Your BATNA in a Dispute Resolution Negotiation

0:09 we're not going to continue with our 0:10 analysis 0:11 of a negotiation the analysis that you 0:14 conduct in preparing for a negotiation 0:17 and as you mentioned earlier there are 0:20 three key questions we already talked 0:23 about 0:24 the cluster of questions you should ask 0:26 to complete the analysis 0:28 the second big question is what is my 0:31 bad now 0:32 when i'm involved in a dispute 0:33 resolution negotiation 0:36 the analysis that we did earlier related 0:38 to a deal making 0:40 negotiation so how is a dispute 0:42 resolution 0:43 negotiation different please try to 0:46 think about that 0:47 for a second if you're involved in a 0:50 dispute with somebody 0:52 what is the alternative 0:56 if your negotiation fails why don't you 0:59 write down your answer 1:03 in a dispute resolution negotiation 1:07 the ultimate batna might be litigation 1:11 or an arbitration which is basically 1:14 private litigation 1:16 and as a result to analyze your 1:19 litigation 1:20 badna especially in a global economy you 1:22 should understand some basic differences 1:24 between 1:25 the litigation process in the u.s and 1:28 the litigation process 1:30 in other countries so please 1:33 hit pause for a second and try to think 1:37 of basic differences between 1:40 the u.s and elsewhere and prepare a list 1:45 here are the key differences between 1:47 litigation in the u.s 1:49 and elsewhere six key differences and 1:52 let's go down the list starting with 1:54 contingency fees 1:56 in the united states unlike many other 1:58 countries 2:00 lawyers can be hired on a contingency 2:02 fee 2:03 basis and what that means is that the 2:06 lawyer's fee 2:07 is contingent on the results in the 2:10 litigation 2:12 let's assume for example that you hire a 2:14 lawyer on a 30 percent contingency 2:17 if the lawyer wins 10 million dollars in 2:20 a lawsuit 2:21 the lawyer's fee is 30 percent of the 10 2:24 million 2:25 or 3 million dollars if the lawyer 2:28 loses the lawsuit then the lawyer's fee 2:31 is 30 percent of zero 2:33 the lawyer does not get paid that's the 2:35 contingency 2:36 fee system used in the united states 2:39 adopted in a few other countries perhaps 2:41 spreading 2:42 to to other countries in the world in 2:45 the us 2:45 class actions have long been used in 2:48 certain types of cases 2:51 let's assume that a company cheats me 2:55 by overcharging me one dollar illegally 2:59 i'm probably not going to sue the 3:00 company for that one dollar 3:03 it's not worth it but let's assume that 3:05 the company 3:06 has overcharged 30 million 3:09 customers now 30 million 3:13 customers can join together in a class 3:16 and sue the company 3:17 for the 30 million 3:20 guess who's the big winner in a class 3:22 action 3:23 given the contingency fee system it's 3:26 often the lawyers 3:27 the lawyers might take let's say 3:29 one-third 3:30 of the 30 million 10 million dollars 3:33 the other two thirds might go to the 3:36 customers 3:37 so i would end up with two-thirds of a 3:39 dollar or 3:40 66 cents or perhaps a coupon 3:44 to buy products from the company that 3:46 treated me in the first place 3:49 third feature of the us legal system 3:51 that's quite different from elsewhere 3:53 is discovery there are a number of tools 3:57 that lawyers can use to discover what 4:00 kind of a case 4:01 the other side has and two of these are 4:04 especially important 4:07 one is document discovery where 4:10 lawyers can sweep into your business or 4:13 if it's personal 4:14 litigation they can uncover personal 4:17 documents 4:18 and examine those documents and use them 4:21 in court 4:22 so in other words discovery affects 4:25 everyone on the job 4:28 every day and every minute every time 4:31 you create a document 4:34 every time you use email every time you 4:37 text use voicemail all of those 4:40 are subject to discovery you always have 4:43 to be thinking about 4:45 the potential for litigation as a result 4:47 of the information you create 4:50 that's one form of discovery the other 4:52 very powerful form of discovery is the 4:54 deposition 4:56 where the attorneys will force you 4:59 the opposing attorneys will force you to 5:01 testify 5:02 under oath before a court reporter and 5:05 that's a very effective way for them to 5:07 gain information 5:08 about the litigation if you're 5:11 interested in seeing