NEGOTIATION
&
ALTERNATIVE DISPUTE RESOLUTION
OVERVIEW
Professor John Barkai
William S. Richardson School of Law
University of Hawaii at Manoa
Phone (808) 956-5569
E-mail: barkai@hawaii.edu
http://www2.hawaii.edu/~barkai
Common Forms
of Dispute Resolution
Negotiation:
discussion for the purpose of
settling differences
Mediation:
Conciliation:
a neutral third party assists the
parties to reach a negotiated
settlement but has no power to
decide the issues in dispute.
Arbitration:
a neutral third party is given the
power to decide the issues in
conflict. The arbitrator decides after
hearing arguments and reviewing
evidence.
Trial in Court:
evidence is presented to a judge or
jury for a decision under formal
rules of law and procedure.
Professor John Barkai
- Overview p. 1 -
TOP GENERAL COUNSELS SUPPORT ADR:
Fortune 1000 Lawyers Comment on Its Status and Future
David B. Lipsky, Ronald L. Seeber
8 Business Law Today 24 (March/April, 1999)
In a recent survey of the legal counsel of the 1,000 largest U.S.
corporations, the researchers found this information about ADR use:
 90% view mediation as a cost-saving measure
 88% used mediation in the past 3 years
 79% used arbitration in the past 3 years
 most litigate first and then move to ADR or litigate only in
appropriate cases, and then use ADR for all others
 78% have used mediation and 85% have used arbitration in
commercial disputes
 79% have used mediation and 62% have used arbitration in
employment disputes
 81% say mediation is a more satisfactory process than litigation
 mediation is preferred to arbitration in ALL types of disputes
 59% say mediation preserves good relationships
Professor John Barkai
- Overview p. 2 -
BASIC DEFINITIONS FOR DISPUTE RESOLUTION:
COMPETITIVE
Competitive negotiators want to "beat" their opponents; they use high demands,
threats, and make few concessions. They generally try to undermine their
opponent's confidence and seek the maximum for themselves. This traditional
style of negotiating goes by a number of different terms such as positional, winlose, adversarial, power negotiating, hardball, and hard bargaining.
COOPERATIVE
Cooperative negotiators want to "work with" their opponents; they use
reasonable opening offers, show good faith, and initiate the exchange of mutual
concessions. They seek a fair and just settlement. This style of negotiating is
also called win-win, interest-based bargaining, and problem solving.
DISTRIBUTIVE BARGAINING
In distributive bargaining the parties think of the items being negotiated as fixed
and each party tries to get the most for himself. Usually there is just one issue
for negotiation and more for me means less for you. Negotiators are bargaining
over the distribution of profit on the bargaining range. This is a "zero sum"
negotiation. Although the goals of the parties are in direct conflict, a negotiator
can be either competitive or cooperative in a distributive bargaining situation.
INTEGRATIVE BARGAINING
During integrative bargaining, the parties are working together to increase the
amount of resources and to maximize mutual gain. Integrative bargaining
requires two or more issues so that trades can be made. Creating the additional
resources is sometimes referred to as "expanding the pie." Some would call this
"Win-Win" negotiating. The theory here is that the parties have different
interests which can be integrated (reconciled) to create joint gains. Joint gains
are an improvement for all parties to a negotiation.
INTEREST-BASED
Interest-based bargaining attempts to shift the nature of negotiations to a more
collaborative basis. Instead of moving from position to counter-position to
compromise, negotiators try to identify their interests PRIOR to the development
of solutions. Once interests are identified, the negotiators then jointly develop a
wide-ranging set of alternatives, and then choose the best alternative.
Professor John Barkai
- Overview p. 3 -
POSITIONS
Positions are "what" the negotiators say they want. They are really solutions
which have been proposed by the negotiators. Positions are based upon the
interests of the parties; interests are usually not disclosed, at least not in
competitive negotiations. In most negotiations, people take, and then give up, a
series of positions. Behind every position lie many interests.
INTERESTS
Interests are "why" the negotiators want the positions they take. Interests lie
behind the positions of the negotiators. Interests represent the basic needs to be
met. Money and price are not interests in themselves. Money represents
purchasing power, the ability to acquire other needs, status, or power itself.
Understanding interests is the key to understanding "win-win" negotiating. In
many negotiations the interests are never explicitly discussed. In fact, interests
are usually kept secret. Successful "win-win" negotiating requires finding a way
to disclose interests without being taken advantage of.
