In 1978, Kenny Rogers wrote a  song entitled “The Gambler”. Part of the lyrics include the memorable lines,

You’ve got to know when to hold ’em
Know when to fold ’em
Know when to walk away
And know when to run
You never count your money
When you’re sittin’ at the table
There’ll be time enough for countin’
When the dealin’s done

I was reminded  of this song  in reading a recent PON blog post entitled “Dealing  With Difficult People and Negotiation: When Should You Give Up the Fight? “By Kristy Hanstad (February 14, 2023). Using the litigation between the Winklevoss twins (“twins’) and Mark Zuckerberg over the creation of Facebook after the twins asked for his help in creating ConnectU, her thesis is that sometimes negotiators do not know when to walk away from a  dispute and instead waste more money, time, and reputation in the dispute. (Id.)

During the litigation between the twins and Zuckerberg, the twins agreed to accept  $65 million in settlement from Facebook.  However, they soon came down with “buyer’s remorse” and tried to rescind the deal. They argued that Facebook misled them into believing that the shares were worth $35.52 when in reality they were worth $8.88 which was disclosed to them pursuant to an internal valuation after the settlement agreement was signed. So, the twins sued to void the settlement agreement arguing they would not have signed the Agreement had they known the “true” value of the stock. (Id. and see, Facebook vs Pacific Northwest Software 640 F. 2d 1034 ( 9th Cir 2011).)

Ms. Hanstad notes that the twins lost their appeal- twice in the ninth circuit and were thinking of seeking review by the U.S. Supreme Court but decided to give up the fight.

Which brings us to “knowing when  to hold ‘em” and “knowing when to fold ‘em.” The blog post notes that according to New York Times author Steven M. Davidoff who wrote about this case:

…it is not unusual for litigants to try to withdraw from settlements after a mediation ends. In fact, virtually all negotiators are susceptible to irrationally escalating their commitment to a chosen course of action, according to Harvard Business School professor Max H. Bazerman.   (Id.)

Why does this occur? For any one or more of three reasons.

The first is a fixation on “fairness”. “Fairness” is in the eyes of the beholder.  And what one party thinks is “fair” is “heavily influenced by that party’s preferred outcome. So, if a partnership is splitting up, one partner who put in the capital will view “fairness” differently than the partner who put in the time and effort to make the partnership a success. (Id.)  To avoid this  trap, the author suggests looking at “fairness” from the perspective of the other  party and/or ask third party for  her take on the situation. (Id.)

Then there is focusing on “sunk costs”. That is, a party has put so much  time and  effort into the matter, that it would be a “waste” to “throw it all away by not continuing on. The solution: ignore the sunk costs as all one is doing is wasting more time, money and energy and going nowhere! (Id.)

The final trap is the psychological costs. The author suggests letting go psychologically:

The longer a dispute drags on, the more susceptible disputants are to demonizing each other. The desire to punish the other side becomes an unhealthy fixation, and every communication is met with suspicion. The passion you invest in a dispute can become a sunk cost in its own right.(Id.)

After fighting Zuckerberg for so many years, no doubt the twins found it difficult to simply “…let go of the desire to punish him for his perceived wrongs.” (Id.) The trick here is to realize that at a certain point, the pursuit has become a “destructive obsession” and so it is time to move on. (Id.)  Again, discussing it with a third person who can provide perspective may help.

In sum, sometimes, the best thing to do is simply walk away or in the words of Kenny Roger  -“ to fold ‘em. “

… Just something to think about.




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