What are interests in mediation?
Lisa Testart
Author - Artist - Poet - Investigator - Witness Preparation & Family Law Specialist - Cross Examination - Trauma Therapist - Clinical Resource Therapist & Ego State Therapist - The White Rabbit Process model founder
Disclaimer: In preparation for a mediation in the Federal Court I was asked to give the mediator a confidential document containing information about my concerns, my position, my interests, and so on. Being tasked with explaining what my interests were sent me on a search to unpack exactly what it meant, and how to set it out so the mediator would understand it. This article is not my work, but a compilation of the various explanations and examples of what interests are in mediation and how to differentiate between positions and interests. I claim no authorship.
Positions are surface statements of where a person or organization stands, and rarely provide insight into underlying motivations, values or incentives. Interests are?a party's underlying reasons, values or motivations.
Interests explain why someone takes a certain position.
Progression of Interests:?Preparation through Execution
Preparation
Understand your interests and research and hypothesize theirs. Take notice of possible alignment of interests.
Information Exchange
Probe for their interests, and begin sharing some of yours. Use dialogue, discovery and Probing to learn and appreciate their interests, seeing the opportunities for creating value.
Bargaining
All interests are revealed and satisfied. Use dialogue, discovery and Probing to capture value by linking creative options to interests.
Conclude
Interests are resolved to the mutual satisfaction of the parties.
Execution
Interests change over time. Use dialogue, discovery and Probing to secure a re-alignment of interests.
Positions?reflect what we assert we want as an outcome. The more we defend our positions, the stronger we seem to hold onto them. It also seems our identity and ego becomes attached to what we perceive as the rightness of our view – and we defend our position at every turn. Along the way, our growing emotions cloud reason, and the challenges to effective problem-solving also grow.
Interests, on the other hand, reflect not only what is important to us as an outcome. They also reflect the reasons why they are important. Interests lie underneath what we say we want – and reveal our hopes, needs, values, beliefs, and expectations. Unfortunately, they frequently become obfuscated in the fight for our positions – which do not necessarily reflect the core of what the disagreement is about.
Focus on Interests, Not Positions
A?position?in a negotiation is a fixed idea, usually a demand, that is the basis of the conflict. Bargaining based on positions is thought of as win-lose because if you don't walk away with what you wanted, you've lost. Whoever gets the biggest piece of the mythical pie is the winner.?
For example, in a negotiation between buyers and sellers, the buyers have a maximum price they are willing to pay, and the sellers have a minimum price they are willing to accept. These positions are usually inflexible unless another factor (i.e. delivery date) is brought into the equation.?
Interests?in a negotiation are the underlying desires, needs, wants, and goals of a side. A side's interests can be analyzed by asking, ''Why do you want that?''. Interests are so crucial to a negotiation that there is even a style of negotiation called?interest-based negotiation. This style, also known as integrative bargaining, win-win, or principled negotiation, was made popular by Roger Fisher and William Ury in their book?Getting To Yes. The goal of interest-based negotiation is to understand these underlying needs and wants and find ways to build them into a resolution that helps both parties.?
In our purchase contract example, a few questions from the selling side uncovers that the buyers need a quick delivery of the product due to an upcoming project. There might be some flexibility in price or terms to compensate for receiving the goods on the desired delivery date.?
Needs, in this context, are human needs such as security, belonging, fulfillment, self-esteem, and distributive justice. A human-needs approach to negotiations takes into account that these needs cannot be traded or bargained for and that they have a strong influence. For example, if one of the parties in the negotiation knows their job is at stake, they have a need for security that will affect their approach in the bargaining process.?
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Identification of Interests
Issue: Position: Interest:?
Topic or subject under discussion
One party's solution to an issue
One party's concern, fear, need or worry about an issue?
Positional Bargaining?
In traditional negotiations, positions are the primary vehicle of communication between the negotiators. Typically, opening positions are exaggerated and negotiators then use a ritual of posturing and bluffing to retreat from their positions to reach an agreement. Using positions and traditional negotiating behaviour can create the following problems:?
·???????Negotiators become locked into positions?
·???????Positions become entangled with egos?
·???????Creativity is discouraged?
·???????Time and effort are wasted?
·???????May damage the relationship Interest-Based Bargaining?
