true that I will earn some income (a few dollars a month? a couple of hundred? I have no idea).
But I'm not in it for the ad revenue.
Believe it or not, this blog is not merely a marketing device. It is also an attempt to spread the good news of collaborative problem solving and interest-based negotiation to whomever those skills might help in their business and personal lives.
Learning interest-based negotiation and mediation skills radically changed the quality of my life, my work and my personal relationships. I don't just want to share that, I'll go all the way to say I have a mission to share that.
O.K., But What Does This Have to Do With Advertising from Forbes.com
I'm joining the Forbes.com Business and Financial Network to bring the Settle It Now Negotiation Blog to as many people as might find it useful, most particularly business people and attorneys.
Forbes.com's homepage has -- drum roll please -- 20 million visitors a month.
I have 5,000-6,000 visitors a month.
I'd like to have more.
I'm truly hoping that the Forbes.com network will provide a greater array of information and advice to my existing five to six thousand monthly visitors and that the addition of my blog to the network will get the central message of this blog to more people.
What is your blog's central message anyway?
Here it is.
A community thrives on collaboration and reciprocity. All communities -- local and global -- thrive on collaboration and reciprocity. And individuals living in collaborative and reciprocal communities are happier and healthier than those who don't.
The rest is implementation. And practice.
So, let's see how this Forbes.com community can further that goal.
Hop on board! The train is getting ready to leave the station.
But don't worry about being left behind. We're a local so you can jump on any time you're ready!!
Is there any negotiation more frustrating than the one you conduct on the telephone with people who won't give you their last names, have no "authority" to do or say anything that deviates from their script and who you are finally connected to only after enduring the "go ahead, try to choose the right numeral to fit your problem" automated phone system.
I'll include some of these conversations in the series on negotiating the purchase of the flat-screen T.V.
This post, however, is an emergency act of mercy for anyone who is upgrading their DirecTV non-HD DVR service to either Dish or DirecTV HD-DVR system.
Information Gathering Cut Short
After at least one full hour of searching online, I found this clear, easily understood, linked resource entitled My Dish Network vs Direct TV Experience. This advice page links to a side-by-side comparison of the HD-TV-DVR "deals" being offered by satellite providers here at the DigitalTVDojo Daily Deal Monitor. The "Deal Monitor" links to the "secret" web deals that you will not be offered on the telephone or the internet unless you find them.
But that's not all.
Gathering Information about the Dish Service
Preface: After the Dish representative dodged the following question four times, I gave her one last chance, telling her she would lose my potential business unless she answered it. She didn't. I called DirecTV for the second time that day.
The question: will you provide me with a 5 LND dish free with the HD service?
What the question means: I have no idea. My rocket scientist neighbor told me that's what I needed.
Back to DirecTV
If you, like us, are existing DirecTV customers, you cannot get the "deal" linked above online. If you sign in to your account (or create an existing user account) the only "deal" available to you is to pay $299 for a new HD DVR (which you understand you are leasing, not purchasing).
Here's who you have to call to get the same deal being offered to new customers: The Customer Retention Department.
How do you get there? Press 0 even though you're not given this option, which may not directly connect you to a human operator, but will lead you to one more quickly than any other means I tried.
How I Got to the Customer Retention Department
I spent a lot of time appealing to DirecTV's "higher value" of customer service and its interest in retaining customers. I said the words "Dish" alot. I said, you're not a monopoly and you have the power to lose a customer today. That sort of thing.
But all this effort bought me was access to the Holy Customer Retention Department.
So don't bother negotiating your way there. Just ask to be directly connected.
The Deal the Customer Retention Department Will Give the Existing Customer
(please let me know if you do better -- Thad Employee # U2179 represented to me "as a matter of fact" that this was absoutely the best deal any existing customer could get on an HD-TV DVR upgrade. I'm hoping no one proves to me that Thad misrepresented the available deals because I'd like to continue to believe that when directly asked this question, my negotiating partner will either say -- I cannot guarantee that -- or tell me the truth. I'll provide a link for misrepresentations during negotiations and negotiation ethics later).
Here it is: DirecTV will:
provide you with an HD-DVR for $199
it will install the needed 5 LNB dish
though the cost of HD service is an additional $9.99/month, DirecTV will waive that fee for the first year ("that's a $120 value" says Thad)
free handling and shipping
That's it. Happy shopping and thanks to all the selfless TV service bloggers who helped along the way.
