In the May 2008 issue of the Harvard Negotiation Newsletter (Vol. 11, No. 5), the authors discuss how to influence your adversary so that a resolution is reached. In the lead article, “Will Your Proposals Hit The Mark,” five strategies are offered to support the thesis that “our judgment and decisions are strongly affected by the amount of information we receive and the way in which it’s framed.” (Id.)

       The first strategy is not to overwhelm the other side with too many alternatives. While it is wise to offer a few alternatives, offering too many will, in effect, paralyze or overwhelm the other side into not making any decision at all.

       The second strategy (which may seem inconsistent to the first) is to make several offers. However, the offers should not be completely different or discrete from one another but rather should be equivalents of each other. The example given is the offering of a software package either for $1 million with payments in 30 days or the same package for $1.5 million with payment in 120 days or an enhanced package for $1.35 million with payment due in 30 days.

       The third strategy is to “be willing to be rejected”: “. . . rejection can sometimes be the most effective way to get to “yes” ”. (Id.) The authors suggest that a party should initially ask for more than she realistically expects. The response will be a rejection. The party’s next demand/offer will thus seem “more reasonable” or “more appealing” after the first one. In the field of negotiation, such a strategy is called “contrast effect.” As an example, the authors point to real estate agents who initially take prospective buyers to overpriced, unappealing homes so that when the buyers are then shown “reasonably” priced or “appealing” homes, they will find them attractive and make an offer.
 

      The fourth strategy is based on the notion that parties tend to accept the status quo rather than making a change. One example would be the e-mails we receive which require us to take some form of action to unscribe. If we wish to continue to receive them, we need not do a thing, i.e., maintain the status quo. The vivid example given by the authors involves organ donation. In those countries that use presumed consent (the donor must affirmatively say “no”), the donation rate is close to 100%. In the United States, where one must affirmatively consent (“no” is the norm), the donation rate is about 28%. Consequently, the way an offer is framed will greatly affect the other’s party’s decision – or lack of decision – to accept or reject it.
 

      The final strategy is to “use social proof.” Typically, when a party is uncertain about what to do, she looks for examples of how others behave in similar situations, i.e. “social proof.” If we believe that a given proposal is the “right” way to behave, we tend to agree with it. By using “social proof,” “we tend to make quicker, more efficient decisions. . . .” (Id.)  “Popularity makes just about anything seem more appealing.” (Id.)

       Turning to mediation, these strategies will prove useful. I have definitely seen the second and third strategies employed over and over again. . . with success. I have also seen that quite often, the easier one party makes it for the other party to agree (i.e. the less work the second party must do), the more likely the parties will reach a settlement. That is, I have seen the status quo strategy at work and succeed. And, most people do look for validation. . . or social proof. In the same way that a party will reject a term or an offer because it has “never been done that way before,” she will accept a term or an offer precisely because “that is the way it is done.” Social proof provides a very strong impetus to reaching a resolution.

       So. . . the next time you find yourself in a negotiation or mediation, think about how you can influence the outcome to your liking!

       . . . Just something to think about.
 

      In its Science section on Tuesday, May 20, 2008, the New York Times printed an article explaining that older may, indeed, be wiser. In her article entitled “Older Brain Really May Be a Wiser Brain,” Sara Reistad-Long discusses research that shows that brainpower increases, not declines, with age. That is, “. . . the aging brain is simply taking in more data and trying to sift through a clutter of information, often to its long-term benefit.” (Id.)
 

      In one study (detailed in Progress in Brain Research), subjects were asked to read passages. The passages, though, had unexpected and out-of-place words or phrases scattered throughout. The adult subjects 60 and older took more time than the college students to read through the passages. The researchers found that the college students read through the passages at the same speed that they read other materials. The older adults slowed down, meaning they took time to take in and process the out-of-place words.
     

        As might be expected, when the two groups were later asked questions focusing on the unexpected words as the answers, the older adults responded much better than the college students.
 

       As explained by Lynn Hasher, an author of the review and a professor of psychology at the University of Toronto and a senior scientist at the Rotman Research Institute:
    

       “ For the young people, it’s as if the distraction never happened. . . . But for older adults, because they’ve retained all this extra data, they’re now suddenly the better problem solvers. They can transfer the information they’ve soaked up from one situation to another.” (Id.)

       In short, older people have wisdom. Their broad attention span allows them to know about a situation and also understand the indirect messages of the situation that their younger peers miss. Because older adults are taking in more information from any given situation, storing it and combining it with their store of previous knowledge (which obviously is much greater than a younger person’s), they have the “wisdom” that is absent in the younger generation.
   

         Applying the results of this study to negotiations and mediations means, in simple terms, do not give your older adversary short shrift. Just because the other party may be a senior citizen or a baby boomer, this does not mean her brain power is declining; to the contrary, it has increased, giving her “wisdom.” In the course of a negotiation or mediation, she will not ignore but rather pick-up on and use the out-of-context or indirect cues and messages and process them. She will not ignore or skip over the “distractions” or “irrelevant facts” but rather, place them in her “data base” and use them in her efforts to resolve the issues and reach  resolutions.
     

