 I. What is negotiation?

Negotiation has been defined as any form of direct or indirect communication

whereby parties who have opposing interests discuss the form of any joint
action which they might take to manage and ultimately resolve the dispute
between them Footnote1 . Negotiations may be used to resolve an already-existing
problem or to lay the groundwork for a future relationship between two or
more parties.
Negotiation has also been characterized as the “preeminent mode of dispute
resolution” Footnote2 , which is hardly surprising given its presence in virtually all
aspects of everyday life, whether at the individual, institutional, national or
global levels. Each negotiation is unique, differing from one another in terms
of subject matter, the number of participants and the process used.
Given the presence of negotiation in daily life, it is not surprising to find that
negotiation can also be applied within the context of other dispute resolution
processes, such as mediation and litigation settlement conferences.

 II. Characteristics of a negotiation

Negotiation is:

o Voluntary: No party is forced to participate in a negotiation. The

parties are free to accept or reject the outcome of negotiations and can
withdraw at any point during the process. Parties may participate
directly in the negotiations or they may choose to be represented by
someone else, such as a family member, friend, a lawyer or other
professional.
o Bilateral/Multilateral: Negotiations can involve two, three or dozens of
parties. They can range from two individuals seeking to agree on the
sale of a house to negotiations involving diplomats from dozens of
States (e.g., World Trade Organization (WTO)).
o Non-adjudicative: Negotiation involves only the parties. The outcome
of a negotiation is reached by the parties together without recourse to a
third-party neutral.
o Informal: There are no prescribed rules in negotiation. The parties are
free to adopt whatever rules they choose, if any. Generally they will
agree on issues such as the subject matter, timing and location of
negotiations. Further matters such as confidentiality, the number of
negotiating sessions the parties commit to, and which documents may
be used, can also be addressed.
o Confidential: The parties have the option of negotiating publicly or
privately. In the government context, negotiations would be subject to
the criteria governing disclosure as specified in the Access to
Information Act and the Privacy Act (see confidentiality section). For
general information on the privileged nature of communications
between solicitor and client during the course of negotiations, please
refer to the Department of Justice Civil Litigation Deskbook.
 o Flexible: The scope of a negotiation depends on the choice of the
parties. The parties can determine not only the topic or the topics that
will be the subject of the negotiations, but also whether they will adopt
a positional-based bargaining approach or an interest-based approach.

 III. Advantages of negotiation

o In procedural terms, negotiation is probably the most flexible form of
dispute resolution as it involves only those parties with an interest in
the matter and their representatives, if any. The parties are free to
shape the negotiations in accordance with their own needs, for
example, setting the agenda, selecting the forum (public or private) and
identifying the participants. By ensuring that all those who have an
interest in the dispute have been consulted regarding their willingness
to participate and that adequate safeguards exist to prevent inequities
in the bargaining process (i.e., an imbalance in power between the
parties), the chances of reaching an agreement satisfactory to all are
enhanced.
o Like any method of dispute resolution, negotiation cannot guarantee
that a party will be successful. However, many commentators feel that
negotiations have a greater possibility of a successful outcome when
the parties adopt an interest-based approach as opposed to a
positional-based approach. By focusing on their mutual needs and
interests and the use of mechanisms such as objective standards,
there is a greater chance of reaching an agreement that meets the
needs of the parties. This is sometimes referred to as a “win-win”
approach.
o Negotiation is a voluntary process. No one is required to participate in
negotiations should they not wish to do so.
o There is no need for recourse to a third-party neutral. This is important
when none of the parties wants to involve outside parties in the
process, e.g., the matter to be discussed or the dispute to be resolved
may be highly sensitive in nature.
o Unlike the outcomes of certain adjudicative processes, e.g., the courts,
the outcome of a negotiation only binds those parties who were
involved in the negotiation. The agreement must not, of course, be
contrary to Canadian law (e.g., an agreement to commit a crime would
be illegal and thus void for public policy reasons).
o Assuming that the parties are negotiating in good faith, negotiation will
provide the parties with the opportunity to design an agreement which
reflects their interests.
o Negotiations may preserve and in some cases even enhance the
relationship between the parties once an agreement has been reached
between them.
o Opting for negotiation instead of litigation may be less expensive for
the parties and may reduce delays.
 IV. Disadvantages of negotiation
o A particular negotiation may have a successful outcome. However,
parties may be of unequal power and the weaker party(ies) may be
placed at a disadvantage. Where a party with an interest in the matter
in dispute is excluded or inadequately represented in the negotiations,
the agreement's value is diminished, thereby making it subject to future
challenge. In the absence of safeguards in the negotiating process, the
agreement could be viewed by a participant or others outside the
process as being inequitable, even though the substance of the
agreement may be beyond reproach.
o A successful negotiation requires each party to have a clear
understanding of its negotiating mandate. If uncertainty exists
regarding the limits of a party's negotiating authority, the party will not
be able to participate effectively in the bargaining process.
o The absence of a neutral third party can result in parties being unable
to reach agreement as they be may be incapable of defining the issues
at stake, let alone making any progress towards a solution.
o The absence of a neutral third party may encourage one party to
attempt to take advantage of the other.
o No party can be compelled to continue negotiating. Anyone who
chooses to terminate negotiations may do so at any time in the
process, notwithstanding the time, effort and money that may have
been invested by the other party or parties.
o Some issues or questions are simply not amenable to negotiation.
There will be virtually no chance of an agreement where the parties are
divided by opposing ideologies or beliefs which leave little or no room
for mutual concessions and there is no willingness to make any such
concessions.
o The negotiation process cannot guarantee the good faith or
trustworthiness of any of the parties.
o Negotiation may be used as a stalling tactic to prevent another party
from asserting its rights (e.g., through litigation or arbitration).

