Preparing for settlement negotiations guarantees better outcomes and less stress. Preparing for negotiation does not have to be a long process. In fact, for an average case, two to four hours of concentrated work will be sufficient. The secret is in knowing how to prepare. Here are what I consider to be the 10 essential steps for preparing for a settlement negotiation:
Step 1: Understand your client’s true needs. Sometimes, there are forces outside the litigation that drive client decision-making. You need to know what those factors are.
Step 2: Do a thorough damages analysis. Don’t wait for your economic expert to tell you what the case will whiteboard for in the courtroom. You must do the numbers and the legal research yourself. Remember that the law of remedies strives to restore the plaintiff to his or her rightful position at the least cost. Legal remedies are therefore conservative, not generous.
Step 3: Use Big Data to obtain a sense of value. Verdicts & Settlements has a large database of case information that can assist you in understanding how similar cases have fared in courts and in negotiations.
Step 4: Prepare a Non-Monetary Costs Assessment. Litigation imposes external costs on clients. You must assess what those costs are and put a dollar value on them.
Step 5: Prepare a Litigation Budget. Estimating the cost of litigation is no different and more difficult than estimating the cost of constructing a building. You will prepare a base budget then model the changes based on different assumptions. This tool prevents client billing shock and introduces an important reality check before settlement negotiations begin.
Step 6: Prepare an Expected Value Analysis. Human brains are inherently terrible at assessing risk and probabilities. By preparing an expected value analysis, you prevent your client from over or under-estimating the true range of case outcomes.
Step 7: Do Concession Pattern Modeling. Settlement negotiation is distributive. One side demands, the other side offers. The demand and offers reduce in each round until agreement is reached. Big data shows us that lawyers are highly predictable in how and when concessions are made. By modeling the possible concessions scenarios, you will anticipate every move. This is very powerful and, once you learn how to do it, it’s very easy.
Step 8: Perform an Intangibles Analysis. You probably do this intuitively. Formalize your analysis of the judge, likely jury panel, jurisdiction, legal issues, witness credibility and so on. Put your analysis in writing to force discipline on your thinking.
Step 9: Talk It Over. Go through your analysis with your boss or your client. Let someone else poke holes in your preparation.
Step 10: Write It Out. Prepare a written negotiation memo that includes all of the analytical work. Even if you are a sole practitioner, exercising the discipline to write out your plan is important. And, you can share it with your client so that there is no confusion on settlement negotiations day.
I’ve prepare a free e-book, THe 10 Essential Steps to Legal Negotiation, that you can download. You can download it from the sign-up form on the right. Read and share it with your colleagues. In depth explanations with forms and examples are available in the online courses.
If you follow these 10 steps, you will find your mediations and negotiations to be predictable and stress-free. You will not be exploited by the other side. You will have the knowledge and foresight to take advantage of a lesser prepared adversary. What’s not to like about all of that.