Jeffrey Gordon has been running a series of posts entitled Five Fundamental Skills for Effective Negotiation in his Software Licensing Handbook Blog. Unlike most litigators like me and Mr. Thrifty, Mr Jeffrey is a negotiator by trade. So his advice is just the type of "on the ground" guidance litigators -- and purchasers of consumer products -- can really use.
Not surprisingly, the first of the Gordon's "Five Fundamental Skills for Effective Negotiation" is Information Gathering.
Before plunging into the HDTV negotiation, I give you the bone marrow of Gordon's advice, the meat of which can be found at the link above.
As the first "information gathering" step, Gordon advises us to play 20 questions with ourselves
to determine the boundaries of our desire. If [we] do this stage of Information Gathering correctly, [we] will have a deep understanding of our true need as opposed to our “wants.”
Or, put another way, [we] will know our “must have’s” versus our “like to have’s.”
And, if [we]’re already thinking a few steps ahead, this becomes important . . . in making concessions. [We'll] ‘give up’ our like-to-have’s in favor of keeping a better outcome for our must-have’s.
I have to tell you that the poet in me loves the phrase -- the boundaries of our desire.
But I digress.
Mr. Thrifty and I divided the purchasing task strictly along gender lines, meaning that he did all the product research, primarily on CNET (which he recommends as the best source of expert advice) with a heavy emphasis on consumer reviews at sites such as Amazon and Pricegrabber (Toshiba vs. Samsung).
I'm not certain I would have had either the heart or the stomach to decide between LCD and Plasma; 720 vs. 1080p; or 60 vs. 120 Hz refresh rate. If you don't have your own live-in tech-guy or gal, find one now. I'm told these things make a genuine difference.
Though online prices will inevitably be better than those found on in-store price tags, visits to your local merchants are necessary to get the look and feel of the product you wish to purchase. And Mr. Thrifty says that you want to be able to return your TV or lodge complaints with the store. So despite his storied thrift, he'll always pay more for the benefit of dealing with a local vendor.
Even though each sales person has his or her own preferences (and degree of candor) when you talk to enough of them, certain themes begin to come through the sales pitches. And you can look them in the eye.
Speaking of sales people -- you'll see that we end up buying from our favorite sales person because we liked him andfelt he was being a straight shooter about the pro's and con's of our dream set. Before we began our final negotiations for the purchase, we'd already decided we were going to give him our business. Even if it cost us more money. Because it's never only about money. Ever.
Valuing Your Own Idiosyncratic Preferences
I have to admit that it was almost impossible for me to tell the differences in picture quality among the various options Mr. Thrifty had narrowed our choices down to. Still, I had my own set of preferences and desires, as did Mr. Thrifty. Rational or not, this is your purchase and you can value or devalue anything you like.
We, for instance, have a lot of light coming in the back of our small T.V. room. We needed a non-reflective screen. Period. Mr. Thrifty, for reasons all his own, loved the TVs with the swivel bases. Acknowledging that this particular preference wasn't very "rational" he said he'd be willing to let it go. But hey! He really really liked the swivel. So onto our "must have" list it went. Finally, neither of us cared much about 42 vs. 46 inches. The technology was worth more to us than size -- we preferred the newest technology over the larger TV.
Then Of Course We Asked the Neighbors
This may or may not be an option for you but my regular readers will know that we live next door to a rocket scientist. Actually, an astral orbital engineer. Because neighbor Tony reads spec sheets for recreation, of course we consulted with the neighbors.
Narrowing the Choices
You'd have to ask Mr. Thrifty for the skinny on the specs. At Magnolia in Santa Monica yesterday, the HP guy said "well, this LED LCD screen is better than the non-LED." LED LCD? I thought my head might explode. Unlike me, Mr. Thrifty already knew about the LED/non-LED option and had already chosen one or the other. I still don't know which one we bought.
At last our research was done. It was Toshiba instead of Samsung, a 46 rather than a 42 inch screen, LCD, non-reflective, 1080p with the Hz thing.
Tony hipped us to the $100 cable necessity (another potential bargaining point) and we lucked in to a name for the TV stand in the Sunday Electronics inserts. So we checked its online price, which was $300 less than that being offered by our preferred vendor. We knew we didn't want to buy that furniture online because all of the customer reviews said it always arrived damaged. And although the salesman may well have known that -- he didn't know that we knew that.
