Effective Negotiating: Dynamic Negotiation Training

Effective Negotiating: Dynamic Negotiation Training

September 14, 2020

2:00 p.m. – 4:00 p.m.

CT Bar Association

Webinar

CT Bar Institute Inc.

CT: 2.0 CLE Credits (General) NY: 2.0 CLE Credits (Skills)

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Lawyers’ Principles of Professionalism As a lawyer I must strive to make our system of justice work fairly and efficiently. In order to carry out that responsibility, not only will I comply with the letter and spirit of the disciplinary standards applicable to all lawyers, but I will also conduct myself in accordance with the following Principles of Professionalism when dealing with my client, opposing parties, their counsel, the courts and the general public.

Civility and courtesy are the hallmarks of professionalism and should not be equated with weakness; I will endeavor to be courteous and civil, both in oral and in written communications;

I will not knowingly make statements of fact or of law that are untrue;

I will agree to reasonable requests for extensions of time or for waiver of procedural formalities when the legitimate interests of my client will not be adversely affected;

I will refrain from causing unreasonable delays;

I will endeavor to consult with opposing counsel before scheduling depositions and meetings and before rescheduling hearings, and I will cooperate with opposing counsel when scheduling changes are requested;

When scheduled hearings or depositions have to be canceled, I will notify opposing counsel, and if appropriate, the court (or other tribunal) as early as possible;

Before dates for hearings or trials are set, or if that is not feasible, immediately after such dates have been set, I will attempt to verify the availability of key participants and witnesses so that I can promptly notify the court (or other tribunal) and opposing counsel of any likely problem in that regard;

I will refrain from utilizing litigation or any other course of conduct to harass the opposing party;

I will refrain from engaging in excessive and abusive discovery, and I will comply with all reasonable discovery requests;

In depositions and other proceedings, and in negotiations, I will conduct myself with dignity, avoid making groundless objections and refrain from engaging I acts of rudeness or disrespect;

I will not serve motions and pleadings on the other party or counsel at such time or in such manner as will unfairly limit the other party’s opportunity to respond;

In business transactions I will not quarrel over matters of form or style, but will concentrate on matters of substance and content;

I will be a vigorous and zealous advocate on behalf of my client, while recognizing, as an officer of the court, that excessive zeal may be detrimental to my client’s interests as well as to the proper functioning of our system of justice;

While I must consider my client’s decision concerning the objectives of the representation, I nevertheless will counsel my client that a willingness to initiate or engage in settlement discussions is consistent with zealous and effective representation;

Where consistent with my client's interests, I will communicate with opposing counsel in an effort to avoid litigation and to resolve litigation that has actually commenced;

I will withdraw voluntarily claims or defense when it becomes apparent that they do not have merit or are superfluous;

I will not file frivolous motions;

I will make every effort to agree with other counsel, as early as possible, on a voluntary exchange of information and on a plan for discovery;

I will attempt to resolve, by agreement, my objections to matters contained in my opponent's pleadings and discovery requests;

In civil matters, I will stipulate to facts as to which there is no genuine dispute;

I will endeavor to be punctual in attending court hearings, conferences, meetings and depositions;

I will at all times be candid with the court and its personnel;

I will remember that, in addition to commitment to my client's cause, my responsibilities as a lawyer include a devotion to the public good;

I will endeavor to keep myself current in the areas in which I practice and when necessary, will associate with, or refer my client to, counsel knowledgeable in another field of practice;

I will be mindful of the fact that, as a member of a self-regulating profession, it is incumbent on me to report violations by fellow lawyers as required by the Rules of Professional Conduct;

I will be mindful of the need to protect the image of the legal profession in the eyes of the public and will be so guided when considering methods and content of advertising;

I will be mindful that the law is a learned profession and that among its desirable goals are devotion to public service, improvement of administration of justice, and the contribution of uncompensated time and civic influence on behalf of those persons who cannot afford adequate legal assistance;

I will endeavor to ensure that all persons, regardless of race, age, gender, disability, national origin, religion, sexual orientation, color, or creed receive fair and equal treatment under the law, and will always conduct myself in such a way as to promote equality and justice for all.

