How to Reject an Offer or Demand
Impasse in mediation is common when you’re confronting a take-it-or-leave-it offer or nonnegotiable demand that the other party’s likely to reject. Instead of allowing the other party to reject the offer or demand outright, shift the focus from positions to underlying interests.
Start by asking diagnostic questions to explore what the parties really want. After identifying each party’s underlying interests, work with the parties to develop options that address those underlying interests instead of wasting time and effort on the much more difficult task of bringing their positions into alignment.
Suppose you’re helping the parties settle a claim for a breach of a software contract. The plaintiff demands a broad indemnity agreement (legal protection against future loss) that amounts to an insurance policy.
You know the type: I want to be indemnified for all litigation arising from any breach of the settlement agreement and for our company’s continuing use of your software in perpetuity (forever). It’s nonnegotiable. We’ll stop the mediation right now and pull out of the deal if you don’t provide it to us.
Before making an effort to persuade the plaintiff to do something other than what he wants to do, make an effort to learn whether the party is being driven by need, desire, or fear. When any party asks to be indemnified, he’s asking for protection from harm as the result of future unforeseeable events.
In other words, the plaintiff’s interest is his fear of potential liability. The defense can rest assured that the plaintiff isn’t worried about what’ll happen if an asteroid strikes his corporate offices. A specific danger is lurking in the back of his mind or the mind of his manager.
The diagnostic question is simple: What type of potential liabilities are you worried about? When the plaintiff answers that question, the parties can begin crafting a far narrower indemnity agreement than the plaintiff originally sought. Ideally, the agreement serves both parties’ interests by protecting the defendant against unlimited liability for unknowable future catastrophes and by protecting the plaintiff from reasonably anticipated events.
If the parties can’t come up with examples of their own, prime the pump by asking leading questions, such as:
Would Software Services be willing to enter into an indemnity agreement that covers potential liabilities arising from software defects?
Would you need to define what constitutes a defect?
Through suggestive questions such as these, you lead the parties into the process of problem-solving rather than simply saying No and remaining at the same roadblock.
Continually reframe disputes as opportunities to problem-solve. The key is to refocus the parties’ attention on resolution and to slow down the negotiation process so they have time to brainstorm.