THE OUTER LIMITS OF PRINCIPLED BARGAINING

[My wife Barbara and I celebrated our 38th anniversary this month. As we reminisced about the day in 1985 that’s so memorable to us, we were reminded of one negative occurrence that put a minor damper on our wedding party. I happened to be teaching a course on negotiating at Fordham Law School at the time, and it occurred to me that this mishap would serve as an ideal example of a particular point I wanted to make about differing approaches to negotiating the resolution of disputes. So the next year I wrote an article about it (later contained in my book, “THE ACQUISITION MATING DANCE and Other Essays on Negotiating). I just re-read the essay, and I think it retains enough timeliness to circulate it through my blog. Hope you enjoy it.

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Those are my principles; and if you don 't like them, I have others.

                             — Groucho Marx

How would you classify yourself as a negotiator? Try this test. When you get involved in striking a deal or resolving a dispute:

 * Do you view the participants as
  a. adversaries, or
b. Problem-solvers ?

* Is your goal
  a. victory, or
b. a wise outcome, reached efficiently and amicably?

* Do you
 a. make threats, or
b. explore interests?

*Are you insistent
a. on your position, or
 b. on using objective criteria?

*Do you
a. apply Pressure, or
b. attempt to reason on the basis of principle?
 

If your answers were all in the (a) column, then you're probably a bargainer of the old school — an evolutionary product of haggling in Turkish bazaars and knockdown, drag-out labor/management tussles. Truly competitive bargainers hate to give an inch — digging in to their positions, demanding concessions, distrusting others, misleading opponents as to their bottom line, trying to win a contest of wills.

If you ended up each time in the (b) column, then you've probably read "Getting to Yes" by Roger Fisher and William Ury (Houghton Mifflin, 1981), which has become the bible for those who shun positional bargaining, adopt a cooperative mode, and "negotiate on the merits.'

ALTERNATING APPROACHES

If you're like me, you're located somewhere in between a strictly (a) or (b) approach — sometimes slugging it out, sometimes searching for answers; one minute, trying to get a leg up, and the next, attempting to break an impasse. Particular deals or disputes and even particular sessions within an extended negotiation — may tilt more in one direction than the other, depending on the issues involved, your adversary, your client, their respective positions, what hour it's getting to be, whether your lower back is giving you trouble, and so on.

In writing and lecturing on the subject, I've consistently adopted a sort of balance theory — that roughly half of what you do is to gain an advantage over the opposition and the other half consists of working out accommodations. So, for instance, you have to be persistent, but you also need perspective (you can't win 'em all). It's a personal approach that goes back to before Fisher and Ury did their thing (but after the Turks did theirs).

Anyway, up to now I've never bothered to develop an analytical basis for deciding which approach to use at any particular moment. But I may recently have found the key.

LEARNING FROM THE STUDENTS

Here's the background. I've been teaching a course at Fordham Law School on negotiating. A number of the students in my class, which meets at night, hold daytime jobs. Having one foot in the world of academe and the other in commerce makes for an interesting student profile. I find that not only can the students probe and analyze in the best law school tradition, but they also have plenty of practical know-how street smarts dealing with such business affairs as negotiation.

I've been exposing the class to both the competitive and cooperative approaches to bargaining. My usual technique is to pose a hypothetical negotiating situation, and then get he students to address the key issues in terms of various tacks the bargainers might take.

In one recent class, the overall topic was resolving disputes (as contrasted with striking a deal). As a lawyer who spends most of his time doing deals but has lately gotten involved in several cases of dispute resolution, I had been struck by the differences between the two setups — the brooding presence of the litigation alternative in a dispute (as contrasted with a simple walkaway in a deal), the uncertainty of a judicial result, the heightened emotions of a legal scrap, the mood of distrust between the parties, their ambivalence over suing or settling, the rigidity caused by each side's fear of showing weakness, and the frequent absence of a problem-solving mentality — all of which make resolving a dispute so difficult.

In short, it's a fertile field for application of the Fisher-Ury technique.

THE GROOM AND THE TENT MAN

So, here's the situation I gave the class that evening — not a hypothetical scene but a vignette from real life.

In January 1985, I got married. The wedding party was held in our new apartment, occupying the two lower floors of a brownstone in New York City. In order to have enough room for a sit-down dinner, we hit on the idea of using our small garden in the back of the house.

Now, this required a large tent and sufficient heat to overcome the wintry weather. The tent man came, surveyed the scene, and said, "no problem"; with two large heaters (which he would supply), it would be perfectly comfortable. His price was, let's say, $500.

Early on the day of the wedding, the tent man and his people installed the tent. He showed the caterer how to operate one of the large gas heaters. I asked the tent man to test the second heater; he declined, saying they had just tested it back at their place, where it worked fine; and he  left.

