In the mediation of a lawsuit, following the reality testing and risk analysis, the parties inevitably engage in the value claiming phase of the mediation. This is the bargaining phase, where parties exchange offers and demands. Experienced mediators will have a sense of when to begin this phase, which depends on factors such as how much reality testing is required in one room or the other, how extreme initial offers or demands are likely to be, or external time demands. When the actual bargaining begins, the parties use the mediator to convey demands and offers together with verbal messages in a complex chess match where each move has direct implications for the ultimate result. While the mediator will manage the information flow and reframe as appropriate, advocates control the messaging they would like the mediator to convey and, importantly, the patterns and pace of concessions.
The first move, regardless of whether it is conveyed at the mediation or during pre-mediation negotiations, is possibly the most consequential, and begins with deciding whether you prefer to go first. There is an expectation in the settlement of most lawsuits that the moving party, the plaintiff or claimant, will go first by placing the initial demand on the table. The plaintiff/claimant can finesse this by putting the claim in the complaint on the table and look to the defendant or respondent to counter.
The determination of who begins has implications and, as with anything in negotiation, it is better if it is not done reflexively. When you can set the parameters appropriately and set an anchor, it is wise to begin the bargaining. If you are unsure of the exact settlement range in play, it is better to protect your own bottom line and let the other side put the first number on the table.
Choosing the correct opening amount has implications for the result and must be chosen only after thorough analysis. The best open will be one that is outside the zone of possible agreement (ZOPA). If you begin in the ZOPA, or even on the edge of your best result, you will have eliminated any chance that you will settle for your best result. Your open should be aggressive enough to protect your best result, while not so aggressive as to be completely indefensible, unreasonable, and extreme and thereby risk alienating the other side.
The best way to identify the ZOPA or range of settlement options is by analyzing all your alternatives, to determine your best alternative (BATNA). Thereafter, compare your own BATNA to your most informed assessment of how the other side views their own BATNA. Although, objectively, you both have the same BATNA, you will probably be viewing it differently. This conflict in perceptions will directly impact the likely settlement range. Identifying the correct place to begin the bargaining requires a fair amount of analysis, and is preparation best done before arriving at a mediation.
If you can identify what you believe to be the likely ZOPA, you can find the best place to open the negotiation. If you are unsure, you can safely test out possible opening offers or demands with your mediator. Your mediator can be a sounding board and will save you and your deal from what might be an overly aggressive open—if you will listen to your mediator’s advice. Appropriately aggressive openings will anchor your adversary. Just remember that your adversary can re-anchor. If you have done your homework, you will recognize this strategy for what it is and resist it.
As you proceed through offers and demands, pay close attention to the messages communicated through the numbers and patterns of concession as well as any accompanying verbal messages. A verbal message, as well as a lack of message, accompanying each demand and offer may reveal valuable information.
Signaling that you are reaching the end of your authority is essential for managing the other side’s expectations and avoiding a situation in which your adversary would lose face by accepting the deal presented. Make larger concessions first and indicate you are reaching your limit by decreasing the size of the concession. Pacing is another way to communicate that you are nearing the end of the negotiation. Slowing the pace will communicate that the concessions are becoming more difficult to make. While you should be candid to a point with your mediator about the extent of your authority, remember that ethically mediators are indifferent to the objective fairness of your deal. Mediators will encourage each side to reach if not cross, their bottom lines to close a deal. Depending on the circumstances, your sharing of your true bottom line may help the mediator more than it will help your client.
Careful attention to the initial opens, patterns of concession, and pacing, in addition to the merits-based information shared during a mediation will help you and your client remain on track to achieve success in your mediations.