ADR

UNIT IV
NEGOTIATION

Asst Prof Nithin Rajeev, ISBR Law College

 “ Discourage litigation. Persuade your neighbors to compromise whenever you can. As a peacemaker the lawyer
has superior opportunity of being a good man. There will still be business enough”. Abraham Lincoln

◦ But in India, Negotiation doesn’t have any statutory recognition i.e through way of legislation. Negotiation is self
counseling between the parties to resolve their dispute. The word "negotiation" is from the Latin expression,
"negotiatus", past participle of negotiare which means "to carry on business". "Negotium" means literally "not
leisure”.
◦ Negotiation is a process that has no fixed rules but follows a predictable pattern. Negotiation is the simplest
means for redressal of disputes. In this mode the parties begin their talk without interference of any third
person. The aim of negotiation is the settlement of disputes by exchange of views and issues concerning the
parties. There is an ample opportunity for presentation of case in this mode of redressal. If there is
understanding and element of patience between the parties this mode of redressal of dispute is the simplest
and most economical. Negotiation is a dialogue intended to resolve disputes, to produce an agreement upon
courses of action, to bargain for individual or collective advantage, or to craft outcomes to satisfy various
interests. It is the primary method of alternative dispute resolution
◦ CONCEPT OF NEGOTIATION

◦ Negotiation may be defined as any form of direct or indirect communication through which parties who have
conflicting interests discuss the form of any action which they might take together to manage and ultimately
resolve the dispute between them.
◦ It must be noted that there is no compulsion for either of the parties to participate in the process of negotiation.
The parties have the free will to either accept or reject the decisions that come out of the process of negotiation.
There is no restriction in the number of parties that can participate in the process of negotiation.
◦ They can vary from two individuals to the process involving dozens of parties. Unlike arbitration and mediation,
the outcome of a negotiation is reached by parties together without resorting to a neutral third party. The
process is flexible and informal also ensures confidentiality at the choice of the parties.
◦ In terms of procedure, negotiations is probably the most flexible form of dispute resolution process because it
involves only those individuals or parties who are interested in the matter. They shape the process of negotiation
as per their own needs and at their own convenience.
◦ The chances of reaching a mutually acceptable agreement is high in this process since the acceptance by all the
parties is ensured. Since the process of negation uses the interests-based approach instead of the generally used
positional-based approach, it provides a greater possibility of a successful outcome.
◦ As mentioned above, there is no compulsion for either of the parties to participate in the process which makes
negotiation a voluntary process. Once an agreement is reached between the parties, negotiation may also
enhance the relations between them. Apart from all of this, opting for negotiation over litigation may also reduce
the number of delays and turn out to be less expensive as well.
◦ However, negotiation has some disadvantages as well. Though negotiation provides a greater possibility of a
successful outcome, if the parties are unequal the those in a weaker position may be placed at a disadvantageous
position.
◦ The parties may terminate the process whenever they wish to during the proceedings, this may cause a huge loss
of time and money invested in the process. Negotiation does not ensure the good faith and trustworthiness of
either of the parties. It must also be mentioned that some issues may not be amenable to negotiation.
◦ Whenever we need the cooperation of another person to do something, however small, we have to engross in a
negotiation. Almost everything we do-from deciding with a friend where to go to lunch to buying a new car to
interviewing for a job- involves negotiating. The media portray negotiations as complicated, dramatic affairs
involving powerful politicians or mighty business leaders or high-priced lawyers. But often negotiations involve
ordinary folks who, if they felt less intimidated by the process, would find themselves considerably more
empowered in their lives
◦ FIVE STYLES OF NEGOTIATION
◦ Competition (win-lose):
◦ A competitive negotiation style is the classic model of “I win, you lose.” This style of negotiation considers winning at all costs even
at the expense of the other party. Competitive negotiators use hardball tactics to achieve their needs without regard to the other
party’s needs. A competitive negotiation style is beneficial when the outcome is important, and the relationship is not. This style
might be useful when the goals of the party’s goals are short term and incompatible. The tangible benefits are the most
important. The competition style can be an effective counter balance when you expect the other party to be competitive.
◦ The competition negotiation style is, however, very risky. It can be costly and time consuming and often lead to a deadlock. This
style is often used by inexperienced negotiators who either believe it is the only viable style or who have had success with its use in
the past.
◦ Collaboration (win-win):
◦ In contrast to the competitive style, a collaborative negotiation style seeks a “I win, you win” outcome. This win-win model
focuses on making sure all parties have their needs met. With this style, both relationship and outcome are important. The
purpose is to maximize outcome and preserve the relationship. A collaborative style is appropriate in situations where
developing and maintaining a relationship is important, where both parties are willing to understand the other party’s needs and
objectives, and when finding a long lasting and creative solution is desired.
◦ A collaborative negotiation style is often the most difficult to employ because it requires an investment in time and energy in
finding innovative solutions. It is successful in situations where the party’s goals are compatible such as within an organizational
or family unit.
◦ Accommodation (lose-win):
◦ This style can be described as the “I lose, you win” model and is the direct opposite of the competitive style. For accommodating
negotiators, the relationship means everything and the outcome is not important. The accommodating style might be used in
situations where one party has caused harm to another party and needs to repair the relationship. Additionally, this style might
be preferred in order to increase support and assistance from the other party and hope they will be accommodating in the future.
◦ Accommodation is sometimes the best style to employ because it serves to strengthen personal factors. It can build trust, show
respect, and enhance relationships. The major drawback, however, is that it may appear to be condescending toward the other
party or cause the other party to feel uncomfortable because of an easy win.
◦ Avoidance (lose-lose):
◦ This style is the “I lose, you lose” model. This style is used when both outcome and relationship are not important.
Negotiations can be costly in terms of time and energy. Do the costs of negotiation outweigh the likely outcome and
relationship returns? If not, it may be preferable not to negotiate at all. This strategy is implemented by withdrawing from
active negotiations or by avoiding the negotiations entirely. An avoidance style is used infrequently in negotiating and is often
used when the negotiation concerns a matter that is trivial to both parties.
◦ APPROACHES TO NEGOTIATION