 V. How to use negotiation

o Objective of a Negotiation

Negotiations allow the parties to agree to an outcome which is mutually

satisfactory. The actual terms of the agreement must be concluded by
the parties and can be as broad or as specific as the parties desire. A
negotiated settlement can be recorded in the form of an agreement.
Once signed, has the force of a contract between the parties. If the
settlement is negotiated in the context of a litigious dispute, then the
parties may wish to register the settlement with the court in conformity
with the applicable rules of practice.

o Negotiating Styles
 Generally speaking, although the labels may vary from one
commentator to the next, negotiating styles can be divided into two
categories:

i. Competitive/Positional-Based Negotiation

In the competitive model, the parties try to maximize their

returns at the expense of one another, will use a variety of
methods to do so and view the interests of the opposing party or
parties as not being relevant, except insofar as they advance
one's own goal of maximizing returns. Competitive bargaining
has been criticized for its focus on specific positions rather than
attempting to discern the true interests of the parties Footnote3 .
Among the criticisms which have been levelled at the
competitive model are its tendency to promote brinkmanship
and to discourage the mutual trust which is necessary for joint
gain Footnote4 .

ii. Cooperative/Interest-Based Negotiation

Cooperative or problem-solving negotiation starts from the

premise that the negotiations need not be seen as a “zero-sum”
situation, i.e., the gains of one party in the negotiation are not
necessarily at the expense of the other party Footnote5 . Common
interests and values are stressed, as is the use of an objective
approach, and the goal of the negotiations is a solution that is
fair and mutually agreeable Footnote6 .
In recent years, the form of cooperative negotiating style known as
principled bargaining has won widespread acceptance Footnote7 . The
proponents of principled bargaining believe that bargaining over fixed
positions can lead to situations where parties will either be stubborn
(“hard bargaining”) or accept unilateral losses (“soft bargaining”) in
order to reach agreement Footnote8 . Principled bargaining, which attempts
to reconcile the interests underlying these positions, helps the parties
to reach agreement and circumvent the problems of hard and soft
bargaining. It is this form of negotiation which is seeing increasing use.
See Part G “Steps of a Negotiation” for further discussion.

o What is the Role of Justice Counsel in a Negotiation?

Simply put, a negotiator is supposed to advance the interests of the

party that he or she represents in order to obtain an optimal outcome.
Beyond this general statement, the functions to be performed by a
negotiator will vary, depending on the mandate conferred on her or him
by the party.
In the most elementary form of negotiation, two or more parties work to
achieve an agreement between themselves. However, the parties can
delegate representatives to act on their behalf. These representatives
include the following:
 i. members or employees who have been designated by the party
in question;
ii. third parties (e.g., dispute resolution professionals, lawyers,
labour negotiators, etc.) whose services have been retained by
the parties because of the negotiating skills of these individuals
rather than any involvement on the part of the latter in the
dispute or discussion in question.