(the Toshiba 46LX177 46" REGZA™ Cinema Series® 1080p LCD HDTV with 120Hz refresh rate; our vendor - Ken Crane)
I have long complained that high definition television is the triumph of form over the "content" our 500-plus channels deliver to us.
Nevertheless, the February 2009 deadline to go digital is, more or less, looming. Not to mention the fact that today is our first wedding anniversary and the seventh day of Hanukkah. Christmas is just around the corner.
That confluence of events provided the rationale, the justification for me and Mr. Thrifty to finally bite the H.D.T.V. bullet and negotiate the purchase of technology that would likely cost us more than each of us paid for our first automobiles.
There's not a lot that's new in the Telegraph's report of a five-day Oxford negotiation program for seasoned professionals -- first "identify what you want, what the other side is likely to want, what you can discover from the public media [and then] build relationships with the other party, picking up intelligence which couldn't be gathered in advance such as his personality, mood, style of negotiating, constraints."
What struck me as noteworthy was the article's expressed surprise that people 'at the top of their game' professionally would feel the need for a course in negotiation.
This is not news to someone like me who realized on my first day of mediation training that I'd been negotiating the settlement of litigation for 25 years as crudely as Cullen, director of the Oxford Programme, said sophisticated business people tend to do. They "negotiat[e] fairly crudely," he said, and "hadn't realised how they could do it so much better."
As I sit at home today waiting for delivery of the TV at the top of this post, I'm going to take my readers on a step-by-step guide to buying the high-end technological gee-gaw of your choice this holiday season. Or, because we don't watch television all that much, the mid-market Flat Screen High Definition LCD T.V., with accessories and furniture.
High-market, mid-market or low-end, one negotiation is as easy or tough as another depending upon your negotiation skills. And to tell you the absolute truth -- those lawsuits with the least in controversy are generally the most difficult to negotiate.
The full post is well worth reading. Most applicable to my own practial ethics needs, however, is the following post excerpt.
None of the existing or proposed ethical codes, he writes,
address the relatively common and always difficult situations in which more than one ethical principle is implicated, and in which no course of action perfectly protects all of the mediation principles involved.
One party appears to have an imperfect understanding of some aspect of a deal, the other party is credibly indicating an intention to withdraw from the mediation, the conversation up to this point suggests that the issues appearing in the legal complaint are only one component of what’s going on and what each party cares about, the case is proceeding under brutal external time constraints, the media are making regular requests for updates, and the mediator isn’t sure what the best next steps might be.
That’s not just an ethical question, but there are ethical questions embedded in there. And nothing in most articulations of mediation ethical standards even acknowledges, much less guides, the balancing I must do.
Amen, brother and thanks for joining the conversation about ethics.
I think the question you raise here, requires a cognitive psychologist to answer. Having said that, I've seen this phenomenon [of the negotiation ending half way between the first two offers] myself. I suspect it's because the notion of "splitting the difference" or "meet me halfway" is so deeply ingrained in us.
However, I don't think it's fair to assume that this applies in all cases. I don't believe it holds true in mediations between an attorney and his/her client on one side and an unrepresented party on the other, when you're more likely to get out-of-the-ballpark initial demands from the unrepresented party (the "it's what my third cousin who's going to law school said I could get" phenomenon), or when either or both parties are unprepared to negotiate and have no objective criteria on which to base their dollar demands. Then the end result is wildly different from what you've described. And those are the cases that can break your heart.
For example, consider a not-so-untypical employment discrimination case between an unrepresented complainant and an employer with their lawyers. The complainant's first demand is $900,000 -- about $896,000 shy of what would have been a reasonable starting demand. The counteroffer is $500. The complainant's next move is to $50,000. The counteroffer is $750. In the next exchange of numbers, the complainant moves to $35,000, followed by a counteroffer of $900, which astonishingly settles the case.
Mathematical formulae are all very well, but they don't take into account all the variables that can come into play at the table. I've long stopped trying to predict what clients will do -- I just strap on my seatbelt and get ready for the ride.
I'm curious to hear what the experts on human behavior have to say on this. And I'm very much looking forward to the next installment in this series, Vickie.
I keep telling friends that the following formula is descriptive, not prescriptive, and yet, I don't think I really know what I'm talking about.
The formula? In a pure distributive bargain, the case will settle half-way in between the first two reasonable offers.