◦ Integrative negotiation
◦ Integrative negotiation, sometimes called win-win or collaborative negotiation, is a bargaining approach where
negotiating parties attempt to reach a mutually beneficial solution. Unlike distributive negotiations, integrative
negotiations can involve multiple issues.
◦ For example, an established fashion company and a cosmetics startup company agree to collaborate on a
product geared toward their shared target market. They negotiate a contract that allows the cosmetics startup
to gain greater exposure and the fashion company to reach its financial and marketing goals.
◦ Here are a few tips you can use in an integrative negotiation:
• Take a principled approach. You can discuss your principles during an integrative negotiation to build trust
with the other party.
• Discuss your needs and interests openly. Communicating your goals in an integrative negotiation can
promote transparency and a positive relationship.
• Use bargaining to solve problems. In integrative negotiation, both parties can use negotiations as an
opportunity for collaborative problem-solving.
◦ Distributive negotiation
◦ Distributive negotiation, sometimes called zero-sum negotiation or win-lose negotiation, is a bargaining
approach in which one person succeeds only if another person loses. A distributive negotiation usually involves
a discussion of a single issue.
◦ For example, a sales business wants to enter a contract with a vendor for IT services. The business wants the
most IT services for the lowest price possible, while the IT vendor intends to provide the lowest number of
resources for the highest price. Each party's desire to get a better deal represents a distributive negotiation
approach.
◦ Below is a list of tips for success in a distributive negotiation:
• Be persistent. When you're taking a distributive approach to negotiation, persistence and polite assertiveness
can help you fulfill your interests.
• Make the first offer. In a distributive negotiation, you can make the first offer to begin the bargaining in your
favor.
• Don't communicate your minimum favorable outcome. It's important to aim high in distributive negotiations
to ensure successful bargaining. You can withhold any information on the minimum you're willing to accept
from bargaining for the best results.
TYPES OF NEGOTIATION