The role of Justice counsel in a negotiation will vary with the

circumstances and the mandate of the negotiating team. The extent to
which Justice counsel will participate in the negotiations will depend on
a variety of factors, including whether or not legal issues or issues of
mixed fact and law are at stake as well as whether the client
department needs or simply wants Justice counsel to participate
actively in the negotiation. For example, counsel with Legal Services
Units work with their clients and on their behalf and help represent their
views in a variety of situations, e.g., formulating contractual terms
concerning the development of a project. In some cases, Justice
counsel will have carriage of files such as ongoing litigation and may
be directly involved in negotiations, e.g., settlement conferences in
litigation files.
When negotiating on behalf of the client, counsel must ensure that
there is no divergence between his or her negotiating stance and the
mandate of the client. This is best done through following the client's
instructions and providing frequent updates to the client. At other times,
client departments may ask the Justice counsel to participate as a
member of the negotiating team. Should the client be present at the
negotiations, counsel must determine in advance whether the client will
actually participate in the negotiations. It is crucial for the success of
the negotiations that no divergences, real or apparent, emerge
between the positions advanced by Justice counsel and those
proposed by the client. To avoid any such disclosures, counsel and the
client should clarify their respective mandates and formulate a common
negotiating strategy.
The choice of negotiating style will also be an important consideration,
as a competitive negotiator will view the bargaining exclusively in terms
of advancing his or her interests and will conduct the negotiations
accordingly. The cooperative negotiator, however, will view the issues
in a fundamentally different light and will attempt to seek common
ground with his or her counterpart.
While the role of counsel will depend on the circumstances surrounding
the negotiations, she or he is always bound by the principles of
professional ethics. For example, the Code of Professional Conduct of
the Canadian Bar Association states that when acting as an advocate,
the lawyer must treat the tribunal with courtesy and respect and must
represent the client resolutely, honourably and within the limits of the
law. Although no two negotiations are identical, counsel must apply
these principles of professional responsibility in each situation Footnote9 .
 Counsel for the Department of Justice are bound as well by the
provisions of the Department of Justice Act, and relevant directives and
policies which outline the appropriate role for Justice counsel. Of note
is the Treasury Board Contracting Policy, which specifies negotiations
as one means of resolving contractual disputes. Section 12.8.3 reads:
Efforts should be made to resolve disputes as they arise, first by
negotiating with the contractor. This can be through discussion
between representatives of the contractor and the contracting authority
or by a more formal review established by the department or agency.
Contracting authorities should develop systems that ensure:

iii. prompt attention is given to disputes;

iv. unresolved disputes are brought forward quickly to a designated
senior level in the department or agency for decision;
v. the decision is quickly communicated to the contractor so that
the contractor may take further action if so desired.

Counsel should also be aware of all other legislative and government

policy requirements including, for example, the Access to Information
Act, the Privacy Act and the Official Languages Act.

b. Dealing With Differences

Underlying any successful relationship is the principle of mutual

respect. This is particularly true during negotiations, where cultural
and/or linguistic differences between the parties may occasionally
result in misunderstandings between them. Such differences will
influence the perceptions and assumptions of individuals and how they
bargain Footnote10 . Differences in gender may also play a role in the
negotiating process, whether the parties are of the same or different
cultural backgrounds Footnote11 . Reliance on stereotypes, whether they be
based on gender, cultural, physical or racial differences or physical
disability, will cause and reinforce misunderstandings between the
parties.
The ability to deal with others who are not of the same gender or
cultural origin or who differ in some way from one's self varies with
each individual and the degree to which she or he has been exposed to
and is willing to accept diversity. Whatever one's background, clearly
demonstrating respect for and an open-minded attitude towards others
is always an appropriate course of action. When there are cultural or
other differences among parties to a negotiation, it is important to be
aware of and sensitive to these differences. In such a situation, it is
essential to communicate clearly and effectively with the other party or
parties in a negotiation. Doing so will enhance the relationship between
the parties as well as minimize the chances of a misinterpretation of
the underlying message Footnote12 .

