The Bottom Line on Negotiation
Negotiation is the bread and butter of lawyering. In this introductory presentation, we give you the bottom line on negotiation skills. First, we explore the various theories of negotiation, including adversarial and problem-solving models, negotiation styles, and ethical considerations. Second, we review the preparation process and phases of negotiation. Finally, we introduce the hot topic of negotiating remotely with videoconferencing technology.
Jason Potter: Welcome to the Bottom Line on Negotiation by Quimbee. My name is Jason Potter, and I am a staff presenter at Quimbee. We have some written materials for you today, including slide handouts and course materials. You can follow along with them or just sit back and enjoy this introduction to negotiation.
Life happens through negotiation. We negotiate in almost every aspect of our lives, with nearly every person in our lives. We learn how to negotiate from a very young age. Some negotiations are more difficult than others. Some should only be attempted by Jedis. All of life's negotiations involve a series of choices.
Benjamin Franklin once said, "We stand at the crossroads, making choices. We choose the thoughts we allow ourselves to think, the passions we allow ourselves to feel, and the actions we allow ourselves to perform." Mr. Franklin was an expert decision maker. He was an author, a painter, an inventor, a politician, an ambassador, a startup guru, an inventor influencer. Hello, swim flippers. A writer, an editor of the Declaration of Independence, and a contributor to the U.S. Constitution, and the forever spokesman for the hundred dollar bill.
The great BF was also an expert negotiator. On Franklin's negotiation style, one author called him a master of the oblique approach, genual and ruthless. His adept and informal approach to diplomacy in France led to the treaty of Paris in 1783, which ended the Revolutionary War. Franklin's expert negotiation skills allowed him to forge agreements that shaped the future of the United States. As a negotiator, Franklin was knowledgeable, a leader, patient, a good communicator, ethical, confident, and creative. Ben Franklin also had no formal education beyond the fourth grade. Rock star.
Now, most attorneys like Ben Franklin lack formal instruction in negotiation, but that's no reason why their negotiation skills can't be as on fleek as Mr. Franklin's. Negotiation is the process of reaching agreement through compromise and problem solving. It takes preparation, it takes presence, and it takes mindfulness.
In this presentation, we'll navigate the ins and outs of negotiation. We'll also meet and observe an attorney named Benny, as he negotiates through life and law practice.
All right. As Ben Franklin once said, "Nothing, ventured, nothing gained." That's Benny. Benny was up almost all night with his crying two year old. Benny has a long full day of appointments all over town. He's a busy solo practitioner, whose practice spans both litigation and transactional. By the time Benny has opened his eyes, he has already engaged in his first negotiation of the day. In the legal context, negotiation is advocacy through the course of a discussion over a thing of value. It occurs in any situation where two parties have different interests, but both have some value to gain from each other. This includes negotiations over something of value between attorneys and clients, and even with other attorneys in personnel, in the attorney's own office.
Negotiation is the bread and butter of lawyering. A successful negotiation involves learning and practice. Even though we learn negotiation at a young age and use it in almost every aspect of our lives, being a successful negotiator in the professional context, and in the service of clients, well, like any other skill, it takes practice and learning. A successful negotiation also involves mindset. The negotiator has to plan to give and take. The likelihood of meeting all needs of everyone is small. And the likelihood of meeting all of one party's needs is also small.
Successful negotiation also takes preparation. Successful negotiation requires an assessment of the needs and interests of the parties and the problem, and to reach a solution that meets as many of those need as possible. Being a successful negotiation also involves being client oriented and ethical. The client's needs and interests should steer the negotiation, and all attorneys, in both litigation and transactional, are bound by the ethical duty of candor, among other duties.
In this presentation, we'll take a look at the mile high view, exploring the various theories of negotiation, including adversarial or competitive, and problem solving, or cooperative models of negotiation, styles of negotiation and ethical considerations in negotiation. Second, we'll get our feet wet in a practical discussion of how to prepare for negotiations. And third, we'll review the phases of negotiation, which will include some helpful practice pointers and examples. We'll also cover the hot topic of negotiating remotely through video conference technology.
Theories of negotiation. Although there are many theories of negotiation, we'll hone in on the adversarial and the problem solving models. The purpose of examining these theories is to help you identify some frameworks that could help you in your own negotiation planning, as well as help you understand how the other party might be approaching negotiation. These frameworks are helpful, but ultimately, the process is human, and it's highly susceptible to variation, to ambiguity, and to innovation.
First adversarial models. Sometimes called position-based models, they include game theory, economic theory, and psycho-social theory.
