During a recent mediation, I encountered a situation which seemed to call into question the efficacy of the traditional negotiation dance. Despite my best efforts, settlement negotiations stalled after only two moves, with a chasm of more than $1,200,000 still separating the parties. Hoping to close the gap, I persuaded each side to propose their own potential brackets — which were summarily rejected. It became clear to me at that point that both sides were holding back, either in an attempt to gain a competitive advantage over the other or out of fear the other would seek to gain a competitive advantage over them.
I suggested a joint meeting between counsel, at which time counsel for plaintiff announced his intention to serve a Statutory Offer, pursuant to CCP Section 998, in the amount of $825,000. Counsel for defendant thanked him for his candor and the mediation came to an end.
I followed up with both sides a few weeks later and counsel for defendant authorized me to transmit a new offer of $250,000 — substantially more than the last formal offer of $90,000 which had been transmitted at the mediation. Counsel for plaintiff rejected the offer without a counter.
Counsel for defendant understandably refused to “bid against himself,” so it became necessary for me to devise a strategy that would not only close the gap, but create the momentum needed to reach a settlement.
Given the parties’ distrust of one another, I felt the only way forward was to abandon the usual negotiating dance and convince both sides to become more transparent with me and place their utmost trust in me.
First, I asked both sides whether they were open to having me propose my own bracket for further negotiations, with the understanding that I would not disclose their respective responses unless both sides accepted my proposed bracket. Both sides gave me their permission to do so.
I proceeded to propose that counsel for plaintiff reduce his demand to $765,000 on the condition that counsel for defendant increase his offer to $525,000. Both sides agreed to this bracket.
Having reduced the gap to $240,000, and thinking it might be easier to negotiate further reductions in a series of smaller and more manageable steps, I then suggested that both sides resume their negotiations “in secret,” revealing their next numbers to me confidentially, with the understanding that I would disclose those numbers if — but only if — they further reduced the gap by at least $60,000 (i.e., to $180,000 or less). Both sides agreed to continue “dancing in the dark.”
Counsel for plaintiff reduced the demand to $735,000 and counsel for defendant increased the offer to $575,000, thereby reducing the gap to $160,000.
After disclosing the new demand and new offer to counsel, I asked them to once again reveal their next numbers to me confidentially, with the understanding that this time I would disclose those numbers if — but only if — they reduced the gap another $60,000 (i.e., to $100,000 or less). They each gave me their new numbers, but this time the gap remained more than $100,000.
I asked them to try again. They each gave me a new number, but the gap was still more than $100,000. Nevertheless, both sides had obtained valuable information. More importantly, so had I.
At that point, I asked whether the parties were open to a Mediator’s Proposal, and both indicated they were. The next day, both accepted a Mediator’s Proposal of $660,000.
The traditional negotiation dance is not always the most effective way to reach a settlement. Sometimes, ironically, dancing in the dark can prove to be more illuminating.
As always, it would be my pleasure to assist you and your clients in the dispute resolution process. Please don’t hesitate to contact me if I can be of service.
Best regards . . .
Floyd J. Siegal