c. Dealing With Difficult or Deceptive Conduct

 At any point during negotiations, one party may decide to use a variety
of tactics in order to obtain an advantage over another party. This
behaviour can range from pressure tactics (attempting to force a party
to accept specific terms), intimidation (implicit or explicit), deliberate
ambiguity regarding the scope of the negotiating mandate to blatantly
unethical behaviour (providing misleading or false information, lies,
etc.) Footnote13 .
Advance preparation is essential in order to respond effectively to
these tactics, whenever they may arise. In devising strategies to
counter such behaviour, each situation must be viewed as unique.
Previous experience of others can provide useful guidelines in
formulating a suitable response Footnote14 . Awareness of basic
communication techniques and strategies on how to communicate with
difficult or deceptive individuals may also be extremely helpful.
Ultimately, the choice of tactic(s) to be used to rebut difficult or
unethical conduct is a question of personal judgment, as what may be
an appropriate response in one situation may be excessive or too
conciliatory in other circumstances.
d. Preparing for a Negotiation

i. Initial Assessment

The negotiation process begins with a communication or signal

from one party to the other indicating a willingness to bargain.
Since negotiation is a voluntary process, the first and
fundamental step to be taken is to confirm whether or not the
other party or parties are interested in negotiations. In making
such an assessment, it is important to take into account the
following factors:

 the desire to resolve the dispute;

 whether a negotiated solution is in the interests of any or
all of the parties in question;
 the credibility of the other party(ies);
 the willingness of the parties to establish or preserve a
relationship;
 whether or not there is a disparity between the parties to
the extent that it would be impossible to bargain equally,
i.e., there is a marked contrast between the parties in
terms of the level of education or the resources of the
parties;
 the desirability of using another form of alternative
dispute resolution, such as mediation or arbitration; and
 proper authority to enter into negotiations and to reach an
agreement or settlement.
ii. Contacting the Other Party

Once it has been decided that negotiations are an appropriate

course of action, arrangements that must be made with the
other parties include:
  outlining the agenda and the scope of the negotiations;
 fixing the timetable, i.e., whether or not there will be a
fixed period for the talks as well as the frequency and the
duration of the negotiations;
 determining the identity of the participants, ensuring that
all interested parties have been consulted;
 choosing the locale for the negotiations (preferably a
neutral location) and arranging necessary support
services;
 specifying the official language(s) to be used for the
purposes of the negotiations, as well as the need for
translation and interpretation services (please refer to the
discussion of the Official Languages Act).
 deciding whether or not the negotiations and any
resulting agreement will be confidential (please see the
discussion of the Access to Information and Privacy
Acts).

Consistency in these matters will not only assist in ensuring the

negotiations are as effective as possible, they will also reinforce
one's credibility and can thus contribute to establishing mutual
confidence and trust Footnote15 .

iii. Preparation of a Strategy and Interest Assessment

A crucial factor in achieving one's goals in negotiation is

thorough preparation. Therefore, it is suggested that the
following steps should be taken prior to any bargaining session:

 Study the dispute in question before the negotiations.

This means not only obtaining the facts surrounding the
dispute, but also attempting to find out as much as
possible about the other party or parties, their
background and their negotiating interests.
 Harmonize and reconcile the varying and sometimes
competing interests within one's negotiating side before
negotiating with the other side Footnote16 . Failure to do so can
undermine one's negotiating stance by making the other
party aware of internal disagreements and thus raising
doubts as to one's ability to implement any future
agreement.
 When assessing one's interests as well as those of other
parties, the Best Alternative To a Negotiated Agreement
(BATNA) must be taken into account Footnote17 . The BATNA
is “the standard against which any proposed agreement
should be measured” Footnote18 . It is, in essence, the best of
all the possible alternatives to negotiation should the
latter fail. Assessing one's BATNA is indispensable and
should be done carefully and well in advance of any
bargaining session so as to avoid unpleasant surprises
 from the opposing party during the negotiations.
Attempting to estimate the BATNA of the other party will
also be worthwhile when planning one's negotiation
strategy.
 Creativity is necessary when attempting to devise
solutions when at first glance the dispute appears to be
insoluble. An impasse will often result when the
negotiating parties advance specific positions and refuse
to change them. Each party should then canvass the
various members of the negotiating team in order to
obtain their views regarding possible solutions, i.e.,
determining the parties' underlying interests and how they
may be satisfied. This should be done in an environment
which encourages the team members to express their
ideas freely and without fear of criticism, e.g., a
brainstorming session.
 Thought must be given as to how the negotiations will be
handled. For example, it must be decided in advance
whether there will be one spokesperson or whether each
member of the negotiating team will be responsible for
one or more particular areas or topics. Another
consideration is fixing in advance when and how to call a
private team caucus that will interrupt the negotiations.
Resorting to a caucus of team members is helpful when a
new issue emerges at the table or an issue on the table
requires clarification or further analysis. Finally, all
members of the negotiating team should be aware of the
need to resolve any internal disputes away from the
negotiating table and to avoid revealing any such
disputes or doubts to the other parties, e.g., through the
use of inappropriate body language.
ii. Steps of a Negotiation Footnote19