First, game theory. Under this theory, negotiation is a game consisting of players and rules. Knowing the rules helps you predict and plot out what the players will likely do based on those rules. The rules limit options available to players, and that's why you can predict it. So, some of the common foundational rules of negotiation are, first, negotiation doesn't usually begin from the bottom line. Second, concessions usually get smaller as the bottom line is approached. And third, revoking or rescinding a concession once it's clearly established is a foul.
But negotiation tends to be more unpredictable than this. Negotiators never have perfect information. Often it occurs before discovery has even been conducted in the litigation context, for example. Also, negotiators are humans with different priorities, different levels of comfort with risk, and different styles of negotiation. Also, negotiators represent clients who are also human, and can have their own sets of priorities, risk tolerances, and so on.
In addition to game theory, another adversarial model is economic. According to this model, negotiation is a continuum that the parties move along until they reach the bottom line, which should be within their zone of settlement. Here's an example. Let's imagine attorney Benny is representing Baby Got Bach, a dealer of fine musical instruments, in the sale of the most expensive piano in the world, to renowned concert pianist. Iva Toddler.
Attorney Benny knows that BGB's starting point is 1.8 million, and that its bottom line is one million. Here's what that looks like on a continuum. Iva Toddler's first offer is 800,000. Based on the piano's appraised value, recent comparable auctions, and Iva Toddler's status, and her eagerness, attorney Benny estimates that Iva's bottom line is 1.3 million.
Here's what that looks like on the continuum. As you can see, the zone of settlement is between A and D, or between one million and 1.3 million. For BGB and Iva, if the stopping point doesn't reach the center area, then there's little hope for a deal.
So, the benefits of this. As you can see, the benefits are that it's a linear, and it's a concrete process. The drawbacks is that the process works better when negotiating about single issues or items that can be quantified, like a piano or goods. And it doesn't work well in situations where there's no continuum to work along. For example, the determination of custody.
And the last adversarial model is the psycho-social model or approach. Under this model, negotiation doesn't involve bargaining on the merits at all. It involves affecting your perceptions, your feelings, and your confidence, in a way that makes the opponent want to acquiesce. Acquiesce. Some psycho-social tactics include making someone physically uncomfortable, using guilt, and using intimidation. So to ward off these tactics, identify them and ignore them.
Opposite the adversarial models are problem solving models, sometimes called the interest-based approach. This model is distinct from adversarial models, where the negotiation is position-based. Here, negotiators mutually explore the needs and interests in advance, to devise solutions to mutual challenges that the parties face, based on the underlying assumption that interests are a better measure of negotiation goals than positions. This model involves interests, not positions. So rather than take a position and defend it or bargain for it, problem solving models focus on the interest behind that position. The more likely you understand the interests of both parties, the more likely you can find a solution that's mutual and sustainable. This model is particularly appropriate for multi-item, non-monetary negotiations.
But let me rewind for a moment. A position is a tangible outcome someone argues for. A price, a job, a work schedule, revised contractual provision, for example. An interest is the reasons why that outcome is desired, and the underlying concern about the problem. There's usually more than one interest. Might include status principles, value, relationships, time, and so on. The effect of interest-based models is that the interest-based model separates the parties from the problem. It shifts the mindset from your position versus mine, to you and I versus the problem, or the dispute, or lack of agreement, is the adversary in this case.
Interest-based models also shift from position taking to perspective taking. It can result in more transparency, more brainstorming, more creativity, open-mindedness, and they can create a climate of understanding.
So some styles of negotiation. Many styles of negotiation exist, and each negotiator can have their own individual style. But two of the major approaches are competitive and cooperative. There's a stark contrast between competitive negotiation and cooperative negotiation. Let's look competitive negotiation. The mindset in competitive is win lose. The mindset in cooperative is win, win. In competitive, compromise is a bad word. In cooperative, compromise is a good word.
In competitive, the downside to that approach, to that style, is a greater likelihood of failure. In cooperative, the upside is a greater likelihood of success, or winning. In competitive, the upside is that it can produce a bigger win. In cooperative, the downside is, it can produce a smaller win. And both competitive and cooperative can be used in the same settings, in both litigation and transactional.
How about pairings? Well, competitive pairings can often end in settlement failure, if the parties aren't able to make concessions themselves. Cooperate or cooperative pairings often result in successful agreements. Now, a competitor, cooperative match often in, in a competitive negotiation. The strong cooperative negotiator won't stick with their negotiation style, and make concession after concession, to find common ground, if there's no cooperative reciprocation from the other side.
