8
Across the Table
The goal across the table is to establish a relationship and process with the other side that permits value creation, while protecting your client from exploitation. In the next two chapters we offer specific advice on the objectives you may have in disputes (Chapter 9) and deals (Chapter 10). Here, we discuss three goals that apply to negotiations in both domains. First, in preparing yourself, we suggest several key shifts in mindset that can be critical. Second, we argue that you should take the lead and negotiate a process with the other side that supports problem-solving. You will find that many lawyers will follow your lead and become problem-solvers themselves. But because this will not always be the case—some lawyers like to play hardball—we end with advice on how best to deal with hard-bargaining tactics.
GETTING YOUR HEAD STRAIGHT: ADOPTING A PROBLEM-SOLVING MINDSET
In addition to reorienting his stance toward working with his client, a lawyer must reconsider his basic assumptions about negotiating with the other side. Too often lawyers fall prey to the zero-sum, adversarial culture described in Chapter 6. This gives rise to a variety of limiting assumptions (see Box 16).
Box 16
Lawyers often report that tough, adversarial negotiations are commonplace in the legal world and that, to their regret, problem-solving is not the norm. They generally blame the other side. Most lawyers claim to be switch-hitters whose approach to negotiation depends on the other lawyer’s behavior. “If the other lawyer is collaborative, I will be too. But if he’s adversarial, I respond in kind.”1
To some extent, this is perfectly natural. When under attack, our instinct is “fight or flight.” For lawyers representing clients, flight is hardly an acceptable option. Afraid of being exploited, and prepared to assume that the other lawyer is irredeemably adversarial, many lawyers just start throwing punches. “I know how this game is played, and my best bet is to play their game but better!”
This is, of course, one option, but it has serious drawbacks. It cedes your choice of strategy to the other side: it’s reactive, not proactive. While it may occasionally lead to victory, simply fighting back often leads only to further escalation, higher transaction costs, frayed relationships, and failed negotiations. A reactive approach virtually guarantees that your negotiations will become confrontational, for two reasons. First, the world is full of lawyers (and clients) who enter negotiations with a zero-sum or adversarial mindset. Second, legal negotiation is a noisy process. Because it may often be difficult to know whether another lawyer’s behavior signals an intent to exploit your collaborative overtures, a lawyer’s “response in kind” may in fact start a war, not continue one.2
These assumptions unduly constrain lawyers and keep them from experimenting with ways to create value for their clients. To guard against the risk that you will revert to these basic attitudes when you negotiate, it can help to commit yourself in advance to a different set of beliefs:
• Proactive: Rather than determine your strategy entirely in reaction to the other side’s approach, you can try to lead the way toward problem-solving.
• Optimistic: Rather than assume that legal negotiations are primarily about distribution, you can enter disputes and deals looking for value-creating trades and framing that search as an essential part of serving your client.
• Realistic: Rather than retaliate on a hair trigger when you perceive hard bargaining on the other side, you can take measures to protect your client while continuing to try to engage the other side in a constructive negotiation.
As we have said, we are realistic optimists. The most helpful mindset is one in which you adopt the basic belief that there is almost always the potential to create value—but you don’t fool yourself into assuming that distributive exploitation isn’t also a possibility. A lawyer with an optimistic yet realistic frame of mind is less likely to be knocked off balance by the other side’s tactics. There’s no reason immediately to demonize the other lawyer and fight, on the one hand, or to give in, on the other. Instead, you can expect the other side to begin negotiations in an aggressive posture—after all, it remains the norm—and adopt a proactive attitude toward it. “It’s part of my job to try to reorient their approach; I can lead the way.”
LEADING THE WAY: ESTABLISHING A PROCESS THAT SUPPORTS PROBLEM-SOLVING
In negotiation, “the game is that which the parties act as if it is.”3 The rules of play are up for grabs. How creative and explicit about interests and options you are depends on the process you negotiate with the other side. The first step is to lead the way yourself. A problem-solving lawyer’s goals should be to establish a process that, to the extent possible:
• Creates a collaborative working relationship with the lawyer on the other side
• Promotes effective communication about the legal opportunities and risks and the relevant law
• Facilitates effective communication about the parties’ interests, resources, and priorities in order to find value-creating trades
• Encourages the development of creative options
• Minimizes transaction costs
• Treats distributive issues as shared problems
• Does not harm (and may improve) the relationship between the clients
• Defends your client against exploitation
Be Explicit from the Beginning
When you’ve prepared thoroughly, you’re ready to meet with the other side. The opening moments of a negotiation can be crucial. In a matter of minutes, lawyers can poison the atmosphere or set the stage for collaboration.4 The bargainers are engaging, meaning that each is sending implicit and explicit messages about their assessment of their counterpart and interpreting the messages they receive. The bargainers are also framing—to themselves and to each other—the task they are about to undertake. A frame is the story or narrative each bargainer tells herself about the negotiation.5 If we asked “What is this negotiation about?” your answer would reveal how you understand—or frame—what it is you and the other bargainer are negotiating and what you think the task ahead is.
