PROFESSIONALISM

Texas Land Title Institute

December 5-6, 2019

Presented by:

Professor L. Wayne Scott

St. Mary’s University School of Law

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Negotiation – Summary

By

Prof. L. Wayne Scott

(Director of Conflict Resolution Studies, St. Mary’s University School of Law)

April 2019

(This is a work in progress)

Introduction

To ethically resolve conflict, one must have the tools for conflict resolution.

There are many routes to conflict resolution, including negotiation, non-binding

arbitration, moderated settlement conferences, mini-trial, arbitration, and trial. Of these

alternative dispute resolution procedures, however, the least expensive, the most

common, the most adult1, and the most effective procedure is that of negotiation. Hence,

the concentration on this paper will be on negotiation. Many of the ideas expressed in

this part of the paper result from my use of Korobkin’s, Negotiation Casebook (2000) in

my negotiation classes.

To ethically serve as a negotiator or mediator, one must be competent to so serve;

that is one must know how to negotiate. Additionally, to one must know how to best

satisfy the interest of the client or the parties to a mediation. To do this, one must not

only know to identify interests but must be able to utilize many forms of negotiations.

Therefore, before beginning a discussion of the ethical constraints on attorneys

who negotiate, this paper will explore some of the fundamental principles of negotiation,

which one must know in order to conduct an ethical negotiation..

I. Basic Purpose of Peaceful Conflict Resolution Through Negotiation.

A. Negotiation. When we speak of peaceful conflict resolution, we are

usually referring to the resolution of conflict through negotiation. The basic purpose of

negotiation is to reach an agreement, which will avoid or settle a conflict. This goal

cannot be accomplished without recognizing that to reach an agreement, all parties to the

negotiation must agree to the resulting agreement.

B. All Interests Must Be Satisfied. The point most overlooked by most

people in a negotiation is that one cannot reach an agreement without satisfying the

interests of all others to the agreement. Basically, for an attorney to be a good

negotiator, that attorney must forget (or turn upside down) all that was learned in law

school, and all that was learned in the adversarial practice of law. Mistreatment,

belittlement, chastisement, or embarrassment of the opponent will not, usually, aid in

reaching a negotiated settlement.

1 Eric Berne, GAMES PEOPLE PLAY (1963); Thomas A. Harris, I’M OK-YOU’RE OK (1967).

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C. Be Proactive.2 Negotiators must realize that the only person that they can

control is themselves. They must learn to be proactive and not reactive. They must learn,

that often they must help the other party in reaching an agreement that satisfies the

interests of all parties. The interest of the opponent should be satisfied adequately; the

interest of the proactive negotiator should be satisfied fully and completely.

D. Begin with the End in Mind.3 One must not begin a negotiation without

out knowing what they want at the end of the negotiation. It is amazing to see how many

people come to a negotiation to get what they can, rather than seeking what they want.

Have a negotiation plan in mind, and stick to it unless new information requires an

adjustment.

E. Think Win-Win. Stephen R. Covey, in his book The Seven Habits of

Highly Effective People (1989) summaries this concept as follows: Habit 4 – Think

Win/Win. Under this “habit, Covey defines six paradigms of human interaction:

1. Win/Win – agreements/solutions are mutually beneficial

2. Win/Lose – “If I win, you lose.” Humans are prone to use

position, power, credentials, possessions, or personality to get their way.

3. Lose/Win – “I lose, you win.” “Go ahead, have your

way with me.” In negotiation – lose/win is seen as capitulation – giving in or giving up.

No standard, no demands, no vision.

4. Lose/Lose – determined, stubborn, ego-invested people

interact – both lose. “get back” or “get even.”

5. Win – most common approach in everyday negotiation

a. Doesn’t necessarily want someone else to lose.

b. Win mentality thinks in terms of securing her own ends –

and leaving it to others to secure theirs.

6. Win/Win or No Deal – if no solution is found that benefits both parties,

then each has the freedom to disagree agreeably

F. Prepare Your Side and Theirs. Last, but certainly not least, is the

requirement that any negotiator be prepared to negotiate. A lawyer who will spend days

preparing for trial may spend only minutes preparing for a negotiation. Since over 98 %

of all cases are settled, and since most work of lawyers and non-lawyers involves

negotiation, and not litigation, this lack of preparation makes no sense. It is not enough

to prepare the negotiators own case, the negotiator must prepare the case for the other

2 Habit one of Stephen R. Covey’s, THE SEVEN HABITS OF HIGHLY EFFECTIVE PEOPLE is to be proactive. 3 This is habit two of Coven’s seven habits.

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parties. As detailed in Roger Fisher and William Ury, GETTING TO YES (2d Ed. Patton,

Editor) (1992), the negotiator must know the prime interests involved, must have thought

of options to satisfy those interests, must have looked at the alternatives of not settling,

must have looked for standards to provide legitimacy for obtaining their interests, must

determine the impact of any negotiation on any relationship(s), must concentrate on how

to communicate all information and to insure that there are no misunderstandings in the

negotiation or in future dealings between the parties, and must prepare to make a

commitment that will memorialize any agreement reached—and doing so, will allow the

negotiator to control the negotiation by using the memorandum of understanding as a

guideline for the negotiation. Additionally, the negotiator must prioritize the interest and

options for themselves and for all other parties, in case “horse trading” is required.

