Mediating ZOPA

To determine whether a Zopa exists, each party must decide what is their respective “walk away number” or “bottom line” or, in the words of Roger Fisher and William Ury, their respective BATNA’s (Best Alternative To a Negotiated Agreement.) In litigated cases, it is often an amount above or below which the party would just assume go to trial and take its chances with a judge/jury.

As the examples below show, where there is no ZOPA, no amount of negotiation will settle the case: it is impossible to settle unless and until one party or the other or both change their BATNA’s or “bottom line” numbers so that there is some overlap between the lowest amount a plaintiff will accept and the highest amount that a defendant will pay, to settle.

The first mediation involved alleged violations of debt collection statutes under both state and federal laws. The defendant debt collector believed that it had not violated the law, and that the case had been way over litigated. As the damages set by statute were limited to $1,000 each plaintiff or $2,000 total, the defendant believed that at most the value of the case was $10,000. It was not willing to pay the large amount of attorneys’ fees incurred by plaintiff.

(Plaintiffs are entitled to attorneys’ fees in addition to statutory damages.) Plaintiffs on the other hand believed that they had suffered egregious violations and that the only reason the case had been so heavily litigated was due to defendant’s recalcitrance and refusal to settle early on. Thus, its initial demand was $50,000.

After some hours of negotiation, Plaintiffs were willing to accept $25,000 in settlement. However, Defendant was not willing to pay more than $15,000.

Thus, a gap of $10,000 existed and as try as I might, I could not convince either party to use bracketing or to adjust their respective “bottom lines” or BATNA’s. To the defendant, the costs of litigating the matter through trial was not a concern and so suggesting that such expense be applied to the settlement did not work. The defendant did request a mediator’s proposal which I made; whether defendant will adjust its “bottom line “upward is a good question.

The second mediation was a lemon law matter. Plaintiff demanded a repurchase of the vehicle which amounted to approximately $100,000. Defendant, on the other hand, viewed the case as a nuisance matter offering $5,000 to resolve the matter. Again, no amount of discussion on my part with the defendant or plaintiff convinced either of them to change their respective “bottom lines”.

In both instances, the thing that will cause the parties to rethink their positions is new or more information. In the first case, perhaps more depositions need to be taken while in the second case, the defendant needs to inspect the vehicle to determine if the alleged defects are really still present as plaintiff claims.

In short, more often than not… it is the passage of time and new information that causes parties to change their “bottom lines” and thus move into ZOPA.

…. Just something to think about.

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