what a deposition 5:13 looks like 5:14 i have a link here to a youtube 5:16 deposition 5:17 of the president of a health care system 5:21 and he is being questioned about the 5:23 pricing 5:24 used in one of his hospitals 5:27 i highly recommend that you look at this 5:30 deposition for 5:31 a flavor of what goes on and try to put 5:33 yourself into the ceo's position 5:36 how would you deal with the questions 5:38 raised by the 5:39 opposing attorney it only takes about 5:41 five or six minutes 5:42 but highly worthwhile jury trials 5:46 are another distinction between the u.s 5:49 and other countries 5:50 a number of other countries use jury 5:52 trials in criminal cases 5:54 the u.s is one of the very few countries 5:58 that use jury trials in civil cases 6:02 for example business litigation 6:05 punitive damages another unique feature 6:08 of the us system 6:10 in in almost in every country of the 6:12 world 6:13 if you injure me and i sue you 6:18 i can recover what are called 6:20 compensatory damages damages 6:23 to compensate me for my loss 6:26 however in the u.s if your injury was 6:29 caused by conduct that was malicious 6:32 or intentional then the court 6:35 might tack on punitive damages to punish 6:39 you 6:39 for your outrageous conduct this 6:43 is sort of like a criminal fine in other 6:46 countries 6:46 the difference is that the criminal fine 6:49 goes to me 6:50 unless there's a local law that provides 6:53 it should go elsewhere 6:55 and finally in the united states there 6:58 is the so-called 6:59 american rule regarding attorney's fees 7:03 and that rule provides that even if 7:07 i win my case you do not have to pay 7:11 my attorney's fees and this is different 7:14 from the rule used in other countries 7:17 which is sometimes called the everywhere 7:19 but american rule 7:21 sometimes called the loser pays rule 7:24 which 7:24 provides that if you lose your case 7:27 then you have to pay the winner's 7:30 attorney's fees 7:32 so those are the six key features the 7:34 six key distinctions between the u.s 7:36 and other countries when you look at 7:40 combinations 7:40 of these features you can see why 7:43 litigation 7:44 might be more popular in the us than in 7:46 other countries 7:48 for example let's say that 7:51 a sues b they each have their attorneys 7:56 b immediately goes to court and has the 7:59 case dismissed 8:01 so what does a have to pay a the loser 8:05 have to pay his own attorney under the 8:07 contingency fee 8:08 nothing what does plaintiff a 8:12 have to pay to cover attorney b's 8:15 fees under the american rule nothing 8:19 so in other words there's a very low 8:21 barrier to entry 8:22 into the u.s legal system when you look 8:25 at the contingency 8:26 fee system in combination with the 8:28 so-called american rule 8:31 so that lays out the basic distinctions 8:33 between the u.s and elsewhere that you 8:34 need to think about 8:36 in looking at your batna in a dispute 8:40 resolution and let's conclude this 8:42 discussion by looking at an actual case 8:44 so here's the situation we've got a 8:47 grandfather 8:48 driving a dodge caravan with a friend 8:51 sitting in the passenger side 8:53 his daughter's in the back seat with his 8:55 eight-month-old grandson jason 8:57 who's sitting in a car seat a pickup 9:00 truck 9:00 speeding 70 miles an hour in a 35 mile 9:03 an hour zone 9:04 crashes into the rear end of the dodge 9:07 caravan 9:08 the passenger side seat in the front 9:11 collapses back 9:12 on top of baby joshua killing the baby 9:16 so those are the facts and now we have 9:19 litigation 9:20 started by joshua's parents 9:24 we can assume that they probably hired 9:26 an attorney on a contingency fee 9:29 that isn't required but that's typical 9:31 for a case like this 9:33 and in their case they asked for 9:36 punitive damages 9:37 the second feature of the u.s system so 9:40 they sued daimler chrysler 9:42 the manufacturer they claimed that the 9:44 dodge caravan seats were defective 9:46 daimler chrysler failed to warn 9:48 consumers the seats were dangerous 9:51 and therefore the company should be 9:53 liable for compensatory damages 9:56 to compensate for the laws but also for 9:58 punitive damages because the company 10:01 acted in an intentional malicious or 10:04 reckless manner 10:06 so after starting the lawsuit then the 10:09 company has a chance to respond 10:11 and they basically said