Notes on Negotiation
By Marty Latz, Latz Negotiation Institute
I recently served on a panel of expert negotiators from the business and legal communities. Together the panel had over 100 years of experience negotiating deals, and settlements worth billions.
Here are some of the lessons, along with my own thoughts.
• Set aggressive goals – then get the information to achieve them. One panelist described the negotiation for her dream job, which started while she was in law school. What did she do? Figured out exactly what she wanted and then spent several years learning about that industry and how she could add value to the organization that would eventually hire her as its top lawyer.
• Re-evaluate your goals in long-term negotiations. Some negotiations last years. They require specialized strategies. In all negotiations, set aggressive, specific goals to start. For long-lasting negotiations, re-evaluate those goals in light of information gathered, fluctuating leverage, etc. Of course, there’s not likely a need to revise your goals weekly. But do it regularly, especially when significant changes occur.
• Focus on your counterpart’s personal self-interest. Several panel members emphasized the need to find out counterparts’ personal drivers, pain points or self-interests. It’s especially crucial in negotiating with large entities. Why should that mid-level professional do the deal? Are they getting pressure from their boss to show progress or clear their desks of long-running disputes? How can you make them look good internally?
• Gather information in unconventional ways. One panel member described several powerful information-gathering techniques.
- Public companies are required to report critical information – get it. This panel member once analyzed a company’s public statements and financial reports and deduced its actual authority for the deal on which he was working. He got the entire amount, despite that company’s early false statements about its authority. Top mergers and acquisitions lawyers know this well, as many analyze the terms and conditions of their counterpart public companies’ previous deals and use this precedent in negotiating their deals’ terms.
- Always be on the lookout for information. One panel member described a complex negotiation involving multiple impasses. After the last impasse, as he was walking out of the mediation, he inadvertently glanced into the room where his counterparts had been strategizing. Though the whiteboard had been erased, he could still notice the outlines of some critically important numbers. Wow.
- Read everything and talk with everybody. Few negotiators really spend the time doing their strategic due diligence on their counterparts. Talk with folks who have negotiated with your counterparts previously. Read everything they have written. Find out their reputations. Talk to industry experts. Mine your social networks and online resources.
• A strong case may involve weak leverage. One example involved millions of dollars in a litigation matter where the very survival of the company was at stake. And the company was likely to lose. Yet it had decent leverage. How? The company on the “winning” side had no interest in spending a ton of money to win only to likely get little in bankruptcy court. This panel member settled his losing case for pennies on the dollar.
• Limited vs. full authority is usually advantageous. Parties with authority have power, right? Wrong. They have the power to concede. One panel member described a negotiation in which he flew to London to negotiate a big deal. He knew after walking in to the meeting he would get a great deal. How? His counterpart at the table was its top guy, the one with its ultimate authority. From that point on, every time his counterpart requested a concession, this panel member called home to try to get more authority. He got an excellent deal and got his counterpart to even pay for his flight home.
• Fair and reasonable standards can drive the result when you have weak leverage. Sometimes there’s nothing you can do to strengthen your weak leverage. Now what? Focus on fair and reasonable standards. One panel member described negotiations worth hundreds of millions of dollars with the federal government where the government – if it couldn’t negotiate a deal – could legally just stop payment on the services provided. That’s weak leverage. What did this panel member do? Focused on independent objective fair and reasonable standards, like: precedent and market value (what the government had done in similar circumstances in the past with them and other similarly situated companies); costs and inflation (how their increased costs and inflation led to higher amounts to be paid); and experts’ opinions (what independent objective experts suggested was fair.)
• Don’t ask for their bottom line – ask what they want and why. An experienced mediator on the panel shared one of his “secrets” – simply ask what the other side wants and why. And don’t ask for their authority or bottom line, issues where many will bluff or lie or prematurely commit – often reducing their ability to reach a solution later without losing credibility.
Latz’s Lesson: These strategies sound simple. They are. The challenge is systematically putting them into practice.
Marty Latz is the founder of Latz Negotiation Institute, a national negotiation training and consulting company, and ExpertNegotiator, a Web-based software company that helps managers and negotiators more effectively negotiate and implement best practices based on the experts’ proven research. He is also the author of Gain the Edge! Negotiating to Get What You Want (St. Martin’s Press 2004). He can be reached at 480-951-3222 or Latz@ExpertNegotiator.com