In a workshop given recently at the University of Hong Kong, Professor Richard C. Reuben, the James Lewis Parks Professor of Law at the University of Missouri-Columbia School of Law, developed this overlooked yet important area of mediation and concession strategies.
The Negotiation Process In A Mediation
Parties propose mediation because they want to settle a case and almost all mediations will eventually get down to the exchange of offers in the negotiating dance. Indeed, negotiations are usually required to set up a mediation. Concessions may be made or refused on the choice of mediator or venue or date of the mediation. In each case the concession is made for a reason and, intentionally or not, conveys a message. A concession may be made because a party believes the issue is unimportant or because he wishes to convey goodwill, yet it may be interpreted by the other party as an indication that a party is desperate to mediate and ultimately to settle. Parties should always ensure that the message they intend to convey is correctly understood. Professor Reuben said that concessions should be treated as signalling devices.
The Amount Of The Concession
When it comes to trading figures the reason for the offer should always be explained, the figure justified. Without an explanation a large amount is likely to send a message that a party is keen to settle, a medium amount that the party still has more room to move and a small amount that there is little room to move. Even the amount of time taken to make an offer sends a message. A concession that is too small or made grudgingly may discourage the other party from making a reciprocal concession or even continuing with the negotiations, an end that the party refusing to make realistic offers may not desire.
Professor Reuben touched upon the difficulty of making big concessions quickly without sending a message of over-eagerness to settle. The writer recalls being told by an experienced negotiator on behalf of a large company that it was the policy to make good initial offers and stick to them. Such a policy sounds admirable – honest and principled, but even so the offers were seldom accepted. It is human nature to believe that if a good offer is made quickly and easily there must be more money available.
In conclusion, all mediators and negotiators should consider the way in which offers are conveyed as well as the offer itself.