look our seats 10:14 were designed 10:15 to protect occupants of the front seat 10:18 we couldn't 10:18 avoid the design we used the seat design 10:21 met industry standards which was true 10:23 the seat design exceeded government 10:25 regulations which was also true 10:29 so we've got the filing of the case 10:31 we've got the response 10:33 and now it's time for discovery 10:36 now other countries as well as the u.s 10:39 use 10:40 discovery but the united states 10:43 is more liberal in allowing the parties 10:46 into the records 10:48 of other companies in searching for 10:50 evidence 10:52 so in this case the parents attorneys 10:56 searched the company's records and 10:59 developed this evidence first of all 11:02 they found an expert 11:04 who testified that the current seat 11:05 design was not necessary 11:08 to protect occupants of the front seat 11:10 as the company claimed 11:12 and they found evidence that the company 11:14 knew of their seat design problems for 11:17 20 years 11:18 the company had formed a minivan safety 11:21 leadership team 11:23 with employees from a variety of 11:25 functions 11:26 and the team concluded that the seat 11:28 design was unacceptable 11:30 and inadequate to protect consumers so 11:32 what did the company do 11:34 they ordered the chair of the leadership 11:37 team to destroy the minutes 11:39 and they disbanded the leadership team 11:42 and fired 11:43 the chair so this is the evidence then 11:46 then went to the jury another feature 11:50 of the u.s legal system and the 11:53 questions faced 11:54 by the jury were number one should the 11:57 company be held liable for compensatory 11:59 damages 12:00 did they do something wrong number two 12:03 should they also be held liable for 12:04 punitive damages 12:06 to punish the company for conduct that 12:08 was intentional malicious or reckless 12:10 especially if they knew of the design 12:12 problem and didn't correct it 12:14 and then how much would you award in 12:16 punitive damages 12:18 so let's assume you're sitting on the 12:20 jury you know the facts 12:22 the same facts that the jury had 12:25 please write down your answers to these 12:28 three questions 12:30 do you think the company should be held 12:32 liable at all 12:34 for any damages yes or no do you think 12:38 the company should also be held liable 12:40 for punitive damages 12:42 yes or no and then if you were on the 12:44 jury 12:45 how much would you award in punitive 12:47 damages 12:49 these are the results in the case 12:52 the jury decided that the company and 12:55 the pickup driver 12:56 who rear-ended the dodge caravan 12:59 should be liable for five million 13:01 dollars 13:03 in compensatory damages 50 percent each 13:06 for the wrongful death and in addition 13:09 the company should write a check for 98 13:11 million dollars to the parents 13:13 as punitive damages after the jury 13:16 verdict 13:17 the trial court reduced the punitive 13:20 damages from 98 million to 13 million 13:23 because of the very large discrepancy 13:25 between the actual damages 13:27 and the punitive damages and then the 13:29 case was appealed to the tennessee 13:31 supreme court 13:32 and this court decided in 2008 13:36 that the trial court was correct that 13:39 the parents were entitled to 13:41 compensatory and punitive damages 13:43 because the company covered up evidence 13:46 of the deficiencies of its design 13:48 seat while advertising the caravan as a 13:51 vehicle that put 13:52 children's safety first so this 13:55 illustrates various features 13:56 of the u.s legal system that you need to 13:59 consider 14:01 at least in the united states when 14:04 analyzing your batna 14:05 this particular case also applied the 14:08 american rule although it was not 14:10 discussed in the case 14:11 which means that the winners the parents 14:14 were not 14:15 allowed to recover attorney's fees from 14:18 the losers 14:19 which is daimler chrysler so in 14:21 conclusion 14:24 if you can't negotiate the settlement of 14:25 a dispute either directly 14:28 or with the help of a mediator your 14:30 badness 14:31 might be litigation or arbitration 14:35 and in analyzing your litigation badna 14:38 especially in a global economy 14:40 you should understand the basic elements 14:42 of the litigation process 14:44 and how they differ especially the 14:46 difference between the united states 14:48 and other countries