Super Bowl Diplomacy

Here is proof that negotiation of difficult issues is now embedded in our culture:

MIAMI—Team officials from the New Orleans Saints and Indianapolis Colts emerged from a tense, 12-hour negotiating session Thursday and told reporters that, while they had yet to reach a settlement…

Saints, Colts Hoping To Resolve Super Bowl Through Diplomacy (The Onion, January 29, 2010.)

ADR and the State of the Union

The federal sector ADR community has pushed the Obama Administration to establish policies and publish an Executive Order (EO) to encourage federal agencies to use more ADR techniques such as face-to-face (f2f) facilitated negotiations, including specifically greater use of negotiated rulemaking (see the Negotiated Rulemaking Act, 5 U.S.C. §§ 561 - 570). Nearly a year into office, it is fair to ask whether these hopes have been met. The short answer is clearly no.

Over the past year, the Administration has focused its efforts on government transparency and public input. This has led to designing electronic means of sending and receiving information to and from the public, largely based on “crowdsourcing,” the concept of applying open-source software development principles to fields outside of software development.

The Administration, on the President’s second day in office, published a Memorandum on Transparency and Open Government instructing the Chief Technology Officer, the Office of Management and Budget (OMB) and the Administrator of General Services to produce an Open Government Directive to implement the principles of transparency, participation and collaboration outlined in the Memorandum.

On December 8, 2009, Peter Orszag, Director of the OMB, issued the Open Government Directive. This set of policies and principles was strongly supported by many people in the collaborative governance and deliberative democracy community and by ADR practitioners. However, while this memo may have been necessary to open government to the public, it is clearly not sufficient to engage stakeholders.

To date, the Administration has produced no memorandum or EO to encourage agency use of ADR techniques and f2f negotiations. During the summer of 2009 supporters of the Administration, agency ADR staff and others met to draft an EO designed to foster greater agency use of ADR techniques and f2f negotiations.

The draft EO, “Participation and Collaboration in Government” was designed to encourage agency policies to provide stakeholders the fullest opportunity permitted by law to engage meaningfully in governance and the policy process, and to provide the Government with the benefits of their collective expertise and information. The draft EO contained a whole litany of activities that agencies were to have undertaken to accomplish the policy of maximum stakeholder involvement in the policy and processes of government.

The Open Government Directive appears similar and in some ways overlaps with the draft EO on Participation and Collaboration in Government. So what is the big deal? Why should there be an EO on “Participation and Collaboration” in Government when the Administration has already published two directives on Transparency, Participation and Collaboration?

The difference is that the policies on Transparency, Participation and Collaboration all address how the government provides and receives information from and to the public and other stakeholders. This concept has been described as crowdsourcing. As described in the December 8, 2009 memorandum from Director Orszag, these crowdsourcing policies include:

• Transparency – provide the public with information;
• Participation – allow members of the public to contribute ideas and expertise to the government; and
• Collaboration – encourage partnerships and cooperation within the federal government, across levels of government (federal, state and local) and between the government and private institutions.

These three policies generally relate to the government providing and receiving information. Only the third principle, Collaboration, addresses collaboration. The Orszag Open Government memo is not specific about how agencies are to improve Collaboration between the government and stakeholders. The “Participation and Collaboration in Government” draft EO contains the specific instructions necessary to require agencies to meet and negotiate – face to face – with stakeholders over policy, programs and issues.

The Open Government Directive and other crowdsourcing practices are useful for such tasks as brainstorming and idea generation, but they do not meet the basic principles of public participation, like inclusion, neutrality and collaboration.
The Administration should issue specific directions to the agencies requiring them to negotiate directly with stakeholders, which the Open Government Directive does not do, not simply to communicate more effectively by using electronic methods of providing and receiving information, which the Open Government Directive does very well.

Here is a link to a very interesting article by Tim Bonnemann in Federal Computer Week about the outer limits of the crowd’s wisdom, and why crowdsourcing and the policies adopted in the Open Government Directive are simply not adequate. Public participation requires different rules –- rules developed over three decades –- by ADR and stakeholder involvement practitioners.

There are significant characteristics in f2f negotiations using ADR techniques that crowdsourcing techniques do not employ:

• The concept of stakeholders sitting at a table representing interests, not simply people; and
• The concepts of negotiation, deliberation and seeking agreements or consensus.