The belief? I believe the key phrase here is "reasonable," which is not surprising since the entire practice of the law seems to be precariously balanced atop that single word.
The observation? For the past three and one-half years of mediation practice I have performed this math equation (I know it's only arithmetic) at the moment I believe the first two reasonable offers have been put on the table. Often I'll go back to earlier offers -- ones I considered unreasonable. I generally find that the arithmetic works there too. Add the offer and the counter. Divide by two.
I do sometimes say "you seem to be heading toward $X" when the parties are claiming impasse and I'm not buying it. They seem surprised that I somehow know what they're thinking.
(twilight zone music here)
The Question. What's the deal with this little formula, taught to me as holy writ by the Mediating the Litigated case people.
Before the negotiation begins, take the time to [do your] research . . . Establish a reasonable range for [compensation], a typical benefits package and common additional compensation (e.g., stock options, annual bonus, performance bonus). This work makes it possible for you to know the ballpark in which any satisfactory agreement has to fall.
Then, from those general points, determine the most favorable compensation package for you. You should be able to justify that package given the field in which you work (since compensation differs across industries) and your experience, expertise and credentials.
Make sure that this package addresses the real needs you have -- you will likely have trouble asking for more later if you overlook something. This package is your counteroffer.
#2: Be Firm
[S]elect a reasonable and appropriate counteroffer -- one based on the data you gathered in your research -- and stay there until the other side offers a persuasive reason for you to move.
By "persuasive," I mean an argument based on additional data or information that justifies a different figure or package than you had developed. . . . . An example of an unpersuasive argument would be "Your figure is too high. We can't do that."
#3: Be Wise
Keep the big picture in mind. Your goal in the negotiation is to reach an agreement that satisfies your interests -- not to win a battle between positions. If your counteroffer is not moving you closer to an agreement, do not hunker down and defend it to the death.
Instead, think of another proposal that addresses your needs and concerns and is supported by data, and put that out as another offer. Use your energy to generate solutions, not to fight battles.
Thanks to Joe Provenza of Can I Have That With!! for dropping by yesterday's post and leaving a comment and for hipping us to the Mental Blocks that prevent every negotiator and negotiation advocate from distinguishing the conflict resolution forest from the money trees. Joe comments upon and quotes Steve Pavlina's post “2 Mental Blocks to Making Money” with the good news that we should be thinking about people, not money.
“…By focusing on trying to get money, you’re missing the point. The point is to provide value to others. This means serving people in a way they aren’t already being served, in a manner that aligns with your unique creative self-expression. Share what only you can share. Express what only you can express in the way that only you can express it…
…Try to look past your own needs and recognize there’s a pretty interesting world around you. Through your actions you can have an impact on it, for better or worse. Think about how you can provide something that people want or need in a way they aren’t already being served, something that will make a positive difference. Then act on it.”
"Focus entirely on the customer," echoes Provenza "and then act upon it."
A bias for action is tantamount. Too often we spend our energy preparing to act, yet take no action. We have the resources all about us, however we do not use them.
Focus on the customer and acting upon that focus is the only way to break through Mental Blocks!
Take a look at Geoff Sharp's post on the so-called pure money case and then please please please send me your stories on meaning-making about money in the course of mediated or non-mediated negotiations.
(see our previous posts on the subjective experience of money here and here)
What do I mean by "meaning making"?
Let me give you an example of the type of story I'm looking for.
I was mediating a personal injury case and we'd reached impasse. The Plaintiff was having trouble understanding how the amounts of money being discussed could possibly adequately compensate her for her injury -- a self-report of daily 3-hour headaches.
After much discussion I sat down with my calculator and "translated" the final offer of settlement into an hourly wage for two years worth of headaches "if suffering were your full-time job."
The resulting "hourly income" was pretty substantial when viewed as an hourly payment for pain. This way of presenting defendant's offer broke the impasse.
Before we translated the total settlement offer (minus costs and fees) into a compensation scheme familiar to the Plaintiff -- an hourly wage -- she had no metric against which to value that offer. The money wasn't real until she understood it in terms of earnings.
I've heard many other stories like this but my appetite for them is insatiable. Whenever a mediator or lawyer tells me a story like this, I am always inspired and heartened. Their telling also helps me become better at facilitating "pure money" negotiations. I'm hoping they will also be useful to my readers.
All things being equal -- or, more to the point -- most things being impossible to equalize -- your clients' satisfaction with the settlement you negotiate is going to depend upon something other than the absolute number attained.
