Negotiation Strategy: Going to the Balcony

Posted on February 13, 2012 by 907201724028

Take In The View From The Side Line

Lawyers and claims professionals evaluate a case and expect it to settle in a certain range. They also expect the other side will act in a certain way on. When the negotiation does not go as expected, we react. The reaction is instinctive and emotional. Hey, we’re human.

One of your strategies when the other side attacks you or your client or your case evaluation, can be to go to the balcony.

Bill Ury, in Getting Past No, expounded upon this strategy. If you assume the negotiation is taking place on a theater stage, going to the balcony of the theater can give you a broader perspective of what’s really going on. It has the following salutary effects:

It distances you from the fray.
It calms your reactive mind.
It allows you to slow down the negotiation.
It affords you time to name the game the other side is playing and decide how to react logically, as opposed to emotionally.

When negative emotions come up, and they will, take a deep breath. Take a time out, either literally or figuratively. Think it through. As Ury says, “Keep your eye on the prize.”

Be proactive about emotions in negotiation. They always surface—your client’s as well as yours.

We all know the slogan, “Don’t get angry, get even.” In negotiation, it’s not about getting angry or getting even. It’s about getting what your client wants, which is the most value from the negotiation.

Getting More in Your Negotiations

Posted on January 24, 2012 by 907201724028

Getting More by Stuart Diamond

I just read a fabulous new book by Stuart Diamond, negotiation expert and professor at The Wharton Business School, called: Getting More. If you want to get more out of your negotiations, get Getting More today!

Professor Diamond outlines, and then explains, 12 negotiation strategies. His rationales are likely to make “hard” bargainers second-guess strategies that may (or may not) have worked for them in the past. At a minimum, adding these strategies to your skill set will broaden your negotiation worldview.

To give you a flavor of Professor Diamond’s thinking, here are the strategies in summary form:

Goals are paramount.
It’s about them.
Make emotional payments.
Every situation is different.
Incremental is best.
Trade things you value unequally.
Find their standards.
Be transparent and constructive, not manipulative.
Always communicate, state the obvious, frame the vision.
Find the real problem and make it an opportunity.
Embrace differences.
Prepare—make a list and practice with it.

Diamond uses a simple comparison to recommend his strategies: “It’s the difference between saying ‘I play football’ and ‘I play professional football.’”

If you want to negotiate like a pro, buy the book. Read the book. Improve your negotiated outcomes. And, be sure to let me know how it worked for you!

Want To Really Save Money In Mediation? Here’s The Secret: Practice Your Negotiations

Posted on November 17, 2011 by 907201724028

How Do Pro Football Players Get Better? Practice!

I was lucky enough to move to San Francisco in the Bill Walsh-Joe Montana-Jerry Rice era. The games were glorious. Jerry Rice made a name for himself by putting as much effort into each practice as he did in each game. It’s hard to argue with success.

What’s true in sports is true in negotiation. The more you practice negotiating, the better negotiator you will be. Fortunately, there are opportunities everywhere.

We tend to accept the stated price of goods and services as non-negotiable. But think about it: merchants are hurting. A merchant is more likely to negotiate to make a sale than to let a sale get away. Some money is better than no money.

You Can Negotiate Anywhere

Recently I needed a smog inspection for my car. Many gas stations are certified for smog inspections, but the fee they charge varies from station to station. I first drove to the station nearest my house. The stated price was $69, plus $8 for the certificate. I asked the owner (in a curious voice) “How is it that a station two miles away is charging $35 for the same service?” He replied that he had better trained mechanics and that therefore his cost of labor was higher. I shrugged my shoulders and got back in my car.

I then drove directly across the street, where the stated price was $65, plus $8 for the certificate. (Hooray, I’m already ahead!) “How is it,” I asked, “that a station two miles away is charging $35 an hour for the same service?” The clerk shrugged his shoulders. I turned to leave, stopped on the doorsill, then turned back to ask, “Would you do it for $50 flat?” He checked with the owner: “Fifty plus $8 for the certificate.” Deal. When I negotiate, I like to leave the other side with a face saving gesture, so I accepted his counter. That way, he got to feel he negotiated, too.

