Law

Thoughts on Law and Law Practice

5 Ways to Screw Up Your Negotiation

Here are 5 things you or your lawyer can fail to do that are guaranteed to make it harder for you to get a good result from your negotiation:

1.  Fail to prepare.

For heaven’s sake, do your homework. In my experience the vast majority of parties fail to prepare properly to for negotiation. You need to know your BATNA cold, and you need to have a good handle on what the other party’s BATNA is too. You need to envision alternatives, and options that might meet some of the interests of both parties. If you don’t know what BATNA is, and many professionals don’t, then you’d better hope the folks on the other side of the table don’t know either.  http://www.scottflegal.com/preparation-is-all-about-batna/

2.   Fail to avoid the insult zone with your first demand or offer.

Any decent negotiator understands the importance of anchoring. In theory, by making a high demand, you “anchor” the other party with a high number, thereby making them more likely to overpay from a psychological standpoint. Conversely, lowball offers are often made to anchor the other party in the low zone. But if your demand is ridiculously high, or your offer ridiculously low, you can poison the negotiation. Rational, planned and meaningful anchoring is one thing. Immediately making the other side walk out and file suit is another.

3.  Fail to recognize that you’re not arguing your case to a judge in court.

The party on the other side of the table disagrees with you. That’s why you’re negotiating. The party on the other side of the table is not a judge, charged with the task of remaining neutral, listening to testimony and then making the right decision. He or she is not there to be convinced. If you or your lawyer thinks that arguing the strength of your case as zealously as possible is going to convince the other side to cave into your demands, you are sorely mistaken. You’re not in court. To negotiate well you must appreciate the value of listening carefully and actively; of empathizing with the other party; and of demonstrating that you are even capable of changing your mind under the right circumstances. You’ll get better results.

4.  Fail to respect the process.

Lawyers, in particular, love to cut to the chase. Why waste a lot of time talking about past history? Let’s keep the emotion out of this, because this is about business. If you hear these words coming from your lawyer’s mouth, find a new lawyer. Negotiation is always about emotion, and I don’t care what the dispute or situation might be about. Negotiation, to be successful, needs to be structured and respected by the parties. If all the parties do is exchange offers and demands, a lot of value gets left on the table. If the parties refuse to devote time and resources to the exercise, the exercise is undermined.

5.  Fail to remember that both you and your lawyer are human beings.

As human beings, we are all hard-wired to overestimate the strength of our case or argument, and to underestimate the strength of our opponent’s case or argument. Remember this as you head into the negotiation. You need to be realistic. If your lawyers tell you that ANY legal issue is a slam dunk, don’t believe them. A surprising number of slam dunks are missed, even in the NBA. Your expert is never as strong as you think. The expert for the other side is never as bad as your lawyers might portray them. And don’t blame the lawyers for this. They’re only human too.

 

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Legal Fees

There is some fairly interesting debate in the online world about legal fees. In particular, the legal fees that are incurred by start ups in venture capital deals are being challenged. In the post that follows, Fred Wilson, well known venture capitalist, describes a venture capital transaction where the parties by agreement used “standard” documents in connection with the funding of a start up business. Despite their efforts to minimize the legal fees, the start up’s bill came in at $17,000.00. http://bit.ly/ghFqdE

Fred feels this is outrageous, and anathema to start up growth, and he throws down the gauntlet. He challenges start up lawyers to lower their fees, specifically to $5,000.00 or less for “standard” seed financing transactions. I will spare you my initial reaction to the story, which is to spew my own accounts of how often “vulture” capitalists upset the apple cart in start up ventures due to their own greed. Read More »

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What’s Persuasive in Negotiations and Mediations?

Sometimes I’m amazed at how bad we lawyers are at managing and resolving conflict. Far too often it seems to me that when lawyers arrive on the scene of a disagreement, we make things worse, not better. We can be like EMT’s who drop the stretcher while loading the patient into the ambulance. Trained in the art of emergency medicine, but clumsy when it comes to handling the patient.

Why do you suppose this is? Why do some lawyers make things worse? I think it’s because some lawyers haven’t learned that being persuasive during negotiations or during a mediation requires a different skill set than trying a case in front of a judge. Read More »

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Preparation is All About BATNA

Most lawyers I know prepare extensively for court hearings. They realize the important role preparation plays in getting good results in court. But when it comes to preparing to negotiate, parties and their lawyers are more likely to fly by the seat of their pants. This seems odd, given that the objective in court and at the bargaining table is essentially the same: getting a good result. For whatever reason, parties tend to leave lots of stuff in a negotiation or mediation to chance.

Part of the problem is that many of us have simply not been trained to negotiate. At most law schools, negotiation training remains an afterthought. It may be touched on in courses like Labor Law, but it is generally not taught as a stand alone course. This is ironic, given that once we become lawyers we probably do more negotiating than anything else. Read More »

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Judicial Battle Over Health Care Grinds On

I was thrilled to read this week that a federal court in Florida had struck down President Obama’s health care legislation as being unconstitutional. That makes the score 2-2. Two federal court judges appointed by republican presidents have found at least portions of the law unconstitutional. Two judges appointed by democratic presidents have upheld the law. Welcome to justice in America.

Twenty six states – the majority governed by republican governors, of course – have now signed on to support the ongoing effort to use the judicial branch to thwart the actions of the legislative one.

What a ridiculous, pointless exercise. What an enormous waste of time and resources. But when the whole exercise is funded by the taxpayers, who cares? Read More »

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Emotion Matters!

If I had a dollar for every time I’ve heard someone involved in a business conflict say “let’s keep the emotion out of this” I would be a wealthy man indeed. To my amazement, there are plenty of people in the business world who still believe that emotion ought to be locked out of the room when parties sit down to settle a dispute. I’m not sure what’s more amusing: that people believe emotion ought to be kept out of the discussion, or that it can be kept out of the discussion.

In my experience lawyers can be among the most ardent believers in this notion. Most of us were taught early on in law school that the law had little room for emotion. Trial lawyers learn that clients get angry, and that the process flows most smoothly when they are kept insulated from one another. In some instances the first time the parties sit in the same room after the case begins is at trial. Business lawyers, on the other hand, tend to run from emotional negotiations as if the room is on fire.

But the evidence is mounting that what we learned in law school about the need to keep emotion out of decision-making was wrong. Modern neuroscience and related emerging fields like neuroeconomics and behavioral economics are  telling us exactly what many of us don’t want to hear: emotion is not only relevant to decision-making, it is an essential ingredient in the recipe for good decisions. When people in conflict attempt to exclude emotion or pretend it isn’t relevant, bad decisions can result.

What is the basis for this shocking conclusion? It’s the brain, stupid! Read More »

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