From PLI’s Course Handbook
Bridge-the-Gap l for Newly Admitted Attorneys 2009
#18473
7
THE ART OF NEGOTIATION
Dina R Jansenson
Flemming Zulack Williamson Zauderer LLP
© 2008 Dina R Jansenson, Esq. Reproduction without
permission is prohibited.
Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
© 2008, Reproduction without permission is prohibited.
2
Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
Dina R. Jansenson is a Senior Mediator and Arbitrator for JAMS, a national
dispute resolution company. She has been an ADR professional for the past 20
years and has resolved hundreds of complex disputes involving commercial,
employment, construction, franchise, professional liability, intellectual property,
and international claims. In addition, Ms. Jansenson is a leading trainer of
negotiation and conflict resolution techniques. She teaches negotiation at New
York University School of Law and Alternative Dispute Resolution at Brooklyn Law
School. Ms. Jansenson is often called upon to provide training in negotiation and
mediation for corporations and organizations such as the United Nations, the
United States Department of Justice, the United States Information Service, the
Association of the Bar of the City of New York, and the Practicing Law Institute.
Ms. Jansenson has taught about negotiation, mediation and conflict resolution in
Spain, Italy, Mexico, Argentina, Uruguay and Chile. Finally, Ms. Jansenson is Of
Counsel to the New York law firm of Flemming Zulack Williamson Zauderer LLP,
in New York City, where she specializes in commercial litigation. Ms. Jansenson
can be reached at (212) 233-9887; djansenson@fzwz.com.
3
Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
THE ART OF NEGOTIATION
By Dina R. Jansenson, Esq.
INTRODUCTION
1.
Definition: Negotiation is a process of persuasion parties use to obtain a result by
agreement which is better than they would otherwise achieve. Key concepts:
a. Negotiation is a process – it has a beginning, middle and an end. To
succeed you must understand what to do at each stage of the negotiation and
not rush through the process.
b. Negotiation is a process of persuasion – the most important person in the
room is your counterpart. Your whole focus should be in getting your
counterpart to do what you want him/her to do.
c. To have a successful negotiation you must aim to obtain results which are
better than you could otherwise obtain – accordingly, you must clearly
understand what happens if the negotiation fails and evaluate that possible
result as against what you can obtain by agreement.
2.
We are all capable of using many negotiating modes, but most negotiators have a
tendency toward one of the following styles/strategies:
a. Competitive, Adversarial: the goal here is to “win” - obtain maximum
gain for oneself at the expense of the other person.
b. Accommodating: a person using this approach will resolve the conflict by
yielding to the counterpart, will neglect his/her own concerns to satisfy the
concerns of the other person.
c. Avoiding: avoiders will not address the conflict – they may side-step the
issue, postpone addressing the matter, or withdraw from the situation.
d. Collaborative, Problem-Solving: this is a collaborative search for mutual
benefit – an attempt to work with the other person to find a solution which
fully satisfies the interests of both sides
e. Compromising: the goal here is to find a middle ground, often by splitting
the difference, or finding another solution which partially satisfies both
sides.
See Thomas-Kilmann Conflict Mode Instrument.
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Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
3.
Whether you compete or collaborate often depends on:
a. The situation/setting you are negotiating in – a negotiation with your spouse
over where to take your next vacation will [hopefully] be collaborative, but
a negotiation to buy a used car will likely be competitive.
b. The options available to you in the event of no agreement – the extent to
which you compete vs. collaborate is often a function of what happens if
there is not agreement, and how much leverage you have.
c. Your personality and culture – most people, by virtue of their personality,
culture, etc. are naturally drawn to one negotiation style or another.
d. The effectiveness of the strategy you are using – negotiators will/should
switch to a different strategy if the one they are using proves to be
ineffective.
4.
Most people assume that lawyers are competitive negotiators. However, a 1999
study of lawyers made the following findings:
a. When lawyers were asked to describe the negotiation style of the attorney
with whom they had their most recent negotiation, 64% of the negotiators
were described by their peers as using a “problem-solving” approach to
negotiation, while only 36% used an “adversarial” approach.
b. Only 9% of those lawyers seen as adversarial were rated as effective by
their peers; of those lawyers seen as effective 91% used a “problemsolving” approach to negotiation, while only 9% used an “adversarial”
approach.
c. Some comments from the participants of the study:
 “He advocated for his client – kept coming back to the table – and
proposing alternatives – was effective and courteous – never took
it personally.”