II. Styles of Negotiation.

A. The Value Claimer, also know as the competitive bargainer, the

distributive bargainer, or the adversarial bargainer seeks to gain the most possible for

himself/herself or for the client of the negotiator, at the expense of others involved in he

negotiation.. These negotiators are interested in the bottom line, and often gain the better

part of the bargain, but often overlook the possibility of expanding the bargaining zone.

The results are often “wins” for the value claimer, but the wins are often not as great as

those that occur during a cooperative negotiation. Rarely do they create a surplus that

can be distributed between the parties. Rather, they seek to claim the largest share of

what appears to be on the table.

1. Value claiming is most valid when the bargaining pie cannot truly

be expanded, as in a personal injury case, with a fixed insurance policy limit.

2. Value claiming is most successfully used when there is no on-

going relationship, and/or no hope of establishing such a relationship.

3. Value claiming is most often used by those negotiators not

formally trained in negotiation techniques, who do not understand that it often

possible to create a bargaining surplus.

B. The Cooperative Bargainer, also known as the problem-solving or

ethical bargainer, attempts to meet the needs of both parties, and looks for ways to

expand the bargaining zone. These negotiators explore the interests or needs of both

sides, look for options to satisfy those interests, alternatives to satisfying those interests,

standards to use in determining the resolution of the competing or shared interests, ways

to preserve relationships, ways to improve communications, and a commitment that be

clearly understood by all, and followed without further controversy. In short, they seek

to create a cooperative surplus or to create value.4 If not careful, the cooperative

4 “ We are committed to the notion that lawyers can often create value, not just as business lawyers who

serve as transaction cost engineers, but also as litigators who cooperate to facilitate efficient dispute

resolution, and as process architects who design efficient systems to resolve conflict outside of court at low

cost. But we are not naive enough to believe that lawyers -- even the business lawyers whose virtues are

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bargainer can become the victim of the value claimer. When cooperative negotiators

work together, they generally both come out better at the end of the negotiation.

However, when working with a value claimer, impasses frequently occur, or the value

claimer may take advantage of the cooperative bargainer.

1. Cooperative bargaining is most beneficial in commercial, family,

and general negotiations, particularly where the establishment or continuation of on-

going relations is important. It even works in personal injury cases in the hands of a good

negotiator/mediator.

2. Cooperative bargaining is dangerous when used blindly with a

value claimer.

C. The Cautious Cooperative Negotiator is a cooperative bargainer, fully

trained as a value claimer, but recognizing that cooperation is a better way to negotiate.

The cautious negotiator will do everything that the cooperative bargainer does, but will

only do so upon determining that the other negotiators are truly willing to cooperate, and

are not leading them into a value claiming trap. Once the cautious cooperative negotiator

has succeeding in establishing a surplus an expanding bargaining zone or settlement

range), they will proceed in one two ways.

1 They will use standards of legitimacy to distribute the surplus.

This is the ideal or ethical method employed to continue or establish relationships.

2. They may use value claiming tactics to claim a larger share of the

surplus created through cooperation. This is a pragmatic approach; most frequently used

by those so skilled in the technique, that they do not destroy the existing relationship, or

impair the establishment of a future relationship. These are frequently known as very

good “horse traders.”

D. Understanding the Contentiousness of Commercial Litigation.

1. The Changing Payoff Structure in Litigation.

There has been a dramatic increase in the amount of commercial

litigation after 1970.

Over the same period, commercial litigators have become

increasingly uncivil.

Self-Perception. Most lawyers describe their personal strategy as

flexible, either cooperator or gladiator, depending on how the other side

celebrated in this Symposium -- necessarily accomplish these goals.” Ronald J. Gilson, Robert H. Mnookin,

Foreword, Symposium on Business Lawyering and Value Creation for Clients, Business Lawyers and Value

Creation for Clients, 74 Or. L. Rev. 1, 8 (1995).

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plays (i.e., a population of tit-for-tat lawyers, each cooperates until the

other side defects and then retaliates.)

Echoes. Why then is there litigation conflict? Tit-for-tat only works

where all parties have the same information. If one player misinterprets

the action of the other, causing defection, when defection was not

intended, there may be an “echoing” back and forth as the players

simply repeat the initial mistake.

Noise. Thus, the information structure of the litigation game can explain

the presence of significant conflict in litigation even though most

lawyers claim to play tit-for-tat. Litigation is “noisy.” It is not always

easy to know whether the other side intended to cooperate or to defect.

III. Negotiation Goals.

A. Establishing the Possibility of a Settlement. In some manner, the parties

to a negotiation must determine whether a settlement is possible.

1. The exchange of information. The more information that is

exchanged between the parties, the more chances there are of identify the existence of a

bargaining zone, and for creating a surplus by expanding the bargaining zone. Value

creators are usually slow to exchange information, while cooperative bargainers are

usually free with information exchange.

2. Creating an atmosphere for negotiation. Use people skills

(discussed below) to create a friendly atmosphere that is conducive to resolution of

conflict, and the reaching of agreements.

