Everything Is A Negotiation

"Are we negotiating?" "Always," replies Al Pacino playing the devil in the Devil’s Advocate.

In fact, it is more accurate to say that everything is a potential negotiation. Yet, in many situations, the effort to negotiate is not made. Fear, ignorance or complacency seem to be the usual suspects as to why we would not seek advantage.

As Shakespeare said, “Our doubts are traitors and make us lose the good we oft might win by fearing to attempt.” –Measure For Measure, Act 1.

In a recent New York Times article,"How Low Will They Go," the writer decides to test her long held beliefs, and sets off to negotiate the price of furniture at some high end outlets in NYC. While the writer meets with mixed success, she quickly learns that significant discounts can be had on items that she had reflexively assumed were not negotiable.

The writer expresses some discomfort at first even raising the subject of a price discount but once she learns some techniques, seems to enjoy the process. Not surprisingly, many of the salespeople actually were expecting some haggling.

The article is good as far as it goes but it barely touches on the methods that can be used to successfully negotiate just about anything. As a mediator and litigator conversant with the negotiation process, I have negotiated everything from furniture to hospital bills (a recent $18,000 bill to cast my 8 year old’s broken arm comes to mind) to the occasional night out with the boys.

When negotiating material objects, two techniques that are easy to master are the “flinch” and “nibbling.”

The flinch, which is one of my all time favorites, requires only that you respond to the offer, whether it be the price of a car, the insurance company’s settlement offer or the plaintiff’s demand, with a look of incredulity, then slowly repeat the offer as a question with a tone of utter disbelief. “$50,000?” Then, say nothing and wait for the other side to start making compromising gestures.

Nibbling is where the buyer asks for ostensibly small benefits after the price has been struck such as free delivery, no sales tax etc. The individual concessions are small but when added up can be substantial.

To learn about these and a plethora of additional negotiation and counter-negotiation techniques, one of the best sources I have found is "The Secrets of Power Negotiating", a series of audio recordings by Roger Dawsen that have withstood the test of time and will put you in the driver’s seat the next time you need to negotiate anything from the kid’s allowance to your next multi-million dollar settlement.

Medicare Going Nuclear

A new law is going into effect July 1, 2009 which will dramatically alter the equation for Medicare liens. I will have more to say on this in future posts but suffice to say, this will be a game changer.

When the “Enemy” Displays Empathy

In a negotiation context parties, attorneys and claim representatives naturally identify with their positions which can create an us vs. them mentality. It is sometimes hard for plaintiffs to see the decision maker on the other side as a person just trying to do their job in a conscientious manner. Likewise, sometimes the plaintiff and the harm they experienced are marginalized at the expense of trying to pick apart whatever inconsistencies may exist in their case to improve one’s bargaining position and not wanting to show undue sympathy which might be perceived as weakness in the negotiating context.

The mediator can help to put all this into context for a plaintiff who can’t understand why they are being “put on trial” when the other side caused the harm by explaining that it is not about them personally but is part of a negotiation process.

Given the need to maintain one’s game face during a negotiation, it is rare to see genuine sympathy being expressed by the other side.

When such displays do occur, they are memorable. I recently had an opportunity to observe such a display of real empathy from a claim representative who approached the plaintiff in a personal injury matter after the case had settled and let the plaintiff know that she was “in my thoughts.” It was moving to see the claim representative step out of her role and humanize the process by sharing her feelings of empathy.

Familiar Mediator Types

In the spirit of Matt Groening's Life In Hell series, I offer a selection of mediator types that you may have or will some day encounter.

The Pleaser

The Closer

The Storyteller

The Yeller

The Wizard

God Almighty

The Comedian

The Prophet

The Juggler

The "Facilitator"

The Potted Plant

Feel free to add your own favorites or share your experiences with those we have listed.

