A Settlement Lesson From “Switch”: Who Does Your Opponent Think He Is?

From John DeGroote’s Settlement Perspectives

Longtime Settlement Perspectives readers know that I’m a big fan of Chip and Dan Heath. Their first book, Made to Stick, inspired posts back and forth with the authors on why you might not want to send a message in negotiation, and the rest of Made to Stick continues to color my view of message “stickiness” — a term the Heath brothers contributed to today’s communication lexicon.

With advance warning from Mitch Joel, I eagerly awaited my copy of the Heath brothers’ new book, Switch: How to Change Things When Change Is Hard. Like Made to Stick, Switch ostensibly has nothing to do with negotiation, but like its predecessor Switch backs into a settlement insight important to all of us.

The Identity Model of Decision Making

As with most concepts, Switch defines the identity model of decision making early on:

In the identity model of decision making, we essentially ask ourselves three questions when we have a decision to make: Who am I? What kind of situation is this? What would someone like me do in this situation? Notice what’s missing: any calculation of costs and benefits.

According to the Heath brothers, “we adopt identities throughout our lives” that help explain economically irrational behavior — we consider ourselves a patriotic citizen or a devout Catholic or a good mother, and these adopted identities drive decisions beyond superficial self interest. A Silicon Valley millionaire might vote against a Republican who would cut her taxes, or an auto worker might vote against a Democrat who would provide him health insurance.

Identities Drive Settlement Decisions

In our last post we discussed how important kitchen table talking points are to the settlement process, but the identity model insight Chip and Dan Heath provide is just as important. I have had cases that wouldn’t settle despite favorable economic terms because the plaintiff inexplicably wanted her “day in court.” It seemed a bit self-righteous at the time, and I didn’t get why a few more dollars couldn’t get the deal done. But I now see the need that a few more dollars didn’t address; in effect our lawsuit opponents may be asking themselves questions like:

• What would a whistleblower do here?
• How can I help stop lawsuit abuse with this settlement? or
  
• How would Ralph Nader react to the defendant’s proposal?

We often wonder what’s driving the other side to hold out in settlement talks, and we have often known it’s more than money, but Switch puts our finger on it. The ordinary citizen becomes a safety advocate in a rollover lawsuit, or an everyday cardholder becomes a consumer advocate when he realizes everyone’s interest was calculated that way.

What You Can Do

I once had a grizzled old defense lawyer tell me:

They say it’s not about the money. That’s BS — it’s always about the money. Eventually you pay a little more and all of a sudden that other stuff they were talking about goes away.

In some cases he may be right, but in every case your opponent’s conduct is driven at least in part by who they think they are. You can either ignore that fact, and pay more if you’re going to settle at all, or you can approach the settlement talks with the other side’s identity in mind. To take it back to Switch, that auto worker isn’t going to change his vote just to get health insurance, but he might support a Democrat for other reasons. In your settlement talks:

• If the other side thinks she is a whistleblower, put some additional compliance measures in your settlement to satisfy her concerns;
• If the other side considers himself a tough negotiator, plan to endure more $2,000 moves today than usual; or
• If the other side wants to “make sure this never happens again,” consider implementing a reasonable process that will ensure “this” actually won’t happen again — and tell the other side at the mediation you’re willing to do so.

The idea here isn’t to come up with a new set of unnecessary concessions. The point here is to consider who the other side thinks he is, and factor that into your overall settlement approach. You’ll be glad you did.

                       

John DeGroote

John serves as a mediator and arbitrator in complex business, technology, and intellectual property matters involving parties and interests around the country and beyond — often before litigation is filed. Prior to his service as a mediator and arbitrator, John served as the lead settlement negotiator in hundreds of cases,… MORE >