B. Seek to satisfy your interests well, and the interests of the other party

adequately. An option (something the parties must do together) which satisfies the

interests of both parties is referred to as an “elegant option.”

IV. Negotiation Strategies.

1. Don’t Assume That Because “They” Win “You Lose.

a. A distributive bargaining situation may be an

exception. Unless the negotiation is purely distributive (the dividing of a fixed “pie) or a

zero-sum gain, it is unwise to assume that a victory for one negotiator is a loss for the

other.

b. Integrative bargaining. There are usually ways to

structure solutions that benefit all negotiators. This is best done by identifying either

common or differing interests. So long as the parties have different preferences [e.g. a

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carnivore and a vegetarian], the bargaining zone can be expanded. It is absolutely

essential that there be a free exchange of information in order to identify interests and

preferences. This requires the good use of people skills, particularly listening.

2. Don’t commit to anything until a complete agreement has been

reached. Fisher and Ury suggest the use of a “single-text” approach to negotiation.

Everyone works from one document, which ultimately forms the agreement. Parties do

not commit to anything until they have committed to everything. Nothing is off the

bargaining table until everything is agreed to.

3. Look for Essential Differences.

a. Understand. Emphasize understanding the other party,

rather than persuading them.

b. Search for interests. Ask “what” and “why” questions. If

those don’t work, ask “why not” questions. Then ask questions that cause the other party

to prioritize their interests with questions such as “what if” “where” or “when.” , "my Muslim faith." a. Uncertain outcomes. Outcomes of agreements may

depend upon uncertain results and different possibility estimates [e.g. the price of oil]. In

that event explore contingent agreements. Contingent agreements are particularly useful

when the parties believe that they can favorably change the outcome of uncertain events.

b. Differences in risk preference. Even when the parties

agree on the probability of the outcome of future events, their willingness to take risks

may require an agreement that provides different ways for each party to take or avoid the

risk.

c. Differences in time preferences. The value of an event

may depend upon when the event occurs. Mechanisms for sharing the consequences of

the agreement over time can benefit both parties.

d. Differences in capabilities can be combined. If one party

has access, for example, to manufacture a product and the other the ability to advertise

and/or sell the product profitable agreements are clearly available by combining the

differences in capabilities.

e. Reveal your own interests and preferences. Explaining

to the other side your interests and alternatives (an alternative is something you can

accomplish without the assistance of the other party(ies). This helps prevent the other

party from resorting to positional bargaining (the fixed sum error) and encourages them

to engage in integrative (cooperative) bargaining. This also invokes the reciprocity norm.

f. Take advantage of the reciprocity norm. Society

demands (finds it customary) that when one gives something to another, the other is to

respond by giving something back. This phenomenon is known as the reciprocity norm.

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Take advantage of this, initially by showing your own interests and alternatives. Later, if

the negotiation stalls, restart it by making a concession, no matter how small.

4. Avoid Adverse Selection. Sellers usually have more information

about their goods than the buyer. If the seller is willing to insure the quality of the goods,

as by providing a warranty, the bargaining zone is expanded by reducing the potential

cost, because the buyer knows that the goods will be of the quality sought.

5. Moral Hazard. If the seller’s actions, after the agreement is

reached, can affect the value of the agreement, the solution is to create an agreement that

is dependent upon performance.

6. Don’t assume you are finished when you have an

agreement. Once the parties have reached an agreement, they should begin to

brainstorm to see if there is any way to improve the agreement. As defined by Fisher and

Ury, in Getting to Yes, “brainstorming” means putting ideas on the table without

commitment or criticism. Most agreements can be improved once the tension of reaching

an agreement has been eased. However, be clear that before beginning this process of

reexamination that the parties agreed to abide by the original agreement, unless they can

find a better one.

V. Negotiation Techniques –People Skills

A. Fundamental techniques in handling people. Dale Carnegie, in his

HOW TO WIN FRIENDS AND INFLUENCE PEOPLE (1936), suggests the following techniques,

which can be best used to establish a good negotiating environment. See also Robert

Bolton, PhD. PEOPLE SKILLS (1886).

1 Don’t criticize, condemn or complain. This may seem

impossible to those in the legal profession, particularly to litigators. However, going

directly on the attack, is generally counterproductive. It is usually the primary fault of

value claimers.

2. Give honest, sincere appreciation.

3. Talk about what they want and show them how to get it.

William Ury, in his book, GETTING PAST NO (1993), speaks of building a “golden

bridge” across which your counterpart can walk, and in fact will have difficulty in not

crossing..

B. Six Ways To Make People Like You

1. Become genuinely interested in other people.

2. Smile.

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3. Remember that a person’s name is to that person the sweetest and

most important sound in any language.

4. Be a good listener. Encourage others to talk about themselves.

The object here is to find out what the other party wants to talk about. Remember that

information gathering is the most important thing that you will do as a negotiator. It is

hard to gather information when you are talking. Covey describes this as Habit 5 – Seek

First to Understand, Then to be Understood. He states the following principles of

empathic communication

a. Empathic listening –

1) most people do not listen with the intent to understand; they

listen with the intent to reply.