In fact, the social scientists who study these things have told us that people tend to be more satisfied with the outcome of negotiations in which the following occur:
the other side makes numerous concessions (even if they are small or inconsequential);
the outcome achieved is as good or better than similar outcomes obtained by colleagues or competitors (i.e., a 10% raise in salary tends to be viewed favorably if one's co-workers receive 7% raises and unfavorably if one's co-workers receive 12% raises);
the negotiator does better than he hoped to (without regard to whether the expected outcome is "good" or "bad" based upon objective factors);
the negotiator feels that the process by which the outcome was reached was "fair and reasonable"; and,
the negotiator does not believe that his will was overridden by a stronger negotiator on the other side.
What's new about this relatively commonplace insight is that it is at work not only in sophisticated bargainers, but also in human toddlers and our primate friends the capuchin monkeys.
How do we apply this "choice preference" insight to client satisfaction with settlement outcomes?
It's not hard to do.
Whatever a client's reservations about the course a negotiation session takes, by the end of the day they've made dozens of small decisions among (potentially) equally attractive or unattractive choices. Add to the negotiation mix the fact that we tend to value choices that were made only after great difficulty and the "satisfaction outcome" is nearly guaranteed.
Even without coaching by you or assurances given by the mediator, your client should be pretty satisfied with any negotiation outcome by the end of the day. If not, only a little negotiation post-mortem back-patting should be necessary to focus your client on the difficulty of your mutual achievement and on your joint superior wisdom in settling at the time and for the number you both did.
We're not suggesting being disingenuous here. Most cases can profitably settle in a fairly wide range. So long as you've done a thorough cost-risk analysis with your client and have a firm bottom line you've agreed not to alter, most settlementsof risky and unpredictable litigation are the smartest decision you and your client can make at any stage of the proceedings.
Year-end's coming and with it the time to close the book on many cases that are becoming more problematic with time.
Clear these troublesome pieces of litigation away and both you and your client will have much to celebrate in 2008.
Let me just say I'm prejudiced on this topic before we begin yet another discussion of the Vioxx settlement -- this one focusing on the stellar and collaborative case management skills of the jurists responsible for managing these cases through litigation, trial and settlement.
I was a true-believer of the benefits of the Complex Court on the first day my nine-figure environmental insurance coverage dispute was reassigned from a downtown courtroom to the Hon. Carolyn B. Kuhl, presently the Presiding Judge of "Complex."
My respect for the Complex Court only grew when I became Judge Victoria Chaney's superannuated law extern while pursuing my LL.M degree in Conflict Resolution at the Straus Institute.
So it is no surprise that Judge Chaney was one of those Judges who were highly instrumental in pressing the parties to resolve one of the most sophisticated mass tort cases ever -- and not by "twisting arms" or "banging heads," but by the art of case management, collaboration and principled persuasion.
By December 2006, there had been enough [Vioxx jury] trials for both sides to recognize the strengths and weaknesses of their arguments, [New Jersey Superior Court Judge Carol] Higbee said.
Both sides had spent a lot of money, but the litigation was still progressing too slowly.
That month, [U.S. District Judge Eldon] Fallon, Higbee and [Ass't Supervising Complex Court Judge Victoria] Chaney met in New Orleans. Over dinner, they prepared for a meeting the next morning with attorneys from both sides. It was time, the judges had decided, for the lawyers to discuss a resolution.
The judges urged the lawyers to begin talking. They asked for monthly meetings and regular progress reports. They emphasized, among other things, the need to move the cases along.
"We were simply not going to be able to continue this slow progress," Higbee said. "It would go on forever."
Six months later, in June, the judges notified the team of plaintiff attorneys they intended to meet with Merck's legal team, Higbee said. The pace of the litigation weighed on the judges.
"Trying the cases one at a time was no longer going to be an option," Higbee said. "We never thought we would try all the cases, but there was a chance we would try another 500 cases."
The judges told Merck's lawyers they would have to start spreading the cases out among more judges, which would diminish the chance of getting a settlement. "The chance of a fair resolution was much more likely," Higbee said, "while there was a control of the litigation by the three judges."
The Judges' Management Strategy Plus the Three-Year Statute of Limitations, Pushed the Negotiations Along
Kent Jarrell, an outside spokesman for Merck's legal team, said the possibility of the lawsuits being spread out among additional judges was "a factor" that pushed the negotiations along. But Jarrell said the three-year statute of limitations, which arrived at the end of September, also was a big factor.
