NEGOTIATION
&
ALTERNATIVE DISPUTE RESOLUTION
OVERVIEW
Professor John Barkai
William S. Richardson School of Law
University of Hawaii at Manoa
2515 Dole Street Honolulu, Hawaii 96822
Phone (808) 956-6546 Fax (808) 956-5569
E-mail:
http://www2.hawaii.edu/~barkai
Common Forms
of Dispute Resolution
Negotiation:
discussion for the purpose of settling differences
Mediation:
Conciliation:
a neutral third party assists the parties to reach a negotiated settlement but has no power to decide the issues in dispute.
Arbitration:
a neutral third party is given the power to decide the issues in conflict. The arbitrator decides after hearing arguments and reviewing evidence.
Trial in Court:
evidence is presented to a judge or jury for a decision under formal rules of law and procedure.
TOP GENERAL COUNSELS SUPPORT ADR:
Fortune 1000 Lawyers Comment on Its Status and Future
David B. Lipsky, Ronald L. Seeber
8 Business Law Today 24 (March/April, 1999)
In a recent survey of the legal counsel of the 1,000 largest U.S. corporations, the researchers found this information about ADR use:
· 90% view mediation as a cost‑saving measure
· 88% used mediation in the past 3 years
· 79% used arbitration in the past 3 years
· most litigate first and then move to ADR or litigate only in appropriate cases, and then use ADR for all others
· 78% have used mediation and 85% have used arbitration in commercial disputes
· 79% have used mediation and 62% have used arbitration in employment disputes
· 81% say mediation is a more satisfactory process than litigation
· mediation is preferred to arbitration in ALL types of disputes
· 59% say mediation preserves good relationships
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BASIC DEFINITIONS FOR DISPUTE RESOLUTION:
COMPETITIVE
Competitive negotiators want to "beat" their opponents; they use high demands, threats, and make few concessions. They generally try to undermine their opponent's confidence and seek the maximum for themselves. This traditional style of negotiating goes by a number of different terms such as positional, win-lose, adversarial, power negotiating, hardball, and hard bargaining.
COOPERATIVE
Cooperative negotiators want to "work with" their opponents; they use reasonable opening offers, show good faith, and initiate the exchange of mutual concessions. They seek a fair and just settlement. This style of negotiating is also called win-win, interest-based bargaining, and problem solving.
DISTRIBUTIVE BARGAINING
In distributive bargaining the parties think of the items being negotiated as fixed and each party tries to get the most for himself. Usually there is just one issue for negotiation and more for me means less for you. Negotiators are bargaining over the distribution of profit on the bargaining range. This is a "zero sum" negotiation. Although the goals of the parties are in direct conflict, a negotiator can be either competitive or cooperative in a distributive bargaining situation.
INTEGRATIVE BARGAINING
During integrative bargaining, the parties are working together to increase the amount of resources and to maximize mutual gain. Integrative bargaining requires two or more issues so that trades can be made. Creating the additional resources is sometimes referred to as "expanding the pie." Some would call this "Win-Win" negotiating. The theory here is that the parties have different interests which can be integrated (reconciled) to create joint gains. Joint gains are an improvement for all parties to a negotiation.
INTEREST-BASED
Interest-based bargaining attempts to shift the nature of negotiations to a more collaborative basis. Instead of moving from position to counter-position to compromise, negotiators try to identify their interests PRIOR to the development of solutions. Once interests are identified, the negotiators then jointly develop a wide-ranging set of alternatives, and then choose the best alternative.
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POSITIONS
Positions are "what" the negotiators say they want. They are really solutions which have been proposed by the negotiators. Positions are based upon the interests of the parties; interests are usually not disclosed, at least not in competitive negotiations. In most negotiations, people take, and then give up, a series of positions. Behind every position lie many interests.
INTERESTS
Interests are "why" the negotiators want the positions they take. Interests lie behind the positions of the negotiators. Interests represent the basic needs to be met. Money and price are not interests in themselves. Money represents purchasing power, the ability to acquire other needs, status, or power itself. Understanding interests is the key to understanding "win-win" negotiating. In many negotiations the interests are never explicitly discussed. In fact, interests are usually kept secret. Successful "win-win" negotiating requires finding a way to disclose interests without being taken advantage of.