2) involves listening from another person’s point of reference.

3) Then seek to be understood –

Greek philosophy –

Ethos – personal credibility, integrity, competent

Pathos – empathic side

Logos – logic, reasoning side

6 Talk in terms of the other person’s interests.

7. Make the other person feel important—and do it sincerely.

~~~~~~~

C. How To Win People To Your Way of Thinking

(a) The only way to get the best of an

argument is to avoid it. This may seem to be impossible in the contest of the legal

profession, particularly among litigators. It is not, particularly when you learn to begin

with the points on which you agree, and move to solving the points on which you

disagree.

1. Show respect for the other person’s opinions. Never say, “You’re

wrong.”

2. If you are wrong, admit it quickly and emphatically.

3. Begin in a friendly way.

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4. Get the other person saying “yes, yes” immediately.

5. Let the other person feel that the idea is his or hers.

6. Try honestly to see things from the other person’s point of view.

7. “Be sympathetic with the other person’s ideas and desires.”

8. Appeal to the nobler motives.

9. The Movies Do It. TV Does It. Why Don’t You Do It? Dramatize

your ideas.

10. Throw down a challenge.

~~~~~~~~

VI. Attempt to Make the Negotiation Mutually Beneficial Agreements.

A. Use standards and “what is right” as the basis of reaching an

agreement.

B. Establishing Your Opening Offer.

1. Who should make the opening offer?

a. The advantages of you making the opening offer.

1) Setting the tone. By making the opening offer you

set the tone of the negotiation, and establish your end of the bargaining zone. You anchor

the negotiation. In other words you establish a ceiling or floor to the negotiation. By

setting your goal or aspiration level at the upper justifiable limit, you trigger

psychological “striving” mechanism. It has been clearly demonstrated that negotiators

are more persuasive when committed to achieving a specific purpose. “What convinces

most is conviction.” Richard Shell, BARGAINING FOR ADVANTAGE (1998)

2) Goals v. Bottom Lines and Reservation Prices.

Goals, or aspiration levels, are not bottom lines. Bottom lines (or reservation prices) are

the minimum acceptable level you require to say “yes” in a negotiation. Goals are the

highest legitimate expectation of what the negotiator hopes to achieve. Since humans

have a limited capacity for maintaining focus in negotiations, it is better to focus on goals

rather than bottom lines. Do not treat your goals or aspiration levels as your bottom lines.

Otherwise you may walk away from a deal that would be superior to your BATNA.

Russell Korobkin, A Positive Theory of Negotiation, 88 Cornell 1 (2002)5

5 “Negotiation experts, including members of the legal academy, routinely assume that aspirations affect

bargaining outcomes, and there is empirical evidence that supports this assumption. Nevertheless, there has

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3) BATNA/WATNA. It is absolutely essential, before

any negotiation, to calculate the point at which the negotiator will end the negotiation, the

point at which it is clear that your goals will not be met, or the point at which it will be

better for you to settle than to not settle. In other words, the negotiator will calculate the

Best Alternative To A Negotiated Agreement (BATNA) or Worst Alternative To A

Negotiated Agreement (WATNA). Your BATNA is what you can do by yourself, if you

don’t settle. It is he alternative that does not require agreement from the other party.

Roger Fisher and William Ury, GETTING TO YES (2d Ed. Patton, Editor) (1992).

4) Standards. Another way to set goals is to refer to

legitimate standards; to look for similar situations in the outcome of those situations.

b. The risk of making the opening offer.

1) Lack of information. There are some risks in

making the opening offer. The negotiator may not have all the facts, may not understand

whether the other negotiator is risk adverse, risk neutral, or risk seeking, and may,

therefore, set the opening offer too low or too high. It may be better to learn where the

other negotiator stands before proceeding on, if this is possible.

2). Danger of over-informing the opponent. If the

other negotiator has better or different information, the non-opening party may reassess

or rationally update their own preferences by learning the opener is willing to part with

more than expected.

been very little in the way of specific, theoretical descriptions of the mechanism or mechanisms by which

aspirations affect bargaining outcomes, and no empirical testing of the few theoretical descriptions that do

exist. Perhaps more troubling, the standard model of litigation settlement, developed over two decades by

interdisciplinary scholars working first in the law-and-economics tradition and later in the law-and-

behavioral-science tradition, implicitly assumes that aspirations are not at all relevant in the settlement

context.

“This Article has attempted to advance the study of the role of aspirations in litigation settlement

specifically, and in negotiation generally, by proposing a conceptual framework that incorporates

aspirations into the standard model of settlement. The reference point theory of aspirations posits that, by

serving as a reference point for various decisions facing negotiators in the bargaining process, aspirations

have an indirect causal effect on settlement outcomes by directly affecting the "settlement levers"

recognized as relevant by the standard model of settlement. The experimental results reported in Part III.B

demonstrates that the reference point theory is plausible, but this study is clearly only a small step toward a

deeper understanding of the role of aspirations in settlement negotiations.” 88 Cornell 1, 61.