The statute of limitations on filing new cases gave Merck a clear definition of the litigation's magnitude, and that would prove to be a key factor in Merck's ability to formulate a settlement.
The settlement negotiations, which grew more serious during the summer months and into the fall, culminated in the early morning hours of Nov. 9.
"Both sides had a similar goal -- to settle as much of the litigation as possible and to pay people with the strongest cases, the most serious injuries, the most money," the judge said.
Higbee believes the settlement will ultimately succeed. "I'm anticipating they will get more than 85 percent of the cases," she said.
I'm a student of the social psychology of conflict. Of in-groups and out-groups. Of choosing sides and aligning interests. Of polarization and cognitive biases.
But I just never get it when a newspaper reporter -- even someone living as rarefied a journalist's life as New York Times reporter Joe Nocera -- sheds crocodile tears for BigPharma.
Call me crazy. Call me neutral. But the recently settled Vioxx cases never struck me as low-merit, extortionate rip-offs nor as slam dunk victories for injured consumers or their survivors.
Why? For all the reasons Joe notes -- it's extremely difficult to prove that one assault on a person's physical well-being (the use of a potentially life-endangering drug) is a more likely explanation for stroke, heart attack or death than the thousands of other reasons we all eventually die -- obesity, smoking, genetic pre-disposition, exposure to toxic chemicals in the workplace, stress and the like.
John Doe's Alleged Vioxx-Related Heart Attack
In negotiating the settlement of litigation, I find it best when people actually engaged in the dispute are in the room because it tends to focus the parties on the intricacies, texture, dimensionality and simple messiness of real life.
With that in mind, I'll use a hypothetical to put a little flesh and blood into the debate. More precisely, I'm going to use a hypothetical John Doe who had a heart attack about ten months after he started taking Vioxx.
What Merck Did and Failed to Do
As Nocera acknowledges in his article Forget Fair, It's Litigation as Usual, Merck did not behave with the high level of caution the consuming public would expect of a drug manufacturer creating and marketing a product we ingest to help make us better. I mean, no one was taking Vioxx as a recreational drug, right? Here's what Nocera says about Merck's marketing of Vioxx.
[Merck] caught a serious case of blockbuster fever in the 1990s. In its effort to crank out drugs with $1 billion or more in annual sales — the definition of a blockbuster drug — it over-reached. . . .
Merck spent hundreds of millions of dollars marketing Vioxx, largely through direct-to-consumer advertising, portraying it as some kind of miracle pain reliever. So instead of having a few hundred thousand users in the short time it was on the market, it had 20 million. Its annual sales grew to $2.5 billion a year.
Even before the drug was approved by the Food and Drug Administration, there were rumblings in the scientific community that Vioxx might increase the risk of heart attacks or strokes. It’s not quite right to say that Merck completely ignored those potential problems — but the company certainly tried to avert its eyes.
. . . At Merck . . . “there was a kind of studied ignorance” of the possibility that Vioxx could increase the chances of a heart attack — even after one study, called Vigor, suggested that the drug could quadruple the heart attack risk. Only in 2004, when another study confirmed the increased risk, did Merck finally react — by taking the drug off the market.
So Merck was making billions of dollarson a drug that probably should not have been marketed to the general public. Merck ignored the medical research -- some of which showed the drug could quadruple the risk of heart attack -- until yet another study confirmed the increased risk.
Nevertheless, Nocera worries about a judicial system railroading Merck into creating a fund for people who are able to demonstrate that the drug likely caused stroke, heart attack or death.
John Doe's Bereaved Family Seeks to Recover for Their Devastating Loss
As Nocera notes, you can never really be certain what caused your cancer or heart attack. No one will ever know for sure why your brother had a stroke at 35 when everyone else in your family lived into their nineties. We all have medical histories that make us vulnerable to one or more life-threatening conditions that will eventually kill us off. As the National Geographic recently noted in the chart reproduced above, our odds of death from any and all causes are 100%.
The highly unusual agreement not only requires 85% of plaintiffs to agree before it can be finalized but also might unduly force some claimants to settle or risk losing their lawyer.
That's because the deal includes highly unusual restrictions on plaintiffs' lawyers. The settlement requires them to recommend the deal to all of their clients or none. In addition, lawyers must stop representing any clients who turn it down as long as they don't violate ethics rules.
