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How we resolve our disputes

Entries in negotiate (8)


It's All Negotiable

I recently advised a client concerning a real estate purchase. My client had signed an offer to purchase many months ago, but the seller was under water with his lender and was trying to negotiate a short sale. The seller’s real estate broker wanted my client to sign a new offer to purchase, giving the seller another 60 days to complete the short sale negotiations. But my client did not want to delay for another 60 days. So I told the broker that my client would not sign another offer to purchase unless we saw some concrete progress toward completing the short sale. The broker and seller did not want us interfering in their negotiations with the lender, and did not want to show us the seller’s financial documents. But when I told the broker of my client’s concern with the length of time for completion specified in the offer for completion of the short sale approval, they came back with a revised proposal for 20 days. That was acceptable to my client. Now, if the seller or lender is still dilatory, my client can get out of the deal in a relatively short period of time. And the seller gets his new offer, which he says will help pave the way for approval. That may or may not be, but at least both sides now have a written offer they can live with. Sometimes, it is the seemingly small things that make a big difference.

I have said it before and I’ll say it again. When it comes to contracts, it is all negotiable. Even when one party presents a printed form, it is not written in stone. With computers, forms can be redrafted and reprinted much more easily and quickly today than when I began practicing law. That’s a good thing. People need to consider what they really want or need when making big purchases or commitments of time and money. They should not be deterred by the prospect of having to redraft some written document. Even the terms of written contracts to resolve disputes (e.g., Agreements to Mediate or Arbitrate) are negotiable—until you sign on the dotted line. So be sure you read and understand what you are signing. If you don’t, get an attorney to look it over and explain the potential pitfalls and consequences before you sign. If a dispute arises concerning the meaning or effect of the terms of the contract after you sign it, the parties to the contract can get attorneys and litigate in court, or they can agree to resolve it through arbitration or mediation, out of court.

In any event, it is wise to remember that courts are not in the business of creating or negotiating contracts for you. That is your job, with or without the help of an attorney or mediator. Courts either enforce agreements or decide that they are not enforceable. The time to negotiate is before the hammer falls. When a large amount of time, money, valuable property or assets are at stake, it is best to seek out an experienced attorney or mediator to help you.


Negotiating with terrorists

I went to hear Moty Cristal speak tonight.  Mr. Cristal is an Israeli professor of negotiation dynamics and a negotiating strategies consultant.  His company, Nest Consulting, provides complex negotiations and crisis management training, consulting and operational support to senior executives in the public and private sector in the US, Europe, Asia and the Middle East.  He was instrumental in negotiating the release of Israeli soldier Gilad Shalit last year.  Many people have been critical of the deal, which exchanged more than 1,000 Palestinian prisoners for a single Israeli soldier.  However, Mr. Cristal is an expert in low-trust negotiations.  It is difficult to second guess decisions made in such situations. 

Everyone says you should never negotiate with terrorists.  But everyone does it when there is no other feasible or reasonable alternative.  The argument against such negotiation is that it will only encourage more terrorism.  But history does not support this theory.  No more Israeli soldiers have been captured, nor has there been any attempt to do so since Shalit’s release.  The more time that goes by, the harder it will be to blame any such incident on this negotiation.  The fact is that when terrorists negotiate, they may still be terrorists, but they are not engaging in terrorism while they do so. 

In a civil society, we never negotiate or mediate with parties whose members or representatives have killed members of the opposing party’s group.  And usually there is a deadline for the parties to negotiate a settlement or else a resolution will be imposed on them by some outside entity, like a court.  In the Middle East today, there is no such Sword of Damocles, so there is no motive for either side to negotiate or change positions.  Nonetheless, negotiations do go on.  Small issues constantly need to be resolved, regarding water, electricity, transportation and tourism.  Name-calling (terrorists, occupiers) never achieves anything.  Who knows.  One day, maybe the small negotiations will turn toward larger issues?


Play Ball!

This is not about Major League Baseball, even though today is opening day of the 2011 season. However, baseball has been used as a metaphor for, or backdrop to, life in general for most of the last century, at least in U.S. literature and theater. From For Love of the Game to Field of Dreams, from The Chosen to the The Natural, baseball in novels and the movies is part of our national and cultural folklore. Baseball’s lessons and language also permeate mediation and dispute resolution.

The other day, I was engaged in some business negotiations. After presenting our initial proposal, the other party’s attorney said it was not even “in the ballpark” and advised his client to forget about making any deal with us. In effect, he wanted to pick up his ball and look for another game after the first pitch. Recognizing this as a time-worn negotiating tactic, I reminded them that we were only in the first inning and there was plenty of time for both sides to take their turn at the plate. In other words, we wanted to play ball with them. If they would have accepted our initial proposal, we would have been very happy but that was not our entire game plan. After the exchange of a few more proposals, it became apparent what was important to each side and an agreement was reached. All it required was for each side to demonstrate a love of the game and be prepared to “go the distance.”

