04 Nov 2009

The Language of Numbers: Negotiating Claims for Money

By J. Anderson Little

A Presentation for NC Academy of Trial Lawyers in January, 2000

 My job today is to set the stage for the theme of this program, “Making Negotiations Work”.  With that goal in mind I will speak to you about two subjects.  The first has to do with the process of settlement as we now find it in the courts of North Carolina; and the second has to do with negotiating settlement within the specific context of a personal injury claim. 


The Changing Landscape of Settlement in North Carolina


Numerous settlement procedures now exist in the judicial arena in North Carolina that did not exist fifteen years ago.  In Superior Courts throughout the state, mediated settlement conferences are mandatory.  In the Industrial Commission, mediated settlement conferences are ordered in all cases.  In the Office of Administrative Hearings, judges routinely order cases to mediated settlement conferences.  And in the Federal Courts, mediated settlement conferences are a mandatory feature of every civil case.


In some of those courts, mediated settlement conferences are the only settlement procedure available.  In others, mediated settlement conferences are the favored settlement procedure, and procedures like neutral evaluation or non-binding arbitration being available as alternatives.  In the District Courts of North Carolina, we also have non-binding arbitration for general civil litigation, mediation for child custody cases and a menu of settlement procedures in equitable distribution cases.  A decade ago, these procedures were available on a voluntary basis, but were seldom used by the practicing Bar.


Reflect for a moment on the practice of law before settlement procedures like mediated settlement conferences became mandatory, so that the rationale for what we’re doing is not lost in history.  To illustrate the progress we’ve made, let me tell you a short story from my own practice as a trial lawyer.


In 1988, I appeared in Superior Court in Orange County to try the personal injury case of a client who suffered nerve damage as the result of an automobile accident.  Our case was first on the docket, so I dutifully prepared for trial with the certain knowledge that the case would be tried.


After court had been called into session and fifty jurors were oriented to their week’s work, the presiding judge called opposing counsel and myself to the bench to review our pretrial order.


I handed the order to the judge and watched him read it.  As he reached for his pen to sign it, I blurted out, “Judge, I’m not sure I should have certified as true every thing that’s contained in that order.”  The judge stopped and replied curiously, “Why do you say that?”  I answered, “Paragraph 16 says that the parties have had full and frank settlement discussions, and I’m not sure I should have certified that we have done so.”


The Judge looked first to opposing counsel, then to me and then back to opposing counsel.  He said, “Mr. Smith what do you say to that?”  My opponent replied, “Well, your honor, perhaps we could benefit from a few minutes of conversation.  Could you hold the case open for fifteen minutes while we talk?”  The judge allowed his request and dismissed the jury for a fifteen-minute break.


Six hours later, our case settled in a back room of the courthouse.  The judge called the second case on the calendar; and the jury, which had been sitting idle all day, finally began its work.  My client received a decent settlement; my opponent’s client saved trial costs; and I received a handsome fee.  I also lost the better part of a week and most of the weekend to unnecessary trial preparation.


In spite of the fact that rule 16 of the Rules of Practice mandated a pretrial conference in every civil action, most pretrial conferences held prior to 1992 involved only a quick review of a pre-trial order.


Prior to 1992, settlement processes were characterized by fragmented, and sometimes frantic, last-minute activity. Settlement discussions were hard to initiate early in the life of a case.  Such negotiations were conducted almost exclusively by lawyers; seldom did litigants participate directly in settlement negotiations.  Everyone wasted time and energy: the courts, clients, and especially the lawyers.  Over the past fifteen years the lawyers of North Carolina have initiated a system of mandatory settlement events that have solved most of these problems.


In an adversary judicial system, if one side initiates settlement discussions, the other believes that its opponent has a weak case.  There was in our court system a disincentive to initiating settlement negotiations.  Mandatory settlement procedures eliminate the need for one party to initiate settlement discussions and bring the parties to the bargaining table without anyone losing negotiating leverage.


The old saw was that you couldn’t get a case settled until a jury was in the box.  In a way, that was true.  In the old days you couldn’t get settlement discussions begun until the case was ready for trial.  Why not?  All lawyers are driven by deadlines; we’re prompted by deadlines. We tend not to work on files unless there’s an event in the life of a case for which we have to prepare.


