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Effective Negotiation in Mediation
By: David C. Peterson, Peterson, JD, LLM, MDR*


Effective Negotiation in Mediation

By: David C. Peterson*


            We have yet to discover the secret that allows disputing parties to reach agreement without negotiating. When seeking to fix settlement terms we are hardwired to do the “negotiation dance” and angle for advantage. Each side understanding this, competitive juices flow during the process.

            Negotiation in the midst of litigation is different than trying to get the best deal while buying a used car or shopping at the flea market. One can terminate the negotiations and decide to go elsewhere or simply wait to buy. The parties in litigation face trial unless agreement is reached or the case is otherwise terminated. If you don’t like the offer, nine out of twelve people will tell you what price you will take.

Negotiation in litigation focuses on predictions of outcome. Naturally, opposing views of potential outcome are affected by interests. Plaintiffs typically over-evaluate the potential outcome and defendants will underplay the potential. Each typically down-play or ignore strengths in the other’s case. We feel this is just “posturing” but most times it is not feigned but a product of one-sided projection. Hope and expectations spring eternal. Our minds and egos are not always our friends when they lead us astray from reality.

            There are three primary forces hampering negotiation. The first is overconfidence mentioned above. Next is the difficulty in communicating as each side does not accept very well negative views about their case directly from an opposing party. Competitive spirits interfere as communications lapse into debate leaving progress toward settlement impossible.

Each knows the other is angling for advantage and neither wants to become vulnerable as they do the step-by-step compromising. There is worry about being caught having moved too much and losing leverage or negotiating position. As a result, the third hampering element, absence of trust, interferes with progress toward settlement.  These expressions are common: “If I compromise too much with my next move, the other side won’t reciprocate but will take advantage;” and “If I begin the negotiation too close to my anticipated bottom line, the other side will perceive weakness in my positions.”

            We solve the problem of communication impediments by having a third party neutral manage exchanges between the parties. This person also assists in managing expectations. What remains, however, is the impeding competition and lack of trust as the parties contemplate their negotiation strategy.

            The first challenge is, who goes first with a dollar amount or terms? The second is, how much to demand or offer or what terms to propose in the beginning? There are volumes written about the impact of the first move in a negotiation. It is viewed as likely affecting expectations. It is supposed to make a statement of what the party believes will occur at trial. Some have referred to the first offer as setting the first goalpost, with the response setting the other. The negotiation then takes place within these goalposts.

Plaintiff typically makes the first move. Many times the beginning of a negotiation or mediation are crippled by a tendency on the part of an opening party to be extreme with their first number or terms. There is already a built-in reason for lack of trust so when a party determines to be extreme, hope for sufficient trust to make reasonable progress dissipates. One faced with an extreme position feels compelled to respond in kind.

            It is difficult to recover when this occurs and the parties will usually suffer the ordeal of small incremental moves thereafter leaving them hopelessly separated from a reasonable zone within which to negotiate. The mediation either ends early or the parties eventually find a way to negotiate effectively. Good mediators are able to assist in this respect.   

A reasonable zone is often not in the middle of the two starting numbers or terms because one party begins far too high or too low. Results of studies have pinned the blame mostly on plaintiffs but defendants share the blame a good percentage of the time.

Those experienced in mediation are familiar with “bracketing” which is one way out of the ditch of repetitive uncooperative moves. One side will offer to move a great deal, setting out a number or terms which gravitate toward a more realistic range, and at the same time condition this move upon the other side moving to a particular number or set of terms. It’s an offer to set both goal posts simultaneously and toward a more reasonable zone within which to negotiate. For example, a plaintiff may be at $500,000.00 and the defendant at $50,000.00. A bracket from a defendant may be: “I will move to $100,000.00 if you move to $300,000.00,” signaling a midrange settlement of $200,000.00.

This may or may not be reasonable but it can result in breaking a logjam. Even if the bracket terms are not accepted by the other side, a strong message has nevertheless been sent as to, perhaps, more reasonable parameters within which to continue negotiating. The other side, if rejecting the proposed bracket, may nevertheless be willing to offer a bracket of their own, which in turn proposes a new range within which they are willing to negotiate. As a result the parties are more likely able to break out of the deadlock they were headed for. This can produce progress.

But why not do better in avoiding the extreme openings and responses? Delays and frustration can be avoided along with the unnecessary risk of negotiation breakdown if the parties begin more realistically.

This can be done by giving a coherent message along with the number or terms proposed.  If one needs to credibly justify what is being proposed, they are less likely to be too extreme.

It is when a plaintiff, for example, makes a demand that represents an extreme “runaway jury” or something more preposterous, that progress is immediately impeded. The same is true where a defense response reflects a no liability position when such would be an anomaly under the circumstances. The numbers in both cases are not real but artificial. They are merely statements being made that are incredulous on their face. One doing this expecting it will increase or lower the negotiation range in their favor is diluting themselves. What it really does is create lack of respect from the other side and lack of credibility with the mediator. Anger can result as well. It hurts, not helps.

A way to minimize the artificially high and low numbers or terms interfering with productive negotiations is to formulate a message to accompany the number or terms proposed. In other words, explain why there is a factual and supportable basis for the number or terms being communicated. By doing so, there is credibility and trust-building as the negotiation continues. It eliminates the knee-jerk reactions and invites the other side to explain why their response is supportable as well.

Numerous studies have demonstrated that once the parties are within a reasonable range with their demands and offers, the case nearly always settles. The real negotiation is to determine whether the end will be in the middle (usually the case) or at the low or high end of the reasonable range. This is where strength and preparation can make a difference.

Clients are more satisfied when the negotiations and mediation in their matter are not troubled by what they can eventually see as unsupportable and irrational approaches. While they may be pleased at first by wildly high or low moves by their attorneys in their favor, reality eventually sets in when there is no progress. And then there is the inevitable letdown, confusion and disappointment as the mediation either fails or large adjustments in expectations have to take place in a short period.

A realistic opening proposal and giving rationale for it produces more productive negotiations and mediations. It avoids loss of credibility and lack of trust in whether one is negotiating in good faith. The other side is far more inclined to respond in kind. Even if they don’t, it will usually become clear who is failing to act in good faith and is unnecessarily impeding progress. Hidden motives are exposed and dealt with when this occurs. Many more negotiations and mediations will succeed if parties begin more realistically and factually justify each offer and counter-offer made.  




*David C. Peterson is a full-time mediator on the Central Coast beginning in 1997 and mediating over 1,800 cases. After a 20+ year litigation career, he obtained a Master’s degree and then LLM degree in Mediation from Pepperdine University School of Law, Straus Institute for Dispute resolution (rated #1 by U.S. News & World Report) where he also teaches Mediation Theory and Practice. He is head of the ADR Sections in Santa Barbara and San Luis Obispo (co-chair).  For comments or information Mr. Peterson can be reached at or (805) 441-5884.

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