If the reference point theory of aspirations is correct, high aspirations will help a negotiator achieve more-

favorable bargaining results when a deal is reached, but at the cost of a higher risk of bargaining impasse

and less overall satisfaction with bargaining outcomes. Thus, the reference point theory not only offers a

new way of thinking about the role of aspirations in settlement from a descriptive perspective, it also

presents a challenge to the usual prescriptive advice that negotiators should always set high aspirations.”

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3) The self-serving bias. Negotiators tend to view

uncertain evidence in the best possible light. This “self-serving bias” can cause

negotiators to set their opening point too high or too low, thereby reducing the size of the

bargaining zone and impeding a settlement.

4) Reactive devaluation. By making a proposal for

settlement, the other negotiator may reject an otherwise acceptable solution, simply

because the opponent proposed it. This is known as reactive devaluation. This is

particularly true in situations that do not involve pure monetary concerns, and is one of

the reasons that mediators can be of great value to facilitating a negotiation.

5. Spite. If the negotiators are on unfriendly terms the

opponent may want to see that the opening negotiator does not get what they say they

want. The opponent may reject the offer out of spite, and the chances of the opening

negotiator reaching a satisfactory solution, or even their BATAN, decreases.

VI. ` Negotiation Techniques – Strategies. Taken (summarized) from Charles B.

Craver’s book, EFFECTIVE LEGAL NEGOTIATION AND SETTLEMENT (2005).

The following are techniques often used in competitive bargaining situations.

These are not recommended techniques, but you should be familiar with them and know

how to counter the techniques.

A. THE COMPETITIVE PHASE

1. “Principled” Offers and Concessions. Provide a rational basis

for each offer or concession. For example: I can reduce my $100,000 offer to $90,000,

because there is a 10% chance of losing.

2. Argument. An argument is a stated reason for stated positions.

Factual and legal information is disclosed, together with reasons why the facts, law,

public policy, emotion, or other reasons support the position of the advocate.

3. Threats and Promises.

4. Negative Threats. A statement of the cost of refusing to accept

the offer of the proponent. “If you don’t settle within policy limits, today, I am

withdrawing the offer, and it will cost you more than policy limits tomorrow. If that

happens, you will expose your insurance company to excess liability.”

5. Affirmative Promises. An indicated willingness to change a

stated position if the other party does something in return. “If you will settle this case

today, I will continue to do business with you, and will enter into a long term contract

with more favorable terms.”

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6. Silence and Patience. State your position (or offer) and listen.

The more you talk, the more information you give away. Silence gives the other

negotiator the opportunity to absorb your position (or offer), and will call upon them to

respond. Do not be uncomfortable with silence. Wait for a response. Be patient.

6. Anger. One who actually becomes angry loses control, and often

loses the negotiation. Feinted anger, however, is sometimes used to convince the other

side that you are serious. This is dangerous. Anger is often met with anger, and the

negotiation may fail.

7. Aggressive Behavior. Aggressive behavior, such as rude

interruptions, may be used to control the agenda, and to convince the other party of the

actor’s strength. This is dangerous, and can be controlled by ignoring the aggressive

behavior, by keeping the interaction short, or by stating that the behavior is not

acceptable.

8. Uproar. A party may threaten dire consequences. “If you don’t

agree to our labor agreement, we will close two of our five plants.” The implication is

that the plants will remain open if the agreement is accepted. In responding, consider

whether the consequences will occur, and also whether the consequences will be as bad

for the other side.

9. Settlement Brochures and Video Presentations. Well

organized, and professionally presented written or video tapped presentations of positions

may lend an air of authority to the presentation. Additionally, they may appeal to those

people who best communicate visually. In response, present your own brochure or video

presentation, or treat the opponent’s the same as you would a verbal presentation—

respond to it.

10. Boulwarism. Named for Lemuel Boulware, this is the

presentation of a take-it-or leave it offer, which some refer to as a first, firm, fair, final

offer. The offer will be changed only upon a demonstrated showing of a mistake in

calculations or a change of circumstances. There are several risks to such a presentation.

a. First, it is paternalistic, and may insult the other party.

b. Second, it denies the parties the opportunity to participate

in the information gathering function of the negotiation process.

c. Third, it denies the opponent the opportunity to feel that

they have had any input or influence on the final result.

d. Fourth, It may give the opponent, used to the negotiation

dance” an expectation of greater gain.

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e. Evaluate such a proposal on its merits. Do not reject it out-

of-hand. See if it satisfies your interests.

11. Salami. Those using the salami technique, take a little bit at a time

(one slice at time).

12. Br’er Rabbit (Reverse Psychology). Based on Joel Candler

Harris’s Uncle Remus, HIS SONGS AND HIS SAYINGS (1880), Br’er Rabbit used reverse

psychology to ask the fox to do anything with him except throw him into the brier patch.

The fox, who wanted to punish Br’er Rabbit, did just that, not realizing that that was

rabbit territory. Br’er Rabbit got what he wanted by saying that he did not want it.

13. Mutt and Jeff. Here, there is one reasonable, and one

unreasonable negotiator. The object is to lure the opponent into responding to the

unreasonable negotiator, and to assisting the reasonable negotiator. A solo negotiator,

who has an absent superior or client, to whom he/she must respond, may use this tactic.