Mandatory settlement procedures create an event in the life of case to which everyone must pay attention.  Lawyers and their clients take them seriously.  They prepare for them and work hard to achieve settlement. With the advent of mandatory settlement conferences and other settlement procedures, the practice of law is changing in North Carolina for the better.  We are now beginning to pay as much attention to the settlement of civil cases as we are to their trial.


Because of our recent attention to settlement processes, we have begun to change the practice of law in another and unexpected way.  Lawyers are becoming increasingly interested in the art and skill of negotiation, because they are expected to use both in the presence of clients, mediators, and other attorneys during mediated settlement conferences.


Several months ago I researched the topic of CLE seminars sponsored by this Academy and the North Carolina Bar Association. Before 1990 and 1991, settlement processes and negotiation skills were seldom mentioned as seminar topics.  Now, however, the subject of settlement and negotiation appears frequently on CLE programs.


Lawyers’ interest in the subject of settlement and negotiation is illustrated in another way.  It may surprise you to learn that 50 percent of those who attend mediator training courses are lawyers who do not want to become mediators.  Rather, they sign up to learn more about how to represent their clients in settlement conferences.  In other words, they come to learn how to negotiate.


How many of you here today who graduated from law school prior to 1992 had a law school course in negotiation.  How many of you who have graduated since 1992 have had such a  course.  I submit to you that most of the practicing lawyers in the State of North Carolina have never taken a course in the art and skill of negotiation.


Where did we learn to negotiate?  Until recently, learning to negotiate was left to each individual.  Until recently, law schools did not offer courses and workshops on the subject.  Until recently the practicing Bar did not recognize its importance.


Looking back on my legal career, I assumed that you either had negotiation skills or you didn’t.  And if you had observed the way I conducted negotiations, you might conclude that I thought arguing with others passed for negotiating.  I’ve often discribed my negotiating style as a three-part process:  tell my opponent how good my case is; if he doesn’t get it, tell him again; and if all else fails,tell him louder.


In my experience, the mediated settlement conference program in our courts has exposed a weakness in our legal training and education with regard to our ability to negotiate.  With the advent of CLE programs such as this one, the availability of mediator training programs, and the experience of negotiating in mediated settlement conferences, we have begun to learn something about negotiating and settling civil cases.


Models of the Negotiating Process


So, let’s turned our attention to the art and skill of negotiation.  What have we learned?  For starters, let me briefly outline the three models of the mediation process we frequently talk about in our mediator training course.  Why models of the mediation process?  Because the goal of the mediator is to facilitate the parties’ negotiation.  What do mediators learn?  They learn about the negotiation process and how to assist the parties when their negotiations become difficult.


            The Problem-Solving Model


There are three models we explore in mediator training.  The first of them is the problem-solving model.  The aim of the problem-solving model is to move the parties away from arguing about their positions and help them focus on their goals and objectives.  The goal is to help the parties engage in a problem-solving endeavor that produces solutions which work for everyone.  In other words, the goal of the problem-solving model is to change the entire nature of the negotiation, from traditional bargaining to joint problem solving for mutual gain.


Sounds great doesn’t it. And in many cases it works wonderfully. I can recount numerous instances where the problem-solving model helped produce win-win settlements for everyone.  Many of those creative settlements occurred in the context of business disputes.  Can this model be of use in injury claims as well?


I have found it useful in that it helps me focus on the goals and objectives of the litigants themselves.  We lawyers need to remember that our clients have needs and interests, and that they influence settlement decisions as much as our careful analysis of the case does. We should remember always to ask, “What are my clients’ goals and objectives?  Have we explored their needs with respect to this litigation as fully as possible?”


This inquiry will serve you well.  If you employ it, you may discover useful information: that your client cannot afford the time off from work that a trial would entail, that your client has pressing monetary needs, or that your client does not need the money at all.  What you learn may surprise you.  This inquiry will also help your client focus on the realities of their life, which may create a more realistic settlement process.


There is at least one issue that comes up routinely in injury claims for which the problem-solving model is extremely useful.  Near the end of a money negotiation, the issue of confidentiality often will arise.  It doesn’t come up earlier, because the party interested in confidentiality doesn’t believe the case will settle or because he/she fears that to do so will signal an eagerness to settle.


Attorney and clients often become emotional about the subject of confidentiality and began fighting with each other about what they will and will not do with respect to it.  To an outside observer, that conversation sounds very much like, “No you can’t.” “Yes I can”.


