When arguing over money, negotiators often put pressure on the side that’s conceded less by claiming that it is only “fair” for both sides to concede in roughly equal amounts. “Look how much we came down,” they will say. A variant of this strategy is the proposal to “split the difference” after you’ve negotiated for some time and then reached an impasse. Both tactics are difficult to resist. Here are a couple of considerations that may help you stand your ground.
- Not all money is created equal. It’s one thing for a plaintiff in a defamation action to reduce her claim from $1 million down to $600,000; it’s quite another to expect an uninsured defendant to move the same amount, from $200,000 to $600,000, to meet the plaintiff halfway. In this example, the defendant is bargaining with real, hard-earned money: Every dollar the defendant concedes is a dollar out of his or her pocket. By contrast, the plaintiff is bargaining with constructive money—money to which the plaintiff may be entitled after proving the case in court. In this context, comparing the respective concessions made by the plaintiff and the defendant is like comparing apples and oranges.
- Opening offers and demands are arbitrary. Opening offers and demands bear little relationship to reservation points (the point above which the defendant has determined that it’s better off proceeding with litigation and the point below which the plaintiff is unwilling to settle) or target points (each side’s optimistic goal for a settlement outcome). Demure negotiators will open near to their reservation point while aggressive negotiators will open much further away. If you’re pitted against the other type of negotiator, it becomes readily apparent how equal concessions would produce distinctly unfair results. The same is true in the case of a proposal to split the difference at the very end.
The better practice is not to focus on the respective size of each side’s concessions; rather, make concession determinations based on your reservation point and your target point.
For more tips for engaging in successful settlement negotiations, turn to CEB’s California Civil Procedure Before Trial, chap 46. And for strategies to avoid settlement impasse, check out CEB’s program Overcoming Settlement Impasse, available On Demand.
Other CEBblog™ posts you may find useful:
- Settlement: It’s Not All About Money
- Should You Make the First Settlement Offer?
- 4 Tips on How to Be Both Assertive and Effective in Settlement Negotiations
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