14. Belly-Up. Those using this tactic act as though they are weak

negotiators, lacking in skill and knowledge. These negotiators are truly “wolves in

sheep’s clothing.” They throw themselves upon the mercy of the opponent. The object

of this tactic is to cause the opponent to feel sympathy for them. When sympathy is

shown, the “belly-up” negotiators thank the opponent, and then suggest the need for

further accommodation. The response is to require participation by the wolf. Do not

vary from your negotiation plan, and require the “wolf” to state and defend his or her

own positions.

15. Passive-Aggressive Behavior. These negotiators do not directly

challenge the opponents’ proposals. They use oblique forms of passive resistance. For

example, they show up late for a scheduled session, they forget an important document,

or they fail to write up agreements, which they have agreed to prepare. Be prepared for

such actions: bring extra copies of needed documents; prepare your own drafts of

important agreements. Be patient with the other party. Get an agreement in advance,

committing them to adequate time for the negotiation.

16. “Logrolling” is a term often used to describe the practice of two or

more legislators trading votes on bills that are of little importance to them in return for

votes on bills that are very important to them. [Example: Public transportation bill and

farm subsidy bill.] Conceptually, logrolling is just a slightly different perspective on the

strategy of adding and subtracting issues. In practice, it is useful to think in terms of

adding and subtracting issues when the negotiation package is open ended and malleable,

and to think in terms of logrolling when the negotiation package contains multiple items

that appear fairly well fixed.

B. Power Negotiation. The following is drawn from Roger Dawson,

Secrets of Power Negotiating

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1. Never Say Yes to the First Offer. Otherwise, you will think, “I

could have done better,” or “Something must be wrong.”

2. Flinch. React with shock and surprise at the other side’s

proposals.

3. Avoid Confrontation. Don’t be confrontational early on, if you

want to settle the case. If you disagree with the other side, don’t argue. Restate their

position to them, and then tell them how you feel about the offer. Arguing only causes

the opponent to further justify their position.

4. Play the Reluctant Buyer or Seller. “I don’t really want to

sell/buy, but what is the best price/offer you can give me?” But, don’t lie!

5. Don’t Worry about Price. Satisfy the other side’s interests, and

they will enter an agreement with you to satisfy yours. For example: “If it is hot, the

price of the air conditioner is not the most important consideration.”

6. Don’t Split the Difference. Let your opponent do this.

Psychologically, the opponent is then committed to the concept, and you may be able to

re-split the difference, as by appealing to a “higher authority.”

7. Set It Aside. When you come to a point on which you do not

agree, leave it for later (set it aside). If you reach agreements on other points, the

momentum of agreement may allow you to solve the earlier point that was set aside.

8. The Art of Concession. Powers says don’t make equal-sized

concessions, because the other side will expect you to continue on that course. However,

there is value in “even” concessions, if you are using them to communicate a desired

result, and taking small steps to safely reach a larger goal.

9. Make Time Your Ally. “The longer you can keep the other party

involved in negotiations, the more likely he/she is to move around to your point of view.”

Remember, however, that this is a two-way street. You too may make more concessions

the longer you spend on the negotiation.

10. The Most Dangerous Moment. When you think you have an

agreement, watch out for the “nibble technique,” where the opponent asks for one more

small concession.

11. Your Most Powerful Weapon. “Learn to develop walk-away

power.” [In other words, know your BATNA].

a. Preparation. Preparation is, to me, the most powerful

weapon. If you are truly prepared, you will know, not only your BATNA, but also, the

interests, options, alternatives, standards, and relationship needs relevant to both sides.

15

b. Cooperation: It is my firm belief from experience and

study that cooperation is more beneficial than confrontation or competition. At this

point, all should restudy the “Getting to Yes,” cooperative bargaining techniques. Not

only do the Fisher/Ury steps provide the best outline for preparing for a negotiation, they

will assist you in creating and, even in distributing, a negotiation surplus.

VII. Negotiation Ethics 6

A. Questions Concerning the Ethical Floor for the Conduct of Responsible

Attorneys

1. What acts or omissions amount to fraud and are therefore illegal?

2. What are the constraints imposed on a lawyer’s conduct by formal

professional codes of ethics?

B. Questions a Conscientious Professional Will Also Ask

1. Even if my behavior is above this floor, is the conduct worth the risk in

light of my reputation and other pragmatic interests?

2. Is this conduct consistent with my own moral aspirations?

C. The Disclosure Continuum

Full, open

truthful

disclosure of

all

information.

Nondisclosure

of material

information.

Nondisclosure

when the

other side has

erroneous

assumptions

Misleading

statements

about

material

issues.

Intentional

false

statements

about

material

facts or

law.

D. Hypothetical Question: You have a car that runs, but is beginning to

burn a quart of oil every five hundred miles. You have not had the engine checked, and

do not know the cost of repairing any problem that might exist. You want to sell the car.

6 Many of the ideas in this paper come from Robert H. Mnookin, Beyond Winning

(2000)

16

1. What should you, or must you, disclose to a prospective buyer?

• Voluntarily Disclose the Oil Problem to the Buyer?

•

• What if you say nothing?

