GOOD NEGOTIATIONS

By SCOTT FLEGAL, Flegal Law Office , PA

In last month's article, I wrote about the difficulty that many people have with the art of negotiation. While we negotiate all the time in our daily lives, some people seem to be better at it than others. So what is it that separates the good negotiators from the bad ones?

First, oftentimes people mistakenly assume that negotiation skills are intuitive. There are many educated and intelligent people who have not mastered the art of negotiation. As I mentioned in my last column, Boston Red Sox owner John Henry admitted that he is not a skilled negotiator when the deal for Alex Rodriguez fell through. And yet, nobody would suggest that Mr. Henry is anything other than a smart person. The truth is that most good negotiators have studied and practiced to become successful.

Good negotiators understand that negotiation is not about being perceived as "hard" or "soft". It is not about a trade-off between getting what one wants and being nice to people. Good negotiators understand that principled negotiation solves problems. Instead of focusing on haggling about what each side says it will and will not do, good negotiators look for mutual gains whenever possible. As Roger Fisher and William Ury wrote in their classic book, "Getting to Yes", principled negotiation is "hard on the merits, and soft on the people".

Negotiation is usually not easy, particularly in complicated cases. But if the negotiators are good, they understand the barriers to resolution or agreement that tend to characterize most negotiations. One of these barriers is known as "selective perception". Most parties tend to overestimate the strength of their position, and underestimate the position of their opponent. This is a human characteristic in both lawyers and clients that must be recognized and guarded against if the parties want to settle their dispute.

Parties also tend to adopt the wrong baselines for evaluating their position. It is a mistake to compare the offer on the table with what a party might want, or what they believe is fair. The sophisticated negotiator knows that a party's true baselines are quite literally the "best" result that might be achieved in litigation, and the "worst" result that might occur as a result of litigation. Good negotiators remind their clients that these are the proper benchmarks for evaluating offers and settling cases. Clients need to confront the truth, whether good or bad. And in many instances, it's the last thing they want to hear. On more than one occasion I have attempted to establish the proper baselines with a client, only to have the client immediately inquire, "are you my lawyer or theirs".

Unsuccessful negotiations are also often characterized by an insufficient focus on the underlying interests of the parties. Parties and their lawyers too often get caught up in the strengths and weaknesses of their legal positions. They either forget or refuse to include business-driven solutions in their negotiating strategies. Parties should always explore the possibility of the so-called "win-win" solution, especially where the overall relationship between them might be as important or even more important than the dispute itself.

Sometimes the relationship between the parties gets so bad that they simply stop communicating. This can be a significant barrier to resolution. The parties engage in what is called "reactive devaluation". Because they develop a deep distrust of the other side, offers that might in fact have merit are immediately devalued and rejected because of the source.

Our adversarial system is a great way of deciding cases. But it does not necessarily lend itself to solving problems efficiently. Once the case is teed up for trial, the lawyers have a job to do. They must get the case ready for trial. The parties' focus necessarily shifts away from settlement, and toward preparation for the upcoming adversary proceeding. Nonetheless, statistics show that over 90% of all cases filed settle before trial on the merits. Over 98% of all cases filed settle before a final verdict or judgment is obtained.

As surprising as these numbers may seem, they make sense. On the eve of trial, the parties' preparation is largely complete; they can take a brief opportunity to make a run at settling the dispute. On the eve of a verdict, the parties often take advantage of their last opportunity to resolve the dispute themselves. They get nervous about putting the issue in the hands of a third party, whether in the form of a trial judge or a jury.

All of these things are barriers to agreement. They are obstacles that must be overcome if the dispute is to be resolved by the parties themselves. Good negotiators are aware of these barriers, and are prepared to go to significant lengths to overcome them. They are familiar with the tools that are available to break impasses in bargaining that result from these barriers.

Not every case can be settled. There are many that can only be decided in a court of law. But more disputes would settle if the parties and their representatives invested more time and energy on negotiating skills.