Very often in mediation and negotiation, we see parties take positions that are seemingly irreconcilable at the outset. If the parties come in with positions that are truly their bottom lines, no agreement or settlement will be possible. Therefore, I recommend that the parties do their research ahead of time, come in with their best alternative to a negotiated agreement (BATNA) but be aware of the worst that could happen. And then play ball. After all, it is our national pasttime.


Failure to communicate

As if people facing foreclosure of the mortgages on their homes did not already have enough problems, a new wave of scam artists is targeting them.  According to the FTC, so-called forensic loan auditors are offering to review mortgage loan documents to determine whether the lenders complied with state and federal mortgage lending laws.  The other day, a client came to me with an ad from one such company.  The “auditors” say the borrower can use an audit report to avoid foreclosure, accelerate the loan modification process, reduce loan principal, or even cancel a loan.  Of course, they expect the borrower to pay large up front fees in advance.  This is illegal in many states.  Even if it is not illegal, it is foolish.  The FTC recommends that borrowers talk directly to their lenders to negotiate a new repayment schedule. 

Why would someone already deeply in debt, unable to pay their mortgage, fork over hundreds or thousands of dollars to someone to do what they could do themselves?  Two reasons.  First, many lenders or mortgage servicers are so swamped with delinquent mortgages that they do not have sufficient personnel to talk to every borrower who needs help.  Borrowers cannot get in touch with anyone who has authority to work out a new payment plan, so they think that someone with a fancy sounding title, like forensic mortgage loan auditor, might have better luck.  Second, borrowers may lack confidence in their own negotiation skills.  In either case, the person to see for help is a lawyer.  Most lawyers will charge less than the scam artists and will not waste time searching for unnecessary negotiating leverage.  Borrowers already have all the leverage they need.  Banks do not really want to own all of the homes securing their mortgage loans.  If the borrower’s lawyer cannot get a response from the lender, he will certainly be able to get a response from the lender’s attorney when a foreclosure action is filed. 

As they said in the movie Cool Hand Luke, “what we’ve got here is failure to communicate.”  The solution to a lack of communication, or inability to communicate, is to start talking.  If mediation is available or required, the borrower should definitely take advantage of it, using the mediator to help negotiate with the lender.  Ignoring the problem or hoping someone will find a silver bullet to make it go away is rarely the answer.  In the current economy, mortgage default and foreclosure are legal problems that no one should be embarrased to talk about. 


The easiest mediation

Everyone writes about their most difficult mediation case and what they learned from it.  No one seems to write about the easy ones.  But I think there is something to learn even from those easy cases.  Yesterday, a friend told me about a case involving a mistake during construction of a government building that caused about $300,000 damage to the building.  The state sued to recover the cost of repairing the damage, but it really liked the contractor and wanted to continue doing business with them.  The contractor, of course, wanted to keep the state’s business.  Neither one wanted to give away the store, but neither did they want to go to trial.  An easy one, right?  Find out how far apart the parties previous offers are, caucus and try to find their bottom lines.  The difference couldn’t be worth more than the value of future business and services between the parties.  Naturally, the case settled fairly quickly in mediation. 

So what can we learn from this?  In most cases, the parties are not quite so obviously motivated to settle.  But that is precisely the point.  Their motivation to settle might not be obvious, but their motivation not to settle is often painfully obvious.  One side might be so sure of its position that it wants to punish and make an example of the other party.  The other side might be equally sure of its position and figures it has nothing to lose by going to trial.  Regardless of what their motivation is, the first step to settling is finding out what is motivating them.  This requires getting them to talk.  If they won’t talk to each other, maybe they will talk separately and privately to the mediator.  What makes them so sure of their positions?  Have they considered all costs and risks?  Are their assumptions realistic?  What are their alternatives? 

In criminal cases, defense attorneys often argue that their client cannot be found guilty because there is no proof of motive.  Why would the defendant do what he is accused of doing?  The prosecution usually answers that motive is not an element of the crime and they do not have to prove one.  Nonetheless, if they know the motive, they certainly will try to prove it because it makes it easier to get a conviction.  Likewise, in a civil case, motive is not usually an element of the cause of action, but knowing a party’s motive can make it much easier to prove your case.  Or to negotiate a settlement.  It matters not whether the motives favor settlement.  What matters is knowing each other’s motivation.  Only then can you begin to craft a settlement that satisfies those motives.  In my friend’s “easy” mediation, the most important motive for each party was preserving the relationship.  If the mediator had focused only on money, the mediation would have been much more difficult.