When the caterer tried to start the heaters a few hours before the party, the second heater refused to function. He tried everything, but to no avail. Repeated calls to the tent man were unanswered. The single heater was not sufficient to overcome the winter's chill. No one sat in the garden; and though the party was a good one, things were really crowded in the house.

Well, I told the class, you can imagine how furious my wife and I were — our feelings aggravated, naturally, by it being our wedding day, when everything was supposed to  go smoothly. We promptly took the only step plausible under the circumstances: We stopped payment on the tent man's check! And that, of course, made him equally furious.

BLUSTERING VS. THE HIGH ROAD

So, the stage was set, either for some hard competitive bargaining over whether we ought to pay for all or a portion of the rental — bargaining that was sure to be influenced by the emotions of the moment — or possibly for a different, more rational kind of approach to this knotty situation.  

First, I had the class try out some tactics of the blustering variety. Students, simulating the tent man, cast aspersions on the technological competence of our caterer, suggested that my relatives were too lily-livered to take a little cool weather, and demanded every penny of the  original rental. Other students, in the roles of my bride and me, were totally self-righteous, refusing to pay a red cent ("We didn't get a single minute's use out of that tent!"), insinuating that the heater had never been checked, moaning about the pain and suffering we had undergone starting off our married life in such cramped quarters.

Then, I talked in general terms about the "Getting to Yes" approach — particularly the chapter entitled "Separate the People from the Problem," which had been part of their assignment. Put yourself in the other person's shoes; see the situation as he sees it. Don't always place the worst interpretation on what your adversary does. Recognize his need to save face — to reach agreement without seeming to back down. Identify the emotions that are there; acknowledge your opponent's concerns as legitimate; tell him how you feel, rather than throwing stones. And ultimately, think of yourselves as partners in a side-by-side search for a fair agreement, advantageous to both parties.

All right, I said to the class; now, let's try to apply this approach to the tent situation. Assume that you're the tent man meeting with my wife and me to see if things can be resolved without having to bring a lawsuit for the tent rental. You can expect that feelings are running high on the Freunds' part. What things could you do — things that Roger Fisher would be proud of— to help your case?

There was a lot of response. The students rose to the occasion, putting all the right words in the tent man's mouth:

"Gee, Mrs. Freund, I can understand how frustrated you must have felt.

"What an unfortunate occurrence to have happened on your wedding day.

"You probably think I never even tested the heater.

"I can certainly see why you wouldn’t consider it fair to pay the full rental for the tent.

"Try for a minute to see this from my Perspective.

And they were full of ideas for an imaginative solution to the dispute:

"If you pay the full rental this time, I'll be happy to let you have the tent for your next party at half-price. . . .”

"I'm really interested in your recommending my tents to your friends and neighbors, so, if you could just cover my expenses. . . .”

"I'd be happy to give you a credit for the portion of the rental applicable to the non-working heater. . . .”

In short, they joined eagerly in the search for a fair and just solution to this dispute.  

NO COOPERATIVE APPROACH FOR FREUND

Then, I said, okay, now put yourself in my place, and apply the Fisher-Ury approach to my dealings with the tent man.

I waited for some insights, but the class was not responsive. There were a few half-hearted tries —

"I realize you wanted those heaters to work. . . .”

"I'm sure you incurred considerable expense setting up the tent. . . .”

But their hearts didn't seem to be in it. Were they having difficulty putting themselves in my shoes? Had I come across as such a competitive bargainer that they couldn't visualize me embracing the "Getting to Yes" philosophy?

I remarked on this disparity, and just to make sure I wasn't imagining things, I called for a show of hands. How many of you, I asked, favor a cooperative approach for the tent man? A substantial majority raised their hands. How many would take a cooperative approach in my shoes?  Only a few hands went up.

Well, imagine that! I chortled. What's the reason? Now, the class didn't hesitate. "You've got the money!' said one student. "If the tent man is going to get some of it from you, he's got to overcome your negative feelings.'

"That's right," added another. "It would be different, if you had paid in cash. Then you might have had to search assuming you didn't want to throw for mutual interests good money after bad by initiating suit. But here, you're sitting pretty; you can afford to take a hard-nosed position.

For a third student, the real difference lay in the tent man's being at fault — his heater didn't work and he wasn't even reachable by phone. That responsibility made it more logical for the tent man to adopt a "come, let us reason together" approach; whereas I — blameless under the circumstances — didn't have to reach as far.

'But wait,' another student cautioned, "all we've heard is your side of the story!" And, of course, he was absolutely right. I had set forth the facts accurately, but  perhaps a bit loaded in my direction. For example, my crucial premise for paying nothing was that the non-working heater had rendered the tent completely unusable; an argument might have been made that it had some utility (e.g., for storing food and equipment).

Another student pointed out that since the tent man was operating an ongoing business, there might be opportunities to rent to me (or my friends or neighbors) in the future, which could influence him to take a less dogmatic approach. I, on the other hand, could just as easily walk my fingers through the Yellow Pages in search of a more reliable alternative.

