Adversarial Positioning & Distributive Bargaining
In distributive bargaining scenarios, we are dealing with a zero-sum situation, quite unlike cooperative bargaining scenarios and the Prisoner’s Dilemma discussed in subchapters 3 and 4. Here, anything one receives is necessarily withdrawn from the other side’s coffers. There is a finite amount of “stuff” to be distributed, and the two parties are in a competition to see who can get the larger share.
EXAMPLE: Benjamin and Sarah are siblings whose mother has prepared their favorite dinner – shrimp a la mode. There are 14 shrimp total, and only Benjamin and Sarah are eating (their mother hates shrimp). The mother initially presents each child with a plate containing 7 shrimp. If Benjamin wants more, he will have to convince Sarah to give up some of her shrimp. This is a zero-sum situation, as no new shrimp will materialize – the existing shrimp will be distributed between the two parties.
According to Professor Michael Preston, Adjunct at Columbia University’s Business School and co-author of “The Road to Success: How to Manage Growth,” (Wiley & Sons, 1998), one of the worst things one can do in an adversarial/distributive situation is to "negotiate against oneself." In other words, trying to second-guess the other party’s position and negotiate against that imagined position often leads to a result which is less than might have otherwise been obtained.
EXAMPLE: Benjamin would like to get three of Sarah’s shrimp, and would ideally promise to do her homework tonight in exchange. Before opening negotiations, however, Benjamin considers what he knows about Sarah and the current set of facts. He surmises that Sarah would only give up two shrimp and only in exchange for his doing two nights of homework. This is therefore the deal he offers her.
Has Benjamin properly handled this situation? Assuming much of Nutshell’s 10-point checklist has been met (research, analysis, etc.) there are still two questions to ask. First, was it prudent for Benjamin to make the initial offer, and second, was the offer he made wise in view of his goals.
The first question is easily answered in the affirmative in this case. Sarah seemed content with the status quo – there is nothing in the facts to indicate that she would have made any offer at all. The second question, however, is likely answered in the negative and is not nearly so easily disposed of.
Benjamin seems to have negotiated against himself here, much to Professor Preston’s dismay. This hypothetical, however, serves well to illustrate a claim made by Nutshell:
"Research shows that distributive bargaining is greatly influenced by informational asymmetries and by manipulation of information to influence the opponents’ perceptions and create doubt in the validity of their positions." -Nutshell p. 17
Translated into English, this means that in a competitive negotiation situation, information is power. What I know about the other party, and what I let them know about me, will affect my decision-making process and theirs.
Of course, different authors hold differing beliefs about the appropriate use of information in negotiation.
- Some point out that succeeding in negotiation does not have much to do with what is “fair” (e.g., “Guerrilla Negotiating: Unconventional Weapons and Tactics to Get What You Want,” Levinson et al., Wiley & Sons, 1999). Your negotiation style should depend on your opponent’s attitude.
- “Threats,” some say, “may as often lead to impasse as to breakthroughs.” (Dauer, 4-27, citation omitted).
- One might view negotiating as something you do “by a set of rules, just like the game of chess. The big difference between negotiating and chess is that, in negotiating, the other person doesn’t have to know the rules.” (“Resolving Disputes: Theory, Practice & Law,” Folberg et al., Aspen Publishers 2005, p. 46, quoting Roger Dawson’s “Secrets of Power Negotiating, 2d ed.” Career Press, 2001)
- Folberg’s discussion of the 7 stages of negotiation, and our hybrid flowchart (both discussed in subchapter 1) would indicate that Benjamin has failed to play much of the “Game” involved in competitive/distributive bargaining. After all, there has been no posturing and no exaggeration of Benjamin’s strengths (e.g., “If you let me do it, you’ll get all perfect scores on your homework). Rather than negotiating from a position of strength, he is beginning in a position of weakness, having already made an initial offer well above what he originally sought. And this is based, of course, on his perception (right or wrong) of the strength of Sarah’s position.
What are we to take from this very small sample of the great variety of opinions concerning negotiation? Well, if the experts don’t agree, perhaps the best tact for a paralegal is to take his cues from the attorney for whom he works. If she does not readily indicate her views on what is and is not appropriate, ask!
EXAMPLE: Alex has recently passed the Certified Legal Assistant Exam after successfully completing NPC’s training program. His first week on the job, his boss, Claire, a solo practitioner, asks him to write a memo identifying the pros and cons of entering into negotiation settlements on a major case for a new client. Before wasting his time outlining the potential gains and pitfalls of a “soft” approach and a “hard” approach (as well as everything in between!), Alex should try to get a sense of Claire’s style and opinions. She might be a ruthless negotiator who takes no hostages. Alternatively, she might maintain a cordial relationship with opposing counsel. This is vital information, without which Alex cannot effectively proceed.