There's also a stark contrast between the approaches competitive and cooperative negotiators take. In competitive, the end game is offers and counters until acceptance or impasse, and failure is a reasonable end game. In cooperative, failure is not a reasonable end game. The approach is, offers and counters toward agreement. That's the only possibility. In competitive, as I mentioned, compromise as a bad word. It comes slowly. You make as few concessions as possible, and any concessions you make should be small. They should even get smaller as they reach the bottom line. And potential false bottoms occur well away from the drop dead bottom line.
In cooperative, as I mentioned, you'll be willing to reach a meeting of the minds. It's a good word. In competitive, the starting point is slightly unreasonable, with no expectation it will be accepted. It's far away from the bottom line. In cooperative, the starting point is an area of common interest among the parties. In competitive, there's little transparency. Parties are likely to resist sharing info about the case.
Disclosure of facts is more tactical. The other side will need to do their own research, because any competitive disclosure may be done with an eye to mislead. In cooperative, transparency is full and fair. There needs to be a full and fair assessment of the facts to reach a true meeting of the minds. In competitive, you should expect hardball tactics. Bluffing, puffery, intimidation, threats, outbursts, even, and one-upsmanship. Aggressive behavior is to be expected. In cooperative, the expectation are trust, accuracy, respect, and mutuality. Cooperators reject aggressive behavior.
So, the bottom line. Two helpful theories of negotiation are the adversarial model and the problem-solving model. Game theory and economic approaches focus on predicting reasonable moves from certain boundaries, but each has its drawback. Psycho-social approaches involve head games. Tactics should be identified and ignored. Problem-solving approaches involve learning the party's interests. Competitive styles can bring greater potential rewards, but collaborative styles have a greater success rate.
So, we need to talk about ethics. No negotiation course would be a complete without a discussion of candor in negotiation. We couldn't dive into the negotiation process without it. We will make it entertaining, though. Attorney negotiators stand at the intersection of their obligation to get the best result for their client, and their obligation to deal honestly with the opposite side. The ABA model rules of professional conduct are clearer on the duty of candor in front of a tribunal than they are in the non-tribunal context.
The duty of candor in tribunal-oriented negotiations derives from rule 3.3, candor towards the tribunal. Rule 1.0 makes clear that a tribunal is a body acting in an adjudicative capacity. Non-tribunal forms of alternative dispute resolutions, like negotiation, are covered under rule 4.1, truthfulness in statements to others. In representing a client, a lawyer shall not knowingly make a false statement of material fact or law to a third person, or fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is prohibited by rule 1.6, which is, disclosure in cases of client misconduct.
The term knowingly material and fact each have their own definitions, but we're only going to cover the definitions of material and fact. First, material. A statement is material for purposes of 4.1(a) if it could have influenced the hearer. So for example, if one side says to their attorney, "OMG! I can't disclose that. It will kill the deal." That fact is probably material.
Now, the word fact. Well, that depends on the circumstances. Under generally accepted conventions in negotiations, certain types of statements ordinarily are not taken as statements of material fact. Estimates of price or value placed on the subject of a transaction, and a party's intentions as to an accepted settlement of a claim, like puffery, are ordinarily in this category.
Model rule comment one states, "A lawyer is required to be truthful when dealing with others on a client's behalf, but generally has no affirmative duty to inform an opposing party of relevant facts." Rule 4.1 commentary indicates that, unlike an attorney participating in arbitration, a negotiating attorney is not required to inform the opposing party of relevant facts, and may represent estimations of price or value, and may even exaggerate settlement amounts his client finds acceptable.
Here's an exercise. All right. Attorney Benny is negotiating competitively on behalf of his client Vido Vino, who is seeking to sell his meatball eatery to We've Got Balls. There has been no business valuation, and neither party knows the business' true value. Vido has informed attorney Benny that he'd accept an offer between 350,000 and $375,000. Vittle Italy is interested in acquiring we've Got Balls. Vittle Italy's attorney eventually offers 355,000. Attorney Benny responds, "My client can't accept that low ball offer. Attorney Benny rejects it, and Vittle Italy walks away. Now, was it ethical for Benny to say that his client couldn't accept an offer of 355,000, even though his client was willing to sell between 350 and 375,000? Yes. This statement is a typical negotiation statement. It's not to be taken as literal truth. It's posturing about price.
Here's another scene. After Vittle Italy gets the boot, Pizza Piazza comes along, and makes an offer to Vito Vino for $358,000 for We've Got Balls. Attorney Benny says, "Absolutely not. The eatery is worth no less than 400,000. My client will go ballistic." He rejects the offer. And pizza Piazza's attorney says, "I need to circle back with my client."