(In the drive from one station to the other, I realized that I really didn’t want to drive two miles away and wait 90 minute in an unfamiliar coffee shop, when I could walk to my house from station #2, and work at home while my car was being serviced.)

My bottom line: station #2 was closer to my home. It served my interests. And I saved $19 (almost 30%) from where I started.

Practice negotiating and keep track of how you do. Not only will you see a difference in your own wallet, you’ll get some better settlements at work, too.

Where Have You Practiced Negotiating?

Don’t Go Into Mediation Cold: Settlement Requires A Game Plan

Posted on October 3, 2011 by 907201724028

It’s Football Season: Break Out The “X’s” and “O’s” And Prepare

Ninety-eight percent of all lawsuits do not go to trial. The vast majority of those are settled.

It’s time to get more pro-active with your retained counsel to prepare adequately for settlement.

As a lawyer trying cases, I would spend at least a week in 12 hour/day trial prep mode for a three-week trial. Then I’d work between 14 and 16 hours a day during trial. (OK, maybe only 10 hours on Sundays.)

Preparing for mediation? Not so much. I’m not sure what it is about lawyers who gravitate toward litigation, but it seems as if we think we already know how to negotiate. (Unfortunately, I’ve suffered from that same hubris myself.)

I regularly give seminars to lawyers about mediation and negotiation and ask how many of them took a formal negotiation class in law school. The average, over a wide pool in many different states, is less than 15%.

Leigh Thompson, a professor at the Kellogg business school at Northwestern, says, “Excellent negotiators do not rely on intuition; rather, they are deliberate planners.”

A week or so before your next mediation or settlement conference, ask your counsel what his/her plan is for the negotiation. Expect a long pause, or an answer like, “My plan is to start really low and go up r e a l l y, r e a l l y slowly.”

Tell your counsel you want to pay them to be thorough and think creatively about the settlement negotiations. Ask them to send you their mediation game plan. It should include a plan of disclosures and a plan of concessions. You might not stick to it religiously, and of course you will modify it as circumstances dictate, but it will be a guide and it will significantly reduce reactivity and negative emotions which can get in the way of settling those cases you don’t want to try webbanki.ru.

5 Things To Avoid When Negotiating In Business and Claims

Posted on March 2, 2011 by Marc Lanzkowsky

Don’t Box Yourself In When Negotiating

Let’s face it, claims is as much about negotiating as anything. It is a significant part of our jobs as claims professionals, yet little real time is spent honing those skills. I had always considered myself a pretty good negotiator despite having never had formal training. I mean I am an attorney, I could argue with the best of them, and I knew my cases.

All this changed when I finally did take a class on negotiation during my first insurance job at Zurich. Like many training classes, this one involved role playing. Like many, I was not a big fan of role playing, however this particular class changed my view. The role play had been set up with each party given a specific set of instructions as to how to manage the negotiation. Despite it being staged, the emotional responses were fairly real and opened my eyes to techniques to become a better negotiator. I learned to take the emotion out of the process and to follow a very set, repeatable, procedure.

From that point on I had always entered a negotiation with all of my offers written out in advance and rarely did I stray from that framework. It was a huge change in the way I managed negotiations and it paid off on numerous occasions and led to what I believed to have been some very good results.

Avoid These Five Things To Become A Better Negotiator

Recently I came across an article in Inc. Magazine that listed the 5 Things You Should Never Say While Negotiating. These 5 suggestions are a great framework to to help become a better negotiator.

As I have done in the past with other business suggestions, I am reprinting much of this article in its entirety with comments as to how they relate to claims. The article also gives great links to more detailed information on the specific technique.

1. The word “between.” It often feels reasonable—and therefore like progress—to throw out a range like “I can do this for between $10,000 and $15,000.” But that word between tends to be tantamount to a concession, and any shrewd negotiator with whom you deal will swiftly zero-in on the cheaper price or the later deadline. In other words, you will find that by saying the word between you will automatically have conceded ground without extracting anything in return.

