I have been negotiating settlements with insurance companies for years and get more money for my clients using that principle above than any other strategy. Except for life insurance, where you are paying the premium for an exact amount of money when the insured dies, ALL OTHER INSURANCE SETTLEMENTS PAY BASED ON SOME KIND OF NEGOTIATION. Mostly, you are paying the premium to get an amount up to the policy limits if a certain kind of loss occurs.
The key is that to me IT ISN’T A STRATEGY; it’s the right attitude. Here’s what I mean: In almost any human interaction, we can make it easier for the other person (whether it’s an insurance employee or a negotiator for a particular side in a conflict) to say “yes” to our request or try to make it hard to say “no”. My work with insurance provides lots of great examples of how this works. Here are some general principles:
- Assume that the other side IS negotiating in good faith, meaning that they want to do the right thing. But what if they aren’t? That’s okay, often they aren’t, but as you apply these principles, they can move from being an adversary–wanting to win, to beat you–to being a friend, or at least caring about how you feel. However, the best way to establish good faith is to state your assumptions and ask questions as taglines. For example, “I want to do the right thing for all parties here, so that we can all feel good about the solutions, and I hope you feel the same; don’t you agree?”
- Get the assumptions and expectations of both sides out in the open and make sure you are both “speaking the same language.” Examples: “What I want to happen here is ______ (describe your desired outcome in “visual” terms, meaning that if you each were able to record the outcome, it would look substantially similar). Once those outcomes have been described, you will know how to move closer to a “win-win” (or you may find that the differences are too great to get to “yes”).
- If it’s a situation where a written contract is involved, like an insurance policy, know exactly what it says about such a situation. Make sure that what you are asking for is within reasonable bounds. If it is not, then the situation WILL become adversarial, and it’s your fault. Then it becomes about making it hard to say “no” rather than easy to say “yes.”
- If it starts getting ugly at this point, like the example in my post entitled Let there be peace…or not, it is either time for bringing in an independent authority, like an arbitrator, mediator or judge, or switching to the alternative strategy, which I refer to as “making it hard to say “no.”
I have never had to resort to this strategy, because it will usually create an enemy. You may think you’ve won in the short term by getting your way, but if you have to work with or live with this person, you can be assured that they will find ways to pay you back, unless you can win them over. While I could use the example from my other post–the Israeli-Palestinian conflict–to illustrate this state of war, I don’t think that’s a good example because they never got past #1, good faith. Each wants to crush the other side, and what further makes it intractable is that each side is also a proxy for a larger conflict.
The negative side of the “make it hard to say no” principle is this: If we want something and the other side doesn’t want to say ” yes ” no matter what inducements we have offered (the positive side of making it hard to say “no”), we can try threatening to do harm or withhold good if they stick to “no.” That is the approach of both sides of the Israeli-Palestinian conflict. It seems to lead to more of the same. If it’s a court of law or divorce situation, it can become sue and counter sue. When there is a lack of good faith, or when egos are threatened, or emotions get stirred up, there is only one way out of the anger escalation spiral. I will explain that in my next post–Ideas on the most intractable conflict of our time.
After this digression to politics, I will return to my insurance example. The settlement offered my client was initially $7,500, and they had some vague written justifications. The policy didn’t specify what the damages should have been–they never do. Making it easy to say “yes”, I cited some court cases with similar circumstances in which the judgments ranged from $25,000 to $50,000. The claims guy them raised his offer to $10,000.
In response I cited a Washington state statute which mandated arbitration when the potential judgment was under $50,000 (the policy allowed the company to refuse arbitration, but the statute modified the policy). I then explained that, in consideration of saving the insurance company the time, money and potentially negative publicity of losing an arbitration, my client would be reasonable and not ask for the maximum possible arbitration amount, let alone what it might be if we went to court, given the strength of our case. The insurance claims guy said he could go a little higher and asked what our number was.
Normally they expect you to ask for a little more than their offer. I asked for a number which I said would be fair to both parties: $30,000, which was halfway between his offer of $10,000 and the arbitration limit of $50,000. He immediately agreed, my client signed his waiver and the check was in the mail (it was). The way I framed the ask gave the insurance guy a rationale to accept it.
Perhaps I could have asked for more, but it would have violated what I call the 50/50 principle. For example, if someone wants to split compensation on a case, and there is no way to accurately assess how much work each will have to do, the 50/50 split is usually accepted instantly. It feels fair. Anything other than that split will lead to a degree of arbitrariness, which universally feels like it could be unfair.
Anything that breeds even a tiny degree of suspicion tends to harm the agreement. The strategy of making it hard to say “no” almost always involves a threat. “Agree to what I want or else ” never feels good to either party and should ultimately be a weak fallback when you can’t get to “yes.” Unfortunately it’s also the foundation of our adversarial legal system.