Mediators often treat the issue of confidentiality as a negotiation within a negotiation, one that is susceptible to an interest-based analysis and a problem solving approach.  A mediator, or good negotiator, will ask at this point, “What problem are you trying to solve with a confidentiality provision? Why do you need it?  What will it do for you?”  The other side will be asked the same type of question. “How will a confidentiality provision complicate your life?  How will it hurt you?”


It may surprise you to see how quickly parties can achieve breakthrough solutions when the issue of confidentiality is explored in this way.  Turning position-based negotiations into joint problem solving is a thing of beauty when it happens. The challenge for us today, however, is that money negotiations have other characteristics which make a problem solving approach difficult to employ throughout the negotiation.


            Achieving Understanding


The second model that we talk about in mediation training is difficult to name.  Its goal is not settlement at all; its goal is understanding.  Put another way, in this model settlement occurs as a result of achieving understanding.  Therefore, the mediator’s goal, and I submit to you the negotiator’s goal, is to achieve understanding.


Understanding of what?  Everything that touches the case: all perspectives on the facts, the law, the issues involved in liability and damages, the circumstances of the parties, the needs and interests of the parties, the relationship between the parties and their counsel, the options available to them to solve the problem, the power they possess to achieve settlement, and the communications that occur between the parties.


Pretty esoteric sounding  stuff, huh?  Is this a useful approach?  I submit that it is.  And for me it is the heart and soul of mediation and negotiation in whatever type of case you’re dealing with.  Understanding is what makes settlement possible.


The tools for achieving understanding are simple.  They are of the tools of active listening, open-ended questioning, and summary statements.  Achieving understanding underlies everything I do as a mediator.  It is an approach that would serve lawyer/negotiators equally well.


Does this approach help in injury claims?  My answer is, “Yes, but…”  Yes, because it reminds mediators and negotiators alike to gain understanding before jumping to conclusions, to look for what is missing in the discussion, and to constantly check for assumptions that lead to misunderstandings.  But, it doesn’t appear at first blush to have utility in the run-of-the-mill personal injury case where money is the currency of settlement.


            Traditional Bargaining


A more useful approach, at least initially, is one I call traditional bargaining.  Traditional bargaining has a bad name in mediation circles.  Most of the literature of mediation is devoted to the problem-solving model, moving people away from position-based bargaining.  Why is that?  Position-based bargaining quickly leads to impasse.  Parties compare opening positions and say, “No way this can settle” and quit the negotiation.


In addition, achieving settlement in position-based bargaining is characterized by a series of concessions.  How’s that for motivation to settle?  To achieve settlement, I have to keep giving up something.  A process of concessions, giving up more and more, feels very much like a lose-lose proposition.  It’s difficult psychologically for a negotiator to make a seemingly endless stream of concessions.  So, traditional bargaining is difficult to get going and keep going.


The flip side of this discussion is that most of the negotiations we conduct in the real world have a traditional bargaining flavor to them, particularly when they involve money.  Whether we’re buying a car, selling the house, or shopping for supplies, we constantly engage in traditional, position-based, money-oriented bargaining.


This is especially true in a personal injury claim, wrongful death case, or workers’ compensation claim.  Occasionally, we can problem solve our way to a new and creative solution.  But most of the time, a personal injury negotiation is about one thing, money.  Someone wants as much of it as they can get; and someone else wants to keep as much of it as possible.  Negotiations in those cases usually start with money and end with money.


So, is there any way we as mediators and negotiators can do traditional bargaining in personal injury cases better?  The good news is that we can.  First, from Fisher and Ury’s well-known book on negotiation, Getting To Yes, we get the idea of legitimacy. Simply put, legitimacy is the notion that you need to document your claim.


We need to provide the other side with independent verification of our point of view whether it’s about permanency, causation, medical expenses, wages, or any other issue in the case.  And we need to provide it well in advance of the settlement conference, so that the other side can review it as necessary to satisfy themselves of its accuracy.  If we want someone else’s money, we need to supply them with the information to justify  their decision.


Attorneys should carefully review their case before a settlement conference to see if any issue needs further documentation.  If so, then documentation should be provided forthwith, so that the settlement conference will be a productive one.  The most frequent complaint I hear from the defense side of the table is that they have not been provided documentation of some aspect of the claim.  It’s not enough to bring that information to the conference.  It should be provided for review by the defense well in advance of the settlement conference.