It is understood that nothing in these Principles shall be deemed to supersede, supplement or in any way amend the Rules of Professional Conduct, alter existing standards of conduct against which lawyer conduct might be judged or become a basis for the imposition of civil liability of any kind.

--Adopted by the Connecticut Bar Association House of Delegates on June 6, 1994

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Table of Contents Agenda .................................................................................................................................................................................... 4

Faculty Biographies ................................................................................................................................................................. 5

Advanced Negotiation Strategy ............................................................................................................................................. 6

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1

Training Agenda for CBA Session NEO1 INTRODUCTION & SCENARIOS – “WHAT WOULD YOU DO?”

• Impact of our Assumptions • The Importance of Asking Questions • Handling High-Low Bargaining Strategy • Knowing When to Walk Away

DEVELOPING A NEGOTIATION STRATEGY

• Different strategies for varying styles of negotiation, such as soft, principled, and hard (or aggressive) negotiations

• Utilizing principled negotiation as the most flexible and productive model • An emphasis on power, how power is built and leveraged differently in hard vs. soft

negotiations • Communicating internally and with counterparts • Using effective communication to drive improved collaboration and creativity • Eliciting interests to create principled negotiations even in hostile environments • Generating options to fulfill interests • Establishing legitimacy in hard and principled negotiations • Building and leveraging rapport and trust • Commitment and agency in negotiations

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Faculty Biographies

Shahzad Bhatti, SAB Negotiation Group Shahzad is a former lecturer on negotiation skill and theory at Harvard Law School. Shahzad has provided training to individuals from six different continents across a wide spectrum of professions. His clients range from diplomats to CEO’s of Fortune 500 companies to leaders in social impact initiatives pushing to improve the state of the world. Shahzad has also had the privilege of working on a number of large transactions, now totaling over US $100 billion in transaction value.

Shahzad's prior experience includes work in private equity as the Director of Investments of a Sovereign Wealth Fund, CEO of a multi-national education firm, the CEO of Four Corners Technologies (owners of Website.com) and as an attorney. In addition to having taught at Harvard Law School, Shahzad graduated from Harvard Law School (JD), Harvard's JFK School of Government (MPA) and Columbia University (Bachelor's degrees in Political Science-Economics and Biochemistry). Shahzad was named a Young Global Leader in 2009 by the World Economic Forum, Entrepreneur of the Year by Ernst & Young in 2018 and has appeared on the BBC, New York Times, Bloomberg, the Financial Times and the Washington Post, among others. When not working with SAB, Shahzad loves spending time with his amazing wife and three wonderful children, reading and sometimes taking his (rapidly declining) vertical jump to the nearest basketball court.

Celia Chase, SAB Negotiation Group Celia Chase comes to the SAB Group as a seasoned leader with an in-depth background in strategy and marketing. Having held senior level positions in the technology industry, she has over 20 years experience at Oracle, Sun Microsystems and consulting, working with organizations from start-ups to Fortune 100 companies and she has won awards for Excellence in Marketing.

Celia has created her career building and managing global, high-performing teams that focus on bottom line growth. She has successfully unified and empowered teams across the value chain from product marketing to sales to drive meaningful results. In her tenure, she has excelled in a variety of environments across B2B, B2B2C and B2C.

She holds a Masters in Business Administration from the Tuck School of Business at Dartmouth College and a Bachelor’s degree in International Economies and Rhetoric from UC Berkeley.

Outside of SAB, Celia enjoys yoga, traveling, and trail hiking in New Hampshire where she resides with her husband and two children.

Haroon Kalam, SAB Negotiation Group Haroon Kalam is senior consultant at the S.A.B Negotiation Group. In addition to teaching negotiation at Harvard, Haroon has worked with over a hundred Fortune 500 clients. His particular areas of expertise include procurement, sales, and digital and emerging technologies. Haroon has also closed over $700 million in private sector deals, including six platform investments. Haroon has published on how organizations use data driven techniques to harness technology and market and reach new audiences. Haroon holds an MPA from Harvard University as well as a PhD, with a focus on organizational behavior, game theory, and predictive insights.