In interest-based bargaining, parties avoid taking positions and try to focus on underlying interests on each issue. In fact, the success of the process depends upon the ability of the negotiators to suppress the urge to take firm positions.?
Focusing on interests and avoiding positions has the following advantages:?
Effectively Identifying Interests for a Successful Mediation
While parties often make formal demands and offers going into mediation, the underlying interests motivating those positions are not always as clear. Is the plaintiff’s demand motivated by hard costs due to injury, by a sense of injustice? Is a business reluctant to make a settlement offer due to fear of bad publicity? Understanding the parties’ real interests is the key to a successful mediation. As Fisher and Ury explain in their negotiation classic?Getting to Yes: “Interests motivate people; they are the silent movers behind the hubbub of positions.?
Your position is something you have decided upon. Your interests are what caused you to so decide.”??
By getting these different interests out on the table early in a mediation, mediators and parties have more “chess pieces” to work with in crafting a potential resolution. To help with the process of identifying interests, this article provides a short checklist of commonly held interests that parties may have going into a mediation.????
·???????MONEY
While money drives many disputes, parties are often concerned with more than just the amount. Other key factors include payment timing, security, and tax and accounting issues.?
By helping parties to carefully think through all these different financial interests, mediators can generate more options for resolution. To take one common example, with additional payment security (e.g., guarantees, bonds), a party may be more willing to accept term payments spread over time. By carefully analyzing the factors below, a number of other options may open up that the parties did not think of at the outset of negotiations.???????
·???????Amount??
The most basic financial interest for parties is the payment amount. While the amount has obvious practical benefits, parties may also attach symbolic significance to the settlement amount as a de facto scorecard for the parties as to who “won” and “lost” the negotiation.?
As described by psychologist Daniel Kahneman in his psychology and behavioral economics book?Thinking Fast and Slow, people typically start negotiations from a given reference point. Depending on the dispute, the reference point could be an outstanding invoice, repair costs for damaged property, an existing salary, or some other amount that has symbolic significance. People will then experience any losses from the reference point as more painful than the benefits of equal gains elsewhere. Psychologists describe this as “loss aversion.”?
For example, a business may be reluctant to consider a discount on an outstanding invoice, even if other valuable benefits are offered in a negotiation.????????????
Mediators must understand how psychological factors may complicate negotiations and do their best to prevent the parties from getting too attached to symbolic positions early in negotiations. Also, being able to describe the same benefits and concessions in different ways may help the parties get over any psychological hurdles.????????
·???????Time
As a general principle, a dollar today is more valuable than a dollar tomorrow. Using this principle, parties have flexibility to agree on an overall amount while adjusting timing to account for cash flow and other needs. Additionally, some parties may be willing to accept a lower amount to be paid more quickly, giving concessions on the overall amount in exchange for quicker payments. Talking through options for payment timing is often a key to any negotiation.??????
·???????Security
In addition to when and how much they will be paid, parties worry more fundamentally about whether they will be paid at all. Non-payment can be a significant risk, particularly when payments are spread over time.?
One of the ways to deal with this risk is to consider third-party guarantees, bonds, and other mechanisms to ensure that money will be available to make payments as they come due.?
The more security that can be offered for payments, the more flexibility the parties have to consider spreading payments over time.???????
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·???????Tax/Accounting
Finally, payments often have tax and accounting implications that need to be factored into a negotiation. The way a payment is characterized in a settlement or agreement can trigger certain tax treatment and financial reporting requirements for parties. It is thus important to consider these potential tax and accounting factors in negotiating payment terms.
Parties may be flexible on other terms in order to secure favourable tax and accounting treatment.????
·???????PERFORMANCE
Separate from any payment terms, parties may also want prohibitions on future conduct or specific performance of some kind. For example, a business may want to ensure enforcement of a non-compete agreement with a former employee. A building owner may want a manufacturer to repair or replace a mechanical system. Property disputes as well can involve some type of agreement on performance (e.g., stopping certain nuisance activities, ongoing maintenance of a right-of-way). Future performance issues can be an important and difficult part of any negotiation, especially in the context of an already adversarial relationship.?
Thus, confidence-building measures will be key in negotiations over future performance. For example, parties may tie future payments to achievement of certain performance milestones or perhaps agree on a neutral third-party to verify performance. Mediators and parties will need to think creatively to get over obstacles to future performance terms.???????????????
