Ethical Dilemmas in Negotiation: Good Faith, Truthfulness, and Client Representation, Study notes of Negotiation

Download Ethical Dilemmas in Negotiation: Good Faith, Truthfulness, and Client Representation and more Study notes Negotiation in PDF only on Docsity! Negotiation 1 BASICS OF NEGOTIATION J. Alexander Tanford, 2000 1. BASIC PRINCIPLE, WITHOUT WHICH NEGOTIATION IS IMPOSSIBLE Successful negotiation requires compromise from both sides. Both parties must gain something, and both parties must lose something. You must be prepared to give something up to which you believe you are entitled. You cannot expect to defeat your opponent or "win" a negotiation by either the power of your negotiating skills or the compelling force of your logic. This is not to say that good negotiating ability is irrelevant. In most cases, a range of possible outcomes exists. A skilled negotiator often can achieve a settlement near the top of the range. 2. MISCELLANEOUS LEGAL PRINCIPLES, IN NO PARTICULAR ORDER ! Rule 68 provides that a defendant may make a written offer of judgment, and if the plaintiff refuses it, plaintiff becomes liable for all the litigation costs if plaintiff does not do better at trial. ! The judge is permitted to participate in negotiation as long as he or she acts as a catalyst, encouraging settlement but not taking sides. If the judge becomes too actively involved, he or she may become biased against a party who is reluctant to settle, disqualifying the judge from presiding further. ! In most cases in which a settlement is reached, court proceedings can be terminated without obtaining judicial approval. Just file a stipulation of dismissal signed by all parties. See Rule 41. ! Court approval of settlements must be obtained in a few cases, especially if claims by minors are involved. ! A negotiated settlement is a contract, controlled by the law of contracts. ! Generally speaking, an agreement need not be in writing unless it involves real property, is within the statute of frauds, or a writing is required by local rule. ! If the agreement was procured through fraud or duress, is based on a mutual mistake, or lacks consideration, it may be void. Therefore, if you lie about the facts, misrepresent the law, or otherwise deliberately deceive your opponent in order to gain a bargaining advantage, the agreement you reach is voidable. ! If a settlement is breached, contract law applies in determining the remedies available to the aggrieved party -- specific performance, compensatory damages, or treating the agreement as rescinded. ! Conduct and statements made during unsuccessful negotiations are inadmissible at trial on the main issues of liability and amount of damages. See R. Evid. 408. 3. ETHICAL CONSIDERATIONS A. HONESTY VS. GAMESMANSHIP Several ethical questions arise constantly in negotiation. ! Must negotiations be conducted in good faith, without deception or trickery? ! May a lawyer resort to cleverness and benign deception in order to reach a fair And just result? ! May a lawyer take advantage of weaknesses and mistakes by his or her opponent and accept Negotiation 2 an unjust settlement? ! May a lawyer "bluff" during the negotiation game? The answers to these basic ethical questions are far from clear. Some people argue that negotiations must be conducted with truthfulness and candor, and that a lawyer ethically may seek only just resolutions. The kind of all-out partisan advocacy appropriate in a courtroom may not be proper in negotiation. In the American Bar Association's 1908 Canons of Professional Ethics, Canon 15 reflected this feeling that a lawyer had a moral obligation to be fair. It stated that "nothing operates more certainly to . . . foster popular prejudice against lawyers . . . than does the false claim . . . that is it is the duty of the lawyer to do whatever may enable him to [win] his client's cause." Instead, the lawyer is exhorted to "obey his own conscience and not that of the client." Canon 22 required "candor and fairness" when dealing with other lawyers. The 1969 Model Code of Professional Responsibility forsook this ideal, eliminating the requirement of candor and replacing the lawyer's obligation to obey his or her conscience with EC 9-2: "A lawyer should determine his conduct by acting in a manner that promotes public confidence in the integrity . . . of the legal system and the legal profession." The latest revision, the ABA Model Rules of Professional Conduct, returns to the basic idea that you owe an ethical obligation of candor to your opponent. Rule 4.1 states that in "the course of representing a client a lawyer shall not knowingly make a false statement of material fact or law to a third person," a term that includes the opposing party in a negotiation. It would therefore be improper to actively deceive your opponent. For example, it is unethical to suggest a settlement of $100,000 because that is the maximum under your client's insurance policy, when you know she has $250,000 coverage. B. CONCEALMENT AND DECEPTION The ethical prohibitions against making deliberate misrepresentations during negotiation are clear. Rule of Professional Conduct 