 “I felt the attorney was effective because she was assertive and
aggressive in attempting to maximize the settlement for her client,
but at the same time she was a good listener and kept an open
mind regarding my proposals. She was willing to be
accommodating while not forsaking her client’s goal.”
See Andrea Kupfer Schneider, “Shattering Negotiation Myths: Empirical Evidence
on the Effectiveness of Negotiation Styles,” Harv. Negot. Law Rev., vol. 7 (2002).
See also Charles B. Craver, “Negotiation Styles, The Impact on Bargaining
Transactions,” Negotiation, February/April 2002.
5.
Thus, you are more likely to be effective as a negotiator by using a problemsolving approach to negotiation, as opposed to a purely competitive one.
5
Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
6.
Engaging in certain competitive tactics can be particularly counterproductive. For
example, a study conducted in England, over nine years, of 49 professional labor
and contract negotiator in real estate transactions found as follows:
a. The average negotiator used 10.8 “irritators” (self serving descriptions of
one’s offer, gratuitous insults, and attacks on the other side’s proposal) per
hours at the negotiation table, while the more skilled negotiators used an
average of only 2.3 irritators per hour.
b. Skilled negotiators avoided defend/attack spirals -- comments assigning
blame or disclaiming fault. 6.3 % of the average negotiators’ comments fell
into that category, while only 1.9% of the skilled negotiators’ comments did
so.
See G. Richard Shell, Bargaining for Advantage 13-14 (Penguin Books 1999),
citing Neil Rackham and John Carlisle, “The Effective Negotiator – Part 1: The
Behavior of Successful Negotiators,” Journal of European Industrial Training,
Vol. 2, No. 6 (1978), pp. 6-11; Neil Rackham and John Carlisle, “The Effective
Negotiator – Part 2: Planning for Negotiations,” Journal of European Industrial
Training, Vol. 2, No. 7 (1978), pp. 2-5.
STAGES OF THE NEGOTIATION PROCESS
STAGES:
1.
2.
3.
4.
5.
Preparation
Relationship Building
Information Gathering & Exchange
Problem-solving/Bargaining
Designing & Closing the agreement
1.
PREPARATION
a. In every negotiation you must:
i. Understand what your client & the other side wants & needs (prioritize);
ii. List the issues to be negotiated;
iii. Understand the BATNA (“best alternative to a negotiated agreement”)/
Value of the case [also consider: can you improve your BATNA before
the negotiation commences?];
iv. Establish a negotiation goal for each issue, which may consist of money
and/or other interests; and
v. Establish a plan for reaching the goal – that is, what you will say, as
well as how and when you will say it.
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Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
b. Value of Case/BATNA -- consider the following issues:
i.
ii.
iii.
iv.
v.
vi.
What will be decided? [motions, liability, damages, etc.]
Weaknesses & strengths of each
Chances of winning each
Estimated result/ damages
Estimated expenses
Math (result x probability - expenses); time value of money
c. The Negotiation Goal -- What are you trying to achieve? Consider:
i. What do you want? Why? (short & long-term goals; financial & nonmonetary) Prioritize.
ii. What does the other side want? Why? Prioritize.
iii. How can you meet the needs of your counterpart?
iv. How can your counterpart meet your needs?
v. Aim high -- Research shows that negotiators who set high goals for
themselves consistently outperform those who set modest goals.
However, to be credible negotiation positions must supported by a
standard or benchmark – thus, aim high but be realistic, and be prepared
to support your positions with objective criteria. G. Richard Shell at 3133.
d. The Negotiation Plan -- How will you reach your goal? Go through each stage
of the negotiation process, planning what you will do & say, and how you will
say it. Specifically:
i. Relationship Building:
1. What do you know about your counterpart?
2. Find connections & similarities
ii. Information Exchange:
1. What information do you need?
2. What information will you provide?
iii. Problem-Solving/Bargaining:
3. Be very clear about your interests & goals
4. Set high aspirations
5. Focus on areas of common ground with your counterpart
6. Design proposals to satisfy needs of your counterpart, as well
as your needs
7. Prepare to anchor first, anchor high
8. Develop a concession strategy
9. Remain flexible about adjusting proposal & respond to new
information
10. Anticipate problems – how will you respond?
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Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
iv. Closing The Agreement: be prepared to deal with the details and all
possible contingencies
2.