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ADVANCED NEGOTIATION STRATEGY OUTLINE FOR CBA

My Interests

Their Interests

Third Party Interests

Options (Win-Win)

Communications and Commitment (Pareto)

Alternatives (BATNA)

Criteria/Standards

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MY INTERESTS

Our client was the owner of a dot.com company that had been extremely successful.

The owner had a new idea and needed funding to launch the idea into another business.

He tried to persuade his investors to give him $5 million to start the business, but they

would not agree.

When the client came to us, we recognized that “I want $5 million” was our client’s

position, but not his underlying interests. When we asked why he needed the $5 million,

we learned that he actually only needed $3 million, but wanted to have a financial

cushion for bad times. He also had a personal interest: he found asking for money

embarrassing and wanted to avoid having to do it more than once. Our client had not

thought he needed to explain that to his potential investors, whom he saw as savvy

business persons that would simply understand.

Once we understood our client’s interests, we urged him to explain those interests to

his investors in a straightforward manner. It made sense to the investors that he would

want such a thing when he explained that he wanted to make sure that their investment

would perform, and that he would be unable to do so if he had to waste time looking for

additional funding at the last minute during a tough financial time.

The result? The investors agreed to provide $3 million in cash and a $4 million line of

credit. Note that this is more than our client initially requested or expected, and that the

idea was something the investors came up with.

Lesson? Thinking in terms of underlying interests (“why do I really want this?”) and

explaining your interests to your counterpart allows room for creative deal-making that

maximizes value for you and them.

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THEIR INTERESTS

An innovative start-up company in China learned a way to collect trash and turn it into

energy, then worked out a deal with the local government whereby the company would

pick up city trash and earn money by converting that trash into electricity that the city

could plug into.

Many private equity and venture capital firms were interested in investing in the start-

up company, including several large U.S. and European-based firms, all willing to invest

millions of dollars for a 25% equity stake in the company.

Our client, a small, Asian-based equity firm, barely had half as much money to offer the

start-up company. The client assumed that the Chinese start-up would reject such an

offer in favor of getting more money.

We wanted to help, so we went out and did some interest. It turns out that the Chinese

government considers energy to be a key security area and any foreign investments

require longer government approval process than normal. Furthermore, we found

examples of times when the Chinese government had even rejected investments from a

U.S.-based venture capital firm that wanted to invest in a steel company because the

government suspected that a major U.S. company might be backing the firm and was

afraid of American money controlling key Chinese interests.

Armed with this information, we went back to our client and suggested that they offer

the start-up company whatever they could for the 25% equity stake they wanted, even

though it was significantly less than what the U.S. and European firms were offering. We

anticipated that the approval process would be faster for the Asian-based firm, and that

the start-up company might have an interest in getting money faster.

We were right. The start-up company said yes to our client’s proposal on the grounds

that time and ease of approval were key interests.

Lesson? Our assumptions about their interests are not always correct. It is a good idea

to check explore the assumptions you have made about their interests in a negotiation.

You might find that you have more to work with than you thought.

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THIRD PARTY INTERESTS

Our client, a major broadcasting company, was negotiating an annual agreement with

the media agency of a local credit union in their area. During the negotiation, all the

focus was on the agency buyer and planner, not on the credit union. In fact, the agency

specifically told our client not to meet with the credit union or the credit union’s

marketing director.

This “out of sight, out of mind” approach was a mistake for our client, who ultimately

did not get the credit union’s business. Instead, the media agency gave 100% of the buy

to a different radio station group, one of our client’s main competitors in the area. The

competitor had offered the CEO of the credit union a special 15 minute interview on

Sunday morning.

How did the competitor know to do that? Well, the competitor had met with the credit

union’s marketing director, who told them that the CEO “really loves the limelight.”

Our client couldn’t have known without also securing a meeting with the credit union’s

marketing director, and we aren’t sure that the media agency would ever have

approved such a meeting. But in retrospective, the client might have done better if it

had pushed to bring the credit union into the negotiation.

Lesson here? Always take into account interests of third-parties who are not present at

the table but may have an impact on the outcome of the negotiation. And if at all

possible…bring them to the table!