A week goes by. Attorney Benny calls up Pizza Piazza's attorney and says, "Did you know we have several outstanding offers?" Was it ethical for Benny to say the business was worth $400,000? Let's start with that. Probably not. This is a concrete statement that has a precise value and definite meaning. There is value to the business. And for all Pizza Piazza knows, Benny could have that information at his fingertips. So it's likely unethical.
Now, was it ethical for Benny to say he's got several outstanding offers? No. Attorney Benny is telling a lie here. Comment one to the model rules plainly states, a lawyer is required to be truthful when dealing with others on the client's behalf. Attorney Benny seems to have gotten carried away here. And gamesmanship is one thing, lies are another.
So, the bottom line on ethics. Telling a lie is unethical under the model rules. Half-truths and incomplete disclosures are less clear cut, but can cause significant damage in negotiations. Puffery and bluffery about price or settlement amount is likely ethical under the model rules. And if one side has access to all information, and the statement gives a precise answer or number, or gives a yes or no response, it's unethical to lie or give a false yes or no answer.
Moving on to core negotiation skills. Strategic bargaining and communication. First, strategic bargaining. Strategic bargaining is useful with any negotiation style. It's a concept explored in the famous negotiation text, Getting to Yes. This book provides a comprehensive framework for determining your negotiation strategy, but we're only going to look at two pieces of that framework here.
Strategic bargaining separates personality from the problem, and this prioritizes problem-solving, and minimizes personality. It also helps dampen emotions that often run high during negotiations for lawyers and for clients. The goal with strategic bargaining is to be solution-oriented rather than being personality-oriented, and to reframe personality-oriented matters as solution-oriented matters.
So, let's look at an example. Attorney Benny's daughters, Matilda and Bea, 11 and nine, respectively, are bargaining over a lemon in their kitchen. Matilda makes a steep offer. Bea gets beside herself, and gives the personality-oriented response. "Are you trying to swindle my client?" The discussion becomes more about personality than solution.
Now let's reset. Matilda offers the same starting point. If Bea took a more solution-oriented approach, it might guide the negotiation in a different direction. Strategic bargaining also focuses on interests, rather than positions. Usually, what people say they want is just their position in the moment, but not what they need to reach agreement. Focusing on underlying interests, rather than positions, helps shift the paradigm, and can lead to more fulsome discussion and agreement.
So, what do I mean when I say interests? An interest is the motivating factor. This is what you need, not what you want. It's the answer to the question, why? It begins with a because. So, there may be more than one interest as well, which means you should rank them in advance.
Here's an example. Attorney Benny's daughters, Matilda and Bea, are fighting over the lemon in the kitchen. And things are getting really ugly. Benny walks in and notices them fighting over the lemon. Both girls yell that, wait, they need the lemon. What could Benny decide here, assuming that giving it to one of them or neither would lead to world war three? Now, he could just cut the lemon in half immediately, or he could make further inquiries. Rather than just cutting the lemon in half, Benny asks each of them, "Why do you need this lemon?"
Bea responds that she needs it to make mom's vodka martini with a twist. Matilda responds that she needs it to make lemonade for her side business. What are Benny's options now? Well, he could cut it in half, which would lead to less lemonade for Matilda, and a martini with a lesser twist for Bea... I mean mom. Or he could give Matilda the inside and give Bea the rind, which would satisfy both. Because Benny looked past his daughter's initial positions to their underlying interests, he found an integrative solution that fully meets both of their needs.
In addition to strategic bargaining, another core negotiation skill is communication. So, communication skills are foundational for negotiation. Communication or exchange of information can occur verbally, in writing, in sound, in body language, and expressions, in kinesthetics, in images, and a lot more. In effectively communicating with others, there are at least four important considerations. Audience, purpose, context, and tone.
First, audience. The most important consideration when communicating is the audience to whom the information will be communicated. Communication needs to be tailored to the audience to be effective. Be aware of the ways the audience can receive messages from you, like through non-verbal leaks, when some non-verbal cue like expression or demeanor communicates something other than the verbal message you are communicating.
Also be aware of message framing. Consider how your audience might best receive your message, and frame accordingly. But be careful not to make too many assumptions. It's easy to take this one too far. Also, important to be mindful of listening and observation. The more you can learn about your audience, the better you can tailor the message. This requires listening and observation. And listening requires shutting up, refraining from devising your response, interest spotting, and being mindful that you are not superimposing what you want to hear.