Another important contribution Fisher and Ury have made is the concept of B.A.T.N.A., the Best Alternative to A Negotiated Agreement.  Fisher and Ury suggest that a negotiator should know his/her best alternatives to achieving settlement.  Answer the question, “What will I do, what will I get, if I don’t settle this case?”  In the litigation context B.A.T.N.A. analysis means what I will get at trial and what it will cost  me to get it.  This is just plain, old-fashion risk analysis.


Why do we do risk analysis?  So we can have a framework for deciding where to start our money negotiations and for deciding when we’ve moved far enough.  In other words, to know at what point we are better off taking our chances with the judge or jury instead of taking what has been offered in negotiation.  Risk analysis is fundamental.


Do attorneys always conduct a risk analysis before settlement conferences? Do we conduct our risk analysis with our clients before coming to the settlement conference? Even if we’ve conducted risk analysis with our clients, have they absorbed it? The fact that the answer to these questions is often “No’ explains why mediators typically spend a lot of time in private sessions with the plaintiff in the early stages of a mediated settlement conference.  We’re going over B.A.T.N.A. stuff; we’re helping you and your client do risk analysis.


Litigation risk analysis is a service mark registered by Mark Victor, a west coast attorney who has taught a course by that name throughout the country since the late ’70s.  Mark applies a weighted probability analysis to cases in litigation.  That’s a technique taught in business schools, sometimes known as a decision-tree analysis.  I highly recommend Mark’s course for all litigators and mediators.


Mark uses this approach not only to assist lawyers and their clients in settling litigation but also to direct limited discovery resources to the issues in the case which can cause the most dramatic shift in value.


So, expect to spend time in mediated settlement conferences talking about the case, the factual disputes, legal disputes, any decision the judge or jury will have to make and , most importantly, the damages, in order to identify your risk factors and articulate their probability of occurrence.


One additional word about damages.  In my experience, plaintiffs spend more time and energy on the liability portion of a personal injury case than do defendants.  Defendants are always asking me in private sessions, “What does the plaintiff think he/she will get if he wins?”  This is where the concepts of legitimacy and risk analysis come together.


We suggest that you find ways to collect and document the settlement value and jury verdicts in the types of cases you intend to handle.  How many of you keep notebooks on settlements and verdicts that your office has handled, records that can be shown to clients and claims representatives alike?  How many of you talk with the clerks, bailiffs, and lawyers after a term of court to determine what happened to the injury cases tried that week and what the verdicts were?  How many of you meet regularly with a group of trial lawyers to discuss recent settlements and verdicts?  These are techniques, and there are many more, which can enhance your own case evaluation, as well as provide a source of legitimacy which might not exist otherwise.


Are these concepts helpful in a money negotiation?  Absolutely.  Risk analysis grounds the parties in the realities of their case and produces a more realistic negotiation.


The Nature of Money Negotiations


Mediators have these models in mind as we work to facilitate negotiations.  About four years ago, however, I began to doubt that these models adequately describe what goes on in money negotiations and began to wonder what a mediator or negotiator can do when movement from one position to another stalls.


In particular, I began to notice two phenomena that occur repeatedly in injury cases.  The first is that money negotiations are characterized by multiple rounds of bargaining which continue long after discussion about case evaluation or risk analysis has run out.  At some point in a personal injury negotiation, the conversation is less about the merits of the case and more about swapping money positions.  This is the phase of money negotiations that I jokingly called “the used car sale”. 


I first noticed this characteristic in a personal injury case during the early years of the mediated settlement conference pilot program in Fayetteville.  Two excellent attorneys, who routinely met with me after the second or third round of offers, declined my invitation to talk attorney to attorney.  At the end of 12 complete rounds of offers and counter offers, the case finally settled.  As I recall, we quit talking about the merits of the case at round 3.  By the way, the plaintiff started her negotiations at $10,000 and the defendant started at $2,500.  Twelve rounds later, they settled at $4,700.


More recently, I mediated an injury claim in which the plaintiff started at $125,000 and the defendant started at $90,000.  Nineteen full rounds later the case settled at $115,000.  Little mention was made of the merits of the case after the second set of offers.  These cases are extreme examples of what happens to some extent in almost every personal injury case I mediate.  I began asking myself, “What’s going on here?”


The second phenomenon also dawned on me gradually.  I found that money negotiations become surprisingly emotional during private sessions, after starting the conference with a civil discussion together with me in a general session.  People become angry and frustrated with the other side as if they had been cursed or shouted at, even though no one speaks an ill word of the other.


