When everyone had recovered their composure, I suggested that was enough work for the day.
I came to think of that as a breakthrough session. At our next meeting a week later, the atmosphere was noticeably more relaxed. I suggested that the session be devoted to “brainstorming” about options for resolving the conflict over Swann’s Way. Brainstorming sounds easy, but most people find it extremely difficult. They fear that if they mention an option, the others will think they are making an offer. I explained that brainstorming was simply a way to think creatively about options, and suggested two ground rules:
No Evaluation: That is, no comments suggesting that an idea is good or bad. We would evaluate the options later.
No Ownership: When an idea was tossed out, no one’s name would be associated with it. Just because someone suggested an idea did not mean they liked the idea or were making an offer.
I urged everyone to be playful and throw out crazy ideas. “Your crazy idea may provoke someone else to think of a great idea that otherwise would never have occurred to them.”
To break the ice, I tossed out two options—both equally unlikely. One was that Audrey would keep her one-third interest. The other was that Stephanie and Matt would each pay Audrey $1 million cash for her interest. I wrote both on the flip chart. Audrey frowned and said she’d never accept the first. Stephanie winced at the second. I smiled and reminded both, “No evaluations—they’re out of bounds.”
“Okay,” Audrey said with a smirk, “how about hiring a hit man to knock off Betsy?” Everyone laughed. It was no secret that Audrey wasn’t too fond of her stepmother, and everyone knew that once Betsy was gone, the siblings would have no financial worries: their father’s testamentary trust would terminate and the siblings would be loaded. I faithfully wrote, “Hire hit man & terminate trust.”
That gave Matt’s lawyer an idea: “Audrey needs money for retirement, not now. She won’t retire for another seven years. By then, Betsy may have died. Maybe Stephanie could buy Audrey out with a note, which doesn’t become due until Betsy dies or Audrey reaches retirement age, whichever comes first.”
Audrey’s lawyer tossed out the following: “What if we raise cash by selling off a piece of the property—some of the undeveloped land?” Several ideas for doing this were offered. One suggestion was that Swann’s Way be subdivided into three separate lots: one containing the main house, one the guest house, and one to be sold. Audrey could get the proceeds of the sale, and there could be side payments among the siblings to equalize the value received by each.
Stephanie reminded us that she didn’t want to sell any part of Swann’s Way, and Matt worried that it would be difficult to establish the relative value of the various parcels. As the process cop, I reminded them of the ground rules and assured Stephanie that no one was being asked to agree to anything at this point.
The lawyers had experience with valuation methods and suggested a number of ways to value the property, or parts of it. They also had ideas involving charitable gifts and associated tax benefits—for example, conservation easements to the Cape Cod Land Bank that would preserve open space and provide tax deductions.
After we had created a long list of ideas, I asked each Harding to consider the options in light of their own interests and those of their siblings. An “A” meant you would be eager to discuss an option further; a “C” meant you had no interest in discussing it further, and a “B” meant you weren’t sure.
Two broad sets of options survived. Audrey and Matt gave an A to the various “subdivision” options (Stephanie gave it a B). Stephanie and Matt gave an “A” to buyout options involving deferred payments to Audrey.
I closed the session by identifying some questions that would need to be explored: How could Swann’s Way be subdivided under the local zoning requirements? We would want maps showing various ways of dividing the property and information about how the parcels might be valued. If a new lot was carved out and sold, what safeguards were available to protect the views of the main house and prevent the new owner from building some monstrosity?
Within six weeks of their breakthrough session, the three siblings signed an agreement. The property would be subdivided into only two parcels. One six-acre parcel would include both houses and 650 feet of beachfront. A second parcel—three acres of raw land with 150 feet of beachfront—was carved out for sale, with covenants to protect the two houses.
The big parcel went to Stephanie and Matt. They would remain tenants in common with equal shares, but they entered into a written holding agreement providing that Stephanie would have first call on the main house and in return would pay the lion’s share of the maintenance costs, taxes, and insurance. Matt would primarily use the guest house and pay a smaller portion.
The smaller parcel of raw land went to Audrey along with a $100,000 cash payment from Stephanie and a note for $100,000 from Matt. The note provided for annual interest payments at 4 percent, with a balloon payment of the entire principal in ten years.
It was not easy for Stephanie to agree to have the property subdivided, but in the end she decided that it was better to carve off a piece than try to come up with the money necessary to buy Audrey out. I was surprised that the Hardings didn’t create three separate parcels, giving Stephanie the main house and Matt the guest house. But Stephanie strongly preferred that she and Matt remain tenants in common because she liked the idea of them remaining “partners” and she thought this might allow them to plan together what might be done for the next generation of Hardings. Matt, as usual, was amenable to this plan.