The purpose of communication is another important thing to consider. Before communicating, consider the specific purpose. What do you want? Is the purpose to inform? Is the purpose to persuade your audience to do something? Important things. Also, consider the context. Before communicating, based on what you know about your audience and your purpose, where should the communication occur? What context is going to be most conducive to reaching your audience and achieving your goals? For example, in 1781, when Ben Franklin was a diplomat in Paris, he knew the real negotiation with his audience didn't occur at the negotiation table. It occurred at the dinner table. Franklin spent much of his time, in fact, at salons and dinner parties, where he could discuss matters more informally. By doing that, he won the respect of the French. Due, in part, to his negotiation skills, the U.S. was recognized as its own nation by both the UK and France.
And the last consideration with a communication is your tone. Before communicating, consider the tone of a communication. The audience purpose and context of an intended communication should inform the tone. A confident negotiator will always tailor their tone to achieve their purpose or to get what they want. Most negotiators don't tailor tone to the audience and the purpose. Always avoid demeaning, offending, or sending negative energy towards the person you're dealing with. These and unbridled emotions are relationship killers in negotiation.
How you say something is often as important as what you say. Your tone and demeanor convey a lot about you, and you want to avoid information leak. To do this focus on exercising restraint. Back to Ben Franklin. Restraint for him didn't come naturally. His practice of writing involved allowing all of his emotions to come to bear on the first draft, then throwing it away, focusing on the audience, and starting anew. Letting everything out in advance of the task at hand allows for greater restraint when completing the task itself.
So, the bottom line on communication. Good communication involves being equally attuned to the messages we convey, as we are to the messages conveyed by others. Audience, purpose, context, and tone are all important factors in effective negotiation or communication. Audience, and purpose influence the context and the tone. And if you want to influence your audience, step into their shoes, to determine how to frame your communication in a way your audience can hear it. And restraint with tone is almost always advisable.
Planning for negotiation now. By failing to prepare, you are preparing to fail. The most important part of negotiation is what occurs underneath the preparation. It's the best way to gain confidence and ease in a negotiation. Yet on the flip side, failing to prepare is the best way to assure doubt, anxiety, and, well, deal failure. All aspects of negotiations should be planned. The information exchange, the opening offer and demand, concessions, target point, and the bottom line.
There are basically five steps to planning a negotiation. Evaluation, information exchange planning, offer planning, needs and interest analysis, and personality planning.
Step one. Evaluate the matter objectively, regardless of the context, whether it's litigation or transactional. Understand the facts, your side's information, and how much of the other side's information is available. Try to understand those facts, then work on understanding the law. Now, understanding the law is important in both transactional and litigation. In the transactional context, studying the law is an important way of assessing risk and negotiating and drafting an agreement, in a way that prevents future litigation.
In the litigation context, studying the law is important to assess the likelihood of winning, to assess any pressures on value, and to generate a starting point for an acceptable agreement. To assess the likelihood of winning, consider the law, the facts, the novelty of the claim, witness credibility, admissibility, and availability of evidence, and the experience level of the other side, the judges, and the supporting players.
To assess any pressures on value, consider jury verdicts, any punitive awards, frequency of certain decisions in certain courts. For example, a good negotiator would take into account that juries in county have amassed huge awards against defendants in the same or similar type of case. And a good negotiator would adjust the assessment accordingly.
Now, to generate a starting point for an acceptable agreement. The general rule for estimating that starting point is jury verdict times the likelihood of prevailing. For example, if a jury award would likely be 300 to $500,000, and you estimate that the chances of winning are 60, 40, 60%, then an acceptable settlement point would be between 180,000 and 300,000. What you choose may depend on other pressures, like favorable jury verdicts.
Step two, plan to exchange information. The purpose of exchanging is to have enough knowledge about underlying issues, needs, and interests. The form of information exchange can look different, depending on the context. In the transactional context, disclosure is an important part of the deal making process. In the corporate context, this often comes in the form of due diligence. In the litigation context, whether any disclosure occurs, can depend on the negotiators approach, whether they take a competitive or co-op approach to negotiation.
The global considerations in preparing for exchanges are, will disclosure help or harm my client? Does our negotiation style depend on getting and giving information? Also, how much would I be willing to disclose, a broad or narrow amount? And how much control do I want over the various types or pieces of information? To plan for information exchange, examine your information with a dedicated process. Examining the information beforehand takes the decision about it away from the negotiation context, and where the pressures can cloud rational objective analysis. One process for examining information is by focusing on control, and placing each piece of information into categories.
Let's take a look at attorney Benny's process for categorizing information in connection with the divorce of a couple in town. His client is Walter Fudge. First column is, I want. This is information you have no control over. List the type of information you want. Here, Walter wants the appraisal of the pageant gowns, and has no control over that bedazzling data. From those, think strategically about the questions you can ask the other side to get information about them.