It was intriguing to me.  An offer was passed from one side to the other.  And yet, the intensity of feeling displayed by one side upon the arrival of the proposal from the other is often strong, even hostile. People are getting mad at each other not because of some personally degrading remark but as a result of receiving proposals that are deemed to be unacceptable.


Mediators hear all kinds of phrases signaling discontent or anger.  I’ve catalogued these under the heading of “settlement conference cliches”, because I hear them over and over.  “I’m not even going to dignified that offer with a response” is one of my favorites.  What does that mean, and what is going on to stir such strong emotions?  What insight can we provide to move the parties along?


Unfortunately, I have found nothing in the literature of mediation and negotiation that speaks directly to this problem.  I’ve discovered that in an effort to promote the value of the problem-solving model, theorists have neglected to study the negotiation of money claims.  Yet, this is the arena in which we operate every day of our professional lives.


Over the past several years, I’ve given these phenomena considerable thought and have come to some conclusions, loosely collected under the theme, “the language of numbers”.


Money Negotiations as a Form of Communication


When people get mad at each other, threatened to pack up and go home, send low-ball or high-ball numbers in retaliation for unacceptable money proposals from the other side, it is safe to assume that those people are communicating something with their proposal that goes beyond the proposal itself.  In other words, we send “a message” with our proposal. How else can we explain the sometimes strong, negative reaction we hear when an unacceptable proposal is received?


Some time ago, I began to think of money negotiations as a form of communication.  We send messages with our proposals and our opponents react to those messages. If that is true, what is the subject matter of our communication?


My conclusion is this: the parties to a money negotiation are trying to communicate indirectly about something that they dare not communicate directly — that is, the range in which the case can settle.  Why can’t we communicate directly about it?  Why can’t we just say what our number is?  There are at least two reasons.


We can’t (or rather, don’t) because we fear the other side will take advantage of us.  If we tell them our best number, two things will happen.  The first is that the other side will begin to put downward pressure on us to go below that number.  The second is that we will not be able to get more money from the negotiation than the lowest figure at which we’re willing to settle.


So, not only is the other side trying to take advantage of us, we’re trying to take advantage of the other side.  Perhaps that’s a little strong.   We want the most money we can get out of the negotiation.  To communicate our rock-bottom price at an early stage of negotiation means that we forego the opportunity of settling at a higher level.  And so we don’t dare communicate directly about our final numbers.  Rather, we communicate about settlement indirectly, with a series of moves or positions.  In the process, the parties begin to learn where settlement can occur, without absolutely revealing their walk-away number.


The central problem in money negotiations is that we can’t communicate directly; we have to communicate indirectly by making movement from one position to another.  I appreciate the need to do that as a trial lawyer.  But I also know that indirect communications frequently lead to miscommunication and misunderstanding. When we communicate indirectly, our intended messages are often garbled, misunderstood or misinterpreted.


A concrete example comes to mind.  Plaintiff starts at $100,000.  We learn later that the plaintiff’s bottom line is $35,000.  Defendant believes this is a $15,000 to $30,000 case and that the plaintiff is outrageous in her demand.  The defendant wants to quit negotiations, believing that the case will not settle.  The mediator talks him back to the table, but the defendant low-balls with $5,000.  The defendant sends the mediator back to the plaintiff with that number and tells the mediator, “We want them to get the message that they need to get real.”


Plaintiff now hears defendant’s low-ball and goes ballistic. “That’s not negotiating in good faith”, he says.  “OK, he went $5,000, I’ll drop $5,000.  My next number is $95,000.


This is a fairly typical personal injury settlement conference scenario. The Plaintiff started too high; the defendant responded in kind; the plaintiff followed by responding in kind; etc.; etc.  I ask you, “What have the parties communicated to each other about where this case can settle?”


On the negative side, they have communicated nothing clearly about where the proper range of settlement is.  In fact, they have miscommunicated about that aspect of the negotiation.  The defense now thinks the plaintiff’s range is much higher then it actually is, and the plaintiff thinks the defendant’s range is much lower.  They will soon become pessimistic about the prospects of settlement.


On the positive side, the parties have told each other that their positions are way out of the ball park of settlement.  But the import of that part of the message is lost, because negative reactions to the proposals are beginning to cloud the judgment of the participants. 