Each negotiation has its own unique characteristics. There is thus no

uniform and exclusive manner governing the organization of a
bargaining session. For example, the timing of an offer and the
question of which party is to make the first offer fall within the discretion
of the negotiator and are determined by the overall dynamic of a
particular negotiation.

i. Negotiation Session

During any negotiation, the following considerations should be

kept in mind:

 Concentrate on interests, not positions. Try to focus on

the underlying interests of all the parties, i.e., their needs,
desires, concerns and fears, and how they might be
acknowledged and reconciled.
 Separate the people from the problem. Avoid blaming the
other side for the problem(s) one has encountered and
discuss the perceptions held by each side. Ensure that
there is effective communication between all parties.
 Listen carefully and actively to what the other side is
saying and acknowledge what is being said. This can be
done through methods such as asking questions and by
making frequent summaries Footnote20 .
 Try to make the negotiations a “win-win” outcome by
creating options for mutual benefit.
a. There is no need to wait until negotiations have
begun, however, in order to develop these options.
They can and should form part of the development
of the negotiating strategy, although they are
subject to modification in the course of the
negotiation.
b. Creating these options implies a willingness to look
beyond the limits of the issue(s) in question. Doing
this can be achieved through means such as
brainstorming sessions with one's negotiating
team. Brainstorming can also be a joint exercise
involving all the parties. These sessions should be
structured so as to allow all participants the
opportunity to voice ideas in a non-adversarial and
non-critical environment.
 Use objective standards. Citing objective standards such
as legislation or government policies enables parties to
view the issues in rational rather than emotional terms
and facilitates the conclusion of an agreement. There is
likely a variety of alternative objective criteria that could
be cited by the parties and, if possible, they should be
identified by each negotiating team prior to entering into
the negotiating session.
 Evaluate proposals of the other party and the progress of
the negotiations in light of the BATNA (Best Alternative
To a Negotiated Agreement). It may become necessary
to break off the negotiations if there appears to be no way
of achieving an outcome which is superior to the BATNA.
This can occur when it becomes apparent that the
underlying interests between the parties are irreconcilable
or that the other side does not really want an agreement.
 When necessary, feel free to stop the negotiations if there
is a need for the members of the negotiating team to
confer on a new development. To avoid revealing the
content of these discussions, the caucus should be held
in a private location which is preferably not visible to the
other side.
 Stay within the limits of one's negotiating mandate.
Ensure that there is constant communication with the
client when acting on the latter's behalf. The same
 principle applies when bargaining in the governmental
context; before committing the government to a position
Justice counsel must be clear as to the extent of her or
his bargaining authority. More specifically, counsel must
be certain that they have received specific instructions as
to whether or not to conclude an agreement as well as
the limits of the mandate, e.g., the limits governing any
offer to the other party as well as the degree to which
other options can be offered. As well, any agreement that
is reached must respect existing laws and government
policies.
 Prepare for the possibility of being confronted with
provocative, intimidating, unfair or deceptive behaviour of
a party to the negotiations Footnote21 . At worst, it may become
necessary to end the negotiations, having carefully
examined one's BATNA and having concluded that
termination is the preferable course of action.
ii. Statutory/Policy Considerations

A negotiator's authority is limited not only by the mandate given

by his or her principal or client, but also by factors that may not
be explicitly mentioned in her or his mandate, such as existing
statutes, regulations or government policies.
Justice counsel have a particular duty to ensure that any
agreement reached does not breach the terms of any law or
policy directive. For example, the Minister of Justice has
responsibility for a number of federal statutes, including
the Access to Information Act, the Canadian Human Rights Act,
the Canadian Bill of Rights, the Commercial Arbitration Act,
the Crown Liability and Proceedings Act, the Federal Real
Property and Federal Immovables Act, the Official Languages
Act, the Privacy Act, and the United Nations Foreign Arbitral
Awards Convention. These statutes are cited here only as
examples and are not intended to provide a definitive list of
federal statutes to be consulted by Justice counsel. Counsel
should examine the relevant federal, provincial or territorial laws
which may be applicable to the particular fact situation or client
department.
Any agreement reached between the parties cannot override the
terms of the Access to Information Act, the Privacy Act or
the Official Languages Act as these laws are of general
application. Please refer to sections ins “Confidentiality:  Access
to Information Act  and  Privacy Act” and “Official Languages Act:
Considerations” contained in this Reference Guide for further
discussion.