·???????FUTURE RELATIONSHIP
Sometimes, even as the parties are currently in a dispute, they may still want or need to preserve a potential future relationship. While child custody disputes are an obvious example where the parties need to continue working together at some level, in business disputes, many parties may also need to preserve a future relationship as well. Depending on the industry, business partners may be too important to cut off completely.?
For example, purchasers of specialty products may need ongoing maintenance service contracts with the manufacturer.?Manufacturers in turn may need continued access to key distribution channels. Thus, even as parties fight over one issue, it is important not to lose sight of opportunities for a mutually beneficial relationship in the future.?
·???????REPUTATION?
In many disputes, parties have concerns about how the dispute may impact their reputation.?
Employees worry about references for future jobs. Businesses worry about negative publicity stemming from a public contract dispute. Because of these concerns, parties should address reputational issues in any negotiation.?
In addition to confidentiality (discussed below), common strategies include non-disparagement clauses and designating specific representatives to handle any future inquiries about the parties or the dispute.????????????
·???????CONFIDENTIALITY?
Confidentiality is typically an important term in any settlement agreement. Settlement agreements often involve sensitive business and financial information. Additionally, in some cases, publicly disclosed settlements may prompt third parties to pursue separate claims against the settling parties, creating prolonged follow-on disputes.??
An important consideration in any negotiation over confidentiality is whether the parties have legal or regulatory disclosure requirements. Understanding disclosure requirements is necessary to help parties craft enforceable confidentiality terms and prevent unnecessary disclosures.??
·???????LITIGATION RISK
If the parties cannot reach a settlement, they will ultimately have to litigate the case to a judgment. Litigation is expensive, time-consuming, and risky. For businesses, a lawsuit will inevitably require staff resources to gather documents and prepare testimony.?
As trial approaches, preparation can be all-consuming, distracting employees from their day-to-day responsibilities. If the case involves sensitive personal issues, like discrimination or personal injury, litigation can take a serious emotional toll if the process drags out and litigants are subjected to difficult questioning and aggressive litigation tactics.?
And all of this involves substantial costs for attorney fees and litigation support. In addition to these costs is the inherent risk of litigation. Putting the case in the hands of a judge and jury is unpredictable.??
Bad documents can emerge from discovery, witnesses can crumble on the stand, judges can interpret key legal issues against you, and juries may fixate on seemingly irrelevant facts.?
For these reasons, parties must always factor in the realities of litigation in any settlement negotiation. Key litigation milestones often provide motivation to parties to consider settlement. For example, parties may want to avoid the cost of filing a suit or conducting expensive and time-consuming discovery. Or alternatively, the parties may want a court ruling on dispositive motions or other key issues before seriously considering a settlement. Understanding these litigation factors will help mediators and parties reach resolutions that reflect the costs and risk of litigation.???????
Some cases need to go to trial, but parties should be careful not to pass up opportunities to settle based on unrealistic expectations of their chances at trial.
·???????PERSONAL
Finally, personality conflicts and strong feelings about fairness are at the heart of most disputes; even the most sterile commercial cases. People come into negotiations feeling lied to, cheated, and taken advantage of by the other party. Airing these strong emotions and defusing them is often necessary to get the parties in the mindset to try and reach a resolution.?
If people do not feel like they are being heard and acknowledged, they are likely to remain defensive and closed off to possible opportunities for resolution. When dealing with company employees as negotiators, there can be an added layer of personal complexity because the employee-negotiators may have individual interests in “saving face” or improving their standing with company management. This may cause negotiators to be personally sensitive to issues that are not critical to the company as a whole.
Also, since lawyers play a key role in negotiations, their interests are important as well. Lawyers want to maintain credibility with their clients. Thus, mediators should be careful to respect the lawyer-client relationship.?
For example, if a party has advanced a clearly meritless legal argument in a negotiation, it is likely that the lawyer in the negotiations also developed the argument in question. So while a mediator may want to encourage a party to consider yielding on a frivolous legal argument in order to make progress on other issues, it is important to approach the issue in a way that allows the lawyer the ability to walk back gracefully in front of a client.??
No negotiation is perfectly rational. Understanding the personal dynamics at play in a negotiation in addition to the substantive issues allows the mediator to identify these sometimes-hidden obstacles to resolution.