What is missing from this scenario?  What’s missing is a clear and convincing game plan for negotiation by either party.  Both sides have lost sight of the goal of negotiations, which is to find the range in which the case can settle.  If each side had made proposals consistent with their theory of the case instead of reacting to the other side’s proposals, movement toward settlement would have occurred.


Now, this brings me to another conclusion I’ve reached in the past several years about money negotiations.  Movement toward the other side breeds movement.  The closer we come to the other side, the more incentive there is for the other side to move.  Movement creates the perception that settlement is possible and that perception creates a further impetus to move.


Conversely, the perception that the parties are far apart breeds impasse, or minimal movement.  Parties tend not to move, or tend to move in minimal amounts, if they believe a case won’t settle.  So, lack of movement or minimal movement actually slows the progress of achieving settlement.


When I mediate a claim for money, I try to achieve movement from both parties.   I have learned that if the parties can keep movement occurring and not stop it by over reacting to the other side, they will see a reason to keep working and keep moving within a range that they have determined is acceptable.


I encourage parties to pay attention to the movement that’s occurring within the negotiation.  Most importantly, I encourage the party I’m working with at the moment to think carefully about their next proposal and how it presents an opportunity to encourage the other side to put more money on the table.


I ask, “Is the movement you’re about to make consistent with your game plan?  Or is it only a reaction to the other side’s movement?  Is it communicating where the case can settle, or is it communicating a settlement range much higher than intended?


Let me be careful to interject a qualification at this point.  I am not saying that I’m trying to encourage people to move when their case evaluation says they should not.  No, as a mediator I will respect your case evaluation.  In other words, I will respect the range within which you say you can settle the case and the point at which you can go no further.  What I am saying is that I try to encourage movement between the parties when it has stopped  short of their bottom lines because of some reason other than case evaluation.


Let me explain this in greater detail.  Recently I pulled from my files about 50 of the sheets on which I record money positions advanced by both sides to the settlement conference.  Almost without exception, the place where the plaintiff was willing to settle was at least three times less than their initial offer.  Also, almost without exception, the plaintiff either: was ready to quit the negotiations as futile, offered a smaller figure than usual in retaliation for a small movement by the other side, or contemplated not moving at all until the other side “got serious”.


Since these case settled, it’s clear to me now that the plaintiff could have moved lower (that is, hadn’t exceeded the lower limits of his risk analysis) but didn’t do so because of some negative reaction to the other party’s proposal.



I’ve observed another phenomenon about movement in money negotiations that occurs as the parties begin to get close to their best number: we tend not to move to our bottom or top lines if we don’t think the case will settle.  However, what may seem instinctive to us is, in this instance, counter-productive.  In my experience, most cases will settle if the parties eventually state what their best numbers are.  Again, it’s the proximity idea.  If the parties know that the true gap separating them is small, more often than not they will find a way to bridge it.  So, once the parties have concluded that they have to reach their best numbers to settle the case, I encourage them to continue movement toward their best numbers.


Why do we resist going to our bottom line when it appears that a gap between the parties’ positions will still exist? I have asked this question over and over but have never received a reply that’s persuasive.  What I hear the most is. “I won’t have any more room to move.”  Usually that means the speaker fears someone will put downward pressure on him as the case approaches trial.


This is a common fear.  And it’s realistic in that the other side is always putting downward pressure on us.  But when negotiators realize and exercise the control they have in a negotiation, they know no one can force them to settle in a range that is not consistent with the value of the case.


Additionally, since the implementation of mediated settlement conferences throughout the State, trial judges are now more likely to put a case before the jury than they are to engage in the arm-twisting settlement efforts they have been accused of conducting many years ago.



The second observation about money negotiations is this: parties to a money negotiation will get angry with each other while swapping proposals.  They will refuse to make another move, start packing their bags, or sling low-ball or high-ball proposals at each other.  This kind of behavior occurs even though the parties have not reached their bottom lines or their best numbers.


What is happening here to stop movement when a party’s bottom line has not been reached?  Why do we become emotional when the other side has said nothing insulting to us, when they aren’t even in the same room with us? Why do we take settlement proposals personally?  People tell me all the time that they are “insulted” by an offer. How does a money offer made by one party become insulting to the other party? 


