Wednesday, September 24, 2014

Getting to the ZOPA in Negotiation

Yesterday I heard an employment case where a trial lawyer earnestly believed that he could get an inflamed jury to award his client at least $500,000.00 based upon the wrongful termination of a young, minimum wage worker who had less than $20,000.00 in lost earnings and some challenging facts to overcome.  His former employer came to the mediation prepared to pay his lost earnings (actual damages) if he had to, but not at all prepared to pay something akin to "punitive" damages based upon the spin the trial lawyer intended to put on the case.  Clearly, the two parties were not in the same "playing field" and the old-fashioned distributive bargaining (an initial demand of $650,000 and an initial offer of $2,000) were never going to work to get this case settled.
When the parties or their lawyers arrive at mediation with wildly divergent evaluations of the case, it's worth spending as long as it takes to discuss and agree upon the ZOPA:  Zone of Possible Agreement, however broad it may be.  Just as in baseball, the parties need to work with their lawyers to determine the boundaries for negotiation and what is truly "out of bounds".  In this case, that occurred through my own hypothetical negotiations--each time narrowing the ball field until it became clear to me that the case had a settlement value of something between $10,000 and $100,000, not $2,000 and $650,000.  Once both sides agreed to be in the same "ball park" realistic negotiation could ensue.
How do you communicate to your clients or your adversary counsel about the ZOPA before wasting precious time defining the boundaries of negotiation in mediation?