By J. Anderson Little
Once upon a time—before the advent of mediated settlement conferences—I was a trial lawyer. Not a great one mind you, but busy nevertheless. For seventeen years, I handled all kinds of trials: commercial, property, construction, personal injury, equitable distribution, child custody and support, and criminal. For all the stress and exigencies of trial work, it provided an interesting professional life.
By far, the most frustrating part of it was negotiating the resolution of clients’ cases. At first I thought it was because I had no way of bringing the other side to the bargaining table. My feeling was that we needed a systematic way of exploring the resolution of civil cases with all players participating. That’s one of the basic ideas underpinning the Mediated Settlement Conference Pilot Program—and it works.
Mediated settlement conferences are a hit with lawyers because they produce settlement events in which everyone who has a stake in the litigation comes to the table ready to negotiate.
I was right. Getting everyone to the table who needs to be there was part of the problem. I soon discovered what the other part of the problem was—I didn’t know how to negotiate.
Negotiating appears to be one of those skills that lawyers think no one can learn by studying and that you either have or you don’t. Actually I’m not even sure many of us have thought it to be a skill at all.
I used to think that a trial lawyer did well in negotiations about money only because he/she had a reputation for winning handsome awards from juries. At times it appeared to me that you either got what you demanded or you tried your case. Negotiation? I’m embarrassed to say I didn’t think it went on very much; and I certainly didn’t know much about it.
Other types of cases seemed to fare a bit better. Take E.D. cases for example. Many, if not most, E.D. cases are negotiated by lawyers on behalf of their clients. We help our clients list, categorize, and value property. We help them develop proposals and evaluate the proposals of the other side. But what do we do when we can’t get the other side to agree with us?
I know what I used to do. I would either argue the facts and law to my opponent one more time in the hope that he/she would finally see the light. Or I would accuse the other side of being stubborn or of negotiating in bad faith. The truth of the matter is that I was frustrated at not being able to get the case settled or settled in the way that I or my client wanted. I really didn’t know how to get from point A—the position my client had taken about the case—to point B—a settlement of the parties’ dispute.
In my own defense I should quickly add two things. Neither I nor lawyers before me have had much opportunity to learn the art and skills of negotiation. Only recently have courses like the Harvard Negotiation Workshop and N.I.T.A.’s Negotiation Seminar introduced lawyers to the practical skills and the principles underlying successful negotiations.
Secondly, I am a better negotiator now than I was before beginning mediation training six years ago. Mediation, after all, is the facilitation of negotiations. Mediators have to learn the same skills and principles that successful negotiators practice in order to assist the parties in the resolution of their disputes.
So, what have I learned about negotiating in the past six years from my course work, negotiating on behalf of clients, and my work as a mediator in nearly two hundred civil cases?
NEGOTIATING BY THE NUMBERS
I quickly discovered that the literature in the field of negotiation distinguishes between bargaining that is position-based and bargaining that is interest-based. Negotiations that are interest-based are characterized by discussions which uncover the needs and interests of the parties and create solutions which advance their needs and interests.
Position-based bargaining is characterized by discussions which advance the positions or proposals of each side and lead to a resolution of the dispute by the give and take of concessions by the parties.
Most commentators these days favor interest-based negotiations. The reasons are simple: position-based bargaining often leads the parties to impasse, with cries of “foul” and “bad faith”, and leaves everyone with little understanding of how to get beyond the deadlock experienced by the parties.
Interest-based bargaining puts the parties in the position of joint problem solving, enabling them to create multiple solutions for evaluation, and leaving them with principles of decision making that will help them avoid impasse.
I am now convinced that civil cases, particularly those involving personal injury claim, generally will be characterized by position-based bargaining. Even though I will make a case for greater use of interest-based bargaining in a moment, I believe that most of us will negotiate “by the numbers”.
Although this form of bargaining may have its limits, position-based bargaining will be the norm for most lawyers. The good news is that position-based bargaining can, and should, be learned and conducted successfully.
Value Your Case The first rule of thumb for the position-based negotiator is to make a realistic appraisal of the case. This is particularly difficult for plaintiffs’ lawyers. We typically over value our cases. This is due in part to the fact that we are especially aware of our duty to advise clients of potential outcomes. Our clients have no jury verdict data base to help them make decisions. They depend totally upon their lawyers; and their lawyers do not want to carelessly advise them out of recoveries “the right jury” might give them.
Plaintiffs’ attorneys also don’t seem to be in the habit of valuing their cases—at least, compared to defense attorneys. Perhaps it’s because insurance companies require their attorneys to provide written analyses outlining the way in which they arrive at opinions as to value. Plaintiffs’ attorneys rarely talk to their clients about how an analysis of value is undertaken.