The agreement was hammered out by Merck and a committee of top trial lawyers who represent Vioxx claimants. Lawyers for both sides said it was a good deal because it provided immediate and fair compensation instead of lengthy trials with uncertain outcomes. Merck requested the all-or-nothing conditions because it feared lawyers would settle weaker cases and cherry-pick stronger ones for trial and possible higher payouts.
Clients are not inventory that lawyers can just shed when they become inconvenient. It's forbidden.
Local trial attorney Tom Girardi, however, who took at least one 'bellwether' Vioxx case to a jury verdict before Assistant Supervising Complex Court Judge Victoria Chaney in Los Angeles earlier this year, notes that it is
always the clients' decision to accept a settlement or not, and lawyers aren't going to do anything that's unethical [and that] those considering [whether to accept the offer] should know these are not easy cases to try in court.
So is a Mass Tort Injustice on the Horizon? Not Likely.
The law -- and the contract between attorney and client -- gives both the right to withdraw from the attorney-client relationship for any or no reason. Generally, however, the relationship continues unless the same type of "irreconcilable differences" that permit husband and wife to divorce, arise between counsel and client.
One of the most common reasons for the dissolution of the attorney-client relationship is a disagreement over settlement. The attorney is not, of course, the client's indentured servant and the client is neither chattel nor "inventory."
If the attorney believes the client has been offered a settlement that is a better alternative to further litigation and trial, he would dishonor his ethical obligation if he didn't say so. If the client disagrees and their difference of opinion cannot be resolved, they separate.
The only ethical requirements on the part of the attorney in this circumstance are: (1) not to abandon the client or separate at a time when it would cause harm, i.e., bowing out on the eve of trial; and, (2) not putting the attorney's own interests above those of the client.
This is where that pesky contingency fee comes in.
Any attorney who has a one-third to fifty percent financial interest in a settlement reached or judgment entered in his client's case will often appear to have a financial interest that conflicts with his client's. This apparent conflict, however, is actually more of a guard against unnecessary litigation than the defense lawyers' practice of charging their clients an hourly fee.
A contingency attorney lives or dies by his ability to assess the risk of victory or loss and maximize the value of the threat of further litigation and trial to the defendant.
When the contingency fee intersects with mass tort practice, however, common daily practice is writ so large that the tension between attorney and client that accompanies all personal injury litigation can be made to look like injustice -- clients as inventory and attorneys as self-serving monsters.
Let's Talk About the Risks in the Real World
Tom Girardi, after trying a brilliant case to the jury in Judge Chaney's courtroom, lost to Merck. In closing, Merck's attorney argued to the jury that Tom's client was "all in" based upon his testimony about the number of Vioxx tablets he'd taken.
Clients, however, just like any other fallible human beings, "forget" or dissemble. Whatever the Plaintiff's "true" recollection, the pharmacy records proved otherwise. He had not only not taken the number of Vioxx tablets prescribed -- his recollection of how many he took was not even close.
Can the Vioxx attorneys predict victory? No. Can Merck? Nope. Did both sides take their best shot at trying a couple of dozen cases at enormous expense. I think so.
Is there an ethical problem here? Not likely. These are some of the best personal injury trial attorneys in the country. And they don't get that reputation by settling their clients' claims for less than they're worth.
Because these materials are the basis for a speech and not the speech itself, they may be a bit confusing. I'm providing them for those who attended the seminar. If you didn't, please understand that not everything discussed appears in these materials.
The entire day of speakers (a pretty high powered group) will soon be available in audio from the Pincus CLE company here.
The judge didn't care where they went, Herman said yesterday from his New Orleans office, he just wanted them -- all of them -- in one place. Fallon wanted the settlement done by the end of the week.
They converged in New Orleans, where they averaged three hours of sleep a night and lived on pizza, gumbo, diet coke and coffee.
And before dawn yesterday, they finalized the agreement . . .
This was not, of course, the first time these high-powered lawyers met to resolve the most aggressively defended pharmaceutical litigation in remembered history.
From the Star Ledger again
Herman, the plaintiff attorney in New Orleans, said the judges, including Fallon and state Superior Court Judge Carol Higbee from Atlantic City, ordered negotiations to begin last December. The judges' message, said Arnold Levin, who helped negotiate the settlement, was it was a good time to get started because the litigation had matured, or progressed.
