#16049 - Negotiation - BPC Alternative Dispute Resolution

Negotiation

Definition what is negotiation??

• Either between the parties direction, or through their legal representatives.

• Non-adjudicative; parties themselves seek to reach an agreement settlement, without recourse to a third-party neutral.

• Is VOLUNTARY, (often) confidential, flexible

Advantages

• Costs: much lower than litigation

• Parties have Control of process:

  • Control of costs

  • Control of outcome

• Less stress

• Speed/time

  • Speed of getting to point of resolution

  • Once within process, eg in negotiation can impose own timetable, in control of how long it might take..

• Confidentiality/privacy (CF, litigation is public)

• Maintaining business relations/long-term relationships, as ADR less confrontational.

• Maintain reputation (keep the dispute private)

• Flexibility:

  • Procedural flexibility

  • Greater range of remedies,

  • Flexibility in potential outcome, not black-and-white as in court.

• Avoid litigation risk (court is all or nothing)

• Variety of claims: can make submissions on any matters, not only restricted to points of law.

• Simpler procedures and strict rules of evidence do not apply

• Can have flexible solutions which go beyond the strict parameters of the original dispute (CF in court, jurisdiction only to make orders within confines of the issues raised by the statements of case).

Disadvantages

• Negotiation procedures agreed before a dispute arose may be inappropriate for resolving the actual dispute that arises.

• A party with a strong case may have to abandon their actual rights if the ADR procedure is to achieve anything.

• Can be expensive and time-wasting if one party is not genuine in their participation.

• Sometimes unworkable if there are multiple parties.

• Enforcement of the amount determined is easier in litigation than ADR (other than arbitration).

• Certain remedies only a court can provide.

Trial risk

• An analysis of trial risk identify risks and price them. Can concede that a judge might likely rule something, without necessarily conceding that issue.

• Advising the client to buy out the risk.

• i.e. what should client concede to make the risk go away. Pricing a risk, advising client to buy the risk out of the process, by settling for less than they want to, but they then know the risk has gone because settlement has been achieved.

• It doesn’t so matter what did/didn’t happen; as analysing what would likely be found to have happened at court/trial. Analyse from judge’s point of view.

Negotiation styles (essentially manner of presentation)

• (1) cooperative

  • Friendly, courteous, conciliatory, seeking to gain trust.

• (2) competitive/confrontational

  • Making demands, argumentative, emphatic language

Negotiation strategies (cooperative/collaborative/competitive) (overall plan for getting possible outcome

• For purposes of syllabus, some understanding of:

• (1) COOPERATIVE approach:

  • joint enterprise, operating together to try and achieve purpose.

  • Focus on reaching agreement that is fair & acceptable/reasonable to both sides.

  • Concessions/offers from both sides and information is shared.

  • Advantages of cooperative strategy:

    • Good likelihood of reaching agreement (if an opponent responds cooperative).

    • Appropriate concessions are seen as principled and not as a weakness.

    • Can support a continuing relationship between the parties.

    • Fewer risks of negotiation breaking down.

    • Should reach settlement quickly.

  • Weaknesses:

    • Can be undermined by a competitive opponent;

    • Can be easy to see settlement as the main goal, rather than meeting client’s objectives.

    • can lead to unnecessary concessions and weaker outcome for client;

    • Could make unilateral or early concessions, which limit room to manoeuvre later on;

    • May give info and get nothing in return;

    • May fail to press the strengths of the case by trying to avoid confrontation.

• (2) COMPETITIVE/POSITIONAL approach:

  • Focus is on own position and on winning, getting possible outcome for client;

  • Takes strong stance on each issue; focus on demands rather than concessions;

  • slow to yield.

  • Shows little interest in concerns/objectives of opponent.

  • Settlement is not a goal in itself; will walk away rather than accept unsatisfactory terms.

  • ‘Positional’ strategy = focus on the position of the client, putting client’s goals above all other factors.

  • Make high demands, demand concessions, make few concessions, give limited info.

  • Use tactics eg bluffs or threats.

  • Strengths:

    • High starting position better settlement (research shows high starting position tends to lead to a better settlement).

    • Most successful where there are few issues and based on money.

    • Works well where there is an imbalance of power.

    • Little chance of exploitation.

    • Often more successful for the party with a stronger case.

    • Easy to use.

  • Weaknesses

    • Often ineffective against good lawyers on other side, lawyers not susceptible to that approach.

    • Use of pressure can make settlement less likely.

    • Damage where an ongoing relationship

    • Can be undermined by a well prepared opponent.

    • Increase tension and stress

    • Not effective to deal with complex issues

    • Can increase misunderstanding

    • Unlikely to work if hope to get a significant amount of info from opponent.

• (3) COLLABORATIVE approach (principled/problem solving): thinking about what’s good for all parties.

  • Focus on underlying interests/motivations/needs of both parties, what is objectively fair, creative in finding solutions, share information.

  • Problem solving

  • Information is shared

  • Creative in finding solutions.

  • More than cooperative—is based on mutual effort, requires analysis and planning.

  • Not necessarily limited by original issues identify options for mutual gain.

  • Each issue is approached constructively, from point of views of needs/interests and options, rather than fault and blame.

  • Emphasis on objectivity, agreed criteria to test fairness.

  • 2 strands:

  • (1) a ‘principled’ strategy: seeks an outcome which is objectively fair against some external authoritative norm, eg view of an agreed expert.

  • (2) a ‘problem-solving’ strategy: focuses on both parties’ real needs and interests, seeks a practical solution without building costs.

  • Strengths:

    • Useful where ongoing relationship.

    • Opens the process to anything of potential benefit to the clients, eg creating new shared marketing opportunities, mutual shared opportunities (win-win, increase the pie).

    • Focus on interests of parties going forward, rather than issues of the past = good chance of success.

    • Can focus on expanding resources, rather than merely dividing them.

    • Even if no agreement is reached, conflict is usually decreased.

    • Rational and reasonable approach, relatively easy to manage.

    • Can be successful against competitive opponent.

  • Weaknesses

    • Requires both parties to collaborate, otherwise won’t succeed.

    • Might require substantial preparation of options.

    • May be defeated or exploited by competitive opponent.

    • Difficult to use if time limited (eg Court door).

    • May have little to offer where options cannot be developed.

    • Can be defeated or exploited by a competitive opponent.

  • Elements of ‘principled’ negotiation:

    • (a) separate the people from the problem

    • (b) focus on interest rather than positions

    • (c) look for options that may benefit both sides (aka ‘win-win’ or ‘increasing the pie’).

    • (d) use objective standards to justify offers and concessions

    • (e) developed a BATNA (best alternative to a negotiate agreement) provides a realistic base line against which to judge any possible settlement.

• (4) (probably don’t need to know) Pragmatic strategy:

  • Adapting strategy to meet the needs of the particular negotiation.

Choice of strategy

• Partly a matter of personal preference

• Don’t have to stick to one strategy for each negotiation

• Take the approach of your opponent into account (be flexible).

Miscellaneous points about negotiation

Recording a settlement if reached at negotiation