Appendix A: Checklist for negotiation

1. Initial assessment:
a. Authority/Mandate to negotiate and reach an agreement or settlement
b. Willingness to negotiate
c. Credibility of other party(ies)
d. Ability to negotiate (equality?)
e. Alternatives to negotiation
2. Contact with the other party to arrange/confirm:
a. Agenda
b. Location (neutral)
c. Timetable
d. Participating parties
e. Public/Confidential nature (See statutory requirements, below)
f. Official Languages
g. Support services (word processing, etc.)
3. Preparation of a strategy and interest assessment:
a. Study the issues
b. Harmonize/reconcile competing interests within the team
c. Assess the BATNA (Best Alternative to a Negotiated Agreement) for all
parties
d. Assign roles for team members (spokesperson(s), etc.)
e. Create options for mutual gain (“win-win”)
f. Consult relevant statutes (including the Access to Information Act,
the Department of Justice Act, the Official Languages Act, the Privacy
Act) and relevant policy directives
4. Pointers for a negotiation:
a. Concentrate on interests, not positions
b. Separate the people from the problem
c. Listen carefully and actively
d. Respect the other party (e.g., any cultural, linguistic or other
differences)
e. Create and propose options for mutual benefit (“win-win”)
f. Use objective standards
g. Assess progress in light of one's BATNA
h. Caucus if necessary
i. Anticipate and avoid responding to provocative tactics
j. Communicate frequently with the client
k. Remain within the limits of the negotiating mandate
 Alternative Dispute Resolution: Negotiation

We participate in negotiations every day. We negotiate disputes and we negotiate over

responsibilities. A negotiation is a bargaining process between parties when both seek to reach
an agreement that settles a matter of mutual concern or resolves a conflict.[1]

Though conducting a negotiation has some objective principles that can guide its
success, it is an art. Steve Gates, CEO of The Gap Partnership, an international workshop
provider and organizer, wrote “There is no right, no wrong, no good, and no bad way to
negotiate. Only that which is appropriate to your circumstances.”[2]

This presentation will provide an overview of the steps to a negotiation, how a negotiator
can determine his best and worst alternatives and the primary bargaining styles that can be used
when negotiating.  

Steps to a Successful Negotiation

The five steps to the negotiation process are:

1)    Preparing and planning

2)    Defining ground rules

3)    Clarification and justification

4)    Bargaining and problem solving

5)    Closure and implementation

Preparing and Planning

The first step, preparing and planning, is where the parties determine their goals for the
negotiation. Each party must first determine its BATNA, or “best alternative to a negotiated
agreement,” colloquially often referred to as “best case scenario,” and its WATNA or “worst
alternative to a negotiated agreement” (the worst-case scenario). These two represent the
extreme possibilities and negotiation is about getting a settlement that’s as close as possible to
one’s best case scenario.[3]

The BATNA is your course of action should negotiations break down. The better your
BATNA, the greater your negotiating power, as a good alternative decreases your danger from a
failed negotiation. If one side has many attractive alternatives aside from reaching a deal, that
side has greater power to reach a deal that will be most beneficial to him. The threat of walking
away is more realistic.[4]

Preparing and planning one’s BATNA also helps a party determine whether it is time to
break off a negotiation and pursue an alternative.

To determine a BATNA in the preparation and planning stage, a party should:

1)      List the available alternatives;

2)      Evaluate these alternatives;

 3)      Choose a course of action that would have the highest expected value; and

4)      Calculate the “reservation” value which is the “worst” deal that he would
accept in a negotiated settlement

For example, assume a buyer and a car dealer begin negotiating over the sale of a car.
The dealer offers to sell the buyer a new car for $10,000. The buyer, who took the time to
determine her BATNA during the preparation and planning stage, knows that another nearby
dealer is selling a similar but slightly inferior car for $9,000. The $9,000 is the buyer’s reservation
value and purchasing the $9,000 car is her BATNA. If the first seller doesn’t drop his sales price
from $10,000, the buyer can walk away to the other dealership and purchase the lower priced
car. If negotiations stall with the dealer holding firm at, say, $9,600, the buyer can make an
informed decision as to whether the $600 price difference is worth more than the advantages
over the “backup” car. A buyer who had not done his research or could not find a fallback option
that he’s satisfied with would be in a much weaker bargaining position.

