The Value of Diagnostic Questions
from "Settle It Now Negotiation Blog" by Victoria Pynchon
      

If we want to deliver "win-win" agreements to our clients, says Professor Leigh Thompson of Northwestern's Kellogg School of Business, we need to be asking why our negotiating partners want what they want (determining their interests) instead of why they should get what they want (determining their positions).

In the absence of this type of inquiry, the elusive "integrative" agreement that so many attorneys already believe to be an urban myth will remain beyond our reach.

So What Does that "Integrative" Agreement Look Like Again?

Professor Thompson reminds us in The Mind and Heart of the Negotiator, just what true integrative or "win-win" agreements look like.

True win-win or integrative negotiations, she says, leave no resources underutilized. The lowest level integrative agreements exceed parties' no-agreement possibilities, or reservation points. Reaching an agreement that exceeds parties' no-agreement possibilities creates value relative to their best alternative. The next best integrative agreements are better for both parties than are other feasible negotiated agreements. In other words, negotiators create value with respect to one negotiated outcome by finding another outcome that all prefer. The best ("pareto-optimal") integrative agreements are impossible to improve upon from the perspective of both parties . . . [i.e.,] no alternative agreement exists that improves one party's outcome while simultaneously improving or not reducing the outcome of the other party.

Expanding the Pie

The next time a mediator talks about expanding the pie, think about the problem an old friend and colleague recently brought to me. The Court had already preliminarily enjoined his client from marketing an allegedly infringing product and the case was proceeding to trial solely on the issue of damages -- damages for which his client would likely be found liable but would not likely be able to satisfy.

"What do you think they're thinking," he asked, as if becoming a mediator had imbued me with some extra-sensory perception bearing upon the motivations of plaintiffs. Having no idea whatsoever why this unnamed company in an unidentified industry would continue to pursue litigation to obtain a judgment for damages that couldn't be satisfied, all I could do was ask why?

Why? The Question that Opens a Thousand Win-Win Doors

"Why," I asked my friend, "do you think the Plaintiff sued your client in the first place?"

"For the money, of course, and to protect their patent."

"But you've described your client as a small player who couldn't have harmed the plaintiff's business in a significant way," I replied. "The plaintiff does not need and probably cannot collect a sizeable judgment even if it prevails at trial. So what do you think motivated them to bring the suit against your client in the first place?"

"Oh," he replied. "That's easy. The plaintiff's CEO wants his company to be the only player in the field. He not only wants to drive my client out of business, he wants to drive anyone who makes a similar product out of business."

"And your client," I asked, "how's its business doing?"

"Terribly, of course, what with the attorneys' fees and the preliminary injunction."

"Is it interested in selling the business to the Plaintiff as a way of settling the lawsuit?"

"I think they might," he said, as we went on to explore the potential for an integrative agreement -- one that would yield a higher joint gain than any rational cost-benefit analyzed settlement ever could. With the preliminary injunction lifted, the old business in the new owner's hands would turn a decent yearly profit -- the profit, in point of fact, that the Plaintiff was seeking to recover as damages. The business had value as a going concern only to the party keeping the injunction in place -- the Plaintiff. Instead of investing its money in a lawsuit to drive defendant out of business, the Plaintiff could invest it in the business itself, resuscitating it and benefiting from its customer lists, employees, expertise, market position and the like.

By asking why the litigation was proceeding in the first place (never assume it's only about money) a business loss for everyone could be transformed into a business opportunity for all.

"Why" Diagnostic Questions

Questions about our bargaining partners' underlying interests and priorities are key to achieving win-win solutions. Sadly, reports Dr. Thompason, only seven percent of negotiators ask these questions during negotiation sessions where it would be dramatically better to do so.

To gain the benefit of these questions, we only need to shift our attention ever so slightly from the reasons why we should prevail in the litigation to the reasons why the lawsuit against was filed in the first place. Then think like that 3 or 4-year old who drives you batty with "why" questions.

Why did you file suit?

To maintain and expand our business.

Why does suit against us help you do that?

It removes you as a competitor.

Why do you want to remove us as your competitor?

Because your product is nearly as good (or better!) than ours and you have a better client-base in California -- which we see as the best market for our product in the country.

Why will our elimination allow you to expand your client-base to California?

Because we have no other close competitors and we can outbid everyone else. And, some of your engineers and sales people are more efficient and productive than ours.

Why don't you make us an offer to buy us out?

You Can't Add Value Without Knowing What Your Negotiating Partner Values

As Dr. Thompson notes, you can't create a win-win agreement without knowing what a win might look like to the other side. By asking "why" questions, we quickly learn many alternatives to delivering to (or accepting from) our opponent a sack of cash. Once we know what a "win" might look like -- a better competitive position; access to new customers; local good will and the like, we can begin brain-storming business solutions to business problems.

And that process is so much easier (and comes so much more naturally to your clients) than the typical tug of war over legal positions that too often lead to impasse. Even if we "prevail" in one of those positional "head-banging" negotiation sessions by leaving less on the table than our negotiating partner, we still lose the value of a deal so close at hand we can almost see its shoes peeking out at us behind the nearest curtain.

When we stop fighting about who's right and who's wrong, we can begin to get to why we're having the fight in the first place. When we're representing business people, why usually involves business opportunities that one party has lost and is trying to regain. That's a business problem calling for a business, not a legal, solution.

And that's why getting to why is one of the most efficient and effective ways of finally getting to yes.

SO SHAKE OFF THAT BAR-B-Q LETHARGY AND HAVE A GREAT BUSINESS WEEK!

About The Author

Victoria Pynchon: Judicate West Panelist (www.adjudicateinc.com) 25 years complex commercial litigation and trial experience; instructor, National Institute for Trial Advocacy and Anderson School of Business, U.C.L.A. Entrepreneurship Institute (Summer 2006 - Negotiation Seminar); J.D. U.C. Davis, Order of the Coif; LLM. Straus Institute for Dispute Resolution; Federal District and Superior Court Panelist; Extensive Co-Mediation Experience with Judges Alexander Williams, III and Victoria Chaney of the L.A. Superior and L.A. Complex Litigation Courts, respectively. For full profile see http://www.settlenow.com.  See her mediation blog "Settle It Now Negotiation Blog" at http://settleitnow.blogspot.com/.

Disclaimer