Thursday, May 26, 2011

Negotiaion / Mediation Bracketing

I’ve been thinking about brackets since March Madness and I thought that with the tournament complete, then that would be that.  However, brackets keep coming up in mediation after mediation.  It’s a tool that I sometimes use and I’m finding mediation participants know about them too and suggest them as well. I mediate litigated cases including workers’ compensation and personal injury claims.  We have mandatory mediation in North Carolina that requires certain people attend; however, no negotiation or settlement offers/counter offers are required.  The idea is to get the decision makers together with a mediator and then to allow free choice about how to proceed.  Now back to brackets.

Let me explain bracketing in negotiation/mediation in context. It’s a tool that I’ll use when things seem to be getting bogged down, when we are in what I call the negotiation phase of mediation, i.e., actively making proposals and counter proposals to resolve a dispute, and the progress is slowing or participants are making very small incremental steps.  This slow down usually occurs when folks have very different public evaluations of a dispute which usually translate into the numbers that are discussed.  And when folks perceive a large distance in the numbers, they often get hesitant about making significant moves.  Here’s a recent example from a personal injury claim.  Plaintiff made an initial demand of 155,000, defense responded with 20,000, then a counter at 150,000 and 24,000, then 147,500 and 25,000 - things were not going very far nor very fast.  People were getting frustrated at the pace.

At this point I asked Plaintiff (counsel and client) if they wanted to use a bracket to reframe the negotiation.  The idea is to create new numbers to recharge the negotiation.  Here’s how it worked in this case.  Plaintiff officially countered with 146,500 and said they would move to 125,000 if Defense moved to 42,000 and then it would be back to Plaintiff.  This was rejected by Defendant; however, she proposed a revised bracket.  100,000 - 30,000. This was countered by Plaintiff - 125,000 - 30,000.  Defendant rejected and proposed 90,000 - 35,000.  Note that during these exchanges participants are continuing to evaluate their claim and are in active discussions with the mediator (me) about aspects of their claim, what their future choices might be, what are the risks and opportunities of not settling the claim versus settling.

As a result, Plaintiff accepted the 90,000 - 35,000 bracket proposed by Defendant.  Then we started moving.  Defendant offered 40,000, Plaintiff 85,000, then Defendant 45,000, then Plaintiff 80,000, then defendant 50,000, then plaintiff 75,000.  With the bracketing and ensuing discussions the participants shifted from 146,500 - 25,000, to 75,000 - 50,000.  Things slowed again as both participants wanted to continue negotiating (the spread from 75,000 - 50,000 was likely in the settlement zone), but also didn’t want to over extend themselves.  It took additional work from all and the claim eventually settled for 62,000. 

The bracketing discussion allows participants to share information about what they would do if a different offer was in front of them.  Since information is a large part of the currency of negotiations, any such discussions help move matters forward.  And when things are slowing down or getting stuck, using a bracket to reframe the negotiation can often smooth the way.

Let me know about your brackets - did you pick Connecticut?

1 comment:

Gary Javitch said...

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