CONCLUSION
Negotiations typically involve a lot of proverbial “moving parts,” both business and personal. Making matters more complicated, the parties themselves do not always have a clear understanding of their real interests going into a negotiation. Thus, it is up to the mediator to probe these underlying interests and bring them out into the open where they can be discussed and hopefully resolved. Each of the topics above could be (and in many cases has been) the subject of detailed study. This article does not attempt to give a comprehensive or detailed discussion of all the potential interests parties can bring to a negotiation, but it does provide a useful summary and checklist of the most common interests that arise in negotiations. Thus, a thorough consideration of these interests going into mediation will give both the mediator and parties a good head start on developing possible options for resolution.
Negotiation Positions Vs. Interests
The Negotiation Position
The simple reason why many people?fail to find a negotiated agreement?is that each has taken what is known as a “negotiation position.” One wants something that the other doesn’t.?
It’s like kids in a playground yelling back and forth: “Can’t!”?followed by the equally persuasive reply:?“Can too!”?An example of this often plays out in “grown-up” negotiations when neither side has asked the other to explain the reason and/or motivation behind the position they’re taking. The motivating forces underlying negotiation positions are what we refer to as?“negotiation interests.”?Interests are the “why” behind the?negotiation position.
The main problem is that the people involved in a dispute tend to know the positions of the other negotiators. However, people often neglect to understand why the other person has taken this position.
Examples Of Negotiation Interests
Negotiation interests largely relate to basic human needs. Our needs are powerful influences in our decision-making processes and informing the positions we take. Interests include those tangible desires that relate to the specific problem at hand, such as increasing sales or productivity. Also, our interests can link to our more basic?human emotions. These emotions are less obvious to the participants.
These basic emotional needs are couched in our psyche, but some examples might include our need for:
·??????????????Security
·??????????????Empowerment
·??????????????Inclusion
·??????????????Control
·??????????????Recognition
These intangible needs show what we may be overlooked when considering the interests of the other side. We might even neglect to truly consider our own basic human needs when trying to define or describe our interests to someone else. Our human needs are equally valid and just as important.
It’s vital to ferret out all the underlying information to determine not only our interests, but the interests of the other side. Let’s look at how we might accomplish this process.
What We Need To Know
What’s the issue?
We must be clear we understand an issue or problem by stating it clearly. Both sides should agree on the key issues at stake before even attempting to resolve the issues. Otherwise, the sides will be at cross purposes, and resolution will be extremely difficult—if not impossible.?
What Are the Obstacles?
Having defined the problem, it is equally crucial we understand what obstacles are preventing us from solving our dilemma. Each side will relate both similar and dissimilar obstacles that are acting as barriers to finding?common ground. Both sides need to fully understand all the specific obstacles involved. If we neglect to perform this crucial step, both sides will not fully appreciate all the obstacles that prevent them from achieving closure.
Separation
Training yourself to take a step back is important in gaining perspective in a negotiation. When confrontational disputes linger, there is a tendency towards personal animosity. We begin to take the matter too personally, and a highly charged atmosphere surrounds what we could describe as “verbal combat.” Participants on both sides need to separate themselves from the problem and restore some degree of objectivity.
What Are Your Negotiating Interests?
Our?negotiating interests?include those tangible needs, or what we might consider as the underlying mechanical components, of the problem.
Payment terms, transportations costs, and scheduling are some of the issues that can be addressed at one level. Other interests, such as trust or anxiety, which also relate to our business interests, are equally relevant in terms of importance. We should observe caution, as either side could have a different opinion about the degree of importance they attach to each other’s interests.
Negotiation Problem-Solving
With negotiation problem-solving, we seek to first start with an understanding of the problem and the obstacles that need to be overcome, together with fully understanding the needs and interests behind each side’s position. The possibility of finding a solution is then greatly enhanced.
We can address our approach to problem-solving through a mutual perspective of both sides’ unique circumstances. We can break down most negotiation problems into different components, lessening the strength of any obstacles that lay in the path to a mutually agreeable negotiated resolution.
Conclusion
All negotiation positions are supported by interests. When we train ourselves to both know and define these interests, we can become effective in appreciating and understanding the full extent of the dispute. This approach applies to many kinds of disputes, for example, in business ventures, disputes with co-workers, and even within the fabric of our everyday lives.