BATNA
BATNA stands for the Best Alternative to a Negotiated Agreement. It represents
the best result that a negotiator can get somewhere else if an agreement cannot
be reached with this party. In other words, a BATNA is the alternative that the
party will select if they must walk away from this negotiation. It is an alternative
solution. If the negotiation is a DEAL, the BATNA is to walk away to another
party who can offer you a better deal. If, however, the negotiation is over a
lawsuit, your BATNA is to go to court.
BOTTOM LINE
The bottom line is the position at which the negotiator will walk away from the
negotiation. It is also known as a reservation price. If the negotiator cannot get
at least their bottom line in the negotiation, they will go somewhere else.
ZONE OF AGREEMENT
The Zone of Agreement represents the difference between the bottom lines of
the parties. If there is no overlap in the bottom lines of the parties, no agreement
is possible.
Professor John Barkai
- Overview p. 4 -
The easiest way to
improve your
negotiation skills is to
A__
M____
Q________
Professor John Barkai
- Overview p. 5 -
Two Key Ideas
about Negotiation &
ADR
1) Focus on
____________
2) Improve the
________________
Professor John Barkai
- Overview p. 6 -
Basic Principles from Getting To Yes
by Roger Fisher & William Ury
(additional comments by John Barkai)
1.
SEPARATE THE PEOPLE FROM THE PROBLEM.
Don't attack or blame the other negotiator; attack the problem which
you are negotiating. Allow the other negotiator to save "face." Try to
reduce the emotional temperature of the situation and to build a good
working relationship. Allow emotions to be expressed without taking
it personally (although this is difficult). Good communication is
essential. Ask lots of questions, especially open-end and clarifying
questions. Use active listening.
2.
FOCUS ON INTERESTS NOT POSITIONS.
Positions are "what" negotiators want; "interests" are why they want
them. Ask questions to try to learn their interests. Get into shoes of
the other negotiator. Although problem-solving negotiators may be
willing to disclose their interests, be aware that competitive
negotiators will try to learn your interests, but they will not disclose
their own interests. Remember that not all interests are tangible.
Many undisclosed and unconscious personal needs (Maslow) come
to play in negotiations. Settlements can result from both common
and conflicting interests.
3.
INVENT OPTIONS FOR MUTUAL GAIN.
Most negotiators take only one negotiation position at a time, but this
approach suggests brainstorming many options and maybe even
putting them all on the table at once. Generate a variety of options
before deciding what to do. Some people would say to enlarge the
pie before cutting it.
4.
INSIST ON OBJECTIVE CRITERIA.
Instead of allowing the negotiation to be determined by a contest of
wills or power, negotiators can select one or more objective criteria
which can be used to determine the final settlement, e.g., an
independent appraisal.
5.
KNOW YOUR BATNA.
(Best Alternative To a Negotiated Agreement)
Most people think about a "bottom line" in a negotiation, but seldom
do they think about what they will do if they do not reach settlement.
Your BATNA is what you will have to do if you do not reach
agreement. One way to improve your power in a negotiation is to
work on ways of improving your BATNA. A BATNA is your "Walk-away" alternative. Plan in advance what you will do if the negotiation
does not reach a settlement.
Professor John Barkai
- Overview p. 7 -
LITIGATION RUN AMOK
898 F.2d 95 (1990)
BLACKBURN v. GOETTEL-BLANTON
KOZINSKI, Circuit Judge:
This is a case of litigation run amok. A
minor dispute that long ago should have
been resolved by the parties without the
help of lawyers has been transformed
into an attorney-fee-generating machine.
While yielding only $6,654 in damages, it
has resulted in more than $133,000 in
billings for plaintiffs alone.
Facts
There's no doubt about it:
Sheryl
Goettl-Blanton breached a contract. Four
years ago, she agreed to buy a condominium
for $245,000, signed the appropriate forms
and made a small down payment. She even
moved in. A month later, she changed her
mind and refused to go through with the
deal. The would-be sellers, Joseph and
Mary Louise Blackburn, sued Blanton under
the contract, as was their right. After much
procedural wrangling, the case came to trial
and the district court awarded the Blackburns
damages of $6,654, prejudgment interest of
$14,707.14, costs of $14,262.56 and
attorney's fees of $61,250.
On appeal, Blanton challenges the award
of attorney's fees. ... [W]e agree with
defendant that the fees award exceeded
Hawaii's statutory ceiling.
