Much of the negotiation that takes place between parties involves parties who view themselves as problem solvers rather than as adversaries. That is, the parties both hope that at the end of the day everyone will go home with more in their pocket than when they began. Of course, not all negotiation takes place in such a collegial atmosphere, and there is one important prerequisite for this scenario: both parties must view themselves as dealing with a non-zero-sum situation. In other words, in distributive bargaining situations, one party can gain only at the other party’s expense, so cooperation becomes impossible and the parties necessarily engage in competitive negotiation.
EXAMPLE (1): Asher is an inventor. His most recent invention is something he calls the “Widget Waterer,” which is a device for (what else) watering widgets. Benjamin is a manufacturer who owns a recently-vacated machine shop in Opelika. After reading about Asher and his invention in the newspaper, Benjamin approaches Asher to discuss a joint venture whereby Benjamin would make the Widget Waterers in his Opelika factory. The two enter into a 50-year royalty agreement, allowing Benjamin the exclusive right to produce Widget Waterers, in exchange for which Asher receives a hefty yearly royalty payment plus a small percentage of the profits.
Two years into the venture things go sour. Asher believes Benjamin is cutting corners and making an unsafe product in order to increase profits, while Benjamin is unhappy with Asher’s meddling in production processes about which he knows nothing. For a year, the two fight and argue. Finally, Asher files suit to be released from the earlier agreement and enjoin Benjamin from producing any more Widget Waterers.
So far, we are prepared for two parties who are adversaries, right? They’re not very fond of each other and they have established a history of bad blood. This does not necessarily mean, however, that any ensuing negotiation would require them to take an adversarial/competitive stance. A legal team which is not emotionally involved with the situation could see an opportunity to work as problem-solvers in just this sort of situation.
EXAMPLE (2): The first step taken by Asher’s attorney is to seek a temporary injunction preventing Benjamin from further production. Once the injunction is granted, both parties start losing money until such time as the dispute is resolved in some manner. Asher is not earning royalties on his invention and Benjamin is not earning money on a fully-equipped plant. Both parties are leaving money on the table.
By negotiating a settlement, rather than engaging in a long, costly court battle, each party could achieve some gain without that gain coming from a directly proportionate loss to the other. For example, Asher could agree to permit Benjamin to produce Water Widgets for the next 5 years, in exchange for which Benjamin would release Asher from the original agreement. (Consider also the Microsoft–Stac settlement).
Dauer points out that one important difference between competitive and cooperative negotiating is that with the former, an attorney must identify her client’s demands while in the latter the initial task is to identify the client’s needs. (Dauer, 4-27). Again, we must view the Nutshell list discussed at the beginning of this chapter as a useful, over-simplification. Of course, Dauer and the Nutshell text do agree that cooperative negotiation requires, and produces, a far more complex landscape of discussion than that encountered in competitive negotiation situations.
Nutshell at 24 points out that:
Negotiation is not just a “game” to be won. The problem-solving approach usually functions in an integrative (multiple issue) rather than a distributive (single issue) context. (Emphasis added.)
Dauer elaborates significantly on this concept:
If the negotiation is positional or one-dimensional, the contest will focus on the number of dollars the defendant will pay to the plaintiff [as in a competitive bargaining situation]. Collaborative bargaining, by contrast seeks to identify many diverse interests and to explore ways in which they can be traded without adopting a win-lose limitation.
In other words, a simple, linear approach to negotiation is well suited to competitive bargaining but will generally fail in a cooperative bargaining situation. Creativity is required in what Nutshell and others call “value creators.” (Nutshell at 24).
Any dispute begins with parties who are adversaries in some way. The key to being an effective cooperative negotiator is to prevent adversaries from engaging in classic, adversarial/competitive/distributive negotiation and instead engage in what Nutshell calls
“the predominant model advanced in negotiation theory today,”namely problem-solving/cooperative/integrative bargaining.
Let’s return to the Widget Waterers hypothetical and try to help Asher understand how he should make decisions relating to the negotiation.
EXAMPLE (3): Based on the court docket, it is clear that Asher’s case will not be heard for at least 6 months. During that time there will be a number of preliminary motions (including those contesting the validity of the already-issued temporary injunction) and discovery, which will be costly. The best case scenario is that a decision will be made in favor of Asher in the next nine to twelve months and he will then be free to bring his Widget Waterer design to another manufacturer. Of course, he then needs to allow time to negotiate the new deal before he will begin earning royalties again.
Admittedly, we have not painted a pretty picture for Asher’s earnings over the next year or so. This, however, is precisely why negotiation is an appealing path to take here. Examining Asher’s BATNA (“Best Alternative to a Negotiated Agreement) reveals that, unless negotiations go horribly awry, he is likely to benefit from the process.
Does this mean that he is bargaining from a relatively weak position? Asher’s motivation to avoid a full-blown lawsuit is likely stronger than Benjamin’s. Let’s consider Benjamin’s BATNA.
EXAMPLE (4): The best case scenario for Benjamin is that after the lengthy and expensive court case he will be able to continue producing Widget Waterers. Assuming he believes the product will continue to be profitable for years to come, he has well over 40 years left in the 50-year agreement. The profits to be earned over those 40 years might mean Benjamin would require a hefty pay-off in negotiation in order to settle the case.
In cooperative bargaining, each party’s BATNA will dictate what that party is willing to accept in lieu of continuing with the trial. Of course, BATNAs themselves are rarely easy to calculate. Will Asher ever find another manufacturer for his product? Will Widget Waterers continue to be profitable for decades to come, as is assumed by Benjamin? There are always unknowns, hypotheses, and risks involved. If nothing else, these keep the process interesting. After all, if each side could accurately calculate their own BATNA as well as the other side’s, negotiation would be a very short process.
We must not deceive ourselves, however, into thinking that cooperative bargaining actually involves two parties each seeking the best outcome for the other. In fact, quite the opposite is true. Each party still seeks his own optimal outcome, but the game is played in a setting whereby the parties try to help their opponent perceive some benefit in that outcome.
A 1997 publication by the National Institute for Trial Advocacy includes an excellent example of this. In “A Practical Guide to Negotiation” Ch. 1 § B, we find the everyday car-buying experience discussed in the context of problem solving as a negotiation strategy. There, it is pointed out that when the buyer walks in with a fixed purchase price in mind and the salesman steers the discussion toward monthly payments, the salesman is using problem solving negotiation tactics to make his sale. This, of course, is not to indicate that the car salesman is in any way cheating the buyer, but merely to point out how the best outcome for the salesman (a purchase price well above what the customer had in mind) might be re-packaged as something which the buyer perceives to be to his advantage (a low monthly payment). Both parties believe they walk away winners, and in fact both might. But, so long as the salesman thinks he “won,” and manages to make the buyer believe the same about himself, the salesman is not usually actually concerned with the benefits received by the buyer as a result of this bargain.
What, then can we conclude about the cooperative bargaining? The process itself may differ from competitive bargaining, and the parties’ positioning may tend to be less aggressive and more collegial, however, one must never forget that in negotiation of any kind the ultimate goal is to obtain for your client what your client seeks. Cooperative bargaining is simply another way to accomplish that goal.