In 2018, I wrote a blog about mediating in “good faith”. It involved a mediation in which defense counsel admitted that she was there ONLY because the court had ordered the mediation; her client was not inclined to settle or to offer anything in settlement.
This posed the question: was the defendant attending the mediation in good faith? I had no clear answer. From the defendant’s viewpoint, it earnestly believed the case had no value and so was in “good faith”. The plaintiff, hoping to settle the case, thought otherwise- why am I attending a mediation that is fruitless?
A recent blog post in the Harvard PONS blog by Katie Shonk (January 6, 202) is entitled, “How to Negotiate in Good Faith” and prompted me to revisit this topic.
Ms. Shonk starts with the notion that “good faith” is “…routed in the legal concept of “implied covenant of good faith and fair dealing.” “. Stemming from the mid 1800’s. (Id.)
She then explains that today, the concept means “to deal honestly and fairly with one another so that each party will receive the benefits of your negotiated contract.” ( Id.)
The courts, in determining whether someone has acted in “good faith” look at the context of the situation. Consequently, courts have held it is okay to make take-it-or-leave-it offers, to refuse to attend a meeting or to withdraw consent to a provision previously agreed upon. (Id.) Yet, it is clear, that one breaches “good faith” by knowingly making a false representation of a material fact. The ABA Model Rules of Professional Conduct explicitly forbids misrepresentations of material fact both to a tribunal and opposing counsel. (See: California Rules of Professional Conduct 3.3, 3.4 and 8.4 but interestingly, “tribunal” is defined as a judge, arbitrator or administrator” and does NOT mention a mediator!- Rule 1.0.1(m))
So- why would someone bargain in “bad faith”? Ms. Shonk offers three reasons (1) the other party wants to use the offer you make in this negotiation as leverage in another negotiation; (2) the other party is on a “fishing expedition” hoping to gain useful information that she can use to her advantage, or (3) the other party is forced to negotiate with you by some other third party (i.e. a court ordered mediation, perhaps?). (Id.)
And how can you tell that someone is negotiating in “bad faith”? She will drag out the negotiation, taking forever to respond, or repeatedly mention the constraints she is under in this negotiation or will keep changing the topic to unrelated issues. (Id.)
And the way to figure out whether the other party is negotiating in “good faith” is to ask a lot of questions. (Id.) Ask probing questions or the same question in different ways to see if the same answer is given, or “call” the party on what she is doing ,( i.e. directly confront the party ) or, ask a question that forces the party to directly lie or back off, or ask questions to which you know the answer in an effort to see if those answers are lies as well. Or, you can ignore the lie if it is trivial and not worth pursuing. (Lewicki, Negotiation, Chapter 9, “Ethics in Negotiation” at pp. 291-294 (6th ed. McGraw Hill/Irwin 2009)
So- is a party negotiating in good faith or bad faith? I come to the same conclusion I reached in my previous blog: I will know it when I see it – it will be a gut reaction that I cannot otherwise describe or define.
…Just something to think about.
P.S. I am now a member of The National Academy of Distinguished Neutrals. Please click the following link to see my availability to schedule mediations.
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