There are at least two explanations.  The first stems from our tendency as human beings to become angry when someone disagrees with what we say or do.  Disagreement with our views equates to criticism of us as people.  That is why one of Fisher and Ury’s maxims in  Getting To Yes  is, “Be hard on the problem; be easy on the people.”


This happens most powerfully in wrongful death cases.  Often the plaintiff explodes in anger when the defendant’s offer is perceived as too low or his/her movement as too slow.  The plaintiff instinctively translates that offer into a negative statement about the value of the decedent’s life.  Thus, the offer is taken as an insult.


On the other side of the table, the defense also reacts with strong negative emotion when the plaintiff makes a demand that is “too high” or moves too slowly. (By the way the defense team calls the plaintiff’s offer to settle a “demand”. Do you hear the personalizing and demonizing going on with the use of that term?)  However, my sense is that the defense doesn’t feel insulted in the same way that plaintiffs do, although they may use the same words.


Typically, the flavor of this reaction is, “He’s just wasting my time.”  So, the defense is insulted, but for a different reason than the plaintiff.  “I’ve got better things to do than sit around and let some inexperience, uninformed, money-grubbing plaintiff’s attorney waste my time.”   In almost every personal injury case I mediate, strong negative emotions will be generated by the seemingly innocuous act of passing money proposals from room to room.


I’ve concluded that mediators and negotiators would be well served by viewing money bargaining as a form of communication.  The subject of the communication is the ballpark in which the case can settle.


We sometimes compare money negotiations to “a dance.”  In my experience, the dance begins very slowly in most negotiations about money.  In fact it looks more like a junior high prom with girls on one side and boys on the other, than it does a singles’ club where everyone is looking for action.  Money negotiations tend to begin slowly, bog down in the middle, and generate more emotion than the subject matter would suggest.


When one side thinks the other is out of the negotiating ballpark, the result on a personal level may be anger or frustration. The result is slow movement or no movement at all.  “Let’s quit and go home.”  “This isn’t going anywhere.”  “I’m wasting my time.” If we decide to make another proposal, our movement often will be smaller than ordinary.  Our intent is to send “them” the message that they are in the wrong ballpark.


When movement stops in a money negotiation, it may be because the parties have different case evaluations.  More often than not, however, the parties stop because one party is reacting to his/her perception that the other side is “out of the ballpark”.


I have observed that the defense will stay low if they think the plaintiff is too high and that plaintiffs will stay high if they think the defendant is too low.  Once again, great distance between the parties will breed stagnation or impasse.  Proximity or movement toward each other will breed additional movement.


That is the irony of money negotiations.  If you want someone to come to you ( that is, put more money on the table),  you need to move toward them.  Your movement toward them will tend to increase their flexibility within the range they think is appropriate.


Now, that runs counter to our instincts.  One of our settlement conference cliches is, “ I need to send them a message that they’re just too low.  So, I’ll only move a hundred dollars.”  Do you hear that?  “I want to send them a message.”  Number proposals are intended to send messages; the intent is to communicate.  Once again, the problem in money negotiations is that we communicate indirectly.  As a result we miscommunicate and don’t get the results we want.


So the proper test for our response to another’s proposal is not, “How much do I move in relation to their move?”  It’s, “ How much do I move in relation to my bottom line?”     Our goal should be to communicate, “You’re too high”, by showing the other side where the proper range of settlement is, not where it isn’t.


If we move a dollar from 100 to 99 in retaliation for what we perceive as a low-ball, we have communicated that the case will settle between 90 and 100.  Now, if that is our range, fine.  We’ve done it right.  But if our range is 60 to 100, we’ve sent the wrong message with a one-dollar move.  We have miscommunicated about the ballpark of settlement.  We have done nothing to create the perception that the case can settle and, thus, nothing to encourage the other side to put money on the table.


If we act on our instinct to retaliate, we wind up paying more attention to what the other side is doing than what we’re doing.  Please understand that I’m not saying we shouldn’t pay attention to what the other side is doing.  In fact, I encourage everyone to graph the moves each party makes in order to discover patterns which may tell us something about the other side’s intentions.  Are they slowing up?  Are they continuing to move? Will they meet in the middle?


However, the mistake most negotiators make is that they don’t pay enough attention to how their own movement signals or communicates the proper range of settlement.  The proper test of your response to another’s movement is not, “How much do I move in relation to what they have done?”  It is, “How much do I move in relation to my bottom-line?”


