Page 14 - Miami Vol 6 No 1

Become a Great Negotiator:
Develop a Bargaining Range
My 24 years of experience as a me- diator suggest that most lawyers approach mediations without a negotiation plan. As a re-
sult, lawyers begin their negotiations with proposals that drive the other side away from the table; they spend inordinate amounts of time and energy developing subsequent proposals; and they worry con- stantly about whether they are “giving away the farm.”
So, how can lawyers develop the con - dence they need to provide good advice to their clients and to settle the cases that need to be settled?
e answer lies in learning a process of preparation that leads to a thorough un- derstanding of their case, the development of a range to negotiate within and a plan of movement from start to nish.
Knowing your case for the purpose of developing a bargaining range begins with developing a coherent theory of damages. Early in the case, lawyers make sure that they have a theory of liability/defense sup- ported by competent evidence. However, for purposes of developing a bargaining range for mediation, the lawyer and client need to understand damages, such as what a success- ful plainti will get if she or he wins the case.
It has been my experience that dam- ages are the least understood and most underdeveloped part of litigated cases as they are negotiated in mediation. Some- times the provable elements of damages haven’t been fully developed. Other times, the evidence supporting some element of damage is missing. Examples of these de ciencies are o en found in discussions of future medical expenses and wage loss claims.
Plainti s typically make the rst pro- posals in mediation. If their rst proposal
is higher than their theory or evidence of damages will support, the defense will o en depress the amount of its rst pro- posal. Likewise, in a case of admitted liabil- ity, if the defense o ers less than the dam- ages that the plainti can document and quantify, the plainti will o en depress its next proposal. It is my counsel that the plainti ’s rst proposal should never be higher than the damages that the evi- dence will support.
e response I o en hear to that counsel is, “But then we won’t have any room to move.” at certainly may be the feeling that negotiators have, but it doesn’t accurately re ect the reality of the situation. What is true is that the result- ing negotiation range that is produced by a more realistic starting number is smaller than if the party had started much higher. So, the subsequent incremental movements that the plainti will make will have to be smaller. A realistic starting number will usually result in a series of smaller moves therea er.
A plan for one’s negotiation begins with an opening number. It ends with one’s “bot- tom/top” number. Between the two, there are intervening proposals that represent incremental movement from one’s starting number to one’s nal number. I’m going to save my discussion of planning one’s move- ment from start to nish for another column and end this one with a discussion of devel- oping one’s ending or nal number.
From whence does one’s nal number come? It comes from the same process that produced the starting number – from a careful analysis of the case and its possibili- ties and pitfalls.
One’s bottom/top line comes from some version of what statisticians call a weighted probability analysis. We lawyers sometimes
By Andy Little
use the term, decision tree analysis or litiga- tion risk analysis (Marc Victor’s term), to describe it. ose processes are systematic assessments of the probabilities that a fact nder will decide for us or against us at vari- ous points within the case and assessments of the monetary impact those many deci- sions will have on the outcome of the case. e net result is a statistical analysis of the value of the case.
In my own work, I think of that analy- sis in terms of the answers to four ques- tions: (1) what are you going to win if you win the case (damages); (2) what are your chances of winning (liability); (3) what does it cost you to win; and (4) can you collect on a judgment? e net result – multiplying the chance of winning by the provable damages, less the cost of get- ting those results – will give the careful liti- gator a good handle on the value of the case and provide an approximation of what one’s bottom/top line ought to be.
e resulting number is one that a plain- ti should not go below without compelling reasons. It is a fail-safe number that guides the negotiating team in decisions about what numbers are acceptable and what numbers are unacceptable to settle the case. Of course, careful negotiators will also correlate their statistical analysis with juryverdicts of similar cases in the venue where the negotiated case is pending. ose analyses will be helpful in establishing both the beginning num- bers and the ending numbers of one’s bar- gaining range.
After 17 years as a trial lawyer, Andy Little formed Me- diation, Inc. He has mediated over 5,500 cases and has conducted over 130 40-hour mediation trainings. He can be reached at www.mediationincNC.com or at [email protected].
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