Editor’s Note: For over 28 seasons, Edward Hochuli was an NFL referee, and he has been an attorney since 1983. By negotiating with players and coaches while on an NFL football field and making split-second calls in front of more than one million viewers each week, Hochuli has translated these experiences into valuable lessons for negotiating in the legal and corporate worlds. He has been a CLM member since 2009.
Typically, negotiations are associated only with legal disputes and business deals. However, we all frequently negotiate in both our day-to-day business and in our personal lives. Certainly, there are obvious personal negotiating situations, such as the purchase of a car or house, where a successful negotiation can make a big difference to the bottom line. For instance, the size and importance of a home purchase causes many people to utilize the services of a professional, like a real estate agent or lawyer, to ensure that they get the best deal.
However, many times, people are not even aware that they are negotiating. For instance, if a spouse makes a large purchase without consulting the other spouse, the purchasing spouse will often let the other spouse know what a great deal they received even before describing what was bought and for how much. This negotiation technique is used to soften the blow when the ultimate purchase price is revealed. “I know we can barely afford it, but it was such a good deal that I could not pass it up,” is the refrain.
Children can be inveterate negotiators with their parents, too, doing so without any notion that they are developing valuable skills. They constantly negotiate how many vegetables they need to eat off their plates, how late they can stay out, and how much television or screen time they can have. As many exasperated parents have learned, simply engaging in negotiations with their children usually results in more negotiations, not fewer. They intuitively know the weaknesses of each parent and utilize that knowledge to the parent’s detriment and can be ruthless about it.
On the business side, negotiating is far more common than in just a legal dispute or business deal. People negotiate for job promotions and salaries. They negotiate with colleagues for help with a project or situation. The use of giving and receiving of favors is a common negotiating technique. When clients are taken out for dinners or entertainment, those activities are typically part of an overall negotiation.
Types of Negotiation Styles
Before any successful negotiation, it is crucial to understand the type of negotiator you are as well as the negotiator you are up against.
Negotiators tend to fall into one of two categories: the aggressive negotiator or the cooperative negotiator. It is generally best to be the type of negotiator that feels most natural to you. It is far more difficult to pretend to be an aggressive negotiator if being cooperative comes more naturally, and vice versa. There are strengths and weaknesses to both types of negotiators.
Aggressive negotiators tell you how wrong you are and how right they are. They look for weaknesses in the opposing parties and use them in their best interests. This type of negotiator is often very assertive and will typically talk more while listening less. Aggressive negotiators can be intimidating and may resort to tough, loud language and physical presence to get their way. Other techniques of an aggressive negotiator can include the use of anger, threats, coercion, and claims of superiority or false claims of higher authority.
Since aggressive negotiators are less likely to concede weaknesses, they may also utilize deception to get their way, which can include both outright lies and forms of bluffing or puffery. They will be less likely to fully disclose any negative information about their side. The more skilled aggressive negotiator will be careful not to be caught in an outright lie in order to maintain credibility.
When cornered intellectually, an aggressive negotiator can use distraction techniques, such as focusing or arguing about minor or irrelevant points. In addition, an aggressive negotiator is more likely to strive for extreme results and begin negotiations with less-realistic opening offers, and they are more likely to make “take or leave it” demands.
Conversely, cooperative negotiators try to find a common ground with their adversaries. They are typically polite and appear sincere. Cooperative negotiators rarely resort to loud language and threats. Opening offers and demands tend to be more reasonable and rely upon objective standards in the discussions. They try to maximize the benefits for both parties. The negotiation tools of a cooperative negotiator include considering settlement alternatives through trade-offs that benefit the interests of both sides.
While generally less likely to be deceptive, cooperative negotiators may also use their “friendliness” in an attempt to trick their adversaries to be on their side or understand their difficult position. The focus on a “win-win” solution can be seductive and take the wind out of the sails of a determined opponent. Cooperative negotiators are far less likely to paint themselves into a corner with “take or leave it” demands.
Strengths and Weaknesses
Aggressive negotiators can be very successful with their in-your-face technique. They can intimidate the opposing party and cause the other side to give up too much in their attempt to be reasonable. However, while approximately 20 percent of aggressive negotiators are very successful, approximately 80 percent are not. It is a high-ceiling approach that can often backfire.
