3-d Negotiation: Powerful Tools to Change the Game in Your Most Important Deals [Hardcover]

 

 

Create your own review

A must read for all commercial litigators (and transactional lawyers) who want to make their business clients happy again. Despite the authors' ridiculously impressive academic credentials, they write as well as those people who bring you articles on topics you have absolutely no interest in but can't put down, people like Malcolm Gladwell who brought you Tipping Point and Blink.

This book review is really an appreciative thought-piece from my blog on the value of 3-D negotiation for settling sophisticated, high-stakes, commercial litigation.

"Finesse the Impasse by Changing the Deal"

Former Executive Vice-President and General Counsel to The Walt Disney Company, entertainment law heavy-weight Lou Meisinger, said to me the other day, "one of the best ways of breaking impasse during the mediation of a litigated case is to finesse it by transforming the litigation into an opportunity to make a deal."

I scribbled it down, thinking that Lou was delivering the holy grail of Impasse Busting for mediators. It was like being given a third lung. I could breathe again.

"Transform the litigation into an opportunity to create a business deal." What did that mean?

On the same day I had this conversation with Lou, I started reading 3-D Negotiation by Harvard Business School Professors David A. Lax (Ret.) and James K. Sebenius (the Gordon Donaldson Professor of Business Administration at HBS).

Lou's advice to "finesse impasse by changing the deal" is discussed in great, articulate academic detail by Lax and Sebenius. Their "three dimensions" of negotiation include tactics, deal design and set-up.

Tactics

Briefly, "tactics" are strategies exercised at the bargaining table, such as improving communication, building trust, countering hardball plays and bridging cross-cultural divides.

Deal Design

At its simplest, deal design involves the invention and structuring of agreements that create greater value for all parties, meet the parties' objectives better than easily conceived alternatives and are more durable.

Setup

Finally, set up is the architecture of the deal that ensures the most favorable scope, by involving the right parties, addressing the right issues, and considering all no-deal options. It also involves negotiating sequencing and basic process choices.

Staples Raises Expansion Capital

I won't tell Lax and Sebenius' entire Staples office supply store story. You'll have to read the book to get the rest of it. But it's a great example of Lou's advice to finesse impasse by changing the deal.

Staples was the original big-box office supply store. Like all wildly successful early entrepreneurial successes, Staples soon had a formidable competitor, Office Depot. To ward off the competition, Staples needed expansion capital and it needed it fast. All of the venture capital firms and the investment bankers were valuing Staples at pretty much the same price point, a price point its founder considered unacceptable. So he went to the top -- Harvard Business School Professor Bill Sahlman, an expert on venture firms and start-up financing.

Changing the Players

Sahlman recommended breaking the impasse by changing the players. He helped Staples' founder identify other companies with enormous sums of money to invest and for whom the Staples investment would actually be worth more. Who were these firms and why would a percentage of Staples be worth more to them than to the investment bankers and venture capitalists?

Better players, Sahlman suggested, would be the limited partners in the venture capital firms -- such as pension funds and insurance companies. Wealthy individuals might also be better players if they were sufficiently savvy to recognize a good thing when offered to them.

Because the VC firms charged hefty management fees (usually 20% of the profits) by offering the deal directly to the VC's investors, Staples could give them 100% of the profits for the same share in the business, increasing the value of each share by 20%.

As Lax and Sebenius stress, this result could not have been achieved by negotiations "at the table" or even with the originally identified stake-holders. What Staples did was to "favorably reset the table with right new parties whose interests were far more aligned with the deal he wanted to do." Then it sequenced the process by going back to the VC's and the investment banks, saying, "this thing is filling up fast; do you guys want to play or not?"

How is litigation like a business negotiation where the parties can simply walk away if they aren't interested? It's like that negotiation as soon as the parties realize the lawsuit is simply one bargaining chip of uncertain value, which might be added to a lot of other chips to create a business opportunity for its players, as well as others.

Deal making at this level also brings the parties themselves back into the game they play best -- creating business opportunities for a successful future rather than fighting over the unproductive past.

Even if you still haven't read that copy of "Getting to Yes" that's been sitting on your bookshelf at the office for 20 years, BUY THIS BOOK IMMEDIATELY. I promise you your eyes won't glaze over. In fact, they should pop open, as you realize you CAN settle that $250 million antitrust case -- the one you think is impossible to settle. THINK HOW HAPPY YOUR CLIENTS WILL BE. AND, you might even get to finally go on VACATION!

Share your thoughts with other customers: Create your own review

› See the customer review...

 

Search Customer Reviews
Only search this product's reviews

Search Listmania!