By Steven G. Mehta
Many times when parties to mediation talk about the settlement value of a case, they talk about one number. The case should settle for $100,000, or $50,000, or whatever number is at issue. However, all too often that single number is a flawed method of helping you to figure out the best negotiating strategy.
First, it is important to note that there are many factors that go into deciding the value of a case. This discussion is not intended to address that concern given the multitude of factors that affect the valuation. Instead, once the value has been decided, we should discuss what should be done from there.
The reality is that instead of deciding a number, parties should really discuss a range of numbers. Often times focusing on one single number as an outcome gives you a deceptive picture of the true negotiating picture and result. There should really be 4 or 5 numbers that you should consider as part of your preparatory strategy before the mediation.
Think about a grade for your settlement. A through F.
A – This settlement would be Awesome. If I got this, and kept this up, I could make partner in a year.
B – Bravo. You settled the case for a good number and you’ll get some high fives back at the office.
C- Could Do. You could Easily Settle For this Number and No one would blink an eye at you.
D- Difficult. You would have a hard time selling this settlement, but it’s not impossible.
F – Forget about it. You suggest a settlement like this, and you might as well start looking for another job.
Let’s put this thought process into action. You have a case that you previously spoke with your client about and you have received authority for and you believe $100,000 is the settlement number that you would be willing to pay to settle the case.
- If you got an A settlement, maybe that number would be $70,000. Wow wouldn’t that look good on your performance review.
- A B settlement might be $90,000. Good job. You worked hard on this one.
- A C settlement might just be $100,000 or a dollar below that number. After all, that is what your client authorized you to do.
- A D settlement of $115,000 might be difficult for you to sell, but if push comes to shove, you might be able to help to get it done.
- Finally, there is no way that you could ever settle the case for $125,000. That is a clear F. Your boss knows it’s a recession and there are a thousand lawyers looking at your job.
Now that you have evaluated your range, you can fairly help to change your negotiating strategy. Maybe, you should making a push to get $70,000. However, not all cases are awesome; not all settlements are going to be great. But, it’s worth a try. Maybe, you should set your sights on $90,000 instead. This number seems so much more achievable, and is still a great result. After all, even the best batting average don’t bat a thousand.
This process can also help you over the long term in evaluating your negotiation success. If you look at all your cases this way, and you are consistently getting C settlements, then maybe you need to think about trying to change your expectations. On the other hand, if you are consistently getting A’s and B’s and once in a while a C or D, then that paints a completely different picture.
The reality is that settlements are not pass-fail, but instead graded on a spectrum. By chaning your perspective, you might also have the added benefit of getting better resolutions to your cases.