BATNA
BATNA stands for the Best Alternative to a Negotiated Agreement. It represents the best result that a negotiator can get somewhere else if an agreement cannot be reached with this party. In other words, a BATNA is the alternative that the party will select if they must walk away from this negotiation. It is an alternative solution. If the negotiation is a DEAL, the BATNA is to walk away to another party who can offer you a better deal. If, however, the negotiation is over a lawsuit, your BATNA is to go to court.
BOTTOM LINE
The bottom line is the position at which the negotiator will walk away from the negotiation. It is also known as a reservation price. If the negotiator cannot get at least their bottom line in the negotiation, they will go somewhere else.
ZONE OF AGREEMENT
The Zone of Agreement represents the difference between the bottom lines of the parties. If there is no overlap in the bottom lines of the parties, no agreement is possible.
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The easiest way to improve your negotiation skills is to
A__
M____
Q________
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Two Key Ideas
about Negotiation & ADR
1) Focus on
____________
2) Improve the
________________
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2 copies. Second is not bolded Basic Principles from Getting To Yes
by Roger Fisher & William Ury
(additional comments by John Barkai)
font change?
1. SEPARATE THE PEOPLE FROM THE PROBLEM.
Don't attack or blame the other negotiator; attack the problem which you are negotiating. Allow the other negotiator to save "face." Try to reduce the emotional temperature of the situation and to build a good working relationship. Allow emotions to be expressed without taking it personally (although this is difficult). Good communication is essential. Ask lots of questions, especially open-end and clarifying questions. Use active listening.
2. FOCUS ON INTERESTS NOT POSITIONS.
Positions are "what" negotiators want; "interests" are why they want them. Ask questions to try to learn their interests. Get into shoes of the other negotiator. Although problem-solving negotiators may be willing to disclose their interests, be aware that competitive negotiators will try to learn your interests, but they will not disclose their own interests. Remember that not all interests are tangible. Many undisclosed and unconscious personal needs (Maslow) come to play in negotiations. Settlements can result from both common and conflicting interests.
3. INVENT OPTIONS FOR MUTUAL GAIN.
Most negotiators take only one negotiation position at a time, but this approach suggests brainstorming many options and maybe even putting them all on the table at once. Generate a variety of options before deciding what to do. Some people would say to enlarge the pie before cutting it.
4. INSIST ON OBJECTIVE CRITERIA.
Instead of allowing the negotiation to be determined by a contest of wills or power, negotiators can select one or more objective criteria which can be used to determine the final settlement, e.g., an independent appraisal.
5. KNOW YOUR BATNA.
(Best Alternative To a Negotiated Agreement)
Most people think about a "bottom line" in a negotiation, but seldom do they think about what they will do if they do not reach settlement. Your BATNA is what you will have to do if you do not reach agreement. One way to improve your power in a negotiation is to work on ways of improving your BATNA. A BATNA is your "Walk-a-way" alternative. Plan in advance what you will do if the negotiation does not reach a settlement.
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LITIGATION RUN AMOK
898 F.2d 95 (1990)
BLACKBURN v. GOETTEL‑BLANTON
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KOZINSKI, Circuit Judge:
This is a case of litigation run amok. A minor dispute that long ago should have been resolved by the parties without the help of lawyers has been transformed into an attorney‑fee‑generating machine. While yielding only $6,654 in damages, it has resulted in more than $133,000 in billings for plaintiffs alone.
Facts
There's no doubt about it: Sheryl Goettl‑Blanton breached a contract. Four years ago, she agreed to buy a condominium for $245,000, signed the appropriate forms and made a small down payment. She even moved in. A month later, she changed her mind and refused to go through with the deal. The would‑be sellers, Joseph and Mary Louise Blackburn, sued Blanton under the contract, as was their right. After much procedural wrangling, the case came to trial and the district court awarded the Blackburns damages of $6,654, prejudgment interest of $14,707.14, costs of $14,262.56 and attorney's fees of $61,250.
On appeal, Blanton challenges the award of attorney's fees. ... [W]e agree with defendant that the fees award exceeded Hawaii's statutory ceiling.