Crowdsourcing and public participation as defined in the Orszag directive do not use these concepts; crowdsourcing is simply designed to gather information and allow people to express their views. They do not incorporate the principles of negotiation where people representing specific interests deliberate, exchange information and attempt to seek agreement.

The Administration has taken a necessary first step by requiring agencies to become more transparent and communicate more effectively with the public. But it has not, at least not yet, taken the necessary second step of requiring agencies to negotiate with the public, thus allowing better integration of multiple viewpoints and interests by inviting representatives of the affected public (stakeholders) to participate in the decision-making. The Obama Administration should promulgate an Executive Order requiring agencies to empower stakeholder participation and collaboration with government.

Confidentiality of Settlement Negotiations

Most attorneys are familiar with the principle that Federal Rule 408 (Rule 408) that protects settlement discussions from subsequent disclosure in court. Rule 408, which governs proceedings in Federal courts (Maryland and most states have adopted state analogues to this rule), prohibits the use, as evidence in court, of an offer-to-compromise a claim as an admission of the validity or invalidity of the claim.

Federal Rule of Evidence 408 states:

(a) Prohibited uses.-- Evidence of the following is not admissible on behalf of any party, when offered to prove liability for, invalidity of, or amount of a claim that was disputed as to validity or amount, or to impeach through a prior inconsistent statement or contradiction: (1) furnishing or offering or promising to furnish—or accepting or offering or promising to accept--a valuable consideration in compromising or attempting to compromise the claim; and (2) conduct or statements made in compromise negotiations regarding the claim, except when offered in a criminal case and the negotiations related to a claim by a public office or agency in the exercise of regulatory, investigative, or enforcement authority.

(b) Permitted uses.--This rule does not require exclusion if the evidence is offered for purposes not prohibited by subdivision (a). Examples of permissible purposes include proving a witness’s bias or prejudice; negating a contention of undue delay; and proving an effort to obstruct a criminal investigation or prosecution.

The lazy way of thinking about this Rule is that the Rule protects information exchanged and discussed during settlement negotiations. Not so fast. This assumption is wrong.

The first exception to this rule are admissions of fact, “even though made during the course of compromise negotiations, unless hypothetical, stated to be ‘without prejudice,’ or so connected with the offer as to be inseparable from it.” (See, for example, McCormick on Evidence §251, pp. 540 -541).

This exception alone, even if observed by the thoughtful lawyer, inhibits settlement discussions and restricts free communication. It also has the potential of generating controversy over what was said by whom and whether a statement is hypothetical or a statement of fact. But wait: there are more limits to the protections apparently offered by Rule 408. The rule does not require exclusion if the evidence is offered for purposes such as proving a witness’s bias, negating a contention of undue delay or proving an effort to obstruct justice.

The 3rd Circuit recently found another exception to Rule 408 in Lohman v. Duryea Borough, et al. (No. 08-3524, 2009 WL 2183056 (3d Cir. July 23, 2009). In this case the Third Circuit affirmed the District Court’s reduction of an attorney’s fees based on unusually limited success where the plaintiff rejected a settlement offer of $75,000 and after trial was awarded only $12,205. While much of the case turns on the law of attorneys’ fees, the Court also considered whether, and to what extent, trial courts may consider settlement negotiations when awarding attorney fees. It is easy to see why the Court wanted to limit the amount awarded to the attorney, given the settlement offer of $75,000 and the “win” in trial of $12,205.

In a case of first impression the Court held that evidence of settlement negotiations under Rule 408, while inadmissible to prove the validity or amount of the claim, in respect to an attorney’s fee claim, “does not offend the clear terms of Rule 408. Such evidence can be relevant when comparing what a plaintiff ‘requested’ to what the plaintiff was ultimately ‘awarded.’” (Id. at p. 12)

So there you have it. While the information about how much was offered and accepted (or, as in this case, not accepted), may seem to be the core information intended to be protected by Rule 408, when offered to evaluate the “success” of an attorney when determining attorneys’ fees, is admissible -- at least in the 3rd Circuit.

The Court further considered the major policy reason asserted for excluding such evidence – to protect and support confidential settlement negotiations – and found the assumption that “settlement discussions will not now occur because an attorney could be penalized if he or she achieves less than was demanded makes little sense. In fact, permitting settlement negotiations to be considered would encourage reasonable and realistic settlement negotiations.”(Id. at 14)

The bottom line for attorneys and mediators entering into settlement negotiations? Do not rely simply on Rule 408. Cite to another statute protecting the confidentiality of settlement negotiations – such as the Uniform Mediation Act in those states that have adopted it (Maryland has not) or to a Court rule or by agreement of the parties and, if the last, confirm the agreement in advance in writing.

