This and That by Dennis Wade

In the check-out line at Whole Foods (now one of the tentacles of Amazon), I heard a Mom say to her middle-schooler: “Why is everything with you a negotiation?”  I can’t say whether the dinner menu was in dispute or something else.  But it got me thinking – – in the career of defense lawyers and claim professionals, everything is truly based around negotiations.  And maybe, just maybe, that argumentative youngster is headed for such a career.

In litigated matters, everything is about the outcome: What you want and what the counterparty wants.  And so, I decided to put down some of the common traps to negotiating a successful outcome.

First, you must achieve absolute clarity about the desired outcome, typically expressed in a dollar range.  Too many negotiations go south because discussions begin before you really know where you want to end-up.  Soliciting a demand before you have decided on your goals is almost always a mistake.  Without knowing your optimum range, you will be powerless to anchor the counterparty’s expectations.  If you simply reject a demand, without a signal about your thinking, future discussions will inevitably be linked to the initial demand.  Negotiation is a process and must be treated as such.

Second, you and all relevant decision makers must be on the same page before any discussions take place.  In other words, you must first achieve a firm consensus about the range of an acceptable commercial resolution.  Many negotiations fail for want of that consensus.  Here are some questions to consider: Will the resolution under consideration impact the insured’s financial position?  Does the resolution require the assent of more than one insurer (an especially relevant question in London market practice)?  Has the excess insurer been brought on board if there is any chance that layer will be reached in negotiation or otherwise?

Finally, and perhaps most important, I find candor is a key in successful negotiations.  To be sure, you will deploy all the leverage at your command.  But a failure to acknowledge to a counterparty a potential vulnerability in your case lessens your credibility and diminishes the chances of getting to your ideal outcome.  And often candor about a potential vulnerability can be turned into a strength because it shows you have considered it and likely have developed a strategy to overcome it at trial if necessary.  So, next time, try the 3C’s – – Clarity, Consensus and Candor.

And that’s it for this This and That. If you have any thoughts about other negotiation strategies, please email or call Dennis.