The story of the Hardings had a happy ending. The conflict over Swann’s Way was permanently resolved. Stephanie kept most of the property in the family without financial strain. Matt got a summer place for himself and his family that he could afford. Audrey sold her parcel for $1,550,000 and netted about $1,400,000 after paying commissions and taxes. She also got an improved—but not perfect—relationship with Stephanie. I later learned that Audrey returned to Swann’s Way for a week or two every summer when the kids were there. She took Stephanie’s fifteen-year-old daughter, Jennifer, to Paris for ten days, and the younger nieces and nephews were looking forward to their turns.
Assessment
Stephanie and Audrey were not evil people. They inherited a hard problem that overloaded an already fragile relationship. Audrey’s desire to liquidate her interest in Swann’s Way was rational. Stephanie’s sentimental attachment to Swann’s Way struck me as quite genuine and not narrowly selfish. Both were legitimate interests and some sort of conflict was inevitable. Conflict in itself is not bad—it’s an inevitable part of life. But when a conflict over family property leads to demonization, vital relationships risk being permanently damaged or even destroyed.
One lesson of this case is the importance of effective estate planning.16 Joe Harding could have averted, or at least eased, the conflict over Swann’s Way if he had talked with his children about their interests before he died, thought through a variety of plans that would have served everyone better than a simple tenancy in common, and adopted one of those plans in his will.17 There are also ways to design a process to resolve disputes that may arise after the parent dies.18
Because he didn’t, the Harding sisters fell quickly into negative traps. They saw the conflict in purely zero-sum terms—a dollar more for one was a dollar less for the other. They fell prey to moralism, converting the property valuation dispute into an issue of principle. In Stephanie’s eyes, Audrey was acting as if Swann’s Way were an investment property and trying to claim every last dollar. In Audrey’s view, her richer sister was trying to get a bargain by sheer obstinacy. Each sister tended to see her own motives as good and pure, and the motives of her sibling as corrupt and selfish.
Stephanie, furthermore, fell into the trap of demonization. And for much of the mediation, I feared that she was stuck in this posture for reasons she did not consciously understand and which could hurt her in the long run.
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p; This case poses a new question about the traps. What should you do when you are the one being demonized—that is, when you are willing to negotiate but the other side refuses? What can you do to help the other side avoid doing something crazy that will hurt everybody involved? As is often true in a negotiation, the other side’s problem is your problem, too.
Audrey’s behavior made all the difference, and she deserves a lot of credit. She, after all, had a great BATNA in terms of her material interests. But she also understood that she had other interests that wouldn’t be served by forcing the sale. So she worked hard to demonstrate that she really did understand what was at stake from Stephanie’s perspective. She also demonstrated, perhaps even more remarkably, an understanding of her own contribution, going back many years, to the deterioration of their relationship. And she apologized. I have seen this type of acknowledgment bring about similar improvements in other mediations. It is no miracle cure, but it helps.
Note, however, that Audrey did not sacrifice her own interests. This deal served her interests better than a judicially ordered sale, which might have yielded more money but would have left her family relationships in a shambles.
The lawyers also deserve a lot of credit. Lawyers are often demonized, sometimes appropriately, because they can inflame disputes. In this case, however, Stephanie’s lawyer helped her see the reality of her situation. He helped her understand that by being inflexible she was creating a much greater risk that the entire property would be sold. Audrey’s lawyer was also a big help. He helped Audrey focus on the long run and not worry excessively about capturing the last dollar. All three lawyers helped create the solution that was finally adopted.
I, too, deserve credit for encouraging the parties to have a difficult conversation. This was not an easy call. There is often a good reason for focusing solely on the substantive problem—sometimes a disputant simply won’t do more. Moreover, once the immediate dispute is resolved the relationship may improve on its own. Lawyers are often very reluctant to have disputants meet with each other, except to discuss the material elements of a deal, because the risk of a blowup is so great. But in family disputes, I believe there is no separating the relationship issues from the substantive issues.
This case also demonstrates the advantages of mediation in family disputes, especially when the parties and the mediator forgo the use of private caucuses. Admittedly, this approach is much more demanding for everyone, including the mediator. But the turning point in this conflict was when Audrey demonstrated her understanding of Stephanie’s feelings directly to her, face-to-face. As I discussed in an earlier chapter, decision-making relies on both logic and emotion. My cool analysis of Stephanie’s interests would not have been enough to help her let go of her rage.
CONCLUSION
Lessons Learned
“Should you bargain with the Devil?” If I were pressed to provide a one-sentence answer to this question, it would be: “Not always, but more often than you feel like it.”
“Not always” because I reject categorical claims that you should always be willing to negotiate. “More often than you feel like it” for two different sorts of reasons. First, the negative traps and strong emotions may make you feel like fighting when clearheaded analysis would demonstrate that you should negotiate. The second relates to morality. You may feel that choosing to negotiate would violate a moral principle you hold dear, or be inconsistent with your sense of self. In the very hardest cases, you may feel deeply torn between the “principled” choice and the “pragmatic” one. When one is forced to choose between the two, I lean heavily in favor of pragmatism, but I want to acknowledge how painful that choice can be.