4.1 prohibits you from knowingly making a false statement of law or fact at any time during your representation of a client. The rule provides no exception permitting false statements during negotiation. It covers not only false statements about the facts of the case but also false and misleading statements made to facilitate reaching a favorable agreement. Nevertheless, this is probably the most frequently violated ethical rule. The prohibition against active misrepresentation does not appear to require that you correct your opponent's misunderstanding of the facts or law, as long as you do nothing to encourage it. The Committee on Professional Ethics has stated that while a lawyer is under a duty not to mislead the opponent by misstatement or silence, he or she is under no duty to disclose the weaknesses of the client's case or correct his or her opponent's misconception of the law, even if a wrong or unjust result is reached. Rule 4.1 of the Model Rules of Professional Conduct continue to make it acceptable to take advantage of an opponent's misunderstanding. Proposed language in the 1981 Final Draft of the Model Rules that would have prohibited failure to disclose facts when such a failure would be the equivalent of making a material misrepresentation was not enacted. Nevertheless, in extreme cases even passive deception may be unethical. If you conceal facts that you know would cause your opponent to break off negotiations completely, and permit a settlement to be based on material false assumptions, you may have acted unethically. For example, it is certainly unethical for a plaintiff's attorney to proceed with negotiations in a civil case if the client has died. C. PROTECTING THE INTERESTS OF YOUR CLIENT During negotiation, lawyers often forget that they are there to represent the interests of a client, not to engage in a battle of wits with another attorney. This gives rise to two common ethical violations: revealing confidential information without permission, and failing to adequately communicate with the Negotiation 5 Even in cases where the comparative fault doctrine does not apply, will the jury make a practical application of it during their deliberations and reduce plaintiff's damages? ! If the jury finds for plaintiff on liability, what is the most likely range of possible damage awards? In criminal cases, what sentence will a judge actually give? ! Is there an emotional factor that will cause the jury to increase or decrease plaintiff's damage award, or a judge to raise or lower a sentence? For example, if the jury likes the plaintiff, they may award higher damages. Are any young children involved? ! Will the defendant be seen as having a "deep pocket?" and the plaintiff as being in dire need of money? ! Does the case involve any controversial issues, such as drunk driving, abortion, allegations of sexual harassment, and so forth, likely to provoke extremely emotional reaction by some jurors? ! Who are the lawyers on each side? How good are they? ! Will the jury find out about the previous history and character of a plaintiff, victim or defendant? Will the plaintiff be able to introduce evidence of insurance? ! How much extra would it cost to go to trial? B. SETTING YOUR BARGAINING RANGE IN CIVIL CASES The first step in negotiation planning is to set your bargaining range. You first need to estimate the range of likely results if the case went to trial. What is the best realistically probable outcome and what is the worst likely result? At this stage, you can safely ignore the remote possibility that an irrational jury would do something improbable. To set your bargaining range, you need to establish the upper and lower limits. The upper limit obviously is your best case scenario. Setting the lower limit is a more difficult process. In consultation with your client, you must set a point at which you would rather take your chances at trial than accept a settlement offer. To establish a realistic bargaining limit, you must predict the likelihood of receiving a favorable verdict and the probable amount of such a verdict, and the extra cost in going to trial. In its simplest form, the calculation works as follows: Suppose that a plaintiff lost a hand in a table saw accident. The evidence will show that despite a clear warning not to operate the saw without a protective cover in place, plaintiff had removed the cover. Plaintiff alleges defective design because the cover was cheap plastic easily removed or broken. You may estimate that the most optimistic scenario is a recovery for plaintiff around $250,000. However, you may calculate that a more likely average recovery is around $100,000, and you have only a 50% chance of a favorable verdict on liability. If it would cost an extra $5000 to go to trial, then the bottom of your bargaining range is $45,000. All methods of arriving at a settlement value depend on three predictions: the amount of damages a reasonable jury would award if it found the defendant liable, the likelihood it will find liability, and the additional costs of going to trial. Many attorneys simply rely on averages -- either from their own experience or from