When To Show Your Smoking Gun

As a mediator, I suggest in my opening remarks that if and when it becomes appropriate to do so, the parties be open to disclosing evidence that will adversely affect the other side’s case. Unfortunately, I have seen cases settle at mediation where information was held back that could have been used by the mediator to help the other side appreciate a significant risk in not settling. As a result, the party that chose not to use the smoking gun failed to obtain the best settlement for their client.

Attorneys who have tried a number of cases are especially wary of giving up their best impeachment evidence if there is any chance that the case will not settle. The fear that somehow the other side will be able to diffuse the effect of this adverse evidence at trial has some justification but in actuality, this almost never happens.

As long as the parties are within striking distance of a settlement, there is no reason to leave smoking guns holstered. By that point, both sides have usually invested considerable time and psychic capital to get the case into a settlement posture. Opposing counsel is unlikely to pull out when confronted with a piece of evidence that further compromises their case. Often smoking gun evidence goes to the other side’s credibility and this can quickly deflate opposing counsel’s desire to continue fighting, especially if they were misled by their own client.

The best time to reveal smoking gun evidence is after as much as possible has been accomplished with the known facts and arguments. Where trust has been established with the mediator, freely discuss how best to deliver the bad news to the other side. The mediator can help package information for maximum effect.

If the party with the smoking gun can’t bring themselves to disclose the information, consider that often the same effect can be achieved simply by having the mediator inform the other side that she has seen evidence that will likely pose a danger to their case. If the other side knows and trusts the mediator, this will usually suffice to quickly bring expectations into line. Strategically, letting the other side pick the mediator can often work to your advantage for this reason.

Finally, the mediator can test the waters first by posing a hypothetical to the other side such as “If the defendant had information that contradicted x, how would that affect the evaluation of your case?” If opposing counsel acknowledges that x would damage their case, some selective or partial disclosure at that point would be appropriate. In some instances, it may be necessary to agree to make the settlement contingent on letting opposing counsel see the harmful evidence.

Carefully considering when and how to use your smoking gun evidence, will result in smarter negotiations and more favorable outcomes.

Knock, Knock, Knocking on Hanif's Door

A recent appellate court decision, Olsen v. Reid,164 Cal. App. 4th 200(2008) calls into question the viability of the post verdict hearing and raises anew the issue of whether the collateral source rule mandates that the full amount of the medical bills should be recoverable whether reduced by contract or not.

In Olsen, the plaintiff obtained a verdict which included the full amount of medical expenses. Defendant moved for a post verdict reduction and submitted some billing records which contained ambiguous references to a write off by the health care provider. The trial court reduced the verdict.

The Olsen court held that there was an insufficient basis to allow for a post verdict adjustment because of the paucity of supporting evidence.

The court then used the case as a sounding board to discuss the conflict between Hanif/Nishihama and the collateral source rule.

In the first of two concurring opinions, Justice Eileen Moore, “raised the alarm” that the Hanif/Nishihama rationales for limiting the amount of recoverable medical expenses had “buried” the collateral source rule without “the dignity of any services or parting words.” After discussing the history and rationale of the collateral source rule, Justice Moore declined to apply the post verdict schemes articulated in Greer in a private insurer context, absent “statutory authority or endorsement from the Supreme Court.”

Justice Richard Flybel picked up the gauntlet in his concurrence, and argued that Hanif/Nishihama reductions were in fact consistent with the collateral source rule.

He then laid out a prescription for meeting the hefty evidentiary burden in a post verdict hearing.

A detailed and thoughtful article on both sides of the issue can be found in the current issue of California Litigation, published by the State Bar’s litigation section. This is a must read discussion for attorneys, insurance representatives and health care professionals. Scott Sumner, a partner at Hinton,Alfert and Sumner, who has written and argued extensively on this subject, wrote the brief in favor of application of the collateral source rule.

Happy Thankgiving.

How To Prepare For Mediation...Take A Nap

I have long known from personal experience that a brief mid day nap can substantially boost mental alertness and creative thinking. I like to keep it short, no more than 20 minutes. Several cups of coffee by contrast do little more than prevent withdrawal headaches.