Alternative Dispute Resolution

AuthorStewart I. Edelstein
ProfessionCommercial trial lawyer
Because the vast majority of cases settle before trial, you need to know
how to negotiate effectively. This requires k nowing how to deal with
the inherent stresses of negotiating, when to negotiate, the benefits of
making t he first offer, modes of negotiation, negotiation strategies,
negotiation ethics, what to do if negotiation is successful, and what to
do if it is not. This discussion dr aws on the work of Daylian Cai n, Asso-
ciate Professor of Management and Marketing, Yale School of Manage-
ment; Daniel Kahneman, a Nobel laureate psychologist specializing in
decision making; Edward Edelstein, a partnership consultant who con-
ducts negotiation seminars (full disclosure: he is my brother); Deepak
Malhotra and Ma x H. Bazerman, professors at the Harvard Business
School; and, for the discussion of negotiation ethics, Ethical Gu idelines
for Settlement Negotiations promulgated by the Litigation Section of
the American Bar Association.
1. How to deal with the stresses of negotiating.
By its nature, any negotiation triggers external and interna l stresses.
By being aware of them and knowing how to deal with them, you can
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improve the likelihood of a satisf ying experience for you and your client
in any negotiation.
As your client’s advocate in a negotiation, you feel the pressure to
resolve the matter to maxi mize your client’s satisfaction (recognizi ng
that a good settlement is one in which neither party is delighted) while
minimizing the potential costs a nd uncertainties of proceedi ng with
arbitration or litigation.
How do you reduce these external stresses? First, you gather the
information you need to be effect ive in the negotiation—not only
information about the facts a nd the law relevant to the matter but
also an understanding of your client’s motives, priorities and objec-
tives in seeki ng a resolution. Second, you prepare for the negotiation.
This requires an understanding of the negotiation process; t he style of
negotiation that is appropriate for you, tailored to the matter in ques-
tion; the strategies and techniques that will be ef fective for you in this
negotiation; and awareness of the opposing party’s motives, priorities,
and objectives as well as opposing cou nsel’s negotiating style. Third,
you get the support you need from other members of your firm, as
Internal stressors in a negotiation arise from your own self-regard,
confidence in your abilities, personal measures of success, and the real
and presumed career and business implications hinging on t he results
of a particular negotiation. You don’t want to enter into a negotiation
feeling uncomfortable, insecure, anxious, or fea rful—a ll emotions that
can have a corrosive effect on your per formance and sabotage your
You can deal with these internal st ressors by following the advice in
Chapter 7(D and E). You can also second-chair negotiations handled by
more experienced attorneys in your f irm before you negotiate on your
own. If you do so, keep in mind that each attorney has his or her own
style of negotiation. You must develop your own. There is no “right”
or “wrong” way to negotiate, and although you can learn negotiation
guidelines, ult imately there are no negotiation “rules.”
2. When to negotiate.
As in mediation, you should negotiate only af ter you have a solid grasp of
the facts supporting all claims and defenses and a thorough knowledge
of the applicable law. You don’t want to wait too long before negotiating,
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Alternative Dispute R esolution | 167
by which time the par ties have invested so much time, effort, a nd money
in litigating t hat positions have hardened.
You want to negotiate from a position of strength, such as after you
have obtained material admissions from the opposing part y at a deposi-
tion or after you have filed a compelli ng motion for summary judgment,
putting the opposing counsel at significant risk of loss.
A prerequisite for any settlement negotiation is your client’s author-
ity and then continued authorit y for each settlement proposal you make.
Avoid ambiguity in knowing what your authority is in negotiating. And
promptly disclose to your client each offer and counteroffer when it is
made, as discussed in Chapter 5(A), section 5.
3. Benefits of making the first offer.
Based on the theory of anchori ng, you have an advantage in ma king the
first offer in a negot iation because negotiation is framed based on where
the parties st art. As Malhotra and Baz erman explain in their book Nego -
tiation Genius (Harva rd Business School, 2008):
The primary benefit of making a f irst offer in negotiation is that it
establishes an an chor. An anchor is a number that focuses t he other
negotiator’s attention and expectat ions. Especia lly when the other
party is u ncertain about the correct, fair, or appropriate outcome,
they are likely to g ravitate toward any number that helps them focus
and resolve their uncertainty. As it tur ns out, first offers tend to serve
this purpose well: they anchor the negotiat ion and strongly in fluence
the final outcome.
Of course, when you negotiate, the anchor may include many terms
in addition to a number, especially if the pa rties have a mutual interest in
doing business together in t he future. How do you determine what your
first offer should be? Your first offer should be high but within reason.
The more you ask for, the more value you are likely to get if your first
offer is within t he realm of reasonableness. See the discussion of BATNA
and WATNA (acronyms for best alternative to a negotiated agree-
ment and worst alternative to a negotiated agreement) in Chapter 5(B),
sections 3 and 4, for advice on determi ning what that initial offer should
be. And consider this: In a study, people were asked if they would take
juvenile delinquents to the zoo. Only 17% said yes. But if the study
subjects were f irst asked whether they would adopt a juvenile delinquent
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