      While determining the BATNA in complex litigation is more difficult, the same principles
apply. Before negotiating a settlement, each party must determine whether she’s willing to go to
trial or whether she can even afford the time and expense to proceed to trial. This greatly
influences the leverage that parties have in negotiations.

Just as important as determining a BATNA is discovering the “worst alternative to a

negotiated agreement,” known as a WATNA. This looks at the worst-case scenario if
negotiations break down.[5] What would be the risks, costs, drawbacks, and ramifications if a
deal isn’t reached?

Defining ground rules

The second step, “defining ground rules”, pertains to the procedural requirements for the
negotiation. During this step, the parties will answer questions such as, “How long will the
negotiation last?”, “Where will the negotiations take place?”, and “What will be the starting point
for the negotiations?” It is often helpful to start by clearly establishing what each party concedes
to clarify the areas of disagreement.

Clarification and justification

In the third step, “clarification and justification,” parties will clear up and settle any
confusion about their positions. It’s an opportunity for educating and informing one another on
the issues in dispute. Each side clarifies its demands to ensure the negotiation is properly
focused.

Bargaining and problem solving

The fourth step is bargaining and problem solving. Bargaining and problem solving is the
essence of the negotiation because it’s where the parties may compete or cooperate as they
each seek to advance their interests.

It’s impossible to answer the question, “What is the ‘best’ negotiation style?” as there is
no single approach. Different bargaining styles and tactics are useful depending on the
circumstances.[6]

Competitive Approach to Negotiations

The negotiator who engages a competitive bargaining style is solely concerned with
achieving his own goals without considering the impact on the other side. The competitive
negotiator seeks to force the opposing party to a settlement that is favorable to the negotiator,
[7] and his goal is to win as much as possible.

The competitive bargaining negotiator achieves his goal by attempting to convince his
opponent that her case is not strong and that she should seek a solution as quickly as possible.
[8] Instead of approaching a negotiation like an exercise in joint problem solving so that all
parties benefit, the competitive negotiator views negotiations as a zero-sum game; one party
must win and another will have to lose.

The following aggressive tactics are often used by competitive negotiators:

         Use of assertive language;

         Less willingness to listen and wanting to speak;

         Attempt to dominate the negotiation;

         Distorting information;

         Concealment and selective disclosure of information about his client’s case.

For example, a sports agent negotiating a higher salary for his client using this approach
would likely threaten the team that his client will sign with another team, or sit out a season,
should his current team not agree to his salary demands.

Though such “hardball” tactics may maximize the results in a client’s interest, there are
numerous disadvantages to this negotiation approach. Because a competitive negotiation is so
confrontational, relationships can be hurt. A competitive negotiator’s tactics could lead to mistrust
and anger. Additionally, studies on negotiation tactics have found that competitive negotiators
are more likely to reach an impasse and deadlock during the negotiation because competitive
tactics lead to inflexibility from both sides.[9]

Cooperative Approach to Negotiations  

Also known as the collaborative, or interest-based, approach, parties in

a cooperative negotiation identify interests and then “partner” with the other party for options and
solutions that will satisfy both sides’ interests. Cooperative negotiators will attempt to resolve
conflicts so that everyone benefits, will focus on using problem solving methods to create value
for both sides, and will grant concessions so that it becomes more likely that the other side will
reciprocate.

It’s a “win/win” approach because it is about making sure both parties have their needs
met and that mutual value is created. Cooperative negotiators employ collaborative methods
when they seek to maintain long-term relationships and keep future negotiations in mind when
conducting the present negotiation.

Characteristics of a cooperative approach to negotiation include:

o   Willing to compromise;

o   Adopting a friendly attitude towards the other party;

 o   Separating people from the problem;

o   Using on objective criteria.

Collaborative negotiators emphasize creativity, empowerment, and control by the parties

so that a resolution that advances both sides’ needs can be reached.[10]

Closure and implementation

The fifth step, “closure and implementation”, is the formalization of an agreement that has
been worked out and lays out how the parties will monitor one another’s actions to ensure that
the negotiated agreement is carried out. Usually, this culminates in the signing of a formal
settlement contract.

Conclusion

Because negotiation is so fact-specific, it is impossible to learn negotiation as a “black

letter” course or study. Still, basic principles such as BATNA and competitive and collaborative
negotiation should be considered in any negotiation process.