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Can You Ever Really Know Your Adversary’s Bottom Line?

It was 8 o’clock on a mid-summer evening and the HMO’s representative was packing up his brief case. “I appreciate your hard work,” he was saying, “but I simply don’t have the authority to compromise any further.”

Though we’d only met that morning, I was inclined to believe him because he’d played straight with me throughout the day. Still, no one ever tells you their true bottom line and the number from which Mr. HMO refused to budge seemed odd to me. $124,000. It didn’t feel like impasse.

The facts were simple and undisputed. The HMO made bookkeeping errors. As a result, they overpaid Dr. X $200,000 during the previous three years. Dr. X had no good defense to repayment other than an allegedly failing practice and general lack of assets. Business reverses. Divorce. That sort of thing.

During the day, the parties worked well together. They agreed on a protocol for the review of the doctor’s financial records as a condition to settlement. We’d also made good progress in reducing the gap between the parties’ initially intransigent positions. Dr. X’s last offer had been $100,000 — $25,000 every quarter for the next calendar year secured by a stipulated judgment.

But now both sides were tired and frustrated. They each wanted to make a final “take it or leave it” offer. $124K by the HMO and one hundred by Dr. X. The parties said they could go no further but I was pretty certain Dr. X could be coaxed as high as $115.

In separate caucus, I’d already asked Mr. HMO if he’d take 110.

“I can’t even take $123,” he replied. “I think it’s time to tell Dr. X that it’s $124 or we walk.”

This is one of the most important moments in a negotiation. A time when the parties, and the mediator, need a good way of judging whether one or more of the parties is bluffing.

“I have to call for more authority,” they’ll say. And sometimes you’ll know and sometimes you won’t, whether they’re calling the home office or a dead number. Like that scene in Fargo where the car salesman leaves the nervous buyers to ask his “manager” for concessions when he’s really just taking a break to talk about the upcoming basketball game.

On the internet, how DO you know whether it’s a dog or the CEO on the other end of the line?

Aside from stating the obvious truth — you never really know — there are some ways to track down something close to the actual truth. The best way I know is to ask for detail. Story. I think we’re hard wired for narrative and that if we are misled by it we’re not paying close enough attention. As Mark Twain said, the good thing about the truth is you don’t have to remember it.

The HMO’s alleged bottom line continued to nag at me. “You can’t go to $123?” I asked quizzically. “That seems odd to me. Why is that?”

“Well,” said Mr. HMO, pausing as if he thought it might not be a good thing to tell. “To tell you the truth, we overpaid one of our board members, Dr. Y, too.” He was sheepish now. Surely someone, maybe many people, had paid for these errors with their careers. “I can’t tell you by how much.” He looked at his attorney who nodded to him to go on. “I can tell you that Dr. Y re-paid 62% of what we overpaid him. And 124 is 62% of 200. I can’t cut anyone else a better deal than that.” He paused. “Obviously,” he said.

“Obviously,” I echoed. “Makes sense.” I smiled, “I do hope you’ve got that bookkeeping thing under control now.”

Everyone laughed and I went back to the defendant confident in my assessment that 124 was truly a drop dead number; that Mr. HMO was highly likely to walk unless Dr. X put another $24K on the table.

And that’s what the case settled for.

As I drove down Westwood Blvd., late for dinner with friends, I reminded myself that you can tell whether it’s the guy with authority or someone’s dog Fido on the other end of the phone. Because even in this big anonymous town, we know the truth by its detail. And really, only a writer or a sociopath could make this %$#^ up.


Victoria Pynchon

Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all… MORE >

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