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OPTIONS (WIN-WIN)

Remember the client that lost the buy to a competitor because they weren’t able to

satisfy a third-party interest? The same client won another buy because the client was

able to create a win-win option that the buyer liked.

The client was a major broadcasting company, and they wanted to obtain business from

a promo agency whose client was an auto company. We used two strategies to help the

client in this case:

First, we realized that a lot of times, “first in, wins.” That is: the first seller to get to the

table often has a better chance of winning a deal because the buyer is busy and won’t

have to spend as much time finding a seller if the first seller presents a great offer. Our

client knew it had the demographic the agency was looking for. So it put a lot of effort

into being one of the first media outlets with whom the agency met.

Second, our client offered ways to expand the auto company’s media presence outside

of normal radio advertising opportunities. For example, one of the broadcasting

company’s on-air personalities did a test drive of a vehicle that was video-taped and

posted on his website. The company also offered to tie the auto company’s brand in

with sponsors related to weather: “this weather report brought to you by auto co.”

Of course, our client had already started offering these choices as part of its normal

business, which meant the cost of adding such options was low. For the buyer, on the

other hand, the choices were all added value. It was a classic win-win. Our client

received 100% of the business!

Lesson? It’s not just about big-ticket price items. Smaller perks that boost the value of a

deal add up and can win you a “yes.”

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COMMUNICATIONS AND COMMITTMENT (PARETO)

A Pareto improvement doesn’t necessarily have to be negotiated during a negotiation.

The key is thinking through how you want to communicate the key messages (up to 80%

of messages in a negotiation are non-verbal) and the type of commitment you seek.

That is, sometimes if you could use a favor from your counterpart, it is better to wait to

ask for that favor until after you’ve established a relationship that has led to a better

understanding of your needs on both sides.

For example, one of the major companies we worked with was based in Japan and

needed to do business in New York City, where one of its major clients was based.

Although the business was unrelated to the client, the Japanese company had a good

relationship with its client and was able to ask for free use of the client’s office space

during the business trip. This was of no cost to the client, because the office space was

empty anyway, and the client didn’t at all mind. The secretary even ordered food.

The Japanese company ended up saving a lot of money on that trip thanks to the

relationship it had with its client, but it was good negotiating all round. We tend to feel

the need to reciprocate favors, so the client was also building good will with its supplier.

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ALTERNATIVES (BATNA)

Several of our consultants had the privilege of being taught by the late Roger Fisher,

negotiation guru and co-author of “Getting to Yes.” Roger taught us to understand the

power of alternatives with this legendary and oft-told story:

Late one fall, Roger decided to buy a car. He wanted a reasonably priced car with power

steering, A/C, AM/FM stereo cassette, and in any color except purple. (Fisher’s story

dates us all too much, but let’s go back in time with him anyway for this example.) There

were several car dealerships near his home that were selling the car he wanted. Back

then, people didn’t have access to all the tools we have online today. But being a

negotiation teacher, Roger went to a number of the dealerships, pointed out the car he

wanted and made this proposal:

“I’m buying a car today from you or one of your competitors. Please put your lowest

price in a sealed envelope. I’m going to ask your competitors to do the same thing and I

won’t open the envelopes up until the end of the day. The dealer that gives me the

lowest price gets my business.”

Of course, the dealers all tried to upsell Roger, but he knew what he wanted. He

explained that while he wouldn’t refuse add-ons, he was not willing to pay extra for

them. Then he repeated his specifications and his proposals.

After some hesitation, three different dealers agreed to follow his instructions. At the

end of the day Roger got his car at what he said was below cost. His strategy was based

purely on the notion of alternatives. What Roger was saying to the dealers was: “my

alternatives are very strong because you have nothing I can’t get elsewhere.” But what

about the car dealers’ alternatives? For them it was the end of the year. They would

have new stock arriving soon and needed to sell as many of the current model year cars

on their lot as possible. So they were willing to sell not at: “cost plus” but at: “what can I

get rid of this car for?”

So it was the relative power dynamic that mattered here. Thanks to Roger’s timing, the

car dealers’ alternatives to saying “yes” to him were weak. Roger’s alternatives were

already strong, though, and he made them even stronger by pitting dealers with weak

alternatives against each other.