And finally, several of the students focused on the difficulties and expenses the tent man would have in bringing an action, including the presumption that the court's sympathy would be on the side of the newlyweds.

WHO'S GOT THE MARBLES?

  It didn't surprise me that a majority of the class thought the tent man ought to use the Fisher approach — that's exactly what I would have utilized in his place to get that hard-nosed Freund to come down off his high horse and at least cover the installation expenses. But I was taken aback that so few people thought I ought to. Maybe I shouldn't have been – although "Getting to Yes" doesn't make these kinds of distinctions. I had the money, he was at fault, and litigation wasn't a desirable alternative. In that situation, they were saying, why should I bend over backward to accommodate the other side?

I tinkered with some of the variables. Would the students be more disposed (as me) to bargain on principle had I paid cash, and now wished to get back my money, or at least some of it? I think clearly they would have been.  

The significance of where the money resided was not lost on them. (Earlier in the evening, I had asked them whether they thought I ought to let the tent man in to pick up his tent the next day. Of course, of course, they all said — it would be dirty pool on my part to hang onto the tent, if not outright conversion. But when I changed the facts to my having paid cash, a lot of them weren't too sure; perhaps hanging onto the property — a little self-help — would be called for in that circumstance.)

Now, it's too simplistic to conclude from this that whenever your cause is just and you're holding the money, you can afford to hang tough — that cooperative bargaining has no appeal for you under those circumstances. In fact, there's almost always some cost to persons on either side of a dispute; the equities are rarely the exclusive province of one party; there may be real value in sustaining a relationship; and litigation is no fun for anybody but court reporters.  

So, even with the strongest of cases, I might still be receptive to a reasoned approach from the other side (except possibly on my wedding day or when I've had root canal work); and while I'd put a pretty price on my willingness to settle, I could see myself cooperating to arrive at that point.

But — and here's the real lesson I learned from my students — if I'm sitting there with all the marbles, I'll be damned if I'm going to initiate the principled approach! And when some unrepentant tent man comes blustering in demanding his money, he's not going to get any come-let-us-reason-together pap from this old bird!

NEGOTIATION JUJITSU

One of Roger Fisher's colleagues told me that the tent man example illustrates when positional bargaining is most useful; i.e., where there is a strong alternative to a negotiated agreement (here, holding the cash, paying nothing and waiting to be sued), and where the transaction is single-issue (money), two-party, single-shot and without important or ongoing personal or institutional relationships. A well-rounded negotiator, he said, should be able to be a good positional bargainer when the situation calls for it.

As a matter of fact, one guy who probably wouldn’t have been surprised at the class's outcome is Roger Fisher. He has actually included a chapter in his book entitled, "What If They Won't Play?" This situation must come up a lot; you're trying to discuss interests while the guy on the other side is stating his position in unequivocal terms, attacking your proposals (or even you), and  concerned only with maximizing his own gains. How do you get him to focus on the merits?

Roger's answer: use negotiation jujitsu. Avoid the cycle of action and reaction; sidestep the other side's attack and deflect it against the problem — as in the Oriental martial arts, where you use your skill to turn the opponent's strength to your ends. This involves such methods as treating your adversary's position as one possible option — looking for the interests that lie behind it, seeking out the principle it reflects, considering ways to improve it — as well as inviting the other side's criticism of your ideas (so you can rework them in light of what you learn from their negative judgments), and recasting any personal attacks on you as an attack on the problem. Two of the key techniques advocated are asking questions instead of (statements generate resistance, making statements whereas questions generate answers), and using silence — creating the impression of a stalemate that the other side will feel compelled to break by coming up with a new suggestion.

It's too bad the tent man didn't read "Getting to Yes." I can just picture him now.

"Yes sir, Mr. Freund, I can certainly see that your not paying a red cent is one of the possible options here . . .[Pause]. . .Do you really think, though, that it would be a just settlement of the problem?. . .  [Silence].. I'd be interested in understanding how you believe calling me an 'incompetent idiot' gets us closer to a solution of this matter. . .[Pained smile]. . . What, if I may ask, are some of your objections to my position that you should pay the full rental plus interest for the month that has now passed?. . . [Listen]. .

WELL, WHAT HAPPENED?

  Anyway, you're probably wondering what actually happened. After a quick round of mutual recriminations, the tent man turned the matter over to a collection agency, which wrote a very nasty letter. I turned the letter over to one of my litigation partners, who wrote a blistering reply. The collection agency wrote again, completely ignoring the reply and demanding payment. My partner once again responded, this time hinting at dire happenings (a treble-damage suit for pain and suffering? Perhaps RICO. . . ) if this harassment continued. After that, I never again heard from the collection agency. A year later, my wife and I happily celebrated our first anniversary — indoors, of course.