Analyze Damages First Look to the damage picture first. What are the categories of damages about which the trial judge will instruct the jury? Which of those are subject to being quantified through bills from medical providers or other documentation? Which are subjective in nature and not quantifiable, such as pain and suffering?
Now what is a realistic jury verdict range for this type of case? What is an aberrant verdict on each side of the ledger, the home run and the strike out? In what range will sixty to seventy per cent of the verdicts fall? What is the low side of that range and what is the high side?
It’s truly amazing what can happen when both sides begin analyzing their damages in this fashion. Often the plaintiff’s and the defendant’s attorney will value the case within the same range of verdicts. When that happens, the question then becomes one of liability; and the inquiry can focus on the chances of prevailing on those issues.
Of course the chances of winning the case on liability affect the settlement value of the case. Damages worth $100,000 in a clear liability case may be worth only $50,000 in a case where the plaintiff’s chances of prevailing on liability are fifty per cent. These are examples of the kind of questions that should be asked and answered in order to begin to get a handle on the value of the case for settlement purposes.
Search For Objective Criteria The experienced as well as the inexperienced lawyer can have difficulty in answering some of the questions posed in the preceding paragraphs. How does one know what a jury will do with pain and suffering in a given case? What will claims for society and companionship bring in a wrongful death case?
After a recent CLE course on negotiation that Mediation, Inc. offers, an experienced trial attorney approached me about this problem. He became convinced during the seminar that the single greatest improvement he could make in his negotiating was in the proper valuation of his cases. The question then became, where does one go to develop an opinion as to value?
We should always look for objective standards by which to judge the damages in our cases. The discovery of objective standards serves two purposes. The first is that it gives you confidence the opinion you reach as to value is based in reality. The second is that it provides additional credibility to your position. If your position can be judged by some independent source as an acceptable appraisal of the situation, then your position becomes more than just the opinion of you or your client. It has legitimacy
The first way to do this is by clearly defining for yourself and your client which elements of damages are subjective and which are objective. For those that are clearly objective, be sure to provide documentation well in advance of settlement discussions. Damages which should be objective, but have not been documented, will not be considered by your opponent when they evaluate your settlement offers.
There is only one standard I know of which is considered objective by both sides in a civil case—and that is a jury verdict decided under the same or similar circumstances as your case. Where do you find that information? How similar are the verdicts and awards to the facts and circumstances of your case? Are there any sources that you can tap into to give you the kind of jury verdict information you need to value your case and lend credibility to your opinion?
There are, of course, jury verdict services to which you can subscribe. My experience is that they tell you more about the verdicts in Dade County, Florida than they do in North Carolina. But you do have partners and associates with whom you can discuss your cases on a regular basis. There are experienced trial lawyers in your area who will consult with you on a fee or gratis basis. The important thing is that you get a clear handle on what actual juries have decided in actual cases in the county where you expect to try your case.
Work With a Negotiating Range It’s important to develop a range of numbers to guide your negotiations before you begin settlement discussions. Your range should bear some relationship to the range of jury verdicts developed earlier.
Think about it. What will be the effect of the plaintiff’s starting with a number significantly higher than the best a jury will do sixty to seventy per cent of the time? My experience is that the other side will refuse to begin the negotiating game with you. You will hear them say, “I’m not going to bid against myself”.
On the other side of that coin, why should the plaintiff’s lowest, or “drop dead” number, be anything lower than the worst a jury will do ordinarily? The purpose of negotiating a settlement by the numbers is to get your client what he/she might get from a jury, taking into account the costs and risks of a trial that is necessary to get that verdict.
The reverse is true of defendants. Low balling the plaintiff at the beginning will make him/her mad and confirm what all plaintiffs’ attorneys believe anyway: that you only want to stall the case and force the plaintiff into long and costly trial preparation.
Think about your prior conversations with opposing counsel or adjusters. Are there numbers already on the table which have defined the parties’ starting points? What will be the effect of backing up on those numbers? Do you have a legitimate reason for bringing in a higher or lower figure than the one previously discussed? Do you have the documentation to support the change? What will happen if your opponent finds out about the change of position for the first time at the conference? Should you alert him/her to the change ahead of time?
Finally, you should think about what happens between your starting and ending numbers. I’ve seen few negotiations that are concluded with one or two rounds of movement. There’s something in the human psyche that resists early resolution.
Think about those rare times when you have stated an opening number for the purchase of a car and the salesman took your first number. Your reaction was, “I started too high”. The numbers dance many of us hate appears to be necessary to test the legitimacy of the other side’s positions–and our own.