Discussion
This case presents clearly the dilemma faced by individuals who must seek redress through our legal system for concrete, yet modest, legal claims. Under a breach of contract theory, the plaintiffs were entitled only to the benefit of their bargain. This did not amount to much: When defendant breached the agreement, the condominium was still worth more or less what she had agreed to pay for it; all plaintiffs were entitled to recover, therefore, was the roughly $6000 it cost them to undo some minor physical alterations to the property and to find a new buyer. Yet, as anyone who has dealt with the law knows only too well, a $6000 claim is hardly worth litigating; it often costs more than that to hire a lawyer just to file a complaint. As here, the solution often adopted is to pile on a lot of big‑ticket claims.
Thus, plaintiffs sued not only for breach of contract but also for intentional misrepresentation, negligent misrepresentation, willful and reckless breach, harassment and abuse of process. By the time they were finished, they were asking for more than $1 million, an amount more nearly worth fighting about. Defendant, for her part, further raised the stakes by removing the case to federal court, filing a counterclaim and heaping on every conceivable procedural and substantive defense. What had started out as a small contract squabble had suddenly become a major case.
Litigation has its own perverse logic and, the ante once having been raised more or less by mutual assent, the parties were locked into a wide‑ranging and costly battle. The Blackburns sought extensive (and expensive) discovery as to why defendant had breached the contract. While irrelevant to their underlying contract claim, this discovery was relevant to their tacked‑on claim for punitive damages. When defendant resisted, plaintiffs filed repeated motions to compel discovery and for sanctions.
Eventually, plaintiffs prevailed only on their contract claim, recovering approximately $6000 in damages, plus interest. They spent considerably more than that in litigating the case, however, and, given the scope of the claims and counterclaims, the district court concluded that a $61,250 award was reasonable. On this record, we are unable to conclude that the district court abused its discretion in awarding this amount of attorney's fees.
II
[4] Plaintiffs, however, face an even more serious obstacle in recovering attorney's fees in this litigation, namely the twenty‑five percent ceiling of section 607‑17. ...
Our review of Hawaii caselaw leads us to the conclusion that section 607‑17 limits an award of fees to twenty‑five percent of the judgment. ... The Blackburns claim that defendant's debt to them was $245,000 (the purchase price of the condominium), but that is misleading because, before trial, plaintiffs sold the condominium to another buyer. The true measure of defendant's debt, then, was the amount the Blackburns forfeited by selling the condominium to someone other than defendant. As it turned out, plaintiffs suffered very little damage; the district court found that at the time of defendant's breach the property was still worth $245,000. Defendant's debt, therefore, was limited to special damages, which consisted solely of the amount expended by the Blackburns in repairing the property and finding a new buyer‑‑i.e., $6,654 plus interest. Consequently, under Lennen 's debt rationale, section 607‑17 limits plaintiffs' fees award to twenty‑five percent of the judgment amount.
Here, plaintiffs prevailed; consequently, they were entitled to reasonable fees not to exceed twenty‑five percent of the judgment. The judgment consisted of $6,654 in damages, plus $14,707.14 in prejudgment interest. See Lennen, 456 P.2d at 236; Hawaiian Trust, 663 P.2d at 638‑39. Accordingly, the total judgment was $21,361. 14, and the fees award may not exceed $5,340.29.
Conclusion
Lawsuits have become particularly inappropriate devices for resolving minor disputes. They are clumsy, noisy, unwieldy and notoriously inefficient. Fueled by bad feelings, they generate much heat and friction, yet produce little that is of any use. Worst of all, once set in motion, they are well‑ nigh impossible to bring to a halt.
This case is not atypical: A relatively minor dispute mushroomed into a full‑ blown war of attrition in which both sides suffered substantial casualties. The district judge called it "a cold turkey case" and he was right. Yet the parties trudged through four years of expensive and frustrating litigation all the same. As is quite often the case when litigation ends, neither side will be satisfied with the result we reach today.
We vacate the award of attorney's fees and remand to the district court. On remand, the court is instructed to award the Blackburns reasonable attorney's fees not to exceed $5,340.29 on their breach of contract claim, and reasonable fees for defending against defendant's counterclaim.
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