sources that report typical jury awards, such as Jury Verdict Research, Personal Injury Valuation Handbooks (multi-volume set that reports average jury verdicts according to the kind of injury, gives the likelihood of a verdict, and provides information necessary to adjust the expected verdicts based on overall verdict trends in different localities and on secondary influences such as the age of the plaintiff and the percentage of permanent disability). The problem with using averages is that they are accurate only if you have an average case. For all the reasons discussed in the preceding section, your case may have many peculiar strengths or weaknesses that make it illogical simply to treat it as average. Every case should be evaluated on its own merits. That is, after all, the way the jury will treat it. An estimate of the probable damage award consists of four components. First, uncontested 1 The value of having $50,000 today to invest at 6% interest, as opposed to getting the same $50,000 from a jury two years from now. Negotiation 6 provable damages should be included in your estimate at their full value. This category includes documented special damages -- medical costs, property repair or replacement, lost wages and other out-of-pocket expenses -- about which amount there is no dispute. Second, disputed and undocumented special damages must be evaluated. You must decide how likely the jury is to award such damages. Most attorneys would include only a portion of a disputed amount, a percentage that corresponds to the likelihood of proving it. Third, intangible damages, such as pain and suffering, must be estimated. This is a difficult and imprecise calculation based primarily on the factors that affect whether jurors will want to provide the plaintiff with a substantial award -- the type of injury or disfigurement, the type of plaintiff, the obviousness of suffering, objective indications of pain such as heavy medication, length of hospital stay, and the permanency of the injury. Most attorneys rely on their experience or use a "multiplier" formula based on special damages; for example, that the pain and suffering award will be three times the special damages. Fourth, you must determine whether the law entitles the plaintiff to damages such as punitive or consequential damages, including in your estimate only those items the jury can award under the law. Once you have estimated provable damages, you must determine your bargaining limit. This is a more complicated process than simply multiplying the odds of a plaintiff's verdict times the damages. Each party has transaction costs that keep increasing as the case drags on. To the extent that settlement saves (or increases) these costs, your bargaining limit is affected. You must take into account: ! Litigation costs. ! Settlement costs associated with the time attorneys must spend in negotiation, drafting proposals, etc. ! Fee shifting costs if the loser can be forced to pay the winner's attorney fees. ! Opportunity costs of delaying a resolution. ! Non-economic costs, such as damage to reputation if a public trial is held, or continuing mental distress while the case is pending. Putting all this together, a plaintiff might determine a bargaining limit as follows: 1) P estimates a most likely recover of $100,000. 2) P estimates a 50% likelihood of getting a favorable verdict on liability, so P multiplies $100,000 by .50, which equals $50,000. 3) P estimates that litigation will cost $5000, so subtracts that amount from $50,000, and gets $45,000. 4) P estimates it would take twelve hours of attorney time to negotiate and draft a settlement, which would cost $1800, and adds that to the previous figure. The bargaining limit is now at $46,800. 5) Fee shifting is not an option for a personal injury case, so it does not change the calculus. 6) P figures it will take two years to get the case to trial, so that there is a $6000 opportunity cost.1 The total is reduced by this amount, and now stands at $40,800. 7) The client decides that she would rather settle for as much as $2000 less than go to trial, because she does not want her prior psychiatric history becoming public, so P reduces the figure by that amount. P's bottom line is $38,800. C. VALUING NON-MONETARY ISSUES The negotiation of disputes will almost certainly require resolving nonmonetary issues. A plaintiff Negotiation 7 may want a nuisance removed, a letter of apology from the defendant, delivery of goods in partial performance of a breached contract, child visitation rights in a divorce, public withdrawal of a defamatory statement, a particular method of payment, and so on. Although such demands cannot easily be translated into dollars, there is an old saying that everything has its price. In a typical civil negotiation, a value must be put on them. For example, if the defendant is prepared to offer a maximum of $10,000 in settlement of a libel case, but the plaintiff demands a public retraction in addition to a monetary settlement, it is unreasonable to expect the defendant to give such a retraction in addition to the full $10,000. Both compensate the plaintiff; therefore, the