TCS: We have all used the “meet in the middle” technique. It really can lead to one party being entrenched on the higher side. Stick to you offers and decrease the amount as you increase the offer. For example if you want to settle the claim for $70,000 first offer $25,000 then $45,000 then $55,000 then $62,500 and so on. Every time you decrease the offer you send the message that there is an end and you are coming to it. Believe me, by the third offer they will may even say to you “you are trying to get this at $70,000.” Use this and you remain in control and help direct the outcome. Be comfortable with your valuation and don’t be afraid to get to it.

More Insight: The Art of Effective Negotiation

2. “I think we’re close.” We’ve all experienced deal fatigue: The moment when you want so badly to complete a deal that you signal to the other side that you are ready to settle on the details and move forward. The problem with arriving at this crossroads, and announcing you’re there, is that you have just indicated that you value simply reaching an agreement over getting what you actually want. And a skilled negotiator on the other side may well use this moment as an opportunity to stall, and thus to negotiate further concessions. Unless you actually face extreme time pressure, you shouldn’t be the party to point out that the clock is loudly ticking in the background. Create a situation in which your counterpart is as eager to finalize the negotiation (or, better yet: more eager!) than you are.

More Insight: Creating Win/Win Negotiations

TCS: Just as you need to be prepared to walk out, you need to be prepared to stay as much as needed. You are never in a rush and as long as you let them know you are happy to stay till an agreement can be reached. Remember, it’s about maintaining control of the negotiation and arriving at a fair price for the damages claimed.

3. “Why don’t you throw out a number?” There are differing schools of thought on this, and many people believe you should never be the first person in a negotiation to quote a price. Let the other side start the bidding, the thinking goes, and they will be forced to show their hands, which will provide you with an advantage. But some research has indicated that the result of a negotiation is often closer to what the first mover proposed than to the number the other party had in mind; the first number uttered in a negotiation (so long as it is not ridiculous) has the effect of “anchoring the conversation.” And one’s role in the negotiation can matter, too. In the book Negotiation, Adam D. Galinsky of Northwestern’s Kellogg School of Management and Roderick I. Swaab of INSEAD in France write: “In our studies, we found that the final outcome of a negotiation is affected by whether the buyer or the seller makes the first offer. Specifically, when a seller makes the first offer, the final settlement price tends to be higher than when the buyer makes the first offer.”

TCS: I am so glad there is actually research on this subject, and I cannot agree more. Too many times I have heard claim handlers say they didn’t want to be the first to throw out a number. I strongly believe that offering money first puts the negotiation off to a good start. For me it comes down to how comfortable you are with your evaluation. If you have sufficient facts and information to believe a claim is worth $35,000 then what is the harm in starting off with a number that you would be thrilled to settle for? They know what they want for their case and if it is some wild number then start preparing for trial. More often then not your end number will be closer to theirs.

While it is possible to real get a case for a better number than you would have thought, that doesn’t happen as often as you might think. If you are not comfortable with your evaluation then you are probably shouldn’t be negotiating in the first place.

More Insight: Bargaining for Advantage

4. “I’m the final decision maker.” At the beginning of many negotiations, someone will typically ask, “Who are the key stakeholders on your side, and is everyone needed to make the decision in the room?” In negotiations, particularly with larger organizations, this can be a trap. You almost always want to establish at the beginning of a negotiation that there is some higher authority with whom you must speak prior to saying yes. The point is, while you will almost certainly be making the decision yourself, you do not want the opposing negotiators to know that you are the final decision maker, just in case you get cornered as the conversation develops. Particularly in a high-stakes deal, you will almost certainly benefit from taking an extra 24 hours to think through the terms. For once, be (falsely) humble: pretend like you aren’t the person who makes all of the decisions.

TCS: This is a great one and is very important even in the larger cases. Going back to get authority is a great technique even when you have all the authority you need. When I used to attend trials I would always come dressed casually and sit in the back so no one would think I was the one with the authority to settle. If the settlement is right, make the deal. If not, take the extra time to make sure the decision is sound.