◦ 1. Principled negotiation
◦ Principled negotiation is a type of bargaining that uses the parties' principles and interests to reach an agreement.
This type of negotiation often focuses on conflict resolution. This type of bargaining uses an integrative
negotiation approach to serve the interests of both parties. There are four elements to a principled negotiation:
• Mutual gain: The integrative approach to a principled negotiation invites parties to focus on finding mutually
beneficial outcomes through bargaining.
• Focus on interests: Negotiators can identify and communicate their motivations, interests and needs in
principled negotiation.
• Separate emotions from issues: In principled negotiation, parties can reduce emotional responses and
personality conflicts by focusing on the issues rather than how the problems make them feel.
• Objectivity: Parties in a principled negotiation can agree to using objective criteria as a baseline for negotiations.
Examples of objective criteria in negotiations include market rates, expert opinions, laws and industry standards.
◦ For example, the leaders of two departments for a large company often argue over the resources for each department.
The two leaders enter a principled negotiation to discuss solutions. They listen to each other's positions and decide to
base resource allocation on the percentage of revenue each department generates for the company. The department
leader who receives more resources agrees to support the other department's functions, and the two leaders reach a
compromise.
◦ 2. Team negotiation
◦ In a team negotiation, multiple people bargain toward an agreement on each side of the negotiation. Team negotiations
are common with large business deals. There are several personality roles on a negotiation team. In some cases, one
person may perform more than one role. Here are some common roles on negotiation teams:
• Leader: Members of each team in a negotiation usually appoint a leader to make the final decisions during negotiations.
• Observer: The observer pays attention to the other party's team during a negotiation, discussing their observations with
the leader.
• Relater: A relater on a negotiation team works on building relationships with the other team members during bargaining.
• Recorder: A recorder on a negotiating team can take notes on the discussions of a negotiation meeting.
• Critic: While this may sound like a negative role, having a critic on the team during negotiations can help you understand
an agreement's concessions and other negative results.
• Builder: A builder on a negotiation team creates the deal or package for a bargaining team. They can perform financial
functions during negotiations, calculating the cost of an agreement.
◦ 3. Multiparty negotiation
◦ A multiparty negotiation is a type of bargaining where more than two parties negotiate toward an
agreement. An example of a multiparty negotiation is bargaining between multiple department leaders
in a large company. Here are a few of the challenges of multiparty negotiations:
• Fluctuating BATNAs: BATNA stands for best alternative to a negotiated agreement. With multiple
parties in a negotiation, each party's BATNA is more likely to change, making it harder for parties to
agree. Each party can evaluate its BATNA at each negotiation stage to understand the results of a
proposed agreement.
• Coalition formation: Another challenge of multiparty negotiations is the possibility for different parties
to form coalitions or alliances. These alliances can add to the complexity of bargaining. Coalitions can
agree to a specific set of terms to help all parties reach an agreement.
• Process-management issues: Managing the negotiation process between multiple parties can lead to a
lack of governance and miscommunications. People in multiparty negotiations can avoid these issues by
choosing a leader willing to collaborate with others toward an agreement.
◦ 4. Adversarial negotiation
◦ An adversarial negotiation is a distributive approach in which the most aggressive party in a negotiation achieves an agreement that
serves their interests. Here are a few examples of adversarial negotiation tactics:
• Hard bargaining: Hard bargaining is a strategy in which one party refuses to compromise in an agreement.
• Future promise: A person using this tactic can promise the other party a future benefit in exchange for current concessions. You can
counteract this tactic by asking for the future promise in writing.
• Loss of interest: Another adversarial negotiation tactic is loss of interest, in which one party pretends they've lost interest in pursuing
an agreement.
• Qualities of a good negotiator

◦ Communication
◦ Patience
◦ Active listening
◦ Problem solving
◦ Emotional intelligence
◦ Creativity
◦ Empathy
◦ Listening
◦ Integrity