defendant can expect the plaintiff to give up some economic compensation in return for the non-economic compensation. Both parties must place a value on the retraction. Is it so embarrassing to the defendant to apologize that he or she is willing to pay an extra $5,000 to avoid doing so? Is the retraction so important to the plaintiff that he or she is willing to give up all or part of the monetary damages? Only the client can answer these questions. D. PLANNING THE NEGOTIATION The actual negotiation can be understood as a recalculation of the bargaining limit by the parties working together. If the parties can agree on the value of damages, the likelihood of a finding of liability, and the transaction costs, then calculating a fair settlement is simply a matter of mathematics. However, because of the large number of estimates and approximations involved, only rarely will the parties agree on the numbers. Places where the parties disagree create disputes that must be resolved if you are to reach agreement. This dispute resolution forms the heart of the negotiation. Your planning must identify areas of probable dispute and how you will compromise on them. This is a radically different approach than a trial plan. For trial, you prepare arguments and stratagems for how you will win a disputed issue. Your case theory contains a plan for explaining to a jury why you are right and your opponent wrong. For negotiation, you must abandon these winner-take-all attitudes. You do not win on disputed issues, you concede that both sides have legitimate points, and you compromise. On any quantifiable dispute, such as dollars or percentages, three scenarios are possible: 1) the plaintiff and defendant have independently arrived at the same number; 2) plaintiff's bottom line is still higher than defendant's maximum limit; or 3) plaintiff's bottom line is lower than the defendant's maximum limit. If all cases fell into the first category, negotiation would be unnecessary. If all cases fell in the second category, negotiation would be impossible -- the defendant would rather go to trial than take the plaintiff's lowest offer, and the plaintiff would rather go to trial than accept the defendant's highest offer. Settlement discussions, therefore, must be premised on the third proposition: you can do better than your bargaining limit because your opponent is, for some reason, willing to give you more than you think an item is worth. This phenomenon can be explained by transaction costs and risk factors. Even if both sides evaluate the case in the same way, for example, at a fifty percent chance of a $100,000 verdict, their bargaining limits will be different. The defendant may be willing to give not only the $50,000, but also an additional $10,000 to avoid fixed litigation costs and the risk of an aberrationally large verdict. Thus, the defendant is willing to give the plaintiff more than the plaintiff expects. Similarly, the plaintiff may be willing to settle for $5,000 less than $50,000 because plaintiff faces similar risks. Both parties will therefore be content if the case settles anywhere between $45,000 and $60,000. The picture is complicated by two factors that can either widen or narrow the settlement range. First, the sides may have access to different information that affects the probable outcome of an issue. For example, a defendant sued for negligence may admit to his attorney that he was negligent, causing the defense to evaluate the likelihood of a plaintiff's verdict at 90%, rather than 50%. Alternatively, the defense may discover a new eyewitness who confirms the defendant's denial of negligence, a discovery that reduces the defense's evaluation of the likelihood of a plaintiff's verdict on liability to 25%. Negotiation 10 Litigators stress the importance of advance planning about the precise concession points you will use. Remember that your agenda represents negotiations within negotiations. For example, if you are negotiating a personal injury case, you will have to resolve issues of liability, comparative fault, medical damages, property damages, lost income, and pain and suffering. Within medical damages may be hospital bills, doctor fees, and the cost of physical rehabilitation. Your agenda might therefore look like this: 1. Concede contributory negligence 2. Defendant's liability 3. Comparative fault 4. Property damages 5. Medical damages a. Hospital bills b. Doctor fees c. Rehabilitation 6. Lost income 7. Pain and suffering An initial offer to settle for $325,000 is really just a total of all the numbers that will eventually be plugged into this list. Your concession points should be tied specifically to particular agenda items. For example, you may make a first offer on comparative fault at 80% (best case) and be prepared to go to 50% (worst case). Do you jump right from 80 to 50 if the defense vehemently refuses to consider 80? Or do you plan several stops in between? If you plan several stops, exactly what numbers will you offer and why? Suppose your own client had dropped a beer in his lap while driving, which caused him to suddenly hit the brakes, and that only one brakelight