RELATIONSHIP BUILDING
a. Research shows that negotiators who “schmooze” before a negotiation are
likely to share more information, make fewer threats and develop more respect
and trust during the negotiation than those who do not. Negotiation, October
2007.
b. Similarly, negotiators are more likely to make concessions to people they like
and who have things in common with them. See Robert B. Cialdini, Influence
176 (Allyn and Bacon 2001).
c. Relationship building creates trust, highlights similarities, provides information
about what is important to the other side, and can create a sense of reciprocity.
d. Thus, you should never go into a negotiation without finding everything you
can about your negotiating counterpart.
e. In considering what is the most effective way to build a relationship, take into
account:
i. The background & personality of your counterpart;
ii. The type of negotiation;
iii. What you will be seeking; and
iv. The cultural setting.
3.
INFORMATION GATHERING & EXCHANGE
a. Be prepared to exchange -- provide and obtain -- information about facts,
positions, issues, priorities, interests and any emotional issues that may impact
on the negotiation.
b. It’s important to be thoughtful and strategic about the information to be
provided to the other side. Information should be provided slowly, demanding
reciprocity.
c. Be an effective active listener and communicator. Research shows that
effective negotiators:
i. Ask twice the number of questions;
ii. Test their understanding of what the other side has said;
iii. Summarize where the parties are in the process; and
iv. Listen to all the answers.
d. Beware that intention does not equal perception – focus intently on what
messages you are projecting and how you are coming across to the other side.
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Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
4.
PROBLEM-SOLVING/BARGAINING
a. When the goal is money:
i. Establish a range (your “resistance point” and “target”);
ii. Focus high -- on your “target;”
iii. Your “target” should be as close as possible to the other side’s
“resistance point.”
b. Do not shy away from the negotiation dance – engaging in a back & forth is
often expected, is necessary for parties to feel that they received the best
possible result and can thus provide a sense of success to all.
c. When bargaining, you should determine the following fundamental questions:
i. Should you make the first offer?
- If yes, how high/low should the first offer be?
- If not, how will you respond to your counterpart’s
offer/demand?
ii. How will you perform the concessions?
iii. How will you conclude the negotiation?
d. The Opening Salvo – the pros & cons of making the first offer;
i. Most negotiators are reluctant to go first out of a fear of leaving
money on the table.
ii. Research, however, shows that there can be a significant advantage
in going first in that it will anchor the negotiation and affect the
other side’s expectations.
e. How much should the first offer/demand be?
i. Studies show that negotiators who make more extreme opening
offers/demands get higher settlements.
ii. However, extreme offers/demands may be rejected by other side and
end the negotiation, as well as affect long-term relationships.
f. What if your counterpart makes an extreme offer/demand? Options:
i. Respond with a similarly extreme offer/demand;
ii. Ask for another number;
iii. Remain silent;
iv. Walk away;
v. Ask for justification; and/or
vi. Use objective criteria to demonstrate why their offer/demand is not
reasonable.
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Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
g. Develop a concession strategy
i. The pattern and amount of concessions, like amount of opening
offer/demand, send signals on where the parties intend to end up.
ii. Make concessions bilaterally, not unilaterally – always asking for
reciprocity.
iii. 1993 study found that negotiators who began with a tough stance,
made few early concessions and later made larger concessions were
more effective in eliciting concessions from their counterparts than
those who started with generous concessions and then became
tough. See Leigh Thompson, The Mind and Heart of the Negotiator
33 (Prentice Hall 1998).
iv. Justify concessions with objective criteria / ask for explanations.
v. Research shows that people prefer to experience as many wins as
possible, and to experience losses as little as possible. Thus,
concessions and good news should be doled out over time, while
bad news delivered, to the extent possible, all at once.
h. Try not to negotiate over one issue – find many things to negotiate about so that
you can create trade-offs.
i. Identify your own needs and the needs of the other side and develop options to
satisfy those needs. Research has shown that the more skilled the negotiators
the more likely he or she is to focus during planning on possible areas of
common ground with the other side, as well as possible options for resolution.