•

• What if you say nothing and the buyer says: “Gee, the car runs great and

doesn’t seem to have any problems at all. I’m looking for something

that’s trouble-free.”

2. Can you say any of the following?

▪ “I love this car.”

▪ “It’s been a great car. Except for ordinary maintenance, I have

never had to spend a dollar on repairs. These Toyotas are really

built to last, and this car has only 95,000 miles.”

▪

3. What if the buyer asks: “Is there anything wrong with this car?”

Can you reply:

“Nope. Absolutely nothing wrong. Runs like a charm. And there are no

signs of trouble.

VII Negotiation Ethics For Attorneys.

1. Rule 4.01. Truthfulness in Statements to Others

“In the course of representing a client a lawyer shall not knowingly:

(a) make a false statement of material fact or law to a third person;

or

(b) fail to disclose a material fact to a third person when disclosure

is necessary to avoid making the lawyer a party to a criminal act or

knowingly assisting a fraudulent act perpetrated by a client.

2. Lying [4.01(a)]

• Lying is not allowed about material facts.

• What is a material fact?

• Is an opinion a material fact?

• Is a lie about an alterative a material fact?

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There are two exceptions about non-material statements recognized by the

comments to 4.01:

• Estimates of price or value placed on the subject of a transaction.

• A party’s intentions as to an acceptable settlement of a claim.

3. Nondisclosure [4.01(b)]:

1. Buyer Beware: In general, there is no duty to disclose even

material information that you know an opposing negotiator would find

important to the underlying transaction. Laidlaw v. Organ, 15 U. S. (2

Wheat.) 178 (1817).

2. Fiduciary Duty: “Buyer beware” does not apply to a fiduciary

relationship.

3. Partial Disclosure: If a nondisclosing party makes a partial

disclosure that may mislead the other side, the nondisclosing party may

run afoul of the law.

4. Fraud law may impose a broader duty on sellers than on buyers.

5. Duty to Withdraw. The duty to disclose may be modified by

1.02. You may not have to disclose, but you may have to withdraw.\

4. Rule 1.02 SCOPE AND OBJECTIVES OF REPRESENTATION

(a) Subject to paragraphs (b), (c), (d), and (e), (f), and (g), a lawyer

shall abide by a client's decisions:

(1) concerning the objectives and general methods of

representation;

(2) whether to accept an offer of settlement of a matter, except as

otherwise authorized by law;

(3) In a criminal case, after consultation with the lawyer, as to a

plea to be entered, whether to waive jury trial, and whether the

client will testify.

(b) A lawyer may limit the scope, objectives and general methods of

the representation, if the client consents after consultation.

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(c) A lawyer shall not assist or counsel a client to engage in conduct

that the lawyer knows is criminal or fraudulent. A lawyer may discuss the

legal consequences of any proposed course of conduct with a client and

may counsel and represent a client in connection with the making of a

good faith effort to determine the validity, scope, meaning or application

of the law.

(d) When a lawyer has confidential information clearly establishing

that a client is likely to commit a criminal or fraudulent act that is likely to

result in substantial injury to the financial interests or property of another,

the lawyer shall promptly make reasonable efforts under the circumstances

to dissuade the client from committing the crime or fraud.

(e) When a lawyer has confidential information clearly establishing

that the lawyer's client has committed a criminal or fraudulent act in the

commission of which the lawyer's services have been used, the lawyer

shall make reasonable efforts under the circumstances to persuade the

client to take corrective action.

(f) When a lawyer knows that a client expects representation not

permitted by the rules of professional conduct or other law, the lawyer

shall consult with the client regarding the relevant limitations on the

lawyer's conduct.

(g) A lawyer shall take reasonable action to secure the appointment of

a guardian or other legal representative for, or seek other protective orders

with respect to, a client whenever the lawyer reasonably believes that the

client lacks legal competence and that such action should be taken to

protect the client.

5. HOW MUCH DO I HAVE TO TELL MY CLIENT?

a. Must I communicate an offer?

• Written – Definitely

• Oral -Do it!

b. Must I communicate strategy or tactics?

▪ No Questions – Maybe not.

▪ Questions – Definitely.

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6. Rule 1.03. Communication

(a) A lawyer shall keep a client reasonably informed about the status

of a matter and promptly comply with reasonable requests for information.

(b) A lawyer shall explain a matter to the extent reasonably necessary

to permit the client to make informed decisions regarding the

representation.

7. Misrepresentation

1. Restatement (Second of Torts) (1977):

a. §525. Liability for Fraudulent Misrepresentation:

One who fraudulently makes a misrepresentation of fact, opinion, intention or law

for the purpose of inducing another to act or to refrain from action in reliance upon it, is

subject to liability to the other in deceit for pecuniary loss caused to him by his justifiable

reliance upon the misrepresentation.

2. . Restatement (Second) of Contracts (1981):

b. § 164. When A Misrepresentation Makes A Contract

Voidable:

1. If a party’s manifestation of assent is induced by either a

fraudulent or a material misrepresentation by the other party upon which the recipient is

justified in relying, the contract is voidable by the recipient….

