PROGRAM ON NEGOTIATION AT HARVARD LAW SCHOOL

AN INTER-UNIVERSITY CONSORTIUM TO IMPROVE THE THEORY AND PRACTICE OF CONFLICT RESOLUTION

CAMILIA PICTURES

Illustrative Seven-Element Preparation

Interests

Reynolds’ Interests

• Not feel bullied

• Maintain and raise industry reputation
• Retain sentimental value of the name Camilia
• Keep creative autonomy
• Improve relationship with Statler
• Continue to work at Labrador
• Feel respected, both in private and in public
• Release Privileges & Immunities
• Avoid litigation and arbitration
• Make critically acclaimed work
• Make profitable movies
• Get an apology
• Maintain cash flow

Labrador/Statler’s Interests

• Not feel taken advantage of or manipulated

• Protect Labrador’s bottom line and stock value
• Keep Reynolds at Camilia Pictures
• Keep board of directors satisfied
• Expand Camilia’s home entertainment operation
• Feel respected for his ideas
• Increase DVD sales and marketing
• Don’t compete with Reynolds
• Avoid litigation and arbitration
• Make financially and critically successful movies
• Return Camilia Pictures to profitability
• Maintain Labrador’s public image
• Maintain and raise industry reputation
This case was written by Robyn Kali Bacon and Robert C. Bordone, Thaddeus R. Beal Assistant Clinical Professor of Law at Harvard Law
School. Copies are available online at www.pon.org, Telephone: 800-258-4406 (within U.S.) or 781.239.1111 (outside U.S.); or by fax:
617.495.7818. This case may not be reproduced, revised, or translated in whole or in part by any means without the written permission of the
Director of the Curriculum Development, Program on Negotiation, Harvard Law School, 513 Pound Hall, Cambridge, MA 02138. Please help to
preserve the usefulness of this case by keeping it confidential. Copyright © 2006, 2007, 2008 by the President and Fellows of Harvard College.
All rights reserved. (Rev. 12/08)
 • Keep Labrador in the movie business
• Keep Privileges and Immunities as part of Labrador
• Get an apology
• Enforce a $30-million cap on what Camilia/Reynolds can spend before involving you
• Identify possible political interests
• Keep Camilia brand name
• Produce “safer” movies

Alternatives

Reynolds’ Alternatives

• Quit and start another company

• Wait until contract expires, leave, and start own company
• Distribute Privileges and Immunities through 5th Dimension
• Let Privileges sit on the shelf
• Sue Statler for breach of contract
• Try to get fired/continue to stoke the fires
• Go behind Statler’s back/go to the board independently
• Destroy Privileges and Immunities
• Do nothing
• Give “Privileges and Immunities” to Labrador
• File a discrimination/sexual harassment suit
• Retire and leave the business
• Badmouth Labrador and Statler

Labrador/Statler’s Alternatives

• Fire Reynolds
• Sell Camilia Pictures
• Do nothing
• Go to court or arbitrate
• Let Reynolds release Privileges and Immunities on her own
• Wait until Reynolds’ contract expires and let her leave the company
• Increase approval cap
• Give in to Reynolds

Options

For Releasing Privileges

• Don’t release it
• Let Reynolds release it (on her own through another company)
• Sell the movie to another studio

Copyright © 2006, 2007, 2008 by the President and Fellows of Harvard College. All rights reserved. (Rev. 12/08) 2
CAMILIA PICTURES: Seven-Element Prep Sheet

• Co-release with another studio (maybe 5th Dimensions), not using the Camilia name,
splitting costs and profits
• Co-release with another studio, using the Camilia name, splitting costs and profits
• Create a shell corporation to release the film
• Donate profit to charity
• Purchase the film through Labrador