was working at the time he was rear-ended by a speeding Greyhound bus. You might plan to concede 20 percentage points on the drinking issue, and 5 points on each of the other safety issues, based on your estimate of how seriously they would affect a jury. The process works the same way for dollar-amount concessions. Your client may have been out of work for fifteen weeks, and averaged 40 regular hours and 5 overtime hours a week, so you ask for 600 hours of lost income at $20 an hour plus 75 hours of overtime at $30 an hour, for an opening offer of $14,250. You are prepared to concede $2250 because the overtime is speculative, and another $800 because there were one-week layoffs during the summer. In planning these concession points, experienced negotiators give the following general advice: ! Avoid large concessions because they weaken your credibility by communicating that your initial offer was not a serious one. ! Small concessions communicate that you have little room left to bargain, so they should be avoided unless the you are in fact running out of negotiating room. If your adversary erroneously believes you have no room left, he or she may terminate the negotiating session prematurely. ! Plan concession points on each issue in an order that permits you to move in ever decreasing amounts. This avoids the problem of making premature small concessions. ! Try to have many, rather than few, concession points (without appearing ridiculous). That may enable you to move in smaller increments than your opponent, and it will be easier for you to make small concessions to keep the negotiations rolling. ! Since you cannot change the facts and law, and since you will not be credible if you offer only a small concession on a major issue on which your position is weak, your planning must concentrate on how the issues will be defined. For example, if all medical expenses are Negotiation 11 defined as one issue, the concessions will be large; if treated as separate issues of emergency room expenses, room costs, surgeon fees, medication, and operating room charges, each concession will be smaller. 4. Bring Supporting Documents Part of your job as a negotiator is to sell your compromise proposals to your opponent. But bear in mind an important distinction: your job is not to "win" the negotiation by persuading your opponent to agree to your most optimistic position or give you everything you ask for in your opening offer. You must genuinely give something up (not just pretend to give up something you didn't really want anyway) if you expect to settle the case. But it is important that, when you make a concession and offer a reason for it, that you convince the other side of its soundness. You can best accomplish this with facts. If plaintiff expects the defendant to accept $20 an hour as the basis for determining lost income, plaintiff must prove it -- produce a paycheck stub. If defendant expects plaintiff to concede a week's income because of layoffs, defendant must prove it -- produce the newspaper article announcing it. If either side expects to make a legal argument that attorney fees can be assessed to the losing side, bring the statute or case with you that says so. Do not expect your adversary to rely on your own assurances that a fact is true. Why should your opponent believe you? You are biased and would say anything to get a larger settlement. The more documentation you can produce in support of a compromise, the more likely it is to be accepted. If you and your opponent are arguing about what the impact of the plaintiff's drinking will have on comparative fault -- you say 20%, the defendant says 30% -- if you cannot document your position, you will eventually have to either "split the difference" and accept 25%, or break off negotiations. But, if you can produce a page from a law journal article reporting a statistical study of traffic accident cases in which the authors conclude that drinking affected verdicts by 20%, then your opponent will probably have to concede that your figure is the more accurate one. 5. Client sets bargaining limit. Ultimately, it must be your client who sets the bargaining limit, deciding on the bottom line of your negotiating range. You have the responsibility to advise your client and assist him or her in evaluating where a realistic bargaining limit should be set. This is not always an easy task if the client is unwilling to accept the possibility that he or she might lose.. If the client demands an unreasonable settlement or refuses to authorize settlement negotiations at all, you must either withdraw from the case or carry out your client's wishes. Many attorneys forget that it is the client's claim and that they are playing with the client's money. 