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Disputes cost: talk is cheaper

Settling disputes and preserving relationships is all part of the art of negotiation says regional director at Trett Consulting Bill McMurray.

“Discourage litigation. Persuade your neighbours to compromise whenever you can. Point out to them how the nominal winner is often a real loser in fees, expenses and waste of time” — Abraham Lincoln

There is no doubt that Judge Jackson, who ruled recently on the long running dispute of Multiplex Constructions v Cleveland Bridge UK, would agree with the sentiments of wise Old Abe. The parties to a £60M steelwork subcontract got into a dispute and commenced litigation in 2004.

Due to a series of claims and counterclaims, litigation rumbled on for four years. The legal costs incurred were a staggering £22M, an amount disproportionate to the sums in dispute.

The simplest and cheapest method of resolving any dispute is to do so by negotiation.

Negotiations commonly break down because both parties’ representatives bargain from their positions ie they get locked into a tedious series of offer and counter-offer exchanges, focusing primarily on defending their successive positions rather than trying to reach a mutually beneficial solution.

The key to successful negotiation is to know how to identify a shared vision and common goals. This is achieved by negotiating collaboratively and bargaining based on each party’s interests.

Interests relate to the desires, needs and hopes that give rise to your position. The skilful negotiator can steer negotiations from bargaining from positions to bargaining based on interests of the parties by controlling the negotiations as follows:

  • Be prepared. Have a clear and concise plan. Prepare for “what if” scenarios you might encounter.

  • Prepare a summary position statement setting out briefly each party’s position on key issues to be brainstormed during the negotiations. Prioritise your list in order of importance to you.

  • During negotiation talks display confidence at all times. Preparation aids confidence. If you are surprised by something put to you by the other side, keep your composure

  • Begin discussions on any points of commonality. You want to limit the amount of anger brought to the table. Starting with commonality is a good way to do this.

  • Set your negotiating range. Know what your opening position is going to be, what you are aiming to achieve and the absolute minimum you are prepared to accept. By knowing your range beforehand you are much more likely to get an acceptable result.

  • Plan how you may move from your opening position and what you would expect
    in return.

If parties genuinely want to preserve relationships then they have to be ready and willing to talk issues through to achieve mutually beneficial solutions. It would be advisable for the parties to agree at the pre-start meeting to design a negotiation process and agree ground rules for negotiations that facilitate talking between them and which allow them to brainstorm options.

Finally, keep egos out of negotiations and let common sense prevail. Remember Multiplex v Cleveland Bridge!

Bill McMurray is regional director at Trett Consulting

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