Why is it painful? Because you may feel that justice requires more than just a pragmatic resolution—it requires condemnation. In your eyes, the enemy has committed an act for which they should be punished, not rewarded. Your honor and integrity demand that you resist. This impulse can be just as powerful in business and family disputes as in international conflicts—perhaps even more so.
I have empathy for this desire to punish those who have wronged us. I share it. When we are caught between the demands of principle and pragmatism, what we really need to ask ourselves is, To what extent should we look backward and to what extent should we focus on the future? There’s often an inescapable tension between achieving justice for past wrongs and the need for resolution.1 It is another aspect of the Faustian bargain. If you want to resolve the conflict and move forward, you may have to give the devil something you feel he doesn’t deserve. This is a bitter pill to swallow.
Now that our journey is nearly over, I owe you some general advice. We’ve explored together eight high-stakes conflicts where real people had to decide what to do. We’ve seen the traps at work. We’ve applied my framework. Eight stories can’t capture the full range of situations in which the Devil may make an appearance; nor can they illustrate all the factors that may be relevant in applying my framework.2 But drawing on my framework and these stories, I can suggest four general guidelines.
1. Systematically compare the expected costs and benefits.
When we feel like fighting, we may jump to the conclusion that negotiating a satisfactory resolution is simply out of the question. The best antidote to that kind of knee-jerk impulse and the negative traps is to go through Spock’s five questions carefully.
Who are the parties and what are their interests?
What are each side’s alternatives to negotiation?
What are the costs of negotiation for each side?
Are there any potential negotiated agreements that might better serve the interests of both sides than their best alternatives away from the table?
If such a deal is reached, what is the likelihood that it will be implemented? (In other words, can you trust the other side to live up to it? If not, can it be enforced anyway?)
I am the first to acknowledge that asking these questions will not necessarily lead to a single right answer. This isn’t a mechanical exercise, like balancing your checkbook. This is tedious, it’s hard, and it requires you to make predictions about future behavior in a context of uncertainty. It isn’t value-free. Judgments about values and priorities—what’s “good” and “bad,” what counts as a benefit and what counts as a cost—will of course be included in your analysis. For example, when evaluating costs, one might ask, “Will a deal here encourage more evil in the future?” Reasonable people assessing the same alternatives may reach different conclusions.
There are also deeper critiques of cost-benefit analysis, two of which I’ll address briefly. They suggest that Spock’s sort of analysis is not infallible and should not be your exclusive guide to decision-making.
The first is that it favors analytic over intuitive reasoning. As I said earlier, I believe that rationality encompasses both analysis and intuition. (Think of an experienced doctor making a medical diagnosis.) But with cost-benefit reasoning, the analytic side of the brain is in charge. Spock doesn’t understand intuition, so he may discount or ignore valuable information.
I am not suggesting you ignore your emotions or your intuitions. Instead I’m advising you to probe them. They may be traps, or they may be valuable insights.3 Ask yourself, What may have triggered this reaction? Is there evidence to support it? Evidence that would point in the opposite direction?
A second criticism of cost-benefit analysis is that it values pragmatic concerns over moral categorical principles. This goes to one of the most profound issues in philosophy: Is it proper to judge the morality of an act only on an assessment of its consequences? Cost-benefit analysis is consequentialist at its core—one makes choices among alternative courses of action solely by evaluating and comparing the consequences of those actions.4 Some philosophers would argue that this is an incomplete and inadequate form of moral reasoning, and many ordinary people would intuitively agree. There are well-known philosophical puzzles that expose its limitations.5 Consequentialism doesn’t explicitly leave ro
om for philosophical and religious traditions that emphasize categorical principles for human conduct.6
So why do I still insist, at least as a first step, that you assess costs and benefits? To prevent you from relying solely on intuition or unarticulated moral claims, and to be suspicious of those who do. Conduct the analysis first. If you are still conflicted, you must make the difficult decision whether your moral principle is so absolute that you cannot negotiate, even under these extenuating circumstances.7
2. Get advice from others in evaluating the alternatives: don’t do the analysis alone.
Like Churchill, you should be willing to expose your reasoning to rigorous questioning by people you respect. When they ask how you reached your decision about whether to negotiate, “I just know it in my gut, I can’t explain it” is not an adequate response.
We saw how Churchill initially floundered under fire from Halifax and Chamberlain. It’s hard to reduce a powerful instinct to rational explanation. Churchill huffed and blustered, tossing out one half-baked rationale after another. But finally he managed to build a sound argument: Hitler had shown that he was an unreliable negotiating partner, there were substantial risks that negotiations would fail, and a failed negotiation would have a devastating effect on Churchill’s ability to rally the British people for war. This logic persuaded everyone but Halifax.
In our own lives, particularly in conflicts that involve demonization, there are times when we all need a War Cabinet. Talk with at least one person who’s less emotionally involved. It may be a lawyer. It may be a trusted friend. It may be a group of advisors whose perspectives are different from yours. It may be a mediator who can help all the disputants understand the trade-offs. The point is, let other people help you weed out the traps.
Bargaining with the Devil Page 31