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MEDIATORS' TOOLS EVERY ATTORNEY SHOULD KNOW--BRACKETING

M. Troy Hazelton

Tool belt

A Fresno Mediator’s Observations On Effective Negotiations Skills and Techniques In A Mediation: Bracketing

Have you ever been in a mediation and the mediator or the other side throws around the term "bracketing"? You nodded your head because you figured you should know what it is. But the truth is, attorneys use the term "bracketing" to mean several things. So, let's figure it out.

What Is Bracketing?

Bracketing is essentially conditional negotiations. Instead, of making an offer, a party says, "He will offer 'X', if the other side offers 'Y.'" Really, that is all it is. People try to make it complicated (and complications do arise) but it is simply a conditional term in negotiations.

Ralph Williams, esq., describes it as, "The process of making a conditional offer linked to an expected response from the other side. For example, Plaintiff states, 'I will demand $500,000 if the defendant offers $200,000.'"

Now that you know what it is, a mediator may ask, "Do you want to do a bracket?" Before agreeing, you must weigh the pros and cons.

Pros Of Using A Bracketing

The benefits of bracketing are:

  1. Bracketing can help when the parties are at impasse

  2. Bracketing can focus the parties on the negotiations rather than their issues with the other side

  3. Bracketing allows the parties to "communicate" their range of negotiations without committing.

  4. Bracketing can help alleviate claims of bad faith.

The biggest upside with Bracketing, is that it can overcome an impasse (which is fancy, mediator-speak for being stuck). Sometimes, both parties refuse to move off their numbers. It gets the parties who are reluctant to move confidence the other side will not "stiff them" with a meaningless counter.

It also helps communicate to the other side how you are looking at the case. If you proposed a bracket with each side moving considerably, and the other side refuses, there is a good chance the other side will not move much more with traditional negotiating.

It also helps take the parties' minds off the hotly disputed facts and focus on the numbers, which is good sometimes because the facts can be infuriating to the parties if they are emotionally charged. The parties' emotions might be hindering their perspective of settling and bracketing can alleviate such emotional roadblocks.

As Michael D. Young and Marc E. Isserles put it, "Brackets can help parties shift attention from disappointment with the other side's proposals and toward their own negotiating objectives. When parties fixate on the size of the other side's movement, they tend to get trapped in a vicious cycle of 'tit for tat'."

Bracketing also allows the parties to give a hint at the real distance between the parties without requiring them to reveal their bottom lines to each other. A case will likely settle with approximately three turns when it is in a reasonable zone of negotiations. Of course, this is subjective, but when the parties are "close," as we say, the case has a better chance to resolving.

However, getting into the "Zone of negotiation" is no easy task, as each party is jockeying for position, distrusting the other, and fearful of being the first into the zone. Bracketing will allow the parties to set, or at least get closer to a "zone of negotiation". Many times you will be stuck for two hours dealing with outrageous opening offers/demands. Bracketing could help move the parties there faster without either party "committing" to their position.

Bracketing can help when one side feels the other side is negotiating in bad faith. An experienced mediator may ask, "If the other side offered X dollars, would you be prepared to respond with Y dollars" or "would you make another move, if the other side countered at X dollars?"

Cons Of Using A Bracket

The downsides of using a Bracket include:

  1. The other party will not agree and you end up focusing on the brackets more than settling the case

  2. The other side misconstrues your offer/demand

  3. It sets an inaccurate midpoint settlement expectation

  4. It can end negotiations quickly.

1. First downside: focusing on the brackets, not settlement

The first downside of a bracket is that the other party will not agree with your proposed bracket. Then, you are left haggling over the brackets for three hours. You could easily find yourself fighting over the bracket longer than it would to negotiate traditionally to settle.

Plus, the parties may then focus on the brackets and forget completely the nature of the dispute and the reasonable possible risks of the case. The Bracket's benefit (removing some emotion from the negotiations), if taken too far, could backfire and take the parties away from all facts in the case.

2. Second downside: Parties misconstrue offer/demand

The second downside is that no one wants to go first with brackets because they fear if they put a number out there (even if it is a contingent number), they are stuck at it. In some respects this happens.

For example, if the defense makes an offer of $100,000 if the Plaintiff drops to a demand of $300,000, and Plaintiff rejects it, Plaintiff will presume defendant likely has $100,000 in authority (at least). This can greatly affect bargaining power.

To avoid this, I like to keep a bracket number confidential until both sides are in agreement. In the above example, I will keep the defendant's Bracket number confidential, and advise Plaintiff I have a bracketed number from Defendant in a very general range. If Plaintiff can reach a number (that I know will work), we can move the negotiations into a closer range. If Plaintiff gets close or hits it, then we can disclose the brackets and work from there. If Plaintiff is not in the ballpark, we can stop the bracketing and focus on more traditional negotiation methods.

3. Third downside: Presumed settlement is the midpoint

The third downside, is the parties settle on a bracket and one side presumes the midpoint is the settlement number, which is not usually accurate. The bracketed range is only a new starting point for negotiations. A party's bracketed amount may be really close to a reasonable settlement amount for him, whereas the other party might still be inflated to a degree.

4. Fourth downside: Ends negotiations quickly

The fourth downside, is if the parties cannot agree to a bracket, it usually concludes all negotiations. Parties see it as a failure and then refuse to continue negotiating in the traditional ways. It is more of a last ditch gambit than something I would begin with unless the parties are wildly far apart and recognize it but refuse to proceed out of distrust with the other side.

A Strategy To Avoid The Pitfalls Of Bracketing

To prevent many of the downsides, you could request the mediator to provide the proposed brackets. This is highly effective because it allows the mediator to propose the numbers, so the other side does not automatically assume the other side is at (or can go to) the contingent number, it can keep negotiations going, if rejected, because it is from the mediator, not the other party, and the parties will not assume the midpoint is the deal.

 

Be wary, however, because some mediators will not offer their bracket numbers because they feel only the parties can suggest settlement amounts.

 

What Do To If Involved in Bracketing Negotiations

When the issue of bracketing is brought up, you have several options:

  • Obviously agree to expedite matters;

  • Counter with different bracketing numbers

  • Request the mediator to handle the bracketing numbers confidentially--not disclosing both sides unless they hit the proposed contingency

  • Ask the mediator to submit his own bracketing numbers.

  • Keep narrowing the brackets or resume traditional negotiations. (see JAMS article on bracketing for more detail)

Bracketing is a useful tool for certain circumstances. It is not as ubiquitous as the mediator's proposal, but under certain circumstances it can effectively keep negotiations going and settle a case. So, next time someone remarks, "How about a bracket?" you will not only know what he is talking about, but more importantly will know the pros/cons and strategies for using it.

For a visual summary:

infographic for bracketing in mediations1
infographic bracketing in mediations 2

For further reading check out Mediator's Tools Everyone Should Know--Mediator's Proposal. And there are more to come, stay tuned.

WHAT NEXT?

I am a mediator in Fresno, California who mediates throughout California and beyond. I have used Bracketing, when needed, and I am available for all your mediations. You can reach me to schedule a mediation at:

PEEL | GARCIA

3585 W. Beechwood Ave., Suite 101

Fresno, California 93711

559-431-1300

--Troy

 

P.S.-Get a FREE printable PDF of our

TOP 5 NEGOTIATION TIPS

(throw it in your briefcase to read while that mediator is in the other room and impress him when it's your turn to negotiate)

**This publication is provided as an educational service and is not meant to be and should not be construed as legal advice. Readers with particular needs on specific issues should retain the services of competent counsel.

M. Troy 

Hazelton,

Esq

Mediator

Special Master

Attorney

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