These opening moments of engaging and framing are an opportunity to establish a problem-solving process for your negotiation. Parties usually negotiate over substance: how much rent the tenant will pay; who gets custody of the children; which provisions go into a contract. But when people settle these kinds of questions, they are also negotiating—implicitly or explicitly—about the process by which these substantive issues will be decided. How will we decide how much rent will be paid? Will we haggle? Pick a number out of a hat? Look at comparable rents for other properties? What process will we use to craft the terms of a custody agreement? Is that process efficient, fair, and likely to create value, or will it generate animosity and an inefficient outcome? At the beginning of a negotiation, ask your counterpart what process the two of you should use to reach agreement. Ask how he likes to work. Explain how you like to work. Discuss the pros and cons of different approaches, and then create an agenda.
Often it helps to outline how the game is normally played and then describe an alternative process that might better serve both sides’ interests. For example:
TONY: Our job here is to settle Jake and Samantha’s divorce. The typical approach would be for you to send me a very one-sided agreement and I’d send you back an equally partisan draft favoring Jake. We’d haggle back and forth term by term and eventually we would probably work things out, but only after hours or days of posturing and pushing. I’d threaten to walk out, and you’d claim that a particular term is a deal-breaker and off we’d go.
But I’d like to discuss whether we can’t work something out in a more efficient and collaborative way. You may have some ideas about how to do this. One approach I’ve often found helpful is for us to sit down before we start drafting and make sure we understand each other’s interests and concerns, and for us to identify in advance the provisions that will pose the most challenging problems for us to work out. We co
uld also discuss a variety of options and approaches before we take a stab at creating the first draft. What do you think?
This sort of discussion signals that you won’t be taken advantage of but that you’re ready to propose a more collaborative way of proceeding. Anything can be framed as a joint problem. Even in negotiations in which there is no love lost between the parties, where the only issue is how much (if any) one party is to pay the other, negotiators can still approach distributive issues this way. Framing requires acknowledging explicitly that distributive issues exist and inviting the other side to think creatively about how those issues should be resolved. “Obviously, other things being equal, Samantha would prefer receiving more support, and Jake would like to pay less. Our task is to reach agreement on an amount that is acceptable to both clients.”
Negotiate a Process—Don’t Impose One
Despite your desire to problem-solve, it’s important not to try to impose a process on the other side. The other attorney is unlikely to react well if you enter a negotiation with a fixed agenda that dictates “problem-solving” on your schedule: “First we’ll talk about interests and how to create value. Then we’ll brainstorm—no ownership of ideas! Then we’ll try to resolve our distributive differences by approaching this as a shared problem.” Such rigidity will usually alienate the other attorney, who will likely regard you as hopelessly naive and reject your ideas even if they have merit.
Trying to impose a problem-solving process on someone is inconsistent with the spirit of problem-solving negotiation, which is best seen as a joint activity. After you point out the downside of playing the traditional game, often the other side will agree right away that some alternative would be better. Then they may look to you for suggestions. As you offer your opinions on how you might best use your time, be sure to check in for reactions and concerns. This is a negotiation over process. The advantage of this approach is conspicuous: when the two lawyers create an agenda together and agree on a process, each is likely to feel ownership and be more willing to follow through even when the going gets rough.
Rely on Reciprocity
In discussing process, rely on reciprocity as a norm for structuring your negotiation. The agenda should allocate time for both sides to assert, and for both to demonstrate understanding of the other’s point of view. Both sides should dig for interests. Both sides should participate in a search for creative options and trades.
In contentious negotiations—particularly in dispute resolution—the other side may be more than willing to assert their point of view and have you demonstrate your understanding of it. But when it comes time for your perspective, they just want to keep asserting. And asserting. And asserting. You’re left stuck—what about your chance to tell your client’s story? The power of reciprocity as a process norm is hard to beat. If you’ve negotiated a process up front and have been explicit that both sides will get an opportunity to tell their story, then you can rely on reciprocity in times of trouble. “Remember—we agreed that each of us would get an opportunity to tell it as we see it. I tried to listen to your story and to show you I understood it. Now I’d really appreciate it if you would try to do the same.” By using reciprocity as a fall-back, often you can keep even intransigent negotiators on a problem-solving path.
Build in a Productive Process for Discussing the Law
When lawyers invoke legal arguments, the negotiation process often seems like a boxing match: one side grandly makes a broad legal argument; the other side dismisses the argument and throws back five of its own. The first lawyer tells the second he is wrong and repeats his original argument. Neither side admits any force to the other’s argument and both shamelessly overstate their own case.