More on ACUS

On September 18, 2009 I posted about the Administrative Conference of the United States (ACUS), noting that ACUS was going to be newly reconstituted, starting with the appointment by the President of a Chairman. Last week I received a comment asking if I had any updated information on ACUS, and how folks can keep track of the progress.

In an answer to the first question, I have reprinted a press release from The White House, Office of the Press Secretary announcing the President’s intent to nominate a Chair of ACUS.

November 2, 2009, WASHINGTON – Today, President Barack Obama announced his intent to nominate the following individuals to key administration posts … Paul R. Verkuil, Nominee for Chairman, Administrative Conference of the United States.

Paul R. Verkuil is a public law scholar and academic administrator. He is currently senior counsel to Boies, Schiller & Flexner LLP, where he oversees the firm’s Pro Bono program and participates in antitrust and corporate governance matters. Verkuil is also a professor at Cardozo School of Law. Previously, he has served as President of the College of William & Mary, Dean of Tulane and Cardozo Law Schools, Acting Dean of the University of Miami Law School, and CEO of the American Automobile Association. His legal activities include appointment as Special Master by the U.S. Supreme Court in the original jurisdiction case of New Jersey v. New York, which determined sovereignty to Ellis Island, and appointment as Special Master by the Fifth Circuit in U.S. v. Louisiana, a higher education desegregation case. He is a member of the board of the National Constitution Center, the Statute of Liberty – Ellis Island Foundation, and the Innocence Project. He has published over 60 articles on administrative law and regulation topics and is the coauthor of Administrative Law and Process. His most recent book, Outsourcing Sovereignty, addresses the problem of contracting out essential functions of government. He was chair of the Administrative Law and Regulatory Practice Section of the ABA and a consultant to and member of the Administrative Conference of the United States. He earned an A.B. from William & Mary, an LL.B. from Virginia Law School, and a J.S.D. from NYU Law School. He was an active duty officer in the United State Army from 1962 to 1964.

In response to the second question (how to keep track of the nomination and confirmation and the staffing of this gem of an agency) I will keep track and post whatever information I see about ACUS. So keep an eye here and I will post updates whenever I hear anything.

Update on the Mediator TV Series, "Kate"

A couple of weeks ago I posted about the possibility of a new TV series about a mediator. It seems as if I am developing a habit of blogging about television – at least if the television is about mediation.

According to THR.com, Sarah Shahi has been selected as the lead in the series, “lifting the contingency off the project.”

Shahi, according to THR.com, “most recently played the female lead opposite Damian Lewis on NBC's cop drama Life. Her series credits also include Showtime's The L Word, ABC's Alias, and the NBC comedy series Teachers.”

Now people will start seeing mediation as sexy and exciting as evidenced by this publicity photo of Shahi.


Would that the same were true if they saw me but, real mediators, unlike those on TV, must always bring reality to the table.

(Photo from Exposay.com.)

7 Common Pitfalls to Avoid When Negotiating

I found an interesting article from the Stanford Graduate School of Business Knowledgebase.

The article is based on research by Margaret A. Neal, the Stanford University John G. McCoy-Banc One Corporation Professor of Organizations and Dispute Resolution and Graduate School of Business Trust Faculty Fellow for 2009-2010.

The research described on the blog suggests that successful bargaining means putting a positive spin in every possible circumstance. “If I can trade off issues that I care about more and you care about less, then we've been able to create value in a transaction," according to Neale, "That's the silver lining." She points out common pitfalls or traps that negotiators fall into and leave money on the table. Below is my brief summary of those pitfalls.

1. Poor Planning. Planning is the sine qua non of effective negotiations. Successful negotiators make plans. They know their priorities and their alternatives. They have thought about and discussed thoroughly their Best Alternative to a Negotiated Agreement (BATNA) with their client. They know their bottom lines and deal killers. And they spend the time with their client to make sure that the clients understand and agree with the BATNA.

Good negotiators also try to understand the other parties’ preferences and BATNAs. While at the bargaining table they test to determine if their hypotheses regarding the other parties’ preferences are correct. Good negotiators often prepare a written list or set of goals for themselves.

2. Thinking the pie is fixed. Usually it is not. It is a common mistake when both parties want the same thing to assume that the other side is negotiating from a fixed “win-lose” situation.

