In this series principal Rodney A. Max discusses “breaking impasse” as it relates to closing the deal. In complex cases (including mass torts and class actions), there are four aspects to the opportunity of breaking impasse in closing the deal. The following is Part III: Conditional Offers.
Where negotiations are stalled either because the Plaintiffs are too high or the Defendants are too low, conditional offers can be a means of breaking impasse. Where Plaintiffs will not move below ten million dollars and the Defendants suggest the opportunity of negotiating is in six digits,conditional offers can free the parties from the “cancer” of relationship bargaining. Many times higher offers from Plaintiffs and lower counter-offers from Defendants are provoked because each side is looking at the relationship of their offer to that of the other side. Such relationship bargaining is not helpful to the mediation process.
While the mediator will typically urge the parties to make negotiating moves, not in relationship to the other sides’ numbers, but in relationship to their own goals, often times the parties do not abide by such worthy suggestion, or can not do so. It is in this circumstance that conditional offers play a role. Many times such conditional offers must await several rounds of 4 negotiation. However, when the parties remain very far apart after two or three moves, sometimes conditional offers are called or at an earlier stage.
Conditional offers are also known as bracketing or framing of the negotiation. The beauty of the conditional offer is that where a Plaintiff will not go below ten million dollars because a Defendant has not gotten to a million dollars (or vice versa), a conditional offer can suggest that the Plaintiff will come below ten million dollars, if the Defendant will come to a certain level. Alternatively, a Defendant can indicate that it is willing to go to a certain level if, and only if, the Plaintiff comes below a certain level.
While it is each sides’ intention to get the other side to accept the conditional offer or bracketing, the failure of such acceptance is not fatal. In fact, it can assist in “jump starting” the negotiations. That is to say that where the parties have been above ten million dollars and below one million dollars, a conditional offer from the Plaintiff can suggest some seven digit area that the Defendant may be able to accept or be willing to negotiate at a different or competing bracket. Once the brackets are identified, there is a means of negotiating between the brackets, typically called “negotiating” or “narrowing” the brackets. A number of offers or counter-offers involving bracketing can get the parties to “yes” in an expedited fashion. Bracketing opportunities can reinvigorate the process.
In Part IV of Breaking Impasse as it relates to closing the deal, I will discuss the Mediators Proposal.
Rodney A. Max is a principal mediator at the firm of Upchurch, Watson, White and Max. For more information visit Rodney A. Max’s biography