More Insight: 7 Tips for Masterful Negotiating

5. “F-U.” The savviest negotiators take nothing personally; they are impervious to criticism and impossible to fluster. And because they seem unmoved by the whole situation and unimpressed with the stakes involved, they have a way of unnerving less-experienced counterparts. Whenever you negotiate, remember that it pays to stay calm, to never show that a absurdly low counter-offer or an annoying stalling tactic has upset you. Use your equanimity to unnerve the person who is negotiating with you. And if he or she becomes angry or peeved, don’t take the bait to strike back.

TCS: I love claims professionals that take their job personally and feel they have a stake in the claim that goes beyond their corporate fiduciary responsibility. Nonetheless, this is not the place to let those emotions get the bet of you. Know your claim, go in with a plan, and don’t panic because you are in control.

More Insight: The Ultimate Guide to Negotiating

Some final thoughts

As with any list, there are always more suggestions that can be added to make them better. In reviewing the five above there is one clear message that rings true for all of them: Know your case and be comfortable with your evaluation. If you have a good work up and know what the value of a case is, then you will never be wrong if you can settle the case for that number. You also have to be prepared to do this when the other party is not as prepared.

Join the conversation, add to the list and let us know about other techniques

3 Settlement Techniques That Will Help Move A Case To Resolution

Posted on May 25, 2010 by Marc Lanzkowsky

Is your claim at an impasse?

There really are better ways to help resolve the dispute

As a claims professional, you know you have cases that will ultimately settle, and can settle, but for some reason or another you just can’t get there. Recently I came across a great blog dedicated to providing different ideas and solutions surrounding the settlement process. Settlement Perspectives, written by John DeGroote, provides insights and “thoughts on how to resolve disputes and get your deal done.”

In a recent article posted on their blog, Lawsuit Settlement: 7 Ways to Get There Faster, Better and Cheaper — The Presentation, John DeGroote gave a few different approaches to help move those difficult cases to settlement. I am sure many of you out there have used one or all of these techniques in trying to get by an impasse, and there are certainly many more techniques that can be employed, regardless the list is a great starting point.

Of the seven suggestions, I like the following three the best:

Managing Expectations – In his article, Managing Expectations: An Unexpected Lesson on the Bus to Hertz, John gives a great example of his expectations being managed about how long it would take to get to the rental car lot after getting on the airport shuttle bus. Having had his expectation managed, it allowed him to foresee an outcome different than he had anticipated. Settlements are the same, and managing both the clients, as well as those of the opposing party’s, expectations is a great way to help avoid an impasse. Settlements are always a compromise and before entering discussions setting out expectations may avoid problems later.
Decision Tree Analysis – If you have never worked with a decision tree I strongly recommend you try it. The process itself can be extensively debated, however, as another tool it’s is worth a try. The essential component to the “tree” is trying to place an empirical approach to evaluating and settling a claim. Decisions are raised, values are assigned and an outcome is determined.Once completed, a decision tree is a tool that can be shown to an opposing party to explain the basis for a position being taken. Many will argue the values and measures that you placed on the various “decision” points, but it is a technique that can remove the emotional aspect of a negotiation and demonstrate an objective approach to a decision. You can learn more about using this approach in Decision Tree Analysis in Litigation: The Basics.
Offers of Judgment – Federal Rule 68, and similar state statutes, imposes a penalty on a party who refuses a reasonable settlement offer. Using this tool is a great way to help move an opposing party to take a long hard look at their case. In Rule 68 and Offers of Judgment, Part I: How They Work and Why You Should Care, John gives another great overview of how these rules can assist in moving a case at impasse. We have all had a case where you know what it’s worth, and know it should be settled, but you just can’t get the opposing party to move. Using an offer of judgment is a way to require the plaintiff to at least respond or suffer various penalties.

Keep being creative to help lower claims expenses

As I previously wrote in Improve bottom-line outcomes on claims by thinking outside-the-box!, being creative is a great way to improve claims handling and lower costs. Trying some of the suggestions above are innovative ways to help resolve claims earlier and lower costs.

The Claims SPOT

Identifying opportunities is easier when you know how to SPOT the issues

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