For Improving Camilia Pictures

• Schedule regular meetings between Statler and Reynolds

• Create a three-year budget plan with incentives for growth and penalties for overruns
• Juggle the release calendar to reduce this year’s budget
• Create home entertainment division to be run by a third party or by Labrador
• Issue public retractions and apologies
• Negotiate an independent release exception to the Non-Competition clause: e.g., if
Camilia purchases a film and Labrador decides not to release it, Reynolds has the option
to purchase it herself and distribute it by other means
• Hire consultants to improve Camilia’s efficiency and tighten its non-film budget
• Agree not to litigate for 60 to 90 days

For Ending the Partnership

• Reynolds buys all upcoming Camilia and Built for Speed productions from Labrador
• Reynolds and Labrador divide all upcoming productions between them evenly
• Reynolds trades her film library for selected upcoming releases
• Work out exit deal
• Reynolds gets fired
• Reynolds quits
• Parties seek arbitration

Legitimacy/Criteria

External Standards for Determining Fairness of Agreement

• Seek declaratory judgment regarding Reynolds’ contract

• Submit dispute to industry arbitration
• Value all movies, including Privileges, at cost
• Use neutral, third party industry expertise to place an estimated value on all upcoming
releases
• Value all movies at projected box office x risk
• Value all movies at projected total revenue x risk
• Consider seven years of figures
• Evaluate existing contracts
• Review past performance
• Determine profit projections
• Seek awards

Copyright © 2006, 2007, 2008 by the President and Fellows of Harvard College. All rights reserved. (Rev. 12/08) 3
Commitment

Possible Questions

• What would be a good outcome for this meeting?

• What is the purpose of the meeting?
• What would you like the product of this meeting to be? (A joint recommendation? A
range of options for critique? A second-order agreement on the precise issues in dispute?
A framework agreement? An agenda for the next meeting?)
• What is the agenda for this meeting?
• What is the purpose, product, agenda, etc. for the next meeting (if there is to be one)?
Who should attend this meeting? When and where will it be?
• What are you authorized to do?
• Should there be another meeting?
• What are the third-party interests?

Communication

Possible Questions

• How do I insure that my points will have the maximum impact on the other party?
• How do I let him/her know that he/she has been heard? Perhaps consider:
o Exploring the parties’ interests together
o Letting them start the discussion
o Using active listening
o Asking for clarification of what is unclear
o Recording what is being said on a flipchart, white board, or shared piece of paper
o Starting with an apology from the client? Beginning with a statement of a desire
to jointly solve this problem? Commenting that it would be useful to rise above
the emotions that the clients have brought to these issues in the past?
• How might I handle communication problems that arise? Perhaps consider:
o Being explicit about what I am observing
o Asking what they are observing, and if they are happy with the way the meeting is
progressing
o Suggesting a break
o Proposing that some time is taken to consult with clients and gather more
information?

Copyright © 2006, 2007, 2008 by the President and Fellows of Harvard College. All rights reserved. (Rev. 12/08) 4
CAMILIA PICTURES: Seven-Element Prep Sheet

Relationship

Possible Questions

• What does Statler’s and Reynolds’ relationship look like currently?

• What kind of relationship would they prefer to have?
• What kinds of options are there for changing their relationship so that it has the
characteristics of the kind of relationship that they would prefer?
• If the parties want to alter their relationship, what are some ways of proceeding? (Have
an informal meeting with Statler, Reynolds, and a third party to discuss how they deal
with each other? Have them both apologize? Invite them both to the negotiation? Have
them conduct the negotiation with the lawyers (or a third party) acting as mediators?)
• How can the way that the company is structured and run promote a better working
relationship for Statler and Reynolds? (Consider some of the items listed under “Options
for Improving Camilia Pictures”)

Profit Partnership (separate companies)

• Start new company

• Try mediation
• Hire a third party to run business operations
• Use a different Labrador supervisor
• Have regular meetings, with facilitator present
• Hire a financial consultant

Copyright © 2006, 2007, 2008 by the President and Fellows of Harvard College. All rights reserved. (Rev. 12/08) 5
Copyright © 2006, 2007, 2008 by the President and Fellows of Harvard College. All rights reserved. (Rev. 12/08) 6