Risk Management and the Positive Negotiation Process

Disputes in litigation will be resolved in one of two ways: (i) by a judgment, typically entered on a jury verdict following a trial, or (ii) by a negotiated settlement, oftentimes reached during a mediation.

It is tempting to believe the first of these, a judgment following a trial, will deliver a “just” result - that is, one that all sides agree is fair and appropriate.  Frequently, however, one side or the other, or even for both sides, leave a trial feeling disappointed or worse.  Trials often fail to deliver what one or more parties had hoped for and expected.  Simply stated, trials involve risk.

That risk of trials draws people to the second option: a resolution through a negotiated, and oftentimes mediated, agreement.  That is, people choose mediations to manage risk.

The good news is this desire to manage risk opens the door to a positive negotiation process.  

How so?

The answer lies in the first two steps in any risk management exercise: (i) identifying the risks, and then (ii) analyzing those risks.  Risk management begins with risk appreciation. 

This is where the positive negotiation process kicks in.  Each side engaged in risk management negotiations wants the other side to appreciate the risks they present to the other - as it is those risks that the other side will want to manage through either a reduced demand (from the plaintiff) or an increased offer (from the defendant).  

This, of course, is all pretty simple - if not obvious. You might now ask, “so what”?

So . . . by appreciating that each side is seeking to manage its risks through negotiation, everyone gains an incentive at a mediation to present, in detail, what they can do at a trial - that is, what best evidence they can present that creates risk.   

Put simply, risk management mediations are all about can-do.   

They focus on the positive steps advocates can take, based on the high-value work they have done, to advance their respective clients’ interests.  

To be sure, the risk appreciation process requires a rhetorical “so what?” to every “can-do.”   What risk does that evidence present?  How great is that risk?  Is there controverting evidence - that is, a “can-do” from an opposing party - that negates or at least mitigates that risk?  What are the potential consequences of that risk - modest, severe, or something in between?  

That is where the mediator comes in.  Put the onus on the mediator to coax and convey these questions.  Let the mediator encourage each side toward a candid yet credible appreciation of their respective claims, defenses, and risks.  By focusing everyone on what each side can do to advance their interests, a mediator can then guide the parties to a collective appreciation of the risks they face at trial and the gains they can make by managing those risks through a negotiated resolution.  

No one compromises in this positive negotiation process.  Instead, everyone presents, appreciates, and manages their respective risk.