Negotiation Strategies for Settlement Agreements in South Carolina

Life is a process of negotiation. Outside of a courtroom, we negotiate everything including the cars and homes we buy, our jobs and wages, where our families will vacation next year, and who gets to hold the TV remote control this evening. These negotiations, big and small, take two general forms: (1) “competitive” (win-lose) and (2) “integrative” (interest-based). In all the years that I’ve been a lawyer and a mediator in Charleston, South Carolina, it’s been my experience that most cases settle before ever going to trial. Why do some cases go to trial when so many other cases settle? Unfortunately, some cases go to trial because the lawyers and their clients take an “I’m right” approach to negotiations instead of a “let’s do what’s right” approach.

Competitive (Win-Lose) Settlement Negotiations Typically Fail – “I’m Right!”

In a “competitive” (win-lose) based approach to negotiations, the parties and their lawyers negotiate by trying to pressure the other side to cave into their demands and by sticking to high-end, firm positions – “I’m right, you’re wrong. I win, you lose.” Although this approach may work well in other situations (I’m bigger and stronger than you, so give me the TV remote), a “competitive” approach oftentimes doesn’t work in the world of legal disputes. Let me give you 4 real-world examples:

Example # 1– For several years, I handled a case regarding a commercial construction dispute that has been in and out of the courtroom and all the way up to the South Carolina Supreme Court. Since the dispute’s beginning, my client offered to pay most of what was claimed due by the other party. However, for every offer my client made, the other side responded by demanding every penny they claimed was due. After years of back and forth, the case finally settled because there was no more money to pay their demands, and the other side ended up with a mere fraction of what was originally offered to them.

Example # 2 – In another case that I handled over the course of eight years regarding commercial property development, the opposing side, once again, took the position that they wanted all or nothing. The case went to trial, the other side lost, and they appealed. In the meantime, the property’s value declined from several million dollars to less than 1 million. Although my client made offers to resolve the dispute in a way that would have allowed everyone to profit from the property’s sale, in the end, the opposing side ended up with nothing.

Example # 3 – In yet another case that I had, a commercial landlord attempted to force my client out while the landlord performed property repairs. My client proposed a workable solution whereby the landlord could make repairs while still allowing my client to operate their restaurant business. Instead of looking for resolutions, the landlord and it’s lawyer insisted upon forcing my client out. After several years of litigation, my client ended up with a judgment against the landlord that forced the landlord to turn over the property to my client to pay it off.

Example # 4 – The last example I have is regarding a case that was handled by a friend. This case involved his client’s purchase of a used vehicle and claims that there were misrepresentations regarding the vehicle’s condition. The car purchaser simply wanted the dealership to return to him the vehicle he traded in. After several years of litigation including multiple appeals, the dealership ended up paying the car purchase or $1.6 million. That’s right, 1.6 million for a dispute over a used car!

Integrative (Interest-Based) Settlement Negotiations Lead to Success – “Do What’s Right.”

These cases are prime examples that oftentimes “being right” is much more costly than “doing what’s right.” Unfortunately, in law school, lawyers are taught many things, but the art of negotiation isn’t one of them. Instead of a “competitive” approach to negotiation, the cases I mentioned above probably could have been resolved using an “integrative” (interest-based) approach to negotiations.

In integrative negotiation, both parties attempt to work together to reach a solution in a way that maximizes the benefits to them or strikes a balance between one party’s needs, such as the need for monetary damages, and the other party’s need to engage in “damage control.” In integrative negotiation, the parties: (1) move away from their positions (“I win! You lose!”) by considering the needs and concerns of the other side; (2) consider the alternatives to NOT reaching a negotiated settlement agreement; (3) use objective criteria; (4) focus on the problems and NOT the persons involved; and (5) think creatively.

1. Consider the Other Party’s Needs – This doesn’t mean that you agree with their needs or even find their needs valid. Instead, you explore the reason’s for the other party’s needs by asking yourself, “Why?” In doing so, you open up the possibility for other options that satisfy their needs. For example, let’s say a couple is wrangling over who should get custody of their child or what the parenting schedule should be. By looking beyond their positions (I want custody), you may discover that the father is concerned about becoming a “Disney dad” if he doesn’t have the title of “custodian,” or the mother is concerned that the father may expose the children to his new girlfriend. Both of these concerns, however valid or not, can easily be addressed by agreeing to proper restrains (no exposure to the girlfriend) and a liberal parenting schedule (to give the father more quality time).

2. Consider the Alternatives to Settlement – The first and foremost thing to consider before heading into a courtroom is the COST. There are attorney’s fees, the costs of conducting discovery (depositions and such), the costs of expert witnesses (in many cases such as malpractice lawsuits), and the list of costs goes on. Second, there is the big question of whether that cost will be worth the results. In a previous article (click here), I explored how the outcome of any lawsuit depends on many factors. In other words, it’s always a huge gamble to walk into a trial, and both lawyers and their clients need to carefully weigh the risks, including the weaknesses in your own case, vs. the rewards at trial.

3. Use Objective Criteria – Sometimes, the dispute centers around the value of a thing, such as real property. If the lawyers and the parties disagree, then turn to a 3rd party neutral, such as a trusted appraiser, to settle that issue before tackling a total resolution of the lawsuit through integrative negotiation.

4. Focus on the Problems, Not the Person – In the first example I gave of competitive negotiation, the opposing attorney would repeatedly try to “personalize” the dispute by characterizing my client as, essentially, a “bad” person. Of course, this bled into her client doing the same, which later morphed into both the lawyer and her client characterizing me as a “bad” lawyer because I was representing a “bad” person. There was nothing “bad” about my client. He contracted for quality workmanship on his building and he received less than what he expected. Regardless, this approach of focusing on personalities did absolutely nothing to resolve the dispute or to contribute to any solution. The aggressive approach was taken by opposing counsel ultimately lead to an ineffective resolution for her client. For more on this topic, please click here to read why “aggressive” lawyers don’t necessarily make for “effective” lawyers (also, you may enjoy reading about ways to deal with a difficult opposing attorney). Overall, it’s better to be harder on the problem than on the person.

5. Be Creative – After you crystalize the problem and understand what the other side truly wants and needs, then it’s time to come up with creative solutions during negotiations. Think of as many possible options as you can. For example, in example # 3 above (commercial landlord ousting tenant during repairs), we proposed that the repairs be done at various “off-hours” and in stages that would minimally disrupt my client’s restaurant business. My client also proposed a percentage increase in his rent to cover the additional cost of performing repairs in the evenings and off-peak hours. While the proposal would have cost my client more in rent, it would save him legal fees and he would’ve benefitted from the improvements to the appearance of his restaurant. Meanwhile, the landlord could have made the repairs over a slightly longer period of time, but at little to no additional cost.

In the end, before any lawyer or client embarks on a competitive, “scorched-earth,” no-holds-barred, winner-take-all approach to negotiation, consider the high costs of that approach and whether an integrative negotiation strategy would best serve everyone’s interests. In other words, in a court of law, it’s better to do what’s right than to be right.

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