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Get A Bigger Bang For Fewer Bucks:
Pick Meaningful Numbers*
(in DEFINITIVE CREATIVE IMPASSE-BREAKING TECHNIQUES
IN MEDIATION — WHEN ALL ELSE FAILS
(NYSBA 2011))
This is the moment the mediator dreads. It is late in the day. Tempers are rising; the general frustration level has soared. The gap between the parties' numbers seems unbridgeable. The corporate defendant emphasizes that it has reached the limits of its pocketbook — and its patience; the plaintiff has also dug in his heels. Finally, one of the participants says what all are thinking: "We're getting nowhere. Maybe we should just go home." Simply put, impasse looms.
For the mediator, quitting is not an option. Yet what should she do? She may rack her brain, trying to invent some magic bullet to blast through the shield of recalcitrance. Often, however, the solution to the problem lies not in esoteric "fixes" but, instead, in first principles: When impasse threatens, recur to interests.
Such an approach can be most fruitful when the mediator believes the complainant is being unreasonable and the defendant will in fact give up little or nothing more. At this juncture, re-focusing hard on the plaintiff's interests may reconcile him to a lower settlement than he would hold out for otherwise or than might even be justified by a risk-discounted estimate of recoverable damages. (I say "re-focusing" since I assume that a good mediator has been probing the needs and concerns underlying the parties' positions from the outset.) That is so because the suggested strategy promises to yield a number with particular meaning for the plaintiff. Depending on the precise context and timing of the threatened impasse, the mediator can try to steer negotiations toward that number or, if all else fails, incorporate it into a mediator's proposal.
Why might certain specific amounts hold special significance for a litigant? The reasons cover a spectrum ranging from rational and objective to highly emotional and subjective. With regard to the former, the mediator will usually find it easier to identify and sell the associated number. With regard to the latter, more effort may be required both to unearth the relevant interest and to switch the plaintiff's attention to the related, doable figure targeted by the mediator. To the extent psychological factors motivate a party, he may unconsciously fixate on getting as much as possible not only because "more is better" but also because he views the amount as a measurement of his personal worth. As a counter, I tell the plaintiff early in the process: "The worth of your case is not your worth." This mantra lays the groundwork for later attempts to find a number that makes him feel validated and therefore able to accept it.
Numbers With Mainly Practical Significance. First, let us turn to some of the more tangible interests that can be mined to tempt a party to abandon an unrealistic position. These include concerns with retirement, housing and health. Thus, an amount representing a given number of years that he will not have to dip (further) into his nest egg or that will meaningfully shorten the period needed to repay money borrowed from his IRA may play very well with certain plaintiffs. So, too, may sums embodying months of rent or mortgage payments.
Likewise, health may be a very important consideration to a litigant, especially one who is out of work. The mediator might focus such a client on obtaining enough to cover his insurance premiums. That is an especially useful tack if he just needs to bridge a gap — for example, before Medicare begins or a disability pension comes through. At times, a relatively small amount will enable an uninsured ex-employee to meet a particularly urgent need. One of my clients, a man with a fairly meritless case but very serious dental problems, was persuaded to settle for a few thousand dollars. That sum would permit him to get his teeth fixed, which would enhance his physical wellness and fulfill more emotional needs for a good self-image and greater self-confidence (which, in turn, would likely have a positive effect on his pressing job hunt).
Not surprisingly, money owed — above all, credit card debt — is another huge concern for plaintiffs; hence, I always ask about it. Most people readily concede that a settlement allowing them to discharge their obligations gives a lot of bang for the buck. Thus, I convinced a plaintiff who was adamantly holding out for several thousand dollars more that "killer" interest would very soon eat up the difference if the matter failed to resolve because of her stubbornness.
One take-away from this discussion is that exigent circumstances will make a person value a sum to be gotten now much more than he would a larger amount to be gotten later, to a degree exceeding the time value of money and the risk inherent in predicting recoveries in litigation. The mediator should therefore note when the plaintiff is needy, and for what — not in order to "beat him down" but to see whether a doable number, by meeting that need, will strike him as genuinely satisfactory. (To open the subject, I sometimes say: "Suppose you came into some money now. Tell me how you would spend it in the immediate future.") In steering the client toward a figure, however, she should remember that it must fulfill his minimum requirements net of attorneys' fees and taxes.
In addition, the mediator should not lose sight of the fact that even the most economically rational concerns often derive extra meaning — hence, influence in brokering resolution — from strong psychological motivations. For example, one plaintiff insisted he needed $10,000 a year to supplement his household income. By probing this position, the mediator learned that he had been withdrawing this amount from savings to enable him to stay in his current community. Further inquiry elicited the reason why he viewed not moving as so important: he lived very near to his three grandchildren, whom he wanted to continue seeing daily. Learning that, she helped the parties reach a settlement that would sustain six years of such a subsidy (after which time the man could take Social Security at the maximum).
Notably, by not delving deeply enough into the interest in question, the mediator can miss the chance to avert impasse. In one instance, I learned that the pro se plaintiff had $30,000 in credit card debt — a sum he would never obtain in settlement — for which he was being aggressively dunned. He also had an $8,000 loan from family members. This obligation seemed much less worrisome as it was small and bore no interest, and the relatives were not pursuing recompense. Yet had I focused solely on the objective urgency of the former, I would have failed to discover that the latter actually troubled him more: he found it embarrassing and wanted to make his loved ones whole. (I might also have missed that he was seriously considering bankruptcy, which would have erased his debts.) Getting all of the relevant data, including the critical emotional facts, allowed me to assist the parties to reach a satisfactory settlement for much less than the larger indebtedness.