The second column is, I keep. This is information you do have control over. List the type of information you want to keep in that column. Like Walter's text messages with Lola here. Now I can only imagine their content, but Walter should think strategically about whether the information he wants to hold, like these messages, are really that damaging. Bad facts can often be de-emphasized or logistically dismissed in other ways.
The third column is, I give. You also do have control over the information. List the information you are willing to disclose, and think strategically in planning your dissemination of that information. For example, people tend to value information they had to work for more than information they didn't have to work for. And they tend to disclose that easy information first, even if it's important. If doll appraisals are somehow central to the calculation of assets in divorce, and Walter gives it over early because it was a cinch to appraise them, it could cause the other side to devalue that information, and wonder if he's just toying with them.
Step three, offer planning and setting boundaries. Setting your boundaries includes doing the following things, each of which we'll discuss in more detail. Establishing an opening offer or demand, establishing a starting point, establishing a bottom line, and establishing a clear concession journey.
First, establishing an opening offer or demand. This should be credible, but keep room for bargaining. Avoid starting close to your bottom line, to be fair. Most counterparts won't even believe you anyway, and keeping the final result within your acceptable range would be nearly impossible if you started too close to your bottom line. Also avoid being ridiculously out of reach in your offer or demand. Your counterpart may walk until you come down from the clouds, or you'll have to make an enormous and embarrassing concession to come down to a reasonable starting point. And make sure your initial offer or demand passes the sniff test. It leaves room for bargaining above the bottom line, and takes into account the fact that the other side may have information you don't have.
Second, establish a starting point. This is the settlement point that that should be reasonable, according to your analysis and estimations. You'll proceed to this point during the negotiation, trying your very best not to move below your acceptable range, unless it's very clear that settlement or agreement it can't occur there.
Next, establish a bottom line. This should be the lowest point you're prepared to go during a negotiation, unless it's clear you've seriously misjudged the situations. Failing to preset and stick to your bottom line can lead to giving up the farm during negotiations. Then you'll want to establish a flexible concession journey. Chart out some courses, from opening offer or demand, to your target point or bottom line, should you need to travel there. Think about all the possible journeys the negotiation could take. Where will you go when your counterpart rejects your opening offer or demand, for example? What if your counterpart does X, where to then? Don't get married to one journey to success. Reaching agreement will depend on many factors outside your control or anticipation during the negotiation.
Step four. Analyze the needs and interests. Understanding the party's needs and interests is critical for prioritizing, strategizing and reflecting before and during a negotiation. One way to assess needs and interests of both parties is to create a chart sorting needs and interests as essential, important, or desirable, and then specifying further whether those needs and interests are common, independent, particular to one side of the other, or they're conflicting.
So let's take a look at the example attorney Benny drafted for Walter Fudge in Fudge versus Fudge. Some needs are essential. These are the deal breakers. Here, the doll collection is a deal breaker for Walter. If he doesn't get these dolls, there can be no deal. And Gertrude is going to hold onto those pageant gowns or else. Some needs are important. They're very meaningful, but less than essential. Walter would be loath to concede the taxidermy to Gertrude, but it's not as dear to him, so you'd know it's lower on the priority list for negotiation.
Some needs are desirable. They're lower on the priority list. Here, Walter's desire for granny's beloved ashes ranks below his shotguns, and further below that, doll collection. Some needs are shared. These are a great negotiation starting point. Here, Walter and Gertrude both want a fast settlement, and both want to split their cash accounts. They may disagree on how to achieve that split, but their intent there is common.
Some needs are independent. These needs can be met without a having an impact on the other party. Independent needs are also great places to start negotiations, and a great place to bargain. Here, Gertrude has an independent need for a settlement in connection with her car accident. Walter, knowing that the settlement is part of the estate, but unsure how much, if any, a court would award him, might use the PI settlement as a bargaining chip, offering to relinquish his interest in the PI settlement, if he can keep the lottery winnings.
Some needs are conflicting. This is where both parties have an interest in them, and the loss would cause great harm. Walter and Gertrude have a conflicting important need for N95 masks. When you get to interest in conflict, like the N95 masks here, get ready to innovate in bargaining or just suit up for trial.
Finally, some needs change. Needs and interests analysis is best approached with flexibility, and on an ongoing basis through negotiation. Looking to needs and interests is helpful in any negotiation situation, especially in problem-solving negotiations. Step five. Plan for personalities. Negotiation style and personality can have a major effect on negotiation processes, and the likelihood of reaching agreement. Try to learn what you can about all players to a negotiation.
