Friday, November 1, 2013

Know your BATNA and WATNA

Last week's monthly "Settlement Strategies" newsletter talked about the ZOPA and NOPA (Zone of Possible Agreement and No Possible Agreement), in preparation for "winning" at negotiation.

This week I address another set of acronyms:  the BATNA and WATNA.  This stands for the Best (and Worst) alternative to a negotiated agreement.

Once the parties are engaged in litigation, it is hard to step back and genuinely analyze the best and worst possible outcome.  It may surprise you to know that as a mediator, I do not think it is necessary to carefully look at the BATNA or the WATNA until or unless you are presented with a respectable offer.  Before then, you are only speculating, because you only know your side of the equation, not the "alternatives".  After the negotiation has become and when there is an offer on the negotiating table that has some appeal, the lawyer representative should help their clients to engage in a "what if" questioning mode to determine what the consequence of turning down a respectable offer might be.  Will the rejection signal a breakdown in negotiations altogether? Will the conclusion of negotiation trigger a large expenditure in costs to do better? Will the outcome of a pending motion for summary judgment cause the losing party to double or triple their offer? Is it worth the risk?
    
     Looking at your BATNA and WATNA, a term that most business students learn, but law students seldom know will make you look smart and may improve the outcome for your client, too.