When preparing a client for mediation, mediation-arbitration, judicial pretrial, or a negotiation without a neutral present, one of the biggest questions I always ask is: what is your worst-case scenario here, and what would you be willing to give to avoid it? For one client, it was receiving no compensation for substantial labour and materials. For another, that worst case was the risk of losing at trial when she was retired and her only asset of note was her house. For another, it was not having his contract for services honoured by a party that had promised to pay him.
As an advocate, I see the back end of dispute resolution; stressed-out clients in a conflict they never wanted. Settlement can be a relief – they no longer have the day-to-day of the dispute hanging over their heads – or it can feel like a final defeat. Someday, though, statistically, the file is likely to settle.
In an imperfect world, in which you have to leave money on the table that you feel is rightfully yours, how much is enough?
In other words, what’s your reservation point?
- Finding Your WATNA
- Setting Up the Settlement
- The Emotional Angle
Finding Your WATNA
The Worst Alternative to a Negotiated Agreement (WATNA) has been a staple of negotiation theory and practice since the term was coined by Roger Fisher and William Ury in Getting to Yes forty years ago. In litigation, it’s the worst-case scenario other than settlement. That sometimes means trial, but it could mean settling the file at a later date for the same amount, having incurred more expenses for the same result. These expenses can come in the form of motions, discoveries, or even just a flurry of correspondence followed by another, similar meeting. In a non-litigious file, it could mean that an executive compensation negotiation, share purchase agreement or corporate acquisition falls through.
While a WATNA can be similar to a reservation point, or even the same as a reservation point at times, here are some key differences: