Negotiating your best settlement
Negotiating Your Best Settlement was originally prepared as a set of Top Tips in Ten Minutes for the Institute of Continuing Legal Education’s Basic and Premium Partner-
ships; reprinted with permission.
These tips focus on how to prepare for collaborative negotiating to best meet your clients’ needs. Following these tips will ingratiate you to clients..., while using them will make you even more effective by developing your reputation as a smart, principled negotiator.
Tip 1 Before Planning Your Negotiation Strategy, Be Honest With Your Client about the Realities of Litigation and The Realities Of Their Case
One of the greatest disservices an attorney can do for clients is to be less than honest with them about their case. Yet demanding clients often make being honest difficult by equating an attorney who discusses weaknesses in their case with a weak attorney. One way to combat this is to explain to your client that your role as their counsel is not only to advocate for them, but to also assess the realities of the case and advise the client of those realities. Many clients do not understand the emotional toll litigation can take, the cost of trial and trial prep, the cost of document retrieval and experts or the cost of your client’s time away from their work or other priorities while focused on their case. It is easy, as an advocate, to be lulled into identifying so with your client that you lose the objectiveness you need to tell your client when settlement might be advisable. Resist this temptation, lest you lose the case due to weaknesses you never told your client about or “win” the case at such cost that you still have a dissatisfied client. Be honest up front so they can authorize a realistic negotiation strategy and you can resolve the case with a more satisfied client.
Tip 2 Assess Your Client’s and Your Opponent’s Legal, Factual and Emotional Strengths and Weaknesses – Before negotiations begins you should have a handle on what the key legal issues are and which legal issues weigh for or against you or your opponent or are likely to be decided for or against either side. You also need a basic understanding of the key facts of the case and which facts help or hurt your client or the other side. While this means doing basic research it does not mean that every deposition, document request or Request to Admit has to be answered before you begin your negotiation. Much of the discovery attorneys do is helpful but not essential. Often the value of the information gained by non-essential discovery is not worth the cost of obtaining it. To prepare for negotiation, hone in on the key information you think you need to make a fair analysis of each side’s legal and factual strengths as early in the litigation as you can. (One of the big benefits of negotiating settlements is to save the client the cost of litigation). Also consider factors such as how each client will present as a witness, how each party will fare under the pressure of trial, your judge, your jury, etc. Then analyze each side’s strengths and weaknesses as to each factor and weigh that analysis into your negotiation plan.
Tip 3 Know Your Client’s Interests – Before you can negotiate, you must know your client’s true goals. It is likely they have told you their position (e.g. I want revenge, to teach the other side a lesson, a million dollars, or the amorphous “to be made whole”). But a good lawyer should go beyond positions or wants to seek to understand their client’s true interests or needs. Interests are defined as physical, emotional, psychological, social and intellectual needs. A client’s interest may be to feel respected, to be able to support a family or to eliminate medical bills. Often clients do not know what their interests are and they need you to help identify them. By digging deep with clients to unearth their interests, you are able to pursue the true goals of your client in negotiation. Moreover, there are many more ways to meet a client’s interests than there are to meet their positions. For example, in a sexual harassment case where the worker was let go, while money may meet some interests, other interests may be met by options such as job placement services, sexual harassment training for the employer’s staff, an apology, or a discipline of the alleged perpetrator, thus reducing the amount of money demanded. Therefore, knowing interests has the added benefit of expanding your negotiating options.
Tip 4 Prioritize Your Client’s Interests – It is inevitable that in any negotiation you will need to give and take. Accordingly, in understanding your client’s interests, you should also determine which of your client’s interests are flexible and which ones are non-negotiable. Work with your client on this prioritization in advance of the negotiation so that when you start the negotiation you are clear which goals, needs, or interests of your clients are essential, which ones are important and which ones are merely desired. Then use that information to plan how you will make concessions in negotiation.
Tip 5 Brainstorm A Flexible List of Options to Meet Your Client’s Interests – Before the day of negotiation, once you know your client’s interests and have prioritized them, brainstorm with your client, co-counsel, a trusted colleague or just on your own a variety of options to meet those interests. You do not want to start the negotiation limited to only one or two ways to resolve the case. Nor do you want to wait to initiate the development of creative ideas in the thick of the negotiation—although you certainly can and should continue to develop options with the other side once in the negotiation. While it is important that you start to think outside the box of ways to meet your client’s interests in advance of the negotiation, be sure your client understands that they will not get everything on this initial list. It is merely a starting point for discussions to help open more roads to a resolution. The key is to have options available that you can draw from as appropriate once the negotiations begin.