Of course, if you haven’t determined your bottom-line (or at least, a target number) before negotiations begin, then it’s tough to plan effective movement during negotiations.  My experience is that, more often than not, plaintiffs spend the first half of the settlement conference doing risk analysis with their clients.  Their first number typically does not accurately reflect their ultimate assessment of the proper settlement ballpark.


To the extent that you can do risk assessment or case evaluation before the conference, and plan your positions accordingly, your early proposals will more accurately reflect your range of settlement.  And movement is more likely to occur earlier in the conference.


I should acknowledge here that clients do not always absorb and understand your thoughts about the value of their case.  For this reason, settlement conferences often are helpful to you in achieving greater communication with your clients, thus improving the attorney-client relationship. This is a legitimate use and goal of mediation.


The second reason we react to the other side’s movement with a small movement of our own is a bit more subtle.  Their move suggests to us that they will end up in a ballpark that is unacceptable to us when compared to our own risk analysis, case evaluation, and settlement range.  We resist being pulled into their range or ballpark by shortening up on our moves. “We’re not going there, so we’re not going to move as much as we would have if they had made a bigger move.”  I’ve heard that a thousand times.  It must be human nature.


But like much in human nature, it is counterproductive.  By shortening up on our moves, we send a signal about our range. We’re telling them that we’re getting near the bottom of our range by tightening up.  If that’s true, okay.  But if it’s not true, tightening up will produce a reaction from the other side that is something you don’t want. They will tighten up too.  And they will stop putting more money on the table.


To properly signal your own range, you have to keep moving without regard to what the other side is doing.


After several rounds of proposals, I often hear the following:  “If we keep matching each other we’ll end up in the middle. That’s below our bottom line and I can’t go there. So, I’ll slow up and signal them that I can’t get there.”  Wrong!  We send a signal that we can’t go there when we get to the end of our range, not in the middle.  By slowing up before we get near the end of our range, we’re sending the wrong message about where the case can settle.


We send the wrong signals because we’re concentrating more on what they’re doing than on what we’re doing.  Why do we do that?  Because we fear being pulled into settlement territory that’s lower than we want to go.  When we experience fear, we pull back; we draw up; we tighten up; or we strike out.  Those are the behaviors we exhibit when we react instinctively and without reflection.


When, in a money negotiation, we fear being pulled into the unacceptable range of settlement, we instinctively tighten up with our movement. When we tighten up before we get to the end of our negotiating range, in reaction to the other side’s movement, we send the wrong signal.  We’ve told them that we’re ready to quit, when in reality, we haven’t reached the end of our range.  And when we tighten up at the end of our range, we’ve sent the appropriate signal, “Enough! That’s as far as we’ll go.”


I find the work of William Glasser in his book, Control Theory, exceedingly helpful on this point.  Glasser points out what is in reality an obvious fact: we can only control what is in our power to control.  We can only control our own behavior.


We cannot control judges, juries, or the movement our opponents make in negotiations.  We can not keep them from evaluating differently than we, or from opening with a low-ball, or from moving slower than we wish.  But we can control our own case evaluation, our own negotiating ranges, how much we move at any one time, and, ultimately, to stop when we’ve reached the end of our range.  No one can make us go beyond our range to settle a case.


Feeling pushed by the other party, many negotiators begin to lose a sense of control and react instinctively by tightening up their movement.  Not surprisingly, a mediator can play a useful role at this point by helping parties evaluate their reactions, weigh their options and formulate a proposal that will communicate the right message — the proper range within which this case can settle.  In short the mediator can help parties regain a sense of control.




Mediators are not needed if the parties are negotiating well on their own. When trouble develops, a mediator may help by insuring that clear communications occur and that everyone has been heard, by focusing the parties on meeting their own goals and objectives, by facilitating the flow of information needed for decision-making, by encouraging and facilitating risk analysis and case evaluation, and by helping the parties formulate positions which accurately communicate the appropriate range of settlement and encourage movement from the other side.


In a negotiation about money, the problems experienced by negotiators in creating movement toward settlement can best be understood as communication problems.  This is something that commentators on the mediation process have written about extensively but have never applied to money negotiations.




In closing, let me call your attention to the story about a little boy who asked his father where he came from.  After listening patiently to his father’s awkward discourse on the birds and the bees, the boy looked up quizzically and said, “ Joey told me he came from Brooklyn.  Where did I come from, Dad?”


You see, it’s all about communication.