If the other side says “A court would clearly find you negligent,” it’s hard to hold on to a problem-solving mindset. Rather than say “So you think we’d be found negligent—tell me why,” most lawyers would quickly counter, “No it wouldn’t. There’s no chance.” Anything else feels like an admission that your case is weak. But hearing the other side’s legal arguments can be an opportunity, not a risk. It’s a chance to learn how they see the situation and to reflect back to them your understanding of their views. As radical as it may sound, you can demonstrate understanding of the other side’s legal arguments—not just their interests or perspective. Looping legal arguments is like looping anything else—you listen, paraphrase, and inquire. Your goal is to understand the other side’s claims and demonstrate that you understand. The advantage of looping legal arguments is that the other side knows that you have at least heard what its legal claims are. Thus, if you continue to disagree, the other side won’t be tempted to say “They just didn’t hear what we said.” Looping legal arguments also invites the other side to listen to your legal counter-arguments. And if this happens, you’ll have built a process in which both sides can explore candidly the strengths and weaknesses of their legal alternatives.
Continue to Discuss Process as the Negotiation Unfolds
Negotiating about process is not a one-time undertaking. As your negotiation progresses, bumps in the road will require revisiting your process discussion. Maybe your negotiation is taking too long. Or maybe in the middle of a brainstorming session that is supposed to generate—not evaluate—options, the other lawyer persists in explaining why various alternatives won’t work. Whatever the problem, reopening an explicit dialogue about process is often the solution.
In addition, it is useful to remind the other side of where you are in your negotiation as it goes on. “OK, so we’ve talked about our interests. Either we could discuss the opportunities and risks of proceeding with litigation or we could put that to one side for the moment and discuss options for resolving some of the issues on the table. What are your thoughts on how to proceed?” Checking in like this serves to keep you on track and to allow both sides to raise issues and concerns as they arise.
BUT WHAT IF THEY WANT TO PLAY HARDBALL?
Notwithstanding your invitation to see a negotiation as an opportunity to solve a problem efficiently and fairly, some lawyers will demonstrate by their actions (as well as their words) that they see legal negotiation as a form of combat, that they prefer warfare to diplomacy. What then?
Recognize Hard-Bargaining Tactics
A critical first step is to be able to recognize adversarial tactics and to know how they work. Without understanding, there can be no vigilance. In Chapter 1 we identified our top ten list of tactics often used by negotiators who want to grab the lion’s share of the proverbial pie:
• Extreme claims, followed by small, slow concessions
• Commitment tactics
• Take-it-or-leave-it offers
• Inviting unreciprocated offers
• Flinch
• Personal insults
• Bluffing, puffing, or lying
• Threats and warnings
• Belittling the other side’s arguments or alternatives
• Good cop, bad cop
In both deals and disputes, variants of these tactics are commonly used. We will consider the first three in some detail.
EXTREME CLAIMS FOLLOWED BY SMALL, SLOW CONCESSIONS
Perhaps the most common of all hard-bargaining tactics, this approach has undeniable advantages. Chiefly, it protects a negotiator from underestimating what the other side might be willing to concede. Recall our example from Chapter 4 of the lawsuit brought by Tom Mazetta against the Big Apple Hotel because of an accident on the loading dock. The hotel’s initial settlement offer was for $5,000. Given Tom’s injuries and the basic facts, this was an extremely low offer—far less than Tom’s out-of-pocket losses. But if the hotel’s initial offer had been for $30,000—an amount that is on the low side of the probable bargaining range but plausibly acceptable to Tom—it would have given up any chance of settling for less, even though conceivably Tom would accept less. The analogous tactic in deal-making, as we discussed in Chapter 5, is the proverbial “landlord’s lease.�
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In addition, starting high and making small concessions confers anchoring advantages. Experimental research suggests that bargainers have fluid and highly malleable expectations in the opening stages of a negotiation. A high initial demand tends to anchor the other negotiator’s perceptions of the bargaining range—even though the other side knows full well that the opening demand is probably a self-serving gambit.
In a remarkable experiment illustrating this dynamic, a group of subjects was asked to estimate the percentage of the United Nations member states that are in Africa.6 Before giving their estimates, the subjects were shown a spinning wheel of fortune that was marked with numbers from 1 to 100. For one set of subjects, the wheel stopped at 10; for another set, the wheel stopped at 65. Even though the subjects knew that the result of the spin was random and completely unrelated to the estimate they were about to make, the median number in the first group was 25, and 45 for the second. A similar pattern has been observed in negotiation settings. Some negotiators will foolishly set their aspiration level—and sometimes even their reservation value—by the other party’s extreme demand or offer.
The major drawback of this tactic, however, is that it lessens the chance that a deal will be made, even when one might be possible. If an offer is too extreme or concessions too slow, the other side might conclude that the offeror is unreasonable and not serious about negotiating an agreement. They may simply walk away. This tactic also invites protracted haggling, which inhibits uncovering value-creating trades and often creates delay and higher transaction costs. Most negotiators expect some puffery, but the frustrations involved in dealing with extreme offers may damage the parties’ relationship. Although some bargainers can start off playing this game and later move to a problem-solving approach, others have so thoroughly poisoned their relationship with the other side that a shift becomes impossible.
Beyond Winning Page 24