Discussion
This case presents clearly the dilemma
faced by individuals who must seek redress
through our legal system for concrete, yet
modest, legal claims. Under a breach of
contract theory, the plaintiffs were entitled
only to the benefit of their bargain. This did
not amount to much: When defendant
breached the agreement, the condominium
was still worth more or less what she had
agreed to pay for it; all plaintiffs were entitled
to recover, therefore, was the roughly $6000
Professor John Barkai
it cost them to undo some minor physical
alterations to the property and to find a new
buyer. Yet, as anyone who has dealt with
the law knows only too well, a $6000 claim is
hardly worth litigating; it often costs more
than that to hire a lawyer just to file a
complaint.
As here, the solution often
adopted is to pile on a lot of big-ticket claims.
Thus, plaintiffs sued not only for breach of
contract
but
also
for
intentional
misrepresentation,
negligent
misrepresentation, willful and reckless
breach, harassment and abuse of process.
By the time they were finished, they were
asking for more than $1 million, an amount
more nearly worth fighting about. Defendant,
for her part, further raised the stakes by
removing the case to federal court, filing a
counterclaim and heaping on every
conceivable procedural and substantive
defense. What had started out as a small
contract squabble had suddenly become a
major case.
Litigation has its own perverse logic and,
the ante once having been raised more or
less by mutual assent, the parties were
locked into a wide-ranging and costly battle.
The Blackburns sought extensive (and
expensive) discovery as to why defendant
had breached the contract. While irrelevant
to their underlying contract claim, this
discovery was relevant to their tacked-on
claim for punitive damages.
When
defendant resisted, plaintiffs filed repeated
motions to compel discovery and for
sanctions.
Eventually, plaintiffs prevailed only on
their
contract
claim,
recovering
approximately $6000 in damages, plus
interest. They spent considerably more than
that in litigating the case, however, and,
given the scope of the claims and
- Overview p. 8 -
counterclaims, the district court concluded
that a $61,250 award was reasonable. On
this record, we are unable to conclude that
the district court abused its discretion in
awarding this amount of attorney's fees.
II
[4] Plaintiffs, however, face an even more
serious obstacle in recovering attorney's fees
in this litigation, namely the twenty-five
percent ceiling of section 607-17. ...
Our review of Hawaii caselaw leads us to
the conclusion that section 607-17 limits an
award of fees to twenty-five percent of the
judgment. ... The Blackburns claim that
defendant's debt to them was $245,000 (the
purchase price of the condominium), but that
is misleading because, before trial, plaintiffs
sold the condominium to another buyer. The
true measure of defendant's debt, then, was
the amount the Blackburns forfeited by
selling the condominium to someone other
than defendant. As it turned out, plaintiffs
suffered very little damage; the district court
found that at the time of defendant's breach
the property was still worth $245,000.
Defendant's debt, therefore, was limited to
special damages, which consisted solely of
the amount expended by the Blackburns in
repairing the property and finding a new
buyer--i.e.,
$6,654
plus
interest.
Consequently, under Lennen 's debt
rationale, section 607-17 limits plaintiffs' fees
award to twenty-five percent of the judgment
amount.
disputes.
They are clumsy, noisy,
unwieldy and notoriously inefficient.
Fueled by bad feelings, they generate
much heat and friction, yet produce little
that is of any use. Worst of all, once set
in motion, they are well- nigh impossible
to bring to a halt.
This case is not atypical: A relatively
minor dispute mushroomed into a full- blown
war of attrition in which both sides suffered
substantial casualties. The district judge
called it "a cold turkey case" and he was
right. Yet the parties trudged through four
years of expensive and frustrating litigation
all the same. As is quite often the case
when litigation ends, neither side will be
satisfied with the result we reach today.
We vacate the award of attorney's fees
and remand to the district court. On remand,
the court is instructed to award the
Blackburns reasonable attorney's fees not to
exceed $5,340.29 on their breach of contract
claim, and reasonable fees for defending
against defendant's counterclaim.
Here, plaintiffs prevailed; consequently,
they were entitled to reasonable fees not to
exceed twenty-five percent of the judgment.
The judgment consisted of $6,654 in
damages, plus $14,707.14 in prejudgment
interest. See Lennen, 456 P.2d at 236;
Hawaiian Trust, 663 P.2d at 638-39.
Accordingly, the total judgment was $21,361.
14, and the fees award may not exceed
$5,340.29.
Conclusion
Lawsuits have become particularly
inappropriate devices for resolving minor
Professor John Barkai
- Overview p. 9 -