HUMAN LAW MEDIATION

Do you want to make the 1st offer in a negotiation?

Recently I had the pleasure of meeting mediator and attorney, Vickie Pynchon. She introduced me to this concept of making the 1st offer (see previous post of mine) and the issue is continued on her Settle It Now blog.

"Hmm, anchoring to support aggressive opening bids? Doubtful, despite the academic literature -which in my opinion has little contact with real negotiation.

And nothing about coordination versus nash equilibrium reasoning? Big oversight, in my opinion.

Because I respect (and generally defer to) Michael's opinion, but because I disagree with him this time, I include here my response and open the discussion to our readers.  To help our readers, I'd like to ask Michael, if he has the time, to provide us with his thoughts about the coordination v. nash equilibrium reasoning that is absent from my Power Point Presentation (an absence I'd like to rectify before giving this presentation on the 13th of November)

Response to Michael:

For once in my blogging-career, Michael, I'm going to differ with you but ask for help on the coordination v. Nash equilibrium reasoning. 

It's difficult to "observe" the effects of anchoring and framing outside of a controlled environment. You need to have a kind of duplicate bridge experience where the bargaining partners are all negotiating the same deal to determine the effects of framing and anchoring. Research shows we'll all deny that we've been effected.

I have, however, participated in these types of role plays with "teams" of seasoned attorney negotiators.

In fact, it was the first of these experiences, on my first day of mediation training through the Straus Institute here in Malibu (at Pepperdine where the fires were yesterday -- terrible) that I experienced the power of anchoring first hand.

All twenty attorney teams negotiated a buy-sell contract for about 45-minutes. When we returned to the classroom, we all put our negotiated deals on the blackboard together with the first offer made.

I'd been taught as a young attorney NEVER to make the first offer -- folk practice where I come from, i.e., California.  In the role play, without exception, the negotiator who made the first offer in the hypothetical bargaining session got the best deal -- often by many magnitudes.

THIS is the moment when I decided I wanted to return to school to learn more about this and everything else having to do with negotiation -- rules of persuasion, the effect of cognitive biases, etc.

Since that time, what I've read in the academic literature on controlled negotiation studies, not only on students but on judges and attorneys and business people, has concluded that he who makes the first offer sets the bargaining range and gets the best deal.

As to Personal Bargaining Experience.

Since I've been mediating full time, I've helped lawyers negotiate hundreds of deals. Still, it's difficult for me to say whether the first offer had a substantial anchoring effect because I don't know how the negotiation would have turned out had the other side made the first offer or if the first offer had not been more or less aggressive. "

Also look at the comments on her blog. I like :

"Hello Victoria, From experience of dealing with "Travellers" -Irish roadside dwellers and dealers- I have to agree with you. About every second year I buy something from them, just to watch their methods and they always open high and early. They beat any academic for putting manners on a person. . . "

Amen.

How to negotiate to deliver results

Mediation is about agreement and compromise. For some this might not seem a good way to resolve a dispute, especially when fuelled by the idea of 'winning'. But when you consider the success rates of mediation - where both parties reach an acceptable conclusion - settlement in mediation has to be a better result than 'losing' through the Courts.

According to figures released by the government disputes using mediation settle in at least 80% of cases.

In a mediation situation the mediator will be seeking to help all parties reach agreement using the crucial skills of negotiation. These skills will be used, not only by the mediator to help reach an agreement, but can be used by the disputing parties themselves and their lawyers. Indeed lawyers who master the art of negotiation can not only help their clients reach a settlement, they can often help them get a better deal.

So what should you do to ensure an effective negotiation? Here are just a few tips:

Plan & prepare in the right way - The most successful negotiators are not those that are gifted but those that have in fact given careful consideration to the issue at hand. This can manifest in researching your position and the other sides, your aspirations and those of the other side. If you start thinking what are your best-case scenario, your worst case and giving thought to the concessions that you will make, this sets the basis of having a successful negotiation.

Listen more than you talk - All of us like to express ourselves but often when the other side (or in the case of a mediation, the other side and the mediator) is talking they reveal some information about their desires for the negotiation. Often this can be part of an area of overlap and can be all the difference between the deal being reached or not and enabling you to successfully negotiate more effective terms.

Keep emotions in check - In my experience many people get far too emotional when they negotiate. Emotion is not necessarily a bad thing as it shows motivation. However if you lose control the chances are that you make some form of error which may come back to haunt you in the negotiation process. If you have researched your position carefully, anticipated some of the issues which may come up, then this puts you in a better position to negotiate.

Balance aggression against co-operation - Often individuals can think that the best way to negotiate is by being aggressive. As a mediator I don't agree and believe that the best result can come from a softly, softly approach. According to research conducted in the United States up to 87% of negotiators performed more effectively when they were co-operative whereas those that considered themselves aggressive negotiators 85% of them were found to be ineffective. As a consequence it can be assumed that the aggressive negotiator will only see his or her tactic work in 1 in 6 cases. For a lawyer or mediator this is probably an unacceptable fail rate, so learning another way is well worth while. Food for thought for negotiators who believe that to get the best deal you need to project strength.

(Generally) make the first offer - When people are negotiating many people like to see the other side make the 1st offer but is this the best way? According to Leigh L. Thompson, author of The Mind and Heart of the Negotiator it is not as she writes: "Whichever party - buyer or seller - makes the first offer, that person obtains a better final outcome. Why? First offer acts as an anchor point. First offers collate at least 0.85 with final outcomes, which suggests how important they are." In my experience there are circumstances when you should not make the 1st offer such as if you are dealing with a party who may be desperate to get a deal but generally you should make the 1st offer albeit not too low so that it is accepted straight away.

Will lawyers continue to exist?

I am a firm believer that technology is going to have a massive impact on the legal profession.

Against this background, consider this in the Times and particularly the words of Richard Susskind:

"It was a typical legal dinner. As the fine wine flowed, Richard Susskind cast his eye about the splendid wood-panelled main hall of the Mercers’ Company in the City of London. The mercers, traders in fine cloths and silks, had trained their last apprentice in 1888. Now, like many other ancient trades and crafts, from the tallow chandlers to the wheelwrights, they were mostly known for their livery companies. Could lawyers die out in the same way?

In a new book (to be published next year by Oxford University Press) Susskind argues that lawyers and the legal profession in their present shape face extinction – or at least are “on the brink of fundamental transformation”. He sees a future, as he puts it, when “conventional legal advisers will be much less prominent in society than today, and, in some walks of life, will have no visibility at all”.

The driving force towards the end of lawyers as we know them is twofold: information technology and what Susskind calls the market pull towards commoditisation – carving up a lawyer’s job into identifiable and discreet pieces that can be outsourced and done more cheaply by others. As a result, the jobs of many traditional lawyers will be substantially eroded and often eliminated."