In a Positive State of Mind

In her book, We Have a Deal, the British author Natalie Reynolds talks about the “psychology” of effective negotiation, or put more simply, that reaching a settlement is more about people than it is about numbers.  According to Reynolds, the person who comes to a negotiation with the mind set “I’m here to cut my losses,” makes fewer concessions and behaves in a riskier fashion that the party who believes, “I’m here to maximize my gains.”

Litigators tend to automatically label the plaintiff’s side of the table as the only party with anything to gain from mediation.  Other than “stopping the bleeding” (an apt litigation catch phrase equivalent to cutting one’s losses), what in fact do defendants have to “gain” from being forced to sit in a room all day and hand over money at the end of it?

That last question, according to Reynold’s reasoning, is precisely why negotiations so often fail before they even start.  The defendant is “framing” the mediation incorrectly.  Coming to resolution, that is, settling your case, benefits a defendant in ways significantly greater than not having to pay more legal fees.  What are those benefits?  First, the defendant can stop second-guessing past behavior:  Never again need she wonder, “Why did I hire this person?  Acquire this company?  Sign that contract?  Say yes to that merger?  Not listen to my lawyer?”  The brain drain of remorse can end. 

Secondly, the defendant can enjoy the feeling of vindication that comes from being a bigger person.  Parties often enter mediation determined not to let the other side get “more than they deserve,” and for defendants, that’s framed as only letting a plaintiff get what’s “fair,” and then only after a fight.  But why, then, do defendants generally seem happier at the end of a successful mediation than do plaintiffs?  Because the defense side leaves with the warm internal glow that they gave more than they got.  And that makes them a bigger (and to their mind, a “better”) person.

Finally, the settling defendant has the luxury of being able to evaporate the visage of the plaintiff – the embodiment of evil sitting across the table – the moment the deal is signed.  They can forget the company or individual who sued them.  The money to be paid, no matter how great, is booked in their internal accounting system, and it’s just that, blood money, but a line item, nonetheless.

Not so for the plaintiff.  There is no more insomnia-producing question than, “Could I have gotten more?”  More importantly, plaintiffs will not forget how they were wronged for a very long time.  The hurt and psychic losses do not recede with the payment of damages, contrary to public opinion.  Settlement agreements are designed to end “the matter” but they can’t end the ruminations plaintiffs feel long after the mediation (or trial) concludes.  Perhaps that’s yet another argument to encourage defendants to settle: you’re going to be much happier about this than the other side will, starting tomorrow.