By: Richard P. Byrne, Esq.
Sometimes traditional demands and offers do not allow parties the flexibility to explore the other side’s tolerances before striking an impasse in the negotiations. The use of conditional and alternative demands and offers can often supply the means to change the dynamics, allow one to “message” their adversary without committing to a hard dollar position, and provide a mechanism to continue a dialogue and avoid impasse.
For example, let us employ a scenario in which the parties, after a number of hours of hard negotiation, appear to be stymied at a demand of $3 million with an offer of $500,000 (simply using round numbers for the ease of the example).
At this point, rather than striking an impasse, the plaintiff could communicate a conditional demand as follows: plaintiff will reduce their demand to $2 million if defendant raises their offer to $1 million and, if defendant says “Yes”, plaintiff will make the next move. The message here? Whether or not defendant says “Yes”, the plaintiff is signaling that they are prepared to resolve the matter somewhere between $1 million and $2 million. While some litigants refer to this approach as “bracketing”, this Mediator prefers to use the terms “conditional demands” and “conditional offers” because some parties have an impulsively negative reaction to “bracketing”, perhaps based on past experience or a lack of understanding.
The conditional demand which has been communicated allows the defendant one of three options:
- (i) they can accept the proposal – at which point the onus is on the plaintiff to communicate a demand less than $2 million;
(ii) they can reject the conditional demand and insist upon a straight and unconditional demand against the outstanding offer of $500,000 – (although that is not likely to be productive since the parties’ positions had already hardened where they stood); or
(iii) the defendant can reject the conditional demand and present their own conditional offer. For example, the defendant can increase their offer to $750,000 if the plaintiff reduces their demand to $1,500,000 and, if plaintiff says “Yes”, the defense will make the next offer.
Here, the message is that the defense is also prepared to explore a settlement above the $750,000, possibly beyond the one million mark, but not as high as plaintiff may be looking to achieve.
Do conditional demands and offers reflect that a party is prepared to settle at the mid-point of their proposal? Perhaps, but not necessarily, and caution must be employed to avoid reading too much into the “message”. The more critical point is that this exercise allows the parties to continue a settlement dialogue and avoid an otherwise looming impasse.
Another option which can be utilized is an alternative demand or offer – which is a hybrid of the above. Let us use the same example – the parties are dug in with an offer on the table of $500,000 in response to a demand of $3 million. In an effort to keep the dialogue alive, the plaintiff can present an alternative demand, as follows: the defendant can choose between an unconditional demand of $2.5 million in response to the offer of $500,000 or, alternatively, select a conditional demand by which the plaintiff will reduce the demand to $2 million if the defense offers $1 million in return. Here, the defendant’s responsive options are more limited because the plaintiff has provided the alternative of a straight demand against the outstanding offer, but the substance is not so much in the numbers as in the messaging.
That is the true value of employing conditional and alternative demands/offers in the context of a Mediation proceeding. It allows the parties flexibility to explore settlement parameters in a confidential setting and test where their adversary’s end games may lie without compromising their formal positions if, despite best efforts, negotiations ultimately fail. While these options must be used carefully to avoid any confusion or misunderstandings, this Mediator believes they are very effective tools which can pull a Mediation back from the brink of an impasse, reinvigorate negotiations by altering the dynamics of the situation and, ultimately, lead to a settlement.
Richard P. Byrne, Esq., is a member of NAM’s (National Arbitration and Mediation) Hearing Officer Panel and is available to arbitrate and mediate cases throughout the United States. In 2019, for the fifth year in a row, he was voted a Top 3 Mediator in the country by both The National Law Journal Best of Survey. In 2018, he was voted a Top 3 Mediator by the Corporate Counsel Best of Survey and for the third straight year, he was named a National Law Journal Alternative Dispute Resolution Champion, as part of a select group of only 46 nationwide. Further, he was ranked a Top 10 Mediator in New York State for the sixth consecutive year by the 2019 New York Law Journal Best of Annual Survey.
Meet the Author
For any questions or comments, please contact Jacqueline I. Silvey, Esq. / NAM General Counsel, via email at email@example.com or direct dial telephone at 516-941-3228. For more information or to submit a case, contact us today.