Arbitration & Mediation

The Case for Settlement Counsel: Negotiation is Not a Competitive Sport

By Victoria Pynchon

(right, the must-read Google Story) 

If the point of litigation is winning what is the point of settlement negotiations?  Winning, right? 

Wrong.  The point of settlement negotiations is to create durable agreements that sufficiently serve the parties' interests so that they will either stop bothering one another -- for which the LawGod created iron-clad releases -- or flourish in their mutual business venture.

I mention The Google Story in this post because it contains a small narrative about a  business deal that killed its host.  

In Google years, this story arises at the beginning of time -- the year 2000.  Back then, Google was renting space by the square foot in the air-conditioned warehouses that store online company "servers." Google's stripped-down, high-powered hardware was so small (took up so few square feet) and so powerful (used so much electricity) that its lessor's electric bills drove the warehouse out of business.  The narrative doesn't suggest that Google intentionally negotiated this deal to "get the better of" its bargaining partner.  Nevertheless, a truly competitive negotiator, on hearing this story, would likely experience a little adrenalin rush -- the agreement being quite literally a "killer deal."  

I tell this story because I want to begin a series of posts about competitive and collaborative negotiation in the context of "bet the company" commercial litigation.  At the same time, I want to suggest the need for specially designated 'settlement' counsel to work alongside of (but not with) the litigation team.  The Google story will have relevance to those issues as we proceed.

If I can free up a little of the time of my friend and colleague, AAA arbitrator and Judicate West mediator Jay McCauley to help me out, you'll be hearing from him on these topics during the next several weeks as well.

For now, I'm leaving you with this 2004 article, Negotiation is not a competitive sport by Steven P. Cohen, President of The Negotiation Skills Company in Pride's Crossing, Massachusetts, together with his concluding remark.  

Competitive negotiation yields winners and losers and reduces the likelihood that losing parties will be fully committed to the resulting agreement. If the agreement falls apart, the negotiation must be deemed a failure. If parties are compelled to fulfill their part of the agreement but end up with a bad taste in their mouths, they will approach future negotiations with the winner with reluctance, paranoia, and distrust. The long-term consequences of competitive negotiation are unfavorable, yielding reduced enthusiasm and commitment as well as damaged relationships. Negotiation is about how the parties are going to bring about added value from having worked together. It is not a competitive sport.

Full post as published by Settle It Now Negotiation Blog on April 18, 2008 (boomark / email).