So, Alex is best off seeking guidance from the attorney for whom he works. But what are some of the negotiation tools relied upon by attorneys who have the discretion to use anything in their arsenal to get the best possible settlement for their client? Attorney Jeffrey Krivis, in an article for the July/August 2002 edition of Alternatives to the High Costs of Litigation, published by the CPR Institute for Dispute Resolution, puts forth a list which contains many of the same strategies discussed in Folberg. The majority of Krivis’ article is dedicated to the topic of deception. According to Krivis:
"Deception can best be described as the raw material that drives negotiation of litigated cases. It allows barriers to be overcome and concessions to occur….Deception is part of the human condition…[and] it is unrealistic to expect litigants to be candid [as opposed to parties who have continuing relationships]." -Alternatives to the High Costs of Litigation, July/August 2002
Sometimes it is true that negotiators need prior approval before accepting a certain settlement, but unless negotiators are given a range of acceptability by their clients, the negotiation process would grind to a halt.
EXAMPLE: Attorney Meyer represents Mr. Wormer in an ongoing litigation wherein Wormer has been sued by Mr. Flounder for slander (Wormer said Flounder was fat, drunk, and stupid). Flounder has told his attorney, Otter, that he will accept any settlement amount as long as Wormer also agrees to make a public apology, or, lacking such an apology, any settlement equal to or greater than $6,000 (the amount he needs to fix his recently damaged car). Wormer has constrained Meyer by telling him any settlement must be brought to Wormer prior to acceptance or rejection. The discussions between Meyer and Otter will be quite short, as every offer made by Otter must be brought back to Wormer for his thumbs-up or thumbs-down. Because Meyer has no actual authority, the negotiation process will be slow and tedious.
Contrast this with the following situation:
EXAMPLE: Otter is again given broad discretion. This time, however, Meyer is told by Wormer to reject any settlement which includes an apology and that he is willing to accept a settlement for no more than $10,000. Wormer also tells Meyer than he would really like to pay no more than $5,000, which he considers a bargain, but will go up to the full $10,000 if necessary. This time, the attorneys have each been granted enough latitude to negotiate without constantly halting the process to check with their clients. When Meyer indicates that his client would be willing to pay $4,500 to make this matter go away, Otter flatly refuses, indicating that this is “well below my client’s threshold.” A little bit further into the negotiation, Meyer has offered $7,500 on his client’s behalf and says, “this is as high as we’re going to go.” Otter replies by indicating that it’s still less than he believes his client wants, but he will bring it back to Flounder and contact Meyer the following day. Although Meyer has been granted authority, he need not offer the maximum authorized by his client right away.
Both attorneys here are posturing. Meyer, by suggesting a cap on what his client will pay, and Otter, by suggesting the amount is less than his client will accept. Otter here is hoping that by letting Meyer and Wormer “sweat it out” he will obtain a higher settlement amount for Flounder.
There is nothing illegal about the bargaining tactics used by Meyers and Otter in the second hypothetical, nor is there any breach of legal ethics. This is all part of the game which has evolved around competitive bargaining.
One oft-used tactic discussed by Krivis which is skipped over by many other authors is “the claim that the negotiator lacks full settlement authority.” Consider an everyday example, which is a clear case of a negotiator claiming lack of authority as a negotiating tactic:
EXAMPLE: Kristin walks in to Bob’s Car & Pizza Emporium in downtown Metropolis. Bob’s is famous for its vegetarian pizza and infamous for its shady sales tactics. Because Kristin is new to town, she is unaware of Bob’s reputation, and the wafting scent of pizza pulls her in. She is immediately approached by a man who introduces himself as Tom and who then shows her several cars. After she settles on a “vintage” station wagon, Kristin sits down with Tom to talk turkey. Just when Kristin thinks they have struck a deal, Tom tells her that he’d love to give her the car for the price they discussed, but he has to get the boss to sign off on the deal. A few minutes later Tom returns with a frown. “Boss says I can’t sell it for such a low price…he’d have my job! I’ll tell you what I can do, though…”
If Tom knew all along that the tentative agreement reached would be unacceptable, he has negotiated in bad faith, and his claim of lack of authority is merely a tactic used to push the other party into a disadvantageous position.
EXAMPLE: Terry and Joline are trying to rent a car. Although Terry made a reservation, the clerk tells him they have no cars available. “We have your reservation, sir, but we don’t have any cars,” she tells Terry, at which point she offers to talk to her supervisor and see what can be done to fix things. Terry watches the clerk from a distance as she talks to her supervisor. Terry, always the skeptic, is certain that the clerk and supervisor have no intention of giving him a car, but are pretending to talk just to keep him from getting too upset.
Although different from the negotiations which most concern us, this is another example of a negotiator making a claim of lack of authority in order to put herself in a better bargaining position. Terry and the clerk are negotiating for a solution to the “got the reservation, don’t got the car” dilemma. When the clerk returns and says that it is not up to her and that the supervisor can’t do anything, her claim of lack of authority (if believed) will improve her standing. Of course, this tactic can backfire if the other party believes that the negotiator does have the power to settle but is simply refusing to do so.
Perception is vital in these negotiation scenarios. Whether posturing or any given tactic succeeds depends on the other party’s impressions. There is always some risk that the other party will see through your poker face, or worse yet, that they will believe they see through you, when in fact you are being truthful.