3. Restatement (Second) of Agency (1958):

An agent who fraudulently makes representations, uses duress, or

knowingly assists in the commission of tortious fraud or duress by his principal or by

others is subject to liability in tort to the injured person although the fraud or duress

occurs in a transaction on behalf of the principal.

4 ABA, Model Rules of Professional Conduct (2001):

1. Rule 4.1 –Truthfulness in Statements to Others

In the course of representing a client a lawyer shall not

knowingly:

20

(a) make a false statement of material fact or law to a third

person. . . .

Comment

Misrepresentation

There is no affirmative duty to inform an opposing party of relevant facts.

There is a misrepresentation if the lawyer incorporates or affirms a statement of

another person that the lawyer knows is false. Misrepresentations can also occur by

failure to act.

Statement of Facts

Estimates of price or value placed on the subject of a transaction and a party’s

intentions as to an acceptable settlement of a claim are ordinarily not taken as statement

of material fact.

The existence of an undisclosed principle is not ordinarily taken as a statement of

material fact, except where nondisclosure of the principal would constitute fraud.

5. When Nondisclosure Constitutes Misrepresentation.

a. Nondisclosure is treated as misrepresentation when the

nondisclosing party actively conceals a material fact from a negotiating opponent or tells

a partial truth that implies a falsehood.

b. Silence. When a negotiator is merely silent as to the existence of a

material fact that, if know, would weaken his/her bargaining position, however, there is

no bright-line rule that can reliably divide actionable from nonactionable nondisclosure.

c. Disclosure. Disclosure of material facts is required when the

negotiator has a fiduciary-type relationship of trust with the opponent, or when disclosure

is necessary to prevent a previous statement from being false (for example, when a

lawyer acquires new information inconsistent with a previous assertion) and also in the

apparently broad set of circumstances in which standards of fair dealing require

disclosure.

405 S.W.2d 725 6. Unilateral Mistake. Under contract law, a contract can

be rescinded if one party is mistaken as to a basic assumption that has a material effect on

21

the transaction, if the other party knows of the mistake and the first party does not ear the

risk of such a mistake. A party is considered to bear the risk of a mistake if he agrees to

bear the risk or if he enters the agreement knowing that his knowledge is incomplete or

uncertain.

a. Spaulding v. Zimmerman, 116 N.E. 2d 704 (Minn. 1962)—the case on

which Parker v. Davidson is based. The defendant was not guilty of fraud or bad faith in

not disclosing the aneurysm, but the lower court had the discretion to vacate the original

settlement agreement on the grounds that the defendant knew the plaintiff lacked the

critical information when it agreed to settle the case.

7. Sanctions for Misrepresentation.

a. Cresswell v. Sullivan & Cromwell, 668 F. Supp. 166 (S.D.N.Y.

1987). Here there was an intentional withholding of documents which purportedly fell

within the ambit of a document discovery request. Clearly rescission is available in this

situation, followed by an action for fraud. Fed. R. Civ. P. 60 (b) [allowing the court to

relieve a party from a judgment or order induced by fraud] does not prevent the plaintiff

from retaining the settlement and suing for additional damages.

b. Range of Remedies. Misrepresentation can give rise to both

contract and tort causes of action.

1) Contract Law. Under contract law, a negotiator’s fraudulent

or material misrepresentation that induces his opponent to enter into a transaction makes

the resulting transaction voidable by the victimized party (i.e. rescission is an available

remedy).

2) Tort Law. Under tort law, a fraudulent misrepresentation

gives rise to an action for damages caused by the reliance on the misrepresentation gives

rise to an action for damages caused by the reliance on the misrepresentation.

3) Fraudulent Misrepresentation. When a lawyer makes a

fraudulent misrepresentation, he/she can be held personally liable for damages.

4) Misrepresentation by a professional. Lawyers who

misrepresent in negotiations are subject to professional discipline, as well, if the

misrepresentation is made knowingly.

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b. Necessity of Intent to Misrepresent. Even non-intentional

misrepresentations can give rise to legal sanctions.

1) Rescission. The contract remedy of rescission is available

for misrepresentations –regardless of scienter – as long as they are material and induce

reliance.

2) Damages. Tort law distinguishes between fraudulent,

negligent, and innocent misrepresentations. Although extent of damages that are

recoverable depends to some degree on scienter, the victim of a misrepresentation can

recover at least the damages directly caused by the misrepresentation, regardless of the

level of scienter.

8. Misrepresenting the Objection – “Bad Faith Negotiation.

a. Because the norm is that negotiators genuinely hope to reach an

agreement is so entrenched, it can be said that a negotiator who bargains with no desire at

all to reach an agreement implicitly misrepresents his/her intentions.

b. Venture Associates Crop. v. Zenith Data Systems Corp., 96 F.3d 275

(7th Cir. 1996). The actions of the parties imply a duty of good faith dealing, at least as to

the closed terms of the agreement.

9.. ABA, Model Rules of Professional Conduct (2001):

Rule 8.4 – Misconduct

It is professional misconduct for a lawyer to . . . .

(c) engage in conduct involving dishonesty, fraud, deceit or

misrepresentation.

7. REPUTATION – There is nothing more important to a negotiator

than a good reputation. REMEMBER YOU CAN SAY “NO.”