Posts tagged: negotiating skills

Persuasion

Much of what we do is about persuading – whether in a mediation, before a Tribunal or negotiating.  The key to successful persuasion is as follows:

Reciprocity: make the other side indebted to you – be a first mover and give something unexpected and, so far as possible personalised: “You have this room, it’s better and I have stocked it with my wife’s cookies”

Scarcity: don’t just emphasise the benefits of your position, what are its unique features and what will they lose if it is not accepted: “I am authorised to give you a special price not available to anyone else.  It is only available today.”

Authority: people are more generous to those in authority – an ethical, no-cost endorsement is valuable currency: Could your receptionist say “You are here to see Mr Ashford – we like him, always the gentleman and clients love him.”

Consistency: a big step often follows a small step – invite a small, voluntary and public step and build from there: “Could you see yourself paying a £1 to settle this … [establishes the direction of flow of money] … Could you see yourself paying £…”

Liking: people like to deal with people who they perceive as similar – pay compliments and co-operate towards mutual goals: from a main contractor to a sub-contractor “That was a very clever argument – how can we use that to get more from the employer”

Consensus: if similar people in the same position have acted in a particular way others are likely to follow – “The rest of the team have accepted a pay freeze, will you do the same”

Economic Duress in Commercial Negotiations

Hard bargaining is generally allowed in a commercial setting but it amounted to economic duress in Progress Bulk Carriers Ltd v Tube City IMS LLC, [2012] .  Tube City chartered a ship owned by Progress, making it clear that the identity of the vessel was important to both it and the receiver of the goods that were to be shipped on it. Progress then concluded a charter for the ship with another party, in breach of its agreement with Tube City. Progress conceded this and said it would find another ship, initially agreeing to compensate Tube City for any damages. Tube City relied on these assurances and did not look for another vessel itself. Presumably sensing that Tube City was in a jam, Progress then changed its tune and made a ‘take it or leave it’ offer which would have required Tube City to release all claims against the ship-owner.

The dispute went to arbitration, where it was found that Tube City’s agreement (under protest) to waive its claims had been procured by economic duress. The question was whether that was correct, given that Progress had merely repudiated its contract and not done anything illegal?  The Court considered that ‘lawful act duress’ can – in exceptional circumstances, and not typically in a commercial setting – amount to the ‘illegitimate means’ sufficient to render the contract voidable. Progress had not only repudiated its contract with Tube City but had relied on that breach to take advantage of the situation it had created. The arbitrators had got it right.

CEDR’s mediation audit results

CEDR’s latest audit published in May 2010 puts a value of over £5bn on the cases mediated each year.  Civil and commercial cases have grown by 30% since the 2007 audit.

The audit also reports that 75% of cases settle on the day with a further 14% settling shortly thereafter.

The most important contributor to settlement is preparation beating negotiation skills and mediator techniques.  The contribution of preparation is sub-divided, in order, by client, mediator and lawyer.   

The most significant causes of non-settlement are intransigent parties, unrealistic expectations and fishing expeditions.

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