3. Failing to pay attention to your opponent. Negotiation trainers emphasize that the single most important skill is the ability to listen to and understand what motivates the other party – the other parties’ interests.

Another important skill is called “framing.” If you are able to frame an issue that addresses the other party’s interests (for example, while your offer may be lower than the other party has asked for, you can talk about certainty of payment, or better relationships, or any other advantage that your offer provides). You can then talk about why your offer is different – and better – than the alternatives. You have framed the issue from explaining why your offer is lower in one aspect to why it is better – for the other party.

4. Assuming that cross-cultural negotiations are just like “local” negotiations. People are different. Cultural differences between negotiators or the parties they represent can create potential benefits or big problems if ignored or misunderstood. These differences range from the huge differences between people from other cultures, to the more subtle differences between men and women, or between people in different occupations, for example, attorneys and engineers.

The bottom line is to pay attention. Do your homework (see the first item above) and be sensitive to cultural and social differences between negotiators.

5. Don’t be locked into anchors. An anchor is when a party tries to set parameters to the negotiations; to try to “anchor” the other party. For example when someone walks in and says “This is a $500,000 case and if you aren’t prepared to negotiate based on that, we are out of here” they are trying to anchor the case.

Don’t accept their premise; rather try to clearly set your parameters for the negotiation. If your BATNA is $150,000, it won’t help you to respond by offering $10,000. Rather, a better approach is to ask the other party to explain the basis of their demand and then explain why that is not reasonable from your point of view. You can ask the other party to think about whether they are willing to come back with a more reasonable offer.

The risk is that they will walk, but if you make a first offer of $150,000 (your bottom line BATNA), the other party will think that it is an opening offer and you have room to move. If you open at $10,000 the other party is likely to walk or assume that you are playing a game with them. Better to watch the anchors and where they are set and negotiate about the anchors, if possible.

6. Caving in too quickly. One negotiations guru described this principle this way: “90% of the work in a negotiation is done in the last 10% of the time.” Make people feel as if they have worked for the deal. No matter what the price of a first offer, even if it is fair, offer less – if only to make the other party feel good about the deal.

7. Don’t gloat. So, when you’ve cut the deal and you love it, don’t dance in front of the other party or even in the elevator on the way out. Never tell the other side that you would have settled for less. Keep it professional and congratulate the other parties on the good job they did. Remember, your paths may cross again.

For more from Margaret A. Neale, see Negotiating Rationally by Max H. Bazerman and Margaret A. Neale, Free Press, 1992.

A New TV Series about a Mediator?

When I started with this blog I certainly did not think I would be posting about TV shows. But a blog by Professor Jill Gross of Pace Law School in the ADR Prof Blog has definitely piqued my interest. From the USA Network, she blogged, the cable channel that broadcasts Monk and Burn Notice, coming soon, is a new TV show.

Apparently the USA cable network is getting ready to broadcast a series based on a mediator. Yes, you read that correctly, a mediator. According to the network, Facing Kate focuses on Kate, a divorced lawyer who leaves her job to become a mediator. If the show is realistic, I assume they will show Kate as impecunious and always hustling for paying jobs.

This is the same cable network that has produced two of my kids’ favorite TV shows, Monk –- a series about an OCD detective set in San Francisco and Burn Notice –- a series about a fired spy ("burned" by his employer) trying to regain his position with Miami and its bikini-clad residents very much center stage. In both of these, and I believe other shows on the USA Network, quirky characters and the venue are significant aspects of the formula.

I am willing –- reluctantly –- to admit that I have watched and enjoyed both shows -– Burn Notice a lot and Monk quite often. They have appealed to me because the characters seem more "realistic" while at the same time they are –- as in most of TV-land –- funny, smart and always ready with the right quip. Sort of like in West Wing. Not particularly realistic, but with intelligence and sense of humor, just as you would expect from a mediator. Right.

I worry, however, that the show will take the easy way out. And for good reason.

The press release announcing the show states that the main character, Kate, “… realized that truth and justice are not always being found in the court room. As a mediator, you lose a lot of constraints of the law, you’re a referee in a room with no rules.”

They go on to describe Kate as a unique and inventive lead character. I can only imagine what they will do with this. This does not leave me with good feelings about the likely verisimilitude of the series.

But then I guess that real spies are not thrilled with Burn Notice, the Miami venue and bikinis and San Francisco detectives cannot appreciate the way they are portrayed in Monk.

At least, set in San Francisco, the scenery will be beautiful.