5. CONDUCTING NEGOTIATIONS A. BASIC PRINCIPLES: COOPERATION AND FLEXIBILITY The evidence is overwhelming that cooperation is the surest road to successful settlement. Hostility, distrust, stubbornness, self-righteousness, conflict intensification, unjust demands, and attempts to gain unjustified advantages beget non-cooperation rather than concessions, and tend to cause a breakdown in the communication necessary to reach a settlement. The key ingredient in cooperation, however, is mutuality -- you cannot be unilaterally cooperative. If you are making concessions while your opponent is not, you are engaging in appeasement, not cooperative negotiation. Successful bargaining occurs when you are prepared both to be cooperative and to demand cooperation from your opponent. The general conclusion implied by research is that cooperation begets cooperation; 2 Jeffrey Rubin and Bert Brown, The Social Psychologu of Bargainiong and Negotiation 270-72 (1975). The authors cite twenty-two studies that support this conclusion, but also cite eight studies that have found no systematic relationship between one party's cooperativeness and the behavior of the other party, and two studies finding that noncooperative behavior induced greater cooperation by the other party. Negotiation 12 and, conversely, noncooperation begets noncooperation. But why should this be so? Bargainers ... are often concerned with intangible issues having to do with how they look in the eyes of others. In the presence of an adversary who behaves in consistently competitive fashion, the need to maintain or not lose face emerges as a central theme in the relationship and drives the bargainer to defend himself through competitive behavior. On the other hand, to the extent that one's adversary chooses to cooperate, a bargainer's need to maintain face (to look tough) is dramatically reduced, and he can and does risk the reciprocation of cooperation.2 Genuine cooperation requires flexibility, not just the appearance of flexibility. There is a real possibility that your pre-negotiation evaluation may have been too optimistic, evidence exists of which you are unaware, or you failed to consider an issue. If during bargaining you realize you have over- or undervalued your case, you must be prepared to modify your original expectations. Many lawyers know how to appear flexible, through pre-negotiation planning of concessions, but stubbornly cling to their initial evaluation even after new information becomes available during bargaining that changes the facts under which that evaluation was made. For example, suppose a plaintiff's attorney has set a total bargaining limit of $40,000 based on an expected recovery of $10,000 medical costs and $30,000 for pain and suffering, but the defendant convinces her during bargaining that only $8,000 of the medical costs are recoverable. Many attorneys are not flexible enough to realize that their total bargaining limit now must be reduced because they had misvalued the case. Instead, it is common for bargainers to raise irrationally their limit on the remaining issue to try to make up the difference, stubbornly sticking to their original, incorrect appraisal. B. PRELIMINARY NEGOTIATIONS: AGENDA, AUTHORITY, AND GROUND RULES Social psychologists have found that bargaining effectiveness is usually increased if the channels of communication are structured in advance and agreed upon by both parties. Uncertainty about the ground rules of a negotiating session leads to competitive rather than cooperative behavior. Mutual discussion of the issues to be bargained produces better outcomes than unilateral planning. If the parties do not structure the negotiation, they take longer to reach agreement, remain farther apart on the issues, and are less yielding. Despite this evidence, it is apparent that most lawyers do not negotiate over the agenda, preferring to keep their agendas hidden. This leads inevitably to competitive behavior in which both sides strive for psychological control over the negotiations, which in turn leads to antagonism and the breakdown of cooperation. Even those attorneys who recognize that this happens see little advantage in overt agenda negotiation, preferring the tacit agreement that arises from the process of exchanging offers. They argue that not only do agenda negotiations add more disputes to already contentious situations, but also attorneys never stick to any agreed-upon plan anyway. One good way of beginning a discussion of agenda and ground rules is for you to prepare a written offer in advance and send it to the other attorney. In your letter, you can express concerns you have, suggest a timetable for discussion, provide a proposed agenda, and include your first offer. When the Negotiation 15 stronger demand, encouraging the opponent to accept the milder of the two. It is often used in criminal cases, in which a defendant's refusal to bargain results in additional charges being filed, to "apply pressure." In a normal case, this ploy cannot hope to succeed, because the opponent will simply break off negotiations if you use this tactic. It can be used, however, by the more powerful side in a case where one side has a strong advantage. ! Cooling-off periods are an important tactic. Negotiation takes patience. Giving yourself time to think, to calculate, or to caucus with your associates can prevent you from being stampeded into an unwise agreement. Cooling-off periods can restore a level of decorum and rationality to emotionally charged bargaining. ! Silence is similar to a cooling-off period. Simply waiting the other side out may elicit a new concession or new proposal. Knowing when to stop talking and to let the other side respond is also crucial to effective negotiation. 