Golden Rules of Negotiation

Let’s imagine that you are sitting at your desk Monday morning, the telephone rings, and its peter, (your opponent) calling to see if you might be interested in discussing the offer, he proposed last week. Being up to speed, you jump right in.

Like mant who have experienced negotiation you just made a common event mistake. Who has the advantage here? Peter. Why? You agreed to speak with Peter and before you had prepaired.

Here’s what you should have said: “I’m right in the middle of something. Can I call you back shortly?” Then you should prepare your strategy.

The fact is, we all negotiate all the time. Whether trying to argument, attempting to close a deal, or even crossing the road ‘you’re always negotiating. Yet relatively few have ever learned the strategies and techniques of effective negotiation. Instead, most people negotiate instinctively or intuitively. It’s natural but can also be; devastating.

To avoid this mistake and others like it increase your ability to get what you want, follow these five rules.

 

Rules of Negotiation.

1. Information is Power — So obtain all the information you can get!

Good negotiators often enter negotiations with arguments intended to persuade the other side of the legitimacy of their positions. Unknowingly, they’re giving up power from the first time they open their mouths. Negotiation power goes to those who listen and learn. Therefore, its critical to ask questions and get as much relevant information from your opponent as you can throughout the negotiation process. With more and more information in your pocket, you gain power. Without it, you ’ll be scrambling.

Effective negotiators know this well. Instead of trying to convince the other side of the strength of your case or why the other side should agree with you, get information, build a rapport, developing relationships, asking open-ended questions like – what - how and why). find out your opponents reputation, probe and get their fundamental goals, needs, interests and options.

2. Maximize Your Leverage

How much does your client want or need this deal or settlement? What are your and their alternatives if an agreement is not reached? What can you do to strengthen your leverage? What might your counterparts be doing? Finding the answers to these leverage questions, can be the key to success. Ignoring them can be crippling.

Maximizing leverage can be especially challenging. Why? They must, in effect, simultaneously send two seemingly inconsistent signals.

On the one hand, they should convey to your opponent that they are ready, willing and able to take the case all the way through trial. After all, best alternative to settle your argument however the critical element of leverage and the higher the likelihood of your opponent suffering major consequences if they lose if negotiations fail the stronger your leverage is.

The vast majority of say litigations settle. So, you must also signal an interest in settling. But the more you signal an interest in settling the weaker their leverage.

So how can litigators credibly send both signals? Pursue each on parallel tracks in the following way. On the litigation track, always push forward to trial in an appropriately aggressive fashion.

On the settlement track, get the other side to initiate the process (thus signalling their relatively strong interest in settling), or suggest that it’s your policy in all augments to discuss settlement at an early stage. This signals your strong but reasonable.

3. Employ “Fair” Objective Criteria

The quest for fairness and the perception of fairness are key elements in many legal negotiations. Fairness, in most instances, boils down to a matter of relatively objective standards, like market value, precedent, efficiency or expert opinion. If both sides can agree on a fair and reasonable standard, many negotiations will be successful. If not, it’s far more difficult to reach agreement.

For transactional lawyers, standards can play an especially crucial role. Why? Because many transactions involve parties with future relationships, and standards can provide an independent and objective view of the issues. This can depersonalise the negotiation and help preserve their relationships.

“The reason my client’s purchase price and terms are fair and reasonable, “is because they are in line with guidelines, are the equivalent to a similar company, factoring in unique elements”. Or “it’s standard in the industry for the losing party to pay fees if a future dispute goes to arbitration.”

Focus on standards. While applicable also for litigators (critical standards include jury verdict research, expert opinions and precedent), it can be an especially powerful move in many transactional contexts. And it will give you credibility and help keep that “fair and reasonable” hat on your head – a critical factor in many legal negotiations.

4. Design an Offer-Concession Strategy

No one wants to leave valuable items on the table gratuitously. The best way to avoid this is to design the right offer-concession strategy. Doing this will require you to understand the psychological dynamics underlying concession behaviour, as well as improve your ability to evaluate your counterpart’s “flinch” point. It’s not an exact science, but you can learn to draw out and recognise certain signals that will give you the edge in your negotiations.

A crucial offer-concession element in the legal arena involves making sure your counterpart walks away feeling like they achieved somthing. How can you make sure of this?

Build in enough “room to move” with your offers so your counterpart will feel like they received a decent result. How often have you left a negotiation feeling you achieved a good deal based on how far you were able to get the other side to move? “I know we negotiated a great deal when we settled that lawsuit,” you might say, “because he increased his offer by £100,000 and we only moved down £35,000.” This is common.

So don’t just start at one point and refuse to move. Instead, start more aggressively and make some significant moves. Provide them with the ability to walk away feeling like they negotiated a decent result

5. Control the Agenda

Effectively managing the negotiation process — overtly or covertly — is one of the most challenging elements in striking the perfect deal or settlement, even for the most expert negotiators. Understanding when to use deadlines, how to effectively operate within them, and the psychological tendencies underlying them will give you a leg up in your negotiations.

Controlling the agenda can make or break your negotiation. Counter an opening and refuse to justify and the beginning until your opponent’s climes down from the high ground. You always be able to pull the walk away trigger.

In short, control the agenda. And if your counterpart tries to control the agenda, negotiate it. Not in an overly aggressive way. But in a way that satisfies both parties’ interests.

Experienced negotiators often suggest they wish they had been exposed to the strategic elements of the negotiation process earlier in their careers. “Just think of the difference it could have made,” they say.

My response? “Experience does not equal expertise in negotiations.