       Alternatively, if it happens that you are the “older” party and your adversary  belongs to the younger generation, you may gain some comfort in knowing that you have the greater brain power: you will pick up cues– indirect or “irrelevant” messages – that your younger counterpart will probably miss. In short, you have the “wisdom” that your counterpart has not yet gained and given this gift, you have the responsibility to use it in an effort to resolve the dispute.  
    

        . . .Just something to think about.    
 

       In a negotiation, which is more important: understanding the other person’s perspective (“perspective – taking” or needs and interests) or being emphatic? Interestingly, the former is more crucial to a successful negotiation than the latter.
  

        In a short article entitled “Inside a deal” in the May 1, 2008 edition of The Economist (in its Science and Technology section), the author discusses a study published in Psychological Science by Adam Galinsky and his colleagues at Kellogg School of Management at Northwestern University in Illinois. The study looked at two main approaches used in negotiation to understand the other party: perspective-taking and empathy. As explained in the article, “perspective-taking is the cognitive power to consider the world from someone else’s viewpoint, whereas empathy is the power to connect with them emotionally.” (Id.)
 

       The study conducted a series of experiments using more than 150 MBA students who were novices in negotiations. The researchers divided them into pairs and had them buy-sell a petrol or gasoline station. They were told to strike a deal but that the deal could not be based solely on price because the lowest amount the seller could accept was higher than the highest amount that the buyer could pay. Thus, they had to be creative in their negotiations. The researchers found that more than 66% of the teams reached a deal.
     

       The experiment was then re-run but this time the pairs were split into three groups:
    

       “In the perspective-taking group the buyers were told to try to understand what the petrol station owner was thinking and what his interest and purpose was in selling. The empathy group was told to understand what the seller was feeling and what emotions he might be experiencing. The third group was a control group: the buyers were told simply to concentrate on their own role. Again, it was the pair with a perceptive-taking buyer who were more likely to strike a deal (76%) than the empathizers (54%) followed by the control group (39%).” (Id.)

       This study revealed that the means to gain bargaining power is by understanding the other party’s needs and interests or perspective-taking. To simply connect with the other party emotionally (i.e. empathy) is not enough; a party must also understand where the other party is coming from, or, in essence, understand his/her’s underlying needs and interests. By doing so, and as shown in this study, the parties “can produce a better overall outcome. . . ” (Id.) and thus, have a much better chance at reaching a resolution.
 

      . . . Just something to think about.    

       About a year ago, I was requested to mediate a case that was on appeal. The parties were a real estate agent (“agent”) and the real estate company (“company”) for whom the agent worked. The company had made cash advances to the agent for which the agent had signed promissory notes. When the agent terminated her employment with the company, she still owed the money.
 

      Pursuant to the terms of the agreement, the company sent the claim for collection. When that proved unsuccessful, the company filed a petition for binding arbitration.
 

      During the arbitration proceedings, the agent contended, among other things, by way of a counter-claim that she had been denied one or more commissions lawfully due to her, had been sexually harassed and that during the collection process, the company had violated federal law by reporting to the credit agencies that the debt was valid rather than disputed.
     

        The arbitrator found for the company in all respects. The company then had the petition confirmed by the trial court. The amount of the award against the agent was approximately $80,000.
 

      The agent filed for an appeal from the judgment confirming the arbitration award against her.
     

       At this point, the parties agreed to mediate the matter, and the appellate court sent the matter to me for mediation.
 

      The mediation date was set; the parties submitted their briefs which I reviewed. I also spoke with counsel to learn more about the matter.
     

       On the morning of the mediation, (approximately two hours prior to its start), I received an e-mail from the office of the attorney for the agent; the agent could not make it as she was sick. she had been to a doctor and was under doctor’s “orders” not to do anything stressful for a week or more.
     

      Needless to say, subsequent attempts to reschedule this mediation were futile. Reading between the lines, I gathered that the agent did not really want to attend the mediation and confront the issues. Evidently (and as I was told) she had done this with other hearings in this matter; she was  stalling and delaying to avoid “dealing” with things.
 

      So. . .the appeal proceeded along. I recently received a copy of the unpublished appellate decision. The agent lost. The appellate court confirmed the arbitration award, finding no error.
     

      To stay the enforcement of this judgment in California, the agent had to post a bond of one-and- a half times the judgment or, approximately $120,000.
 

      As a result of the appellate decision, the agent now faces an adverse judgment of approximately $80,000 plus approximately $12,000 in accrued post-judgment interest (at 10% per year) plus the costs of the appeal and the attorneys’ fees of not only her own attorney but those of the company’s as well since it was the prevailing party. And to collect (once the matter is remitted to the trial court), the company simply has to file a motion in the trial court to be paid from the appeal bond.
 