Today, this is why bidding practices are on the rise, as are the growth of formal

procurement departments and organizations. We know a buyer will do better if the

buyer has more to choose from and the seller has more competition.

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CRITERIA/STANDARDS

Our client was a major Latin-American air carrier that wanted to negotiate the purchase

of 40 jets from a major airplane manufacturers. Research and development is a bigger

cost than manufacturing for such companies. Because of this, airplane manufacturers

are very secretive about their cost structure.

Additionally, airplane manufacturers usually only negotiate from the list price of their

planes, which is almost always inflated. In our client’s case, the manufacturer initially

offered to sell the jets at a price of $35 million per jet. We knew that was likely to be

extremely high, but with limited information we had very few standards to work from

that would effectively counter the manufacturer’s offer. Furthermore, our alternatives

were weak. There aren’t very many major airplane manufacturers.

We looked for sources of information anywhere we could find them, and eventually we

lucked out: one of our client’s former employees had moved on to work for a budget

airline and was willing to share that he had recently acquired similar planes (but of

lesser quality) for $27 million per jet. Our client did some research and determined that

if a lesser quality jet could be sold for $27 million, then the jets they wanted to buy

shouldn’t be worth much more than $1 million more. The client counteroffered with a

proposal to pay the manufacturer $28 million per jet for the fleet of 40 jets.

The manufacturer should have questioned the basis for our client’s counteroffer. After

all, the client had not provided any information on why the counteroffer was a fairer

deal. But what we find is that negotiators that get used to purely positional negotiation

based on arbitrary numbers have difficulty playing any other game. They don’t know

how to use standards of legitimacy to re-set the negotiation. So instead, the

manufacturer immediately dropped their offer to $33 million. Our client offered $28

million again, and the manufacturer dropped to $31 million! Ultimately, the parties

settled on a price of $28.5 million, saving the airline about $260 million.

What are the lessons to be learned? First, don’t just stick to one source of information.

Standards that can help you determine what is “fair” are hidden all around. Second,

don’t negotiate against yourself! If the other party gives you an unjustified offer, ask for

the basis behind the offer. Just asking may pressure the other party into providing a

second, better offer.

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NEGOTIATION PLANNING WORKSHEET FOR CBA

INTERESTS

Our interests (why we care about this negotiation,

considering overall strategy, financial situation,

future relationship, strategic opportunities, etc.)

Other Party’s interests (what they care about in this

negotiation, and why)

Third party interests (why would anyone else care?

How could their reaction affect an agreement?)

Options to address these interests (what we can do

together, that can’t be done alone and provides

value for one or both of us) See Options Matrix

BATNA (Best Alternative to a Negotiated Agreement)

Our alternatives (ways to meet our interests if no

agreement is reached)

Our BATNA/walk-away point

Other Party’s BATNA

Strategies to lower value of Other Party’s perceived

BATNA

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Strategies to improve my BATNA before

negotiation

STANDARDS

Objective standards/criteria to judge substantive

issues

Standards/criteria that best meet our needs

Assumptions I have about this negotiation/the

Other Party

Methods to check those assumptions

Questions/messages the Other Party may be trying

to send

How will we respond?

AGENDA RISK ALLEVIATION

1.

2.

Possible risks the other side may perceive

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3.

4.

5.

Solutions/strategies to alleviate those risks

POST NEGOTIATION ASSESSMENT

Results of Negotiation What Worked Well?

What Would I Do Differently?

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Attachment: Options Matrix

OPTIONS VALUE CHECK (√) VALUE CHECK (√)

1. Value to us

High Value Low Value

Cost to us

High Cost Low Cost

Value to them


Cost to them

High Cost Low Cost

2. Value to us


Cost to us

High Cost Low Cost

Value to them


Cost to them

High Cost Low Cost

OPTIONS VALUE CHECK (√) VALUE CHECK (√)

3. Value to us


Cost to us

High Cost Low Cost

Value to them


Cost to them

High Cost Low Cost

4. Value to us


Cost to us

High Cost Low Cost

Value to them


Cost to them

High Cost Low Cost

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Effective Negotiating: Dynamic Negotiation Training

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