Outcome Satisfaction in Negotiation — Good News for Year-End

(photo:  The Choices by Robert La Londe-Berg)

All things being equal — or, more to the point — most things being impossible to equalize — your clients’ satisfaction with the settlement you negotiate is going to depend upon something other than the absolute number attained.

In fact, the social scientists who study these things have told us that people tend to be more satisfied with the outcome of negotiations in which the following occur:

1. the other side makes numerous concessions (even if they are small or inconsequential);
2. the outcome achieved is as good or better than similar outcomes obtained by colleagues or competitors (i.e., a 10% raise in salary tends to be viewed favorably if one’s co-workers receive 7% raises and unfavorably if one’s co-workers receive 12% raises);
3. the negotiator does better than he hoped to (without regard to whether the expected outcome is “good” or “bad” based upon objective factors);
4. the negotiator feels that the process by which the outcome was reached was “fair and reasonable”; and,
5. the negotiator does not believe that his will was overridden by a stronger negotiator on the other side.

For the academically minded, see e.g. Disconnecting Outcomes and Evaluations: the Role of Negotiator Focus here and Voice, Control and Belonging:  the Double-Edged Sword of Procedural Fairness here.

Now, from the “Pride and Preferences” post at The Proper Study of Mankind (hat tip to TEDBlog‘s post How Toddlers (and Monkeys) Make Choices) we learn that the social scientists down the lane have once again proven that which our own experience has already told us — that we routinely justify the choices we make by discounting, devaluing or demonizing the unchosen option and telling ourselves that we had always favored the chosen one.    

What’s new about this relatively commonplace insight is that it is at work not only in sophisticated bargainers, but also in human toddlers and our primate friends the capuchin monkeys.

How do we apply this “choice preference” insight to client satisfaction with settlement outcomes?

It’s not hard to do.

Whatever a client’s reservations about the course a negotiation session takes, by the end of the day they’ve made dozens of small decisions among (potentially) equally attractive or unattractive choices.  Add to the negotiation mix the fact that we tend to value choices that were made only after great difficulty and the “satisfaction outcome” is nearly guaranteed.

Even without coaching by you or assurances given by the mediator, your client should be pretty satisfied with any negotiation outcome by the end of the day.  If not, only a little negotiation post-mortem back-patting should be necessary to focus your client on the difficulty of your mutual  achievement and on your joint superior wisdom in settling at the time and for the number you both did.

We’re not suggesting being disingenuous here.  Most cases can profitably settle in a fairly wide range.  So long as you’ve done a thorough cost-risk analysis with your client and have a firm bottom line you’ve agreed not to alter, most settlements of risky and unpredictable litigation are the smartest decision you and your client can make at any stage of the proceedings.

Year-end’s coming and with it the time to close the book on many cases that are becoming more problematic with time.

Clear these troublesome pieces of litigation away and both you and your client will have much to celebrate in 2008.

                       

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 >