You will need to develop intermediate positions in addition to your negotiating range. They may not be fully developed until the settlement conference, as the other side educates you about the risks you run at trial. But they should have the look of legitimacy and bear some relationship to the facts of the case and the issues at trial. Otherwise, movement on your side from one number to another will begin to look incredible.
If you are going to negotiate by the numbers you need to know the numbers game and how to play it. Resist the temptation to come up with a single “reasonable” number. Those of us who hate to go back and forth tend to opt for the settlement bullet. It doesn’t work. Experienced negotiators don’t play the game that way. And no one will believe you if you do.
Interest-based negotiations assume something that lawyers do not always know. That is, what our clients’ interests in the litigation are, what they need from the lawsuit, what their goals and objectives are. I don’t mean what they want from the lawsuit in terms of amounts of money. I mean: for what do they intend to use the money? What does the action represent to them? What will it enable them to do or accomplish?
Last year I mediated a seven million dollar breach of contract claim in which the emotions of the participants ran high. That case settled not because the parties negotiated by the numbers, but because they took the time to investigate thoroughly their own needs and interests in the litigation. They concluded that each was better off going back into business with the other than going to trial for an uncertain result. Their business goals and objectives were best served by a solution they created and the court had no power to give them.
So, what are the interests of your client? What do they need from this lawsuit? What can they get from the other side which will advance their goals and objectives? When the lawyer’s analysis runs in this direction, numbers usually are not the first thoughts that come to mind.
Analysis by numbers often leads to fixed positions that result in impasse. Analysis by goals and objectives, and needs and interests, often leads to productive problem solving. Some of the most successful cases I have mediated settled with the parties engaging in joint problem solving. The task was to find a solution which advanced both parties’ interests.
Interests Analysis in an Injury Case That’s difficult to do in the context of litigation where the parties come to the table in a combative rather than a “let’s do business” frame of reference. It’s even more difficult in cases where only money appears to be at stake. The typical auto accident, personal injury, case is a good example.
What are the needs and interests of a plaintiff in such a case, other than getting as much money as he/she possibly can? Does he want an opportunity to be heard, to have his day in court, to have the other side take him seriously? Is time a consideration? Does she have the time to leave her business and devote herself to litigation?
Is the payment of past or future medical bills or other services important? Is the need for money a present or future need? What about the ability of the claimant to handle large sums of money over a period of time?
Are there things other than money which will solve this claimant’ problem? Does he really want revenge? Is an apology, framed in some way acceptable to the defendant, what the plaintiff really wants? Are there low cost, non-monetary, but high benefit solutions the defendant can provide that satisfy the plaintiff’s real needs and interests in the case?
Needs and interests analysis is most productive in complex business litigation. The stakes are usually high. The costs of litigation are an important factor. The clients usually have business objectives which the other side can influence. There are many important variables which render a simple “what’s this case worth and can I prove it” approach to negotiation ineffective.
BRINGING THE CLIENT INTO THE PROCESS
I always thought I was fairly client centered in my law practice. Mediation taught me that the client is often left out of the negotiating process, with detrimental results.
Mediators often witness the problems lawyers face in settlement conferences when an adjuster or client is attending in person. The party not present for the conference has to be brought up to speed on the process. Much is lost in the translation. Most importantly, the lawyer is put in the unenviable position of trying to sell his client on a position that took hours of processing to achieve.
That’s the problem with leaving clients out of the negotiating process. They don’t have the opportunity to move with us in understanding the settlement potential of their case. And we put ourselves in the position of having to sell unpopular positions to our clients. You can lose a lot of clients that way.
Settlement conferences often serve the purpose of bringing clients into the negotiating process. There the lawyer can carry the client through a position-based or interests-based analysis of their case. The client is present for all stages of the process and participates with his/her lawyer in the evaluation of settlement offers.
Even without the benefit of a settlement conference, lawyers can do more to bring clients into the negotiating process. Mediation training helped me find new ways of working with my clients to settle their cases. I began dealing with my clients as if I were a mediator. I carried them through a position-based and an interest-based analysis of their cases. We developed ranges of jury verdicts with which to work. We worked out starting and drop dead numbers and positions in between. And we talked about what they needed from the litigation.
Not only did I convey every offer of settlement from the other side, as I was required to do, I conferred with my clients in person as I would in a private session of a mediated settlement conference. Each offer was analyzed in terms of the ranges set out prior to the negotiations and in terms of their needs and interests. And counter offers were developed jointly.
What a wonderful way to work. Bringing the client into the negotiating process takes more time and energy. But it produces satisfied clients—and a sense of accomplishment through teamwork that is satisfying to the lawyer.