Joe Basta

As a mediator and negotiation coach I am struck by how often parties and their lawyers fail to think through exactly what they wish to achieve in mediated settlement negotiations, much less how they plan to get there. You will set your goals as a negotiator by carefully planning and analyzing the nature of your case, the parties involved, their strengths and weaknesses, and their interests and needs. But without a thoughtful concession strategy, you may never achieve your settlement goals.

You may get sidetracked by your emotional reactions to your opponent’s proposals, and they likely will do the same in response. The prospect of reacting emotionally to one another will be compounded by setting limits on your negotiation communications like insisting upon shuttle negotiations, relying on the mediator as a medium between you simply to exchange (often) raw numbers. A good concession strategy will maximize getting what you want and need. Jay Folberg and Jennifer Reynolds offer some helpful tips on developing a concession strategy in Lawyer Negotiation: Theory, Practice, and Law, 4th Edition, Aspen Publishing, 2021.

Concessions are the compromises necessary to make forward movement after the exchange of opening offers. Negotiation protocol usually dictates that one party make a concession in return for that of the other. The nature, timing, and amount of a concession sends important signals about your priorities and your bottom line, even where dollars dominate many commercial, position-based bargaining scenarios.

Your concession strategy will depend upon the nature of your case. You will move differently if continuing relationships are at stake or interests are many, rather than a one-shot distributive negotiation. Whether, when, what, and how to tie concessions will vary. You need to balance collaboration and competitiveness in light of your relationships with your adversary, your client, and your client’s goals, without giving up too much too soon. You also need to remain flexible as new information comes to light in the course of the negotiation. But you do need a plan.

In planning your concessions in a dispute involving multiple issues, determine what is most and least valuable to you and to your adversary. You will then be in a position to offer concessions of little value to you which may have great value to the other side. Prioritizing concessions ensures low cost to you for high value to your opponent. And sticking to your plan minimizes the possibility of reacting emotionally and giving up something you or your client should have held back.

Most negotiators try to get the other party to move first so as to safeguard their own bottom line or reservation point and to gather information. A sizeable gap between demand and first offer creates a dilemma over who moves next. You can ask your adversary to go first as a measure of good faith with the assurance you will respond accordingly. Or, you may make the first concession with an explanation of your rationale and with the expectation they will do likewise. In either event, you should set up a framework of reciprocal trades and exchanges. Reciprocity will generate movement, show the value of your concessions, and telegraph your resolve. In order to avoid “bargaining against yourself,” you should always expect a concession in return for one of yours.

Each concession is a form of communication and sends a message even where raw dollars are the medium. In Making Money Talk: How to Mediate Insured Claims and Other Monetary Disputes, ABA Publishing, 2007, mediator J. Anderson “Andy” Little suggests providing a narrative rationale or explanation for your concession to avoid miscommunication or ambiguity in your message. Words explaining the rationale for the offer can convey more information than the mere number in the proposal itself. The parties may convey information about their views concerning the negotiating range. By defining the range, the parties may avoid needless frustration, speed up the process andgive the mediator more information with which to explore settlement. Timing is important too. Commentary is not likely to be useful until after a couple of rounds of negotiations, when negotiations have stalled, or when the parties express frustration over lack of movement.

The pattern of your concessions itself provides valuable communication. The pattern discloses how close you are to your reservation point or bottom line. Significant concessions likely indicate that more are on the way. Steadily diminishing returns mean you are close to your bottom line. Minimal or no concession says you are done negotiating—at least without some new information to support further movement.

The timing of your concessions can be as important as their pattern. Do not risk stalling the negotiation by giving up too much too soon. Rapid successive concessions may be mistaken as a signal you are desperate to settle or suffer from severe risk aversion. Moving slowly and thoughtfully, appearing to move reluctantly, avoids these dangers. It also enables you to keep further concessions in reserve should you need them and continues to safeguard your bottom line.

Not all negotiations focus just on money. Non-monetary issues add a layer of complexity and opportunity to the negotiation. Distributive or position-based bargaining is more limited than integrative or interest-based bargaining where there is a chance to “expand the pie” beyond or in combination with monetary concerns. The more issues you have, the more likely you are to engage in integrative bargaining, enabling you to package your concessions and trade them off with those of your adversary. There are simply more opportunities for low-cost trades from you for higher value trades from your opponent.

The increased number of issues in integrative bargaining presents more challenges in concession strategy than distributive bargaining, making preparation even more important. You will have to explore more deeply your adversary’s interests and determine what concessions to package together and which to leave for single offer in a later negotiating round. Folberg and Reynolds observe that some negotiators—once they have gotten what they want—offer a low-cost “sweetener” to end the negotiations positively. This makes adherence to the settlement more likely and lays the groundwork for continued good relations among the lawyers and parties.

Complicating the development of your concession strategy is the possibility that a competitive adversary who is familiar with these principles may find a way to turn them against you. This is more likely in a distributive negotiation than in an integrative one built upon trust. The signals may be used deceptively to hide a negotiator’s reservation point. This is another reason to couple a concession with a narrative rationale which invites your opponent to do likewise. In a distributive negotiation, your goal is to get as much information about your adversary’s positions and interests while keeping yours close to the vest if you can.

Regardless of the nature of your case, several tips will almost always apply:

• Develop a plan
• Prioritize and rank concessions
• Create high value from low cost
• Get the other party to move first
• Move slowly and reluctantly
• Offer a rationale
• Always get something in return for your concessions

If you follow these suggestions, you are most likely to stay on plan and remove emotion from the calculus, ensuring that you get the settlement your client wants.

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Joe Basta heads Basta Resolutions, PLLC, an Ann Arbor-based firm specializing in mediation and arbitration of commercial and family disputes.  He is a former chair of the Alternative Dispute Resolution Section of the State Bar of Michigan.  Joe was a trial lawyer for over 34 years at Dykema, litigating complex commercial matters.  He teaches negotiation at the Michigan State University of College of Law and is a member of Professional Resolution Experts of  Michigan, Inc.