Part of the reason why aggressive negotiating can backfire is that cooperative negotiators can always rise to the occasion and increase their aggressiveness to match the firepower of their opponents. Also, cooperative negotiators typically are better prepared to acknowledge weaknesses in their positions and not overplay their hands. In addition, negotiations are less likely to be resolved with an aggressive negotiator.
Cooperative negotiators can compromise to their detriment, though. To reach a settlement, a cooperative negotiator will often focus on reaching an agreement rather than continuing the dispute. This can result in last-minute concessions to the more aggressive negotiator to get the deal done. However, the cooperative negotiator is far less likely to “crash and burn,” and sometimes a settlement itself can be a win-win for a party that recognizes the downside of long, costly drawn-out legal disputes.
Negotiating Techniques
One of the most important tools for a negotiator is the willingness to think outside the box and to not be locked into typical negotiation methods. At a mediation, instead of just a back and forth demand/offer, counter-demand/counter-offer, negotiators should try alternative techniques. These techniques can include bracketing, mediator’s proposal, and even non-monetary offers.
Bracketing and mediator’s proposal can be used when the negotiating back and forth has reached an impasse. Bracketing involves the parties agreeing to a high and low number. Cynically, many negotiators claim that this results in a middle number between the high and the low number. However, it doesn’t always have to be that way. It can be used to get the parties to be more practical and reasonable about their best and worst day in court. Once the numbers are agreed to, it is possible the parties are willing to settle for a number closer to either the high or low number.
The mediator’s proposal is useful where the parties do not wish to give away their highest or lowest numbers. Essentially, the parties trust the mediator to present a number or numbers that the parties may or may not agree to. The mediator suggests a number to each party and asks if they would agree to it if the other party also agrees to it. If the proposal is not accepted, then neither party is compromised.
As far as non-monetary offers are concerned, the most powerful can be an apology. Often, a party is aggrieved and just wants to be heard and understood. If a professional opens up a mediation with a sincere apology, then the aggrieved party may feel appreciated. The professional does not have to concede fault necessarily, only that the professional understands that the aggrieved party’s life has been negatively affected and that everyone hopes they can resolve their differences amicably and get on with their lives.
A second powerful, non-monetary offer involves considering something that the aggrieved party may consider valuable when the parties are deadlocked on monetary amounts. For example, if a child was seriously injured while warming up to bat in a baseball game, it may be valuable to the child’s parents to have a rule instituted that warm-up batters wear a helmet with a mask to avoid injuries in the future. While the offer does not involve any additional money, the parents may feel that the new rule will help prevent other children from getting injured.
Debunking the Anchoring Myth
Effective negotiating involves thorough preparation and planning. This is especially true when it comes to initial evaluation of the strengths and weaknesses of a case. It is through this initial evaluation that a reasonable value range can be set for a case, ranging from a worst-day to best-day scenario in court. Obviously, information can be developed during the course of litigation that may change this valuation; however, it is still necessary to analyze the potential value based upon all currently known information.
The legal myth that still exists today is that defense attorneys and claims handlers should request a demand from the plaintiff’s counsel prior to entering into negotiations. However, this allows the plaintiff’s counsel to set the table, which often results in unreasonable, inflated demands. The counsel’s client then judges each offer based upon its relative value vis-à-vis the initial demand.
This situation is very common and is likely based on the fear among defendants that they may offer too much money initially. Truthfully, most claims can be evaluated fairly with at least a high and low range. Imagine instead of waiting for a demand of $2 million from the plaintiff for a case worth between $100,000 and $200,000, the defendant offered $100,000. Now the $100,000 offer has anchored the low number instead of the inflated high number.
The anchoring method is more likely to result in a counter-demand in an amount far closer to the $100,000 number, such as $1 million. It is far easier to negotiate between $100,000 and $1 million than the high-end of $2 million. This method requires claims handlers and defense counsel to conduct an initial analysis and draw a line in the sand. However, they will be rewarded with overall better control of the negotiation processes and results.