The bottom line. Preparation is the best tool for all negotiations, and it helps with avoiding impasses, as well as identifying strategies and creating solutions. Planning the process of exchanging information can lead to more access to it. Planning for disclosure involves assessing how much control you want over the information. Establish all boundaries in advance and stick to them. And a dedicated needs and interest analysis is critical.
The phases of negotiation are, naturally, next. There are essentially four phases, beginning, info exchange, trading, and closing. First, beginning the negotiation. As soon as you know who is representing your side, you can begin developing a rapport with them. Your goal should be to facilitate trust and to create a friendly working relationship, even if they are a jerk. If you have control over the atmosphere of your negotiation, tailor the space to your audience as much as possible, like the office environment. Remember that you want your audience to do something, and create the environment that will facilitate that.
Also, at the beginning, you'll want to set an agenda, if possible. Negotiations can benefit from having that kind of structure. Although the other side could reject it, that doesn't mean you shouldn't make a suggestion about an agenda. If you're going to suggest it, make sure that you have a proposal in your back pocket, and make sure you indicate your flexibility with it.
After beginning is information exchange. Learn about interests. During information exchange, find out as much as possible about the other side's needs, interests, and priorities. In the litigation context, keep an eye out for facts that could be useful if the case ends up going to trial. Negotiations often occur before the discovery even starts, so it's a good point to learn. You'll often get the opportunity to ask questions, to give answers, and to give non-answers. There's an art to asking questions and adjusting them to getting the information you want.
Always plan your questions if possible. And when you get a response, always pause to consider whether you are satisfied with a response, or could improve it in some way, by posing it a different way. And generally, there are open-ended questions and closed questions. Open-ended questions are questions that don't call for a yes or no answer, and are designed to allow the recipient to elaborate. These can be useful at the beginning of a session, when specific information isn't known, but there is greater opportunity to avoid answering these kinds of questions directly with open-ended questions.
Closed questions are questions that call for a yes or no answer. These are useful to confirm information once learned, or to test the other side, or to zero in on a specific fact.
After information exchange is trading. Trading is where the actual negotiation takes place, and where the opening offer and demand set the tone. Advantages to going second, not first. Well, the traditional advice is that the other side always goes first. Going second allows the negotiator to gain information about the other side's target. The advantage of going first is, gives you control over the information the other side needs to figure out where you're going. You can also leverage the concept of idea anchoring, which is, the first thing someone hears often gets anchored in their mind and they can't move from it.
In terms of the initial offer amount, concentrate on keeping your initial offer above your target, but always rational and supportable. It can be aspirational, but you should be able to articulate logical and fact-based reasons to support your initial offer. Starting too high or too low all but ensures missing your target, or negotiation failure.
So, the auction part of negotiation is where the choreograph back and forth of offers and demands occurs. During this portion, communication often occurs in offers, demands, and other messages as well, verbal and nonverbal messages. A lack of presence in this part can lead to missing the subtext of a proffered solution. Also, to missing signals and body language, and other visual cues. Concessions communicate information non-verbally. Like I mentioned previously, concessions typically begin larger and then get incrementally smaller as the negotiation proceeds. This typically communicates an approach to the bottom line, though a party could always bluff with a false bottom line.
If it's your earnest bottom line, it must be properly communicated and timed before you are actually out of room. If it's not, the other side may be in a position where the offer can't be accepted without losing face. The feelings of loss and anger or embarrassment are powerful deal killers. Starting so high that you are forced to make a significant drop, sends a strong message to the other side, that you were never serious about your first offer, anyway, and it merely confirms the other side's suspicions about your authenticity. Pacing of concessions can communicate how difficult or easy it was for you or your client to make a concession, and how close the negotiation is to finishing. The pace usually begins more briskly at the beginning than it is at the end. Use this pace to your advantage.Concessions that don't demand concessions in return communicate that you don't really want what you're giving up anyway.
Finally, closing the negotiation. If the end is in sight, that is certainly not a time to relax. The end of the negotiation can be rife with regrets and opportunities for error. Here are some don'ts. Don't miss an opportunity to signal your approach to the end of your authority, unless you want to be perceived as engaging in tactics. Don't wait until the last minute to raise terms like confidentiality, non-compete, warranties, arbitration, and liquidated damages clauses, if they're not industry standard. Don't assume that certain terms will be included in the agreement, even if those terms are standard in the industry. Don't gloss over maintaining a written record of the negotiation process, and formalizing the agreement with the writing. Don't indulge in your emotions at the end of the deal, like glee in reaching a deal, or anger with last minute tactics or fear of blowing the deal. This can cause you to give in to end of deal tactics, where the other side presses for just a little more, in case you capitulate, though this tactic may be appropriate to employ in certain instances.