3. Deadlock avoidance tactics ! Go to mediation by enlisting the help of a neutral person who can encourage settlement and suggest compromises. The judge is often willing to act in this role, or you can hire a mediation service. ! Use subcommittees -- assign one person from each negotiating team to try to resolve difficulties away from the negotiating table. ! Substitution is the assigning of new negotiators to take over when the original ones seem to have reached an impasse. ! Splitting the difference. This is probably the oldest negotiation tactic, used to reach final settlement when the parties are near agreement. Logically, this tactic makes little sense, because it is unrelated to any aspect of the case. It is unwise to use it unless the amounts in dispute are small. D. COUNTERTACTICS 1. Making counteroffers If you are negotiating in good faith and wish to facilitate settlement through cooperation, it would seem logical for you to respond to an offer with a counteroffer. This exchange of offers, accompanied by discussions of the reasons underlying them, helps isolate differences of opinion and helps structure the negotiation. Indeed, the wisdom of this approach is borne out by a number of experimental studies. Maximum cooperation is achieved when the parties alternate concessions. You may imagine that it is a good tactic to try to get your opponent to make several concessions in a row, and feel you are gaining an advantage in so doing. The problem is that if you fail to respond to a legitimate compromise with a compromise offer of your own, the party making the first move may feel betrayed. The result may well be a breakdown in negotiation. Some attorneys who employ a more competitive negotiating technique try to delay the making of counteroffers as long as possible. They expect that their opponents will continue to submit lower and lower offers (make all the concessions) while they do nothing, only submitting a counteroffer when they believe the opponent is near his or her bargaining limit. This tactic, however, is likely to work only if the opponent is desperate to settle. Otherwise, he or she is unlikely to make a second offer or to continue negotiations at all unless you submit a counteroffer. 2. Dealing with Hard or Unreasonable Tactics So far the discussion has assumed that both parties genuinely are interested in trying to reach a mutually beneficial settlement and understand that cooperation is the best way to achieve this. Negotiation 16 However, you never can be certain that your opponent is negotiating in good faith unless he or she proves it by honest bargaining. How should you respond to hard tactics -- threats, ultimatums, unreasonable offers, stalling, and so forth -- that threaten to deadlock the negotiation and make settlement impossible? In most cases, you probably should accept the inevitable and terminate the discussion. Negotiation will not be successful unless both sides wish it to be. (a) Unreasonable First Offers Your opponent may make an unreasonable first offer for one of three reasons: he or she is not bargaining in good faith, has reached a very different estimate of the value of the case than you have, or is trying it only as an exploratory tactic to test your reaction. In the first two situations, the probability of eventually reaching a settlement is extremely small. In the third situation, if you indicate a willingness to consider the outrageous offer, your opponent may interpret your reaction as an indication that you are desperate to settle at any amount and may raise his or her bargaining limit. This also makes eventual settlement unlikely. Therefore, your reaction to an unreasonable first offer should be the same regardless of the reason it was made. You should be honest and tell your opponent that the offer is way out of line and indicates that agreement is probably impossible. You can either ask for justification or for a more rational offer, or you can make your own offer. It is then up to your opponent to decide whether he or she wishes to negotiate. You should not be afraid to break off negotiations that cannot result in agreement. Some attorneys play the I-can-be-more-childish-than-you game, and counter an unreasonable first offer with a similarly unreasonable offer of your own. Obviously, this is a silly tactic if your goal is to reach a settlement. (b) Failure to Make an Offer (Not Bargaining in Good Faith) Your opponent may refuse to make an offer or counteroffer. He or she may try to force you into changing your own offer (making concessions) without making any counter-proposal. You may be asked to change your first offer because it is too high or low, or your opponent may tender a few offers and then stop making concessions. Effective negotiation requires that both sides cooperate. If your opponent stops, it is pointless for you to continue. You should never bid against yourself. (c) Deadlocks If your opponent refuses to make further