      Why do I entitle this blog “Settlement Is Always Better?” Because, if the agent had been willing to attend mediation and confront the issues, in all likelihood, the company would have been flexible in the amount it would have accepted in settlement and in the payment terms. It probably would have agreed to accept less than the approximately $80,000 due and to allow the agent to pay it over a period of time. In short, the agent could have resolved this matter for a lot less money, in a lot less time and with a lot less anxiety, heartache and angst. (She, also would not have an adverse judgment appearing on her credit report).
 

      While we all have demons that we do not like to face and at times, avoid facing, in the long run, it is better and often cheaper to face them sooner rather than later. It is usually less costly and more satisfying to participate in the resolution of our own disputes rather than to avoid and delay, thereby allowing strangers (here, an appellate court) to make the decision for us.
     

       . . . Just something to think about.  
  

       More and more parties are using mediation (which is nothing more than a negotiated resolution ) to resolve their lawsuits.  Perhaps, the following explains why.
     

        In late April 2008, the U.S. Chamber Institute for Legal Reform published its Lawsuit Climate – 2008 in which it ranks the states’ liability systems. The survey conducted by Harris Interactive, Inc. polled 957 in-house general counsel, senior litigators and other senior attorneys “who are knowledgeable about litigation matters at companies with annual revenues of at least $100 million.” (Id.) The polling occurred by telephone between December 18, 2007 and March 19, 2008, with each conversation lasting about 23 minutes on average.
 

      As I live in Los Angeles County, California, the first thing I looked for was California’s ranking. It is ranked 44 out of 50. (It seems that in 2007, it ranked 45 and in 2006, it ranked 44). The five best states, respectively are: Delaware (#1); Nebraska (#2); Maine (#3); Indiana (#4); and Utah (#5). The five states below California (or worse than California) are: (Illinois (#46); Alabama (#47); Mississippi (#48); Louisiana (#49); and West Virginia (#50).
 

      In looking through this study, I discovered another statistic: the worst jurisdiction (i.e. specific city, or county courts) is Los Angeles County: 14% of the respondents thought this. Chicago (Cook County), Illinois came in second worst: 11% of the respondents thought this.
   

          As this statistic took me aback, I continued reading to find out why corporate attorneys thought Los Angeles County was so bad. The top 12 issues (with the percentage of respondents who cited the reason) broke down as follows:
     

      1. biased judgment – 20%;
      2. corrupt/unfair system – 5%;   
      3. unfair jury/judges – 5%;
      4. have read/seen a report on a case – 5%;
      5. unpredictable jury/judges - 4%;
      6. personal experience – 4%;
      7. incompetent jury/judges – 4%;
      8. overburdened with cases/too many cases – 4%;
      9. not enough knowledge/experience about other states – 4%;
     10. high jury awards – 3%;
     11. too liberal – 3%; and
     12. slow process – 3%.

       When the respondents were asked what should be the most important issues for state policy makers, the top five issues mentioned were: speeding up the trial process – 12%; reform of punitive damages – 10%; eliminate unnecessary lawsuits – 9%; tort reform issues in general 8% and high litigation costs – 5%.
   

         Indeed, in a separate study published by Public Opinion Strategies in April 2008, 88% of the respondents (executives at California businesses) stated that the number of frivolous lawsuits is a “serious problem,” while 45% believed frivolous lawsuits to be a “very serious problem.” Sixty-two percent believe that the number of frivolous lawsuits has increased in California in the last 3 – 5 years. Moreover, 50% of the respondents stated that they had made a business decision primarily to avoid a potential lawsuit. Ninety percent of the respondents stated that a threat of a lawsuit is a factor in making business decisions.
    

       While these two surveys are from the perspective of defendants and thus reflect a certain bias, their results still provide food for thought. Without doubt, the results are based on perceptions of either corporate attorneys (Lawsuit Climate - 2008) or business executives (Public Opinion Strategies). But, perceptions are “reality” and to these two sets of respondents, the litigation system in many states is not fair, not predictable, is over-burdened and is presided over by inexperienced judicial officers.
           

       . . . Which brings me back to mediation and the negotiated resolution of a lawsuit. The issues raised by the respondents provide all the more reason to resolve disputes through mediation. First and foremost, the parties, themselves, control not only the results, but the process. They need not worry about biased judgments, corrupt/unfair systems, unfair juries/judges, unpredictable juries/judges, incompetent judges and juries, overburdened judges, high jury awards, or a slow process.
 

           By agreeing to mediate their dispute, the parties are in total control: they select a neutral, the pace or timing of the process, the length of the process, the simplicity or complexity of the process and most importantly, the results. The parties control their own destiny – the outcome to their dispute. They can resolve it in any way that they want to do so, and not in a way dictated by some stranger – a judge or jury.
  

          So. . .the next time someone tells you they want to sue . . .think about this study. . .and the beauty of mediation.
       

           . . . Just something to think about.