Over the course of the past 11 months, two teams of attorneys -- 10 in all -- met face-to-face as many as 50 times in a variety of cities across the country. The negotiations, which remained confidential until late Thursday, involved as many as 100 conference calls, Herman said.
They Don't Call Them "Behind the Scenes" Negotiations for Nothing
As the Star Ledger coverage concludes:
"Negotiations over a multibillion settlement only work when they're done confidentially," Herman said, adding the attorneys were under orders by the judges to keep them secret.
In New Orleans, it was nearly 5 in the morning when the attorneys finalized the agreement. Most went off to their hotel rooms to nap or shower before they had to head over to a regularly scheduled conference before Judge Fallon.
And never underestimate the power of pizza, coca-cola and sleep deprivation to get the deal done.
And yes, only a Plaintiffs' trial lawyer from New Orleans can get away with similes like that!
Settlement negotiations began last December and have proceeded fitfully since, reportedly spurred on by Fallon and other judges. The final stretch began Thursday morning at the New Orleans offices of Russ Herman, liaison counsel for the plaintiffs, and wrapped up Friday morning around 5 a.m.
Herman says the primary lawyers for the plaintiffs included Chris Seeger of Seeger Weiss, Birchfield of Beasley Allen, and Arnold Levin of Levin, Fishbein, Sedrad & Berma. Merck was represented by Doug Marvin of Williams & Connolly, John Beisner of O'Melveny & Myers, and Adam Hoeflich of Bartlitt Beck. "It was a true, hard-fought rough and tough negotiation on a very high, professional plane," Herman told Legal Times, ALM's Washington weekly.
(left: football without the grease)
Herman says a general deal was struck 10 days ago. "But the devil's in the details and they can break down at any point," says Herman. "Nobody raised their voice. Or made threats. But people's positions were very hard. It was like each lawyer had a greased football and was running like a wild monkey."
Now its the turn of another BIG "V" LAWSUIT -- Merck's Vioxx litigation -- to benefit itself with the largest drug settlement ever but only in the event 85% of all 26,600 litigants agree to drop their cases.
Here's an except and link to the MSNBC article on the settlement:
TRENTON, N.J. - Merck & Co. said Friday it will pay $4.85 billion to end thousands of lawsuits over its painkiller Vioxx in what is believed to be the largest drug settlement ever.
The deal becomes binding only if 85 percent of all plaintiffs in about 26,600 lawsuits agree to drop their cases. It was finalized in the early morning hours after attorneys for Merck and the plaintiffs met with three of the four judges overseeing nearly all Vioxx claims.
Merck faced personal injury lawsuits representing 47,000 plaintiffs, and about 265 potential class action cases, filed by people or family members who claimed the drug proved fatal or injured its users. The agreement covers cases filed in both federal and state courts.
To qualify, claimants will have to pass three gates:
an injury gate requiring objective, medical proof of MI or ischemic stroke (as defined in the agreement),
a duration gate based on documented receipt of at least 30 VIOXX pills, and
a proximity gate requiring receipt of pills in sufficient number and proximity to the event to support a presumption of ingestion of VIOXX within 14 days before the claimed injury.
Individual cases will be examined by administrators of the resolution process to determine qualification based on objective, documented facts provided by claimants, including records sufficient for a scientific evaluation of independent risk factors.
Neither stroke claims that are hemorrhagic in nature nor transient ischemic attacks will qualify.
Law firms on the federal and state Plaintiffs' Steering Committees and firms that have tried cases in the coordinated proceedings must recommend enrollment in the program to 100 percent of their clients who allege either MI or ischemic stroke.
The parties agree to seek court orders from the four coordination judges requiring plaintiffs' attorneys to promptly register all of their VIOXX claims, whether filed or tolled, and to identify the alleged injury - in order to establish the universe of all existing claims in the United States.
Participation conditions: payment obligations under the agreement will be triggered only if, by March 1, 2008 (subject to extension by Merck), the following number of plaintiffs enroll in the settlement process
85 percent or more of all currently pending and tolled MI claims,
85 percent or more of all currently pending and tolled ischemic stroke claims
85 percent or more of all eligible claims involving a death; and
85 percent or more of all eligible claims alleging more than 12 months of use.
My question: how much of the nearly $5 billion settlement fund does Merck actually project will be paid to Plaintiffs able to jump through all three hoops and what happens to sums remaining in the fund if they are not all expended to compensate Plaintiffs?