Don't walk away from a negotiation based on immaterial demands, and don't give into unreasonable demands due to fear of deal failure. The bottom line, your audience may be more willing to make concessions, or otherwise let their guard down, if they feel respected and comfortable. Precision is key when asking questions. A lack of presence during that information exchange period can also lead to loss of restraint and deal information leaks. Taking the time to signal and approach to the bottom line helps prevent deal failure. And staying present, aware, and audience-focused at the end of the negotiation, helps prevent last minute deal killers.
So, here's a hot topic. Remote negotiation. The COVID-19 pandemic has been a seismic shift in every area of life, including shifting our orientation with and around technology. At this time, negotiation in person is not just hazardous, it's illegal. So negotiators have turned to video conferencing like Zoom, Google Meet, and Skype. While these platforms may initially seem a worthy substitute for in-person negotiations, even have advantages over face-to-face sessions, negotiation via video conference is not the same as negotiation in person. Video conferencing has a number of challenges that can impact negotiations, like cybersecurity and privacy issues, competence asymmetries, implicit bias, and limited visibility.
Just a few things about cybersecurity. Rule 1.1 comment 8 of the model rules declares that, to maintain the requisite knowledge and skill, a lawyer should keep abreast of changes in the law and its practice, including the benefits and risks associated with relevant technology. To negotiate remotely, many attorneys have turned to platforms like Zoom. There's a general consensus that Zoom meets the requirements of rule 1.6, and has been widely used for the purpose of negotiation. But there are some security issues with Zoom, including its lack of end-to-end, or n2n, encryption on video, though it does have n2n encryption for chat. But email doesn't have n2n encryption either. So, privacy is a negotiation issue when working remotely.
There is always a possibility of being recorded, either through software or a peripheral device, or screen capture. It's also possible for someone to easily listen in, even talking off camera to an attorney who's on mute. Competence asymmetries are also an issue. When attorneys negotiating have different levels of competence with video conferencing platforms, it's easy for this asymmetry to impact the negotiation dynamic. A savvy attorney can place cheat sheets or other negotiation aids outside the camera's view. They can manipulate features of the software to have a better or no view of certain parties. And they can use technology for head games by manipulating software features.
Implicit bias is also an issue. In video conferencing, attorneys typically see the faces of both themselves and the other side. Optical contrasts accentuate differences between attorneys and clients, like differences based on race, ethnicity, sex, gender, sexual orientation, dress, aesthetics, environment, and so on. Negotiators may be consciously or unconsciously guided by implicit bias in advice giving and decision making. One professor suggests that attorneys could try to cut through any implicit bias simply by calling attention to it. He suggests, for example, isn't it great that technology allows people from such different places to negotiate?
But doing this could also make unwarranted assumptions about the other side. Imagine an attorney who says, "I've never negotiated with a transgender attorney before. I'm looking forward to this." Not good. Use mindfulness and empathy. Calling one's own attention to the perceived difference, acknowledge that it involves assumptions, and consider the impact of calling out that perceived difference.
Finally, video conferencing limits visibility. The visual information on attorney can receive is naturally limited to the framing of the video and the view of the camera. So these limitations can be distracting, can lead negotiators to wonder, if the other side is looking away from the webcam, what are they looking at? A bird in the sky? A hidden cheat sheet? If the other attorney has muted their microphone, are they getting advice from a more experienced negotiator outside the frame? If the client isn't in view, are they present outside the frame? Or is the opposing attorney even wearing pants?
The bottom line. Quality of service and commitment to professionalism need to be the same or better than in-person negotiation in video conferencing. Know the benefits and risks of technology, and be versed in troubleshooting and mitigating risks that could interfere with ethical duties. When trust is low, consider waiting until negotiation can occur in person. Stipulate as to acceptable procedure, behavior, and features, and condition the deal on compliance. And, more research is certainly needed on implicit bias in video conferencing, but it's an important issue.
Today, we've given you the bottom line on negotiation skills. In negotiation, there are no hard and fast rules. There are many general rules, some of which we covered today, and there are exceptions. Variations abound, but nearly everyone can agree that the key to bringing out your inner talent and getting to yes, is preparation and practice. As author, painter, inventor, money man, and all-around overachiever Ben Franklin said, "Hide not your talents, they, for use, were made. What's a sundial in the shade?"
Thank you for joining us for this introduction to negotiation by Quimbee. We thank you for choosing Quimbee for your CLE needs, and we'd be delighted if you join us again soon.