Tip 6 Consider Your Opponent’s Likely Interests and Ways To Meet Them – Just as it is important to know your client’s interests, it is critical t to analyze your opponent’s interests as well. No one will agree to any resolution that does not meet their interests, so you must develop resolution options that address both sides’ needs. Try to put yourself in the other side’s shoes and ask what their needs are likely to be. If they are plaintiffs, what loss are they trying to recoup? If they are defendants, what asset are they trying to protect? Once you have determined your opponent’s interests, brainstorm, as you did for your client, as many creative options as possible to meet their interests. This allows you to develop some creative suggestions that will increase the likelihood of a resolution that meets both sides’ interests.
Tip 7 Decide What Information You Need From The Other Side And How You Will Get It – Although you will do your best in advance of the negotiation to project things such as your opponent’s interests, the key facts in the case and the strengths and weaknesses of the other side, you will inevitably need to fill in some blanks, corroborate what you projected and generally get as much information as you can directly from your opponent at the start of the negotiation. Thus, before the negotiation, you should consider and itemize what missing information you need to correctly assess how to proceed in making and responding to demands, concessions and offers. Then draft the questions you will put to opposing counsel in the beginning of the negotiation to obtain that information. For example, if you represent the defendant, you may want to ask the plaintiff’s counsel to tell you what happened to lead up to the case being filed, how it has affected the plaintiff and what they want out of the litigation. If you represent the plaintiff, you might ask defense counsel why they deny liability, what mitigating factors they believe exist or what issues they have. In short, identify in advance the information you want to gather at the start of the negotiation and then plan the questions you will pose to gather that information.
Tip 8 Plan Your Moves – Although it is important to be flexible, have a plan in place for your start, middle and end points in negotiation so that you are proactive, not reactive in the negotiation process. For example, to start, most negotiators like to “anchor” their opening demand or offer. Anchoring means you make the opening offer sufficiently low, if you represent a defendant, or sufficiently high, if you represent a plaintiff, to allow room for movement that will nonetheless result in a resolution in your goal range. Yet while you want to start with a number sufficiently far from your ultimate goal, you have to be careful not to be so extreme in your opening that you lose credibility. Once you have determined your opening, the next step is to plan concessions. Decide what must happen in order for you to make each concession, what or how much you will concede first, second, third and the general timing of your concessions. Then you determine your final step. (See Tip 9).
Tip 9- Determine Your Desired End Point and When to Walk Away – The first step in assessing when and how to end the negotiation is to determine your BATNA or Best Alternative To a Negotiated Agreement. In short this means you need to answer the question: “What is the best reasonably likely NET result my client can expect if I do not resolve this case in negotiation?” If, for example, as a Plaintiff in a defamation case you think that, after deducting attorney fees and trial costs, you reasonably can expect to net $70,000 after a trial, then it makes little sense to negotiate much below that number or below your BATNA. This BATNA then helps you determine your aspirational goal and your trip wire number. The aspirational goal is where you would optimally like to resolve the case, which may be, for example $150,000. In contrast, a trip wire is like a flexible bottom line. While a bottom line is usually a rigid line drawn in the sand past which you will absolutely not negotiate, a trip wire is a point (e.g. $70,000 in your defamation case) at which you assess how the negotiation has developed so far, and whether you should proceed or walk away. In short, have an identified range (e.g. $150,000-$70,000) of where you want to end up in the negotiation but be ready to change it as developments warrant.
Tip 10 Be Patient and Collaborative – Once you begin the negotiation, take your time. Remember to gather the information you decided in advance you wanted to get from your opposing counsel before you make offers or concessions. Use the opening stage to develop a rapport with the other side and engender a collaborative atmosphere - one that says you both are working to reach a resolution that meets both your clients’ needs. Finally, if you can’t reach a resolution in the first session, consider planning a second negotiation session to take place after both sides have had time to assess. Even if you don’t plan a follow up session right away, at least keep the door open to subsequent negotiations should future developments warrant it. Persistence and baby steps are often the best tools for building a successful resolution.
Antoinette (Toni) Raheem is an attorney, mediator, arbitrator, ADR professor of law (at MSU and Cooley Law Schools) and mediation trainer. She is a past Chair of the State Bar ADR Section and active with other national, local and state ADR boards, and has authored numberous articles on ADR. A graduate of Princeton University and Columbia Law School, she is the recipient of awards such as Trailblazer of the Year, Businesswoman of the Year, Pioneer Award and more.