G. Richard Shell at 80.
j. Remain flexible about adjusting your proposal and responding to new
information.
k. Use creative alternatives and multiple options for resolution.
l. Throughout the whole process, create and sustain the relationship with your
counterpart.
5.
DESIGNING AND CLOSING THE AGREEMENT
a.
b.
c.
d.
Remain assertive and persistent;
Project a sense of confidence at all times;
Be persistent and get a commitment;
Memorialize all details of the agreement, accounting for the possible
contingencies.
10
Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
HOW TO USE “INFLUENCING TECHNIQUES”
(Material derived from above cited books by Cialdini, Shell and Thompson.)
1.
2.
Reciprocity
a. We feel obligated to return in kind what others have offered to us.
b. Thus, concessions are expected to be reciprocal.
c. Consider having one side make an offer/gift, etc. to create feeling of
reciprocity.
Consistency
a. We have a need to appear consistent and fair in our beliefs, feelings and
behaviors.
b. Accordingly, a proposal should be made within norms and standards
articulated by other side.
c. Also, try to get a momentum of “yes” -- an agreement to a small request
will increase the likelihood of an agreement to a larger request.
3.
Similarity – We are more likely to make concessions to people we like and whom
we have things in common. Thus, finding and highlighting similarities with our
counterparts will make it more likely that they will be willing to reach agreement
with us.
4.
Authority - we are inclined to defer to authority - thus, if presented with “standard
contract,” or “standard procedure” we are more likely to defer.
5.
Scarcity - we find more appealing those things which appear to be rare, hard to
find or in high demand. Thus, one time offers or those with limited time frame are
more compelling,
PSYCHOLOGICAL PRINCIPLES IMPORTANT TO A NEGOTIATOR
(Material derived in part from Barriers to Conflict Resolution, edited by Kenneth Arrow,
Robert H. Mnookin, Lee Ross, Amos Tversky, and Robert Wilson (W.W. Norton &
Company 1995).
1.
Winner’s curse - winning too easily can cause regret – you must make the other
side feel that he/she worked hard for the negotiated result and obtained the last
dollar.
2.
Reactive devaluation - we devaluate offers from other side, particularly those we
are in conflict with. Consider retaining the services of a third party to deliver
proposals if you fear that reactive devaluation will affect your negotiation.
3.
Sense of fairness – we all want to be treated fairly, and research has shown that
negotiators who perceive that they are not being treated fairly will walk away from
the deal. Thus, always consider and address your counterpart’s sense of fairness in
the manner you deliver your proposals and the substance of those proposals.
11
Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com
4.
Overconfidence - we are often overconfident about our ability to meet our goals.
Overconfidence often affects lawyers’ ability to accurately assess the likelihood of
success at trial.
5.
Loss aversion – all human beings have a hard-wired aversion to losing (or feeling
like a loser). We also have a tendency to weigh losses more than gains. In
negotiations you must therefore do all possible to make the other side feel like a
“winner.”
6.
Selective perception - we see the world through a filter - hypothesis we formed to
organize information (Thoreau: “we only see the world we look for”). Negotiators
must understand and work with the phenomena of selective perception.
7.
Fundamental Attribution Error – Negotiators must understand and work with
the tendency of people to attribute another person’s mistakes to internal
characteristics but their own mistakes to external factors.
8.
False Consensus Bias – likewise, negotiators must be aware of the fact that many
people suffer from the bias that our own beliefs, attitudes and behaviors are the
norm.
9.
The Power Of Apology - research has shown that an apology results in a greater
willingness of parties to settle their disputes. The best apology, however, must
include an admission of responsibility (“I’m so sorry that you were hurt. The
accident was all my fault”). A study showed that while a full apology increased
the likelihood that a settlement offer would be accepted, a partial apology (“I am
so sorry that you were hurt”) increased participants’ uncertainty about whether or
not to accept the offer. See Jennifer K. Robbennolt, Apology – Help or
Hindrance? Dispute Resolution Magazine (Spring 2004).
Focus, throughout the whole process, on creating a golden bridge that will
allow the other side to cross and reach a resolution with you.
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Dina R. Jansenson, Esq.
(212) 233-9887
djansenson@fzwz.com