concessions before you have arrived at an agreement, you have reached a deadlock. Deadlocks are more likely to occur when negotiating a component issue than in the exchange of lump-sum offers. A number of tactics are available when you are deadlocked. If the parties are far apart, if the issue is important enough, or if you have no bargaining room left, you may have to break off negotiations. It may be that your opponent genuinely cannot settle within your limits. In many deadlocked situations the parties will be close to agreement, the issue unimportant in relation to the whole controversy, or your opponent's last offer will be within your bargaining range, so that breaking off negotiations and going to trial is a disproportionate response. Available alternatives include: ! Offering to split the difference, if the two side are close. ! Offering to trade concessions, one party conceding on this issue and the other conceding on another deadlocked issue. ! Combining the deadlocked issue with several related issues (this may require reopening an earlier agreement) and trying to negotiate the package. ! Making a final compromise offer at your bargaining limit, making it clear that it is a take-it-or-leave-it proposition. Negotiation 17 (d) Attempts to Reopen Settled Issues Your opponent may attempt to reopen an issue on which agreement had been reached or may try to change a negotiated agenda by adding a new issue. Obviously, this kind of tactic amounts to "unnegotiating." If unjustified, it demonstrates bad faith, and it should not be tolerated. If the negotiations are allowed to start to unravel, progress has stopped and begun to move backwards. Probably the best response is to demand that the negotiations continue, and suggest to your opponent that he or she wait until a final agreement is worked out, at which time he or she can accept or reject the package. Another tactic that can make this problem less likely to occur is to write down the points of agreement as they are reached -- it may be harder for your opponent to try to reopen an agreement that has been reduced to writing. On some occasions, a brinkmanship response -- which, in effect, threatens to break off negotiation unless the other side drops its demand to reopen or add an issue -- may be disproportionate to the controversy. Your opponent may have a valid reason for wishing to reopen an agreement. He or she may have made a mathematical error in arriving at an amount, may have discovered new facts that alter the premises on which an issue was negotiated, or may be trying to work out a way around an impasse. Before you take precipitous action, you should consider carefully whether your opponent's request is justified. Also, if the settled issue resulted in an agreement disproportionately in your favor, and you still had bargaining room left, it is probably better to reopen than risk an eventual rejection of the final settlement proposal. (e) Walkouts Your opponent may terminate the negotiations at any time. You have no control over whether he or she chooses to bargain or decides to go to trial. A walkout may be a genuine expression of your opponent's inability or unwillingness to negotiate further, or may be just a tactic to scare you into a major concession. In either case you have two choices: offer a concession to encourage the other side to return, or do nothing and hope your opponent makes overtures to reconvene. If you have bargaining room, you probably should offer a concession. On the other hand, if you are already at or near your bargaining limit, or have already made several concessions in a row, you should wait for the other side to be reasonable. Do not let a walkout panic you into going below your bargaining limit. E. FACE-TO-FACE, TELEPHONE, OR WRITTEN NEGOTIATION. Negotiations can be conducted in three ways: in a face-to-face meeting between attorneys, over the telephone, or by an exchange of written offers. Is there any reason to prefer one of these methods over the others? Negotiators seem to prefer face-to-face bargaining, because it allows you to judge your opponent not only by what he or she says, but also by how the negotiator appears. Face-to-face negotiation also allows you to present visual or other sensory evidence to support your position. For example, bringing a jar of effluent to a negotiating session may help convince negotiators representing a chemical plant that you easily can prove to a jury that the smell is a nuisance. Experiments by psychologists have shown that greater cooperation is achieved if both parties can see and hear each other than if they are isolated. F. PRESENCE OF CLIENT AT NEGOTIATION. In almost every episode of the television series "L.A. Law," the lawyers bring their clients with them to a negotiation session. There are some possible reasons for doing this --it will show the client you are working on the case, it will make final agreement easier, and, if the client is a good witness or has suffered sympathetic injuries, it may convince your opponent that you can present a good case to the jury. However, the dangers (amply illustrated on L.A. Law) usually far outweigh these small