By David W. Simon, Law Partner at Foley & Lardner LLP in Wisconsin in the USA and former Executive MBA student, and John G. Burrows, Associate Fellow at Saïd Business School and Academic Director at University of Chicago
David, a seasoned lawyer who thought he knew a thing or two about negotiations, took John’s Negotiations course as part of his Executive MBA programme at Saïd Business School and learned a lot about the theory and practice of negotiations. Their interactions inspired them to dig deeper and develop six tips for lawyers, who are usually pretty good negotiators, that can help them become great negotiators. Thanks to David and John for sharing them here on Oxford Answers.
Tip 1:
Know your negotiation style, diversify your styles, and build complementary negotiation teams
Negotiating style plays a crucial role in achieving successful outcomes. Knowing your style (or styles) and its/their strengths and weaknesses is critical to improving your negotiation skills. Having facility with multiple styles and deploying them effectively based on the circumstances will produce better results. It isn’t necessary to be good at all styles.
Negotiating is a team sport, and it is rarely necessary (or wise) to go it alone. Understand what you are good at and where you lack skills and build teams that include colleagues with complementary styles to cover as many as possible.
Tip 2:
Prepare, prepare, prepare
Preparation requires lawyers to understand their client’s objectives, which usually involves a lot more than just 'obtain $X' or 'get a deal done'. Negotiators need to understand the client’s true business objective to negotiate a favourable outcome.
Key to preparation is understanding your side’s Best Alternative to a Negotiated Agreement (BATNA).
This requires identifying all the potential alternatives to a deal and evaluating and valuing each. [i] Once you do both, you can map out the options and identify a Zone of Possible Agreement (ZOPA) that covers the territory between BATNAs.
There will almost always be multiple variables. Lawyer negotiators must understand the value of each variable to the client and should rank them in importance and attach numerical scores to keep focused on the right things during the negotiation itself. This facilitates sensible trade-offs that are in his or her client’s interests.
Tip 3:
Favourably anchor the negotiation
Where you have a solid understanding of the other side’s BATNA, making an aggressive first proposal for a settlement is usually advantageous. Academic research has consistently found an 'anchoring effect' associated with establishing the starting point for negotiations, with the ultimate result affected by the starting point.
Outrageous and offensive first offers can backfire rather than anchor.
The offer should be aggressive enough to make you a little uncomfortable but not so aggressive as to cause the other side to walk away. First offer anchoring is most effective when it is specific, rational, and defensible, and when initiated by the party with more power in the relationship. [ii]
Tip 4:
Consider the structure, setting and timing of the negotiation
Lawyers often give insufficient attention to the timing of, venue, and participants in a negotiation – important 'set-up' factors that impact results.
The timing of the negotiation is key and the right time to negotiate will vary based on circumstances. Resolutions will be reached only when both parties understand the facts of the dispute or transaction well enough to determine their respective interests, positions, and BATNAs.
The location of the negotiation can impact the likelihood of success. Will it occur at your office, the other side’s office, or a neutral site? Will it be a formal setting like a conference room or a courtroom or a more informal setting like a restaurant, coffee shop, bar, or ballgame? The dynamics of any negotiation will be impacted by the milieu, and it is always advantageous to consider the setting carefully and strategically.
Tip 5:
Look for opportunities to create value, not just divide a fixed pie
It is not unusual for lawyers to find themselves in what appear to be distributive negotiations, where one side wins at the other’s expense. Settling a dispute or reaching agreement on the price on a deal are typical examples. Sometimes this is our mandate, but there are many instances where a lawyer negotiator can help create value and turn distributive negotiations into integrative negotiations, where new value is created. [iii]
For example, in a dispute with a supplier over products that did not meet specifications, could the dispute be re-framed from, 'how much of a refund do you owe us?' to 'how can we expand our relationship to make you a reliable, long-term partner?' Perhaps your client invests capital in the supplier to allow it to purchase new equipment, takes an equity stake, and gets a credit on future purchases to compensate for the defective deliveries.
Tip 6:
Think like a lawyer, consider post-deal risks and craft solutions to mitigate those risks
Lawyers must always be on the lookout for negotiated resolutions that are not sustainable. It can be tempting to push too far and get a deal that feels like a total win in the present, but which just represents a ticking time-bomb that will cause the client pain and disruption down the line. Smart lawyer negotiators think hard about what could go wrong and negotiate a resolution to mitigate those risks.
Risk-mitigating lawyer-negotiators will produce more sustainable deals for their clients if they focus on ensuring agreement on the spirit of the deal, not just the specific terms.
A Yank at Oxford
During his two year Oxford Executive MBA David shared his experiences in this podcast series, 'A Yank at Oxford' for the Compliance Podcast Network. David and host Tom Fox talked about what inspired his decision to pursue an Executive MBA, and where his journey might lead. Listen to David in this penultimate episode as talks about his coursework and what he learned about the power of anchoring in negotiations.
References
This Oxford Answers article is drawn from an article David and John wrote Wisconsin Lawyer after David completed his Executive MBA degree.
[i] Malmotra, D. (2004). Accept or Reject? Negotiation, August (Reprint No. N0408D).
[ii] Lipp, W. E., Smolinski, R., & Kesting, P. (2022). Toward a Process Model of First Offers and Anchoring in Negotiations. Negotiation and Conflict Management Research (forthcoming), July 15 (Available at SSRN: https://ssrn.com/abstract=4163493).
[iii] Bazerman, M. H. (2003). The Mythical Fixed Pie. Negotiation, November (Reprint # N0311A).
Other references
Ertel, D. (2004). Getting Past Yes: Negotiating as if Implementation Mattered. Harvard Business Review, November (Reprint # R0411C).
Fortgang, R. S., Lax, D. A., & Sebenius, J. K. (2003). Negotiating the Spirit of the Deal. Harvard Business Review, February (Reprint # R0302E).
Lax, D. A., & Sebenius, J. K. (2003). 3D Negotiations: Playing the Whole Game. Harvard Business Review, November (Reprint # R0311D).
Lax, D. A., & Sebenius, J. K. (2012). Deal Making 2.0: A Guide to Complex Negotiations. Harvard Business Review, November (Reprint # R1211G).
Rogers, J. (2017). Oslo: A Play. Nick Hern Books.
Sebenius, J. K. (2001). Six Habits of Merely Effective Negotiators. Harvard Business Review, April (Reprint No. R0104E).