Numbers With Mainly Psychological Significance. Almost universally, people attach emotional meaning to crossing certain monetary dividing lines. If a plaintiff is highly invested in obtaining more than a "milestone" number (say, six figures), he may place less emphasis on the "how much more" because, for him, the marginal value of money declines after $100,000. He may thus be open to taking a doable amount at or near it instead of pressing for a larger sum. By playing to this psychological preference, the mediator can avoid negotiation breakdown.
Unfortunately, for various reasons, ranging from insurance limitations to the desire to "look tough" by thwarting its adversary's wish, the defendant may also place importance on staying below such arbitrary markers. This creates the possibility of "mini-impasses" along the way, with neither side wanting to be found resting on the wrong side of the line — or lines within lines, like every $100,000. The problem admits of no easy solution. To get the plaintiff a bit over his line at the end in order to avert final impasse, I sometimes appeal to the frequently less irrational defendant to just make that minor move. I point out that while the extra dollars do not matter economically to the company, they count so much for the other side that to refuse will subvert resolution.
A very different kind of bridging-the-gap-with-a-lower-figure ploy, appearing in various contexts featuring a greater or lesser symbolic or psychological component, stems from the longing of many plaintiffs to "right the wrong." A simple example, most applicable in discharge cases before the matter has gone to court, involves getting the employer to agree not to contest, or to withdraw opposition to, unemployment benefits for the worker. Even though the amounts are generally small relative to lost salary and hence to damages, they are often urgently needed and carry a lot of emotional valence since the defendant — wrongly, from the plaintiff's perspective — caused him to become unemployed. Moreover, the plaintiff likely feels that denial of this pittance would not only add insult to injury but also deny him something he has already earned and (partly) paid for. While acquiescence in these benefits will only rarely achieve closure on its own, it can supplement an overall deal with an ex-employee who, in its absence, would have held out for greater value.
Some similar means of "righting the wrong" through a number involve symbolically reconstructing the past to make it better than it was for the plaintiff. Thus, the company's agreeing to give him the severance that he would have received had he not been discharged can restore his vital sense of self-worth. Likewise, repaying time lost due to suspension (viewed by the plaintiff as undeserved) will usually fulfill the same purpose. The amounts involved, whether used as a settlement figure or a mere "sweetener," yield more bang for fewer bucks because they pay the complainant in dignity — in a sense, letting him replay events in a way that makes him feel less aggrieved.
An especially satisfying means for certain parties to remedy a perceived wrong is to hurt the actual wrongdoer. Here the significance of the particular figure chosen resides less in its relationship to some loss in the payee's life than in the identity of the payor: rather than honing in on a number with special significance to the victim, the mediator targets one that will meaningfully drain the perpetrator's assets. When that sum is not exorbitant — and, crucially, not indemnified by the defendant corporation — relatively few dollars can conclude a negotiation that might otherwise have foundered on the shoals of impasse.
This technique works best in instances of clear liability, where the individual defendant would be hard put to deny the charges. In one such matter a university forced the sexual harasser of a student into early retirement, leaving him with little bargaining power. Yet since a settlement of merely $25,000 would cause the professor real pain (in order to procure it, he would have to invade his pension), the plaintiff was appeased and I was able to broker a deal at that amount. Similarly, a teaching assistant stalked by her boss after the demise of their romance accepted an offer of $25,000 to resolve her action against him; this was small compared with his exposure. She did so not only for practical reasons — more might have driven him into bankruptcy and put her time payout at risk — but also because the man had to teach a heavier load to obtain the money, which constituted a hardship for him. Notably, in both these cases, the employer had already settled with the plaintiff for a sizable sum so that recompense from the guilty party had significance mainly as "blood money."
In addition to surmounting monetary milestones, symbolically rewriting history, and exacting a pound of flesh from culprits, "getting even" (in the sense of matching the situations of selected comparators) can motivate the plaintiff to strike a deal instead of insisting on added compensation. Hence, the guarantee of a specific bonus or salary matching that of his peers, real or perceived, may give him subjective satisfaction over and above its tangible worth; less may be more when, beyond a key point, it represents status. More generally, when relative rather than absolute value matters to the client in a given context, gap-bridging opportunities exist.
Conclusion. Finally, I mention a couple of oddball impasse-avoiders that worked at the last minute for me. In one instance, a plaintiff agreed to withdraw a demand for at least $100,000 when I reported that insurance counsel, another young woman, had credibly stated she would get in trouble with her supervisor if she offered six figures. Discussion revealed that the plaintiff, who had had a difficult boss, identified with her predicament and therefore was willing to sacrifice the marginal actual and psychic income to be gotten from crossing the critical divider. In another case (with no legal merit), I convinced a complainant to agree to a few-hundred dollar settlement on the ground that, coming at the end of the year, it would give her family a "special Christmas." This approach worked in part because I had established earlier that she felt guilty when, because of her loss of employment, she could not give her children treats.
I recount these specific anecdotes not because I suppose that they will have broad application. Rather, I simply wish to stress that a good mediator should always be creative in probing interests to generate meaningful, potentially impasse-avoiding numbers. Making more out of less is not magic — it is just good practice!
* While I draw my examples mainly from the employment area, my expertise, I have no reason to think that this method would not work in other contexts involving a non-corporate plaintiff.
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