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The Truth About Using Deception in Mediation BY JEFFREY KRIVIS Now that the court system has institutional- ized the use of mediation in virtually all civil proceedings, trial lawyers are paying closer attention to their negotiation skills. While those skills involve less structured behavior than presenting a case to a jury, they never- theless involve one common strategy that even the most skilled practitioners refuse to ac- knowledge: deception.

Deception can best be described as the raw material that drives negotiation of litigated cases. It allows barriers to be overcome and concessions to occur. It can mean anything from mild exaggeration to lying and outright fraud. The spectrum of possibilities appears in the chart below.

Attorney Jeffrey Knvis teaches a t the Straus Insti- tute for Dispute Resolution a t Pepperdine Univer- sity i n Malibu, Calif., and heads First Mediation Corp., a Los Angeles ADR firm. He is currently the president of the International Academy of Media- tors. This article i s adapted from one he posted a t www.firstmediation.com earlier this year. His most recent previous Alternatives article, “Standing Up for Mediation: A Veteran Neutral Trains i n Comedy and ‘Settles‘ for Getting Laughs,” appeared at 20 Alternatives 93 (May 2002). He wishes to thank Pepperdine law student Brent Daub for his contri- butions to this article.

Deception is part of the human condi- tion and it would be a mistake to dismiss it as improper, particularly when resolving liti- gated disputes. The exception, of course, is fraud, which is illegal and unethical in all

tales to their children about the tooth fairy, Santa Claus, the Easter bunny and other childhood fantasies because our society does not see this form of deception as destruc- tive. When a family pet dies, parents often

contexts. While candor and honesty

are preferred when parties are concerned about continuing re- lationships, it is unrealistic to expect litigators to be candid when the goal is to get as much as they can for their clients.

In other contexts, white lies and exaggerations actually have

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give their children fabricated explanations

‘ “fine” when a coworker asks, become a part of our social framework. They are not only considered acceptable in certain situations but are expected when they result in righting a human wrong, maintaining fair- ness or avoiding harm.

For example, the government uses spies and undercover agents, which is a form of deception, yet it is morally acceptable be- cause it is necessary to stop crime, catch criminals and protect the country. Politi- cians often exaggerate or make promises that they can’t keep, yet they will be re- elected for the next term. Parents tell tall

“How are you doing?” when in fact we are having a tough day.

How about telling someone that an out- fit looks good when it doesn’t, or offering thanks for a gift that you really don’t want? These are all considered acceptable forms of deception.

Our culture reinforces the idea that tell- ing a white lie is better than hurting someone’s feelings, if it results in a positive outcome or makes the situation less diffi- cult. Deception is tolerated in negotiations

(continued on following page)

HONESTY + EXAGGERATION +

WHITE LIES + PARTIAL DISCLOSURE +

S E AS TO OTHER PARTY‘S MISTAKE +

FALSE EXCUSES + FRAUD

The Truth About Using Deception in Mediation (continued from previous page) because there, too, it can be used construc- tively and productively to develop conces- sions that lead to agreement.

IT‘S THE COMPETITIVE MARKET One of the central reasons why the occasional white lie is tolerated is that competition in our society promotes an atmosphere of free- dom of choice and enables buyers and sellers to define the limits of acceptability.

The foundation upon which this environ- ment exists is the age-old principle, “Let the buyer beware.” Competition will reward those individuals who seek to get the best deal of- ten at the expense of the other party. In try- ing to get the best deal for a client, some forms of deception are tolerated within the market- place of ideas, as long as individuals are not being fraudulent. There is no law against stretching the spectrum of deception in or- der to get a good deal.

An individual who uses competitive strat- egies often is believed to be using “shrewd business tactics” or referred to as a “good busi- nessman.” A car buyer shopping at the deal- ership hardly expects the salesman to be straightforward about his true selling price of a new vehicle. The buyer and the seller en- gage in a series of maneuvers designed to ben- efit the one who exploits the weakness in the other. It is not surprising that the dealer will inflate the sticker price and the seller will underestimate his willingness or ability to pay. Both parties maneuver closer to each other in a series of moves in order to meet some-

where in the middle. The best negotiator will be rewarded with a larger piece of the remain- ing prize.

As long as the negotiation moves are not fraudulent, deceptive techniques tend to be the engines that drive the motor of

if the other player overestimates his or her hand.

Similarly, a negotiation can be more prof- itable to an attorney ifthe other party overes- timates its case. One who tricks an opponent is sometimes able to capture more value for

One who tricks an opponent i s sometimes able t o capture more value for his or her client as part of the bargaining

process, provided the trick i s not a material misrepresentation. But the risk of misleading

an opponent i s both shame to the lawyer‘s reputation, and possibly an ethical violation.

litigated negotiations. Our culture has established civil liabilities and criminal punishment for those who cross the lim- its of acceptability, but where the laws are silent, parties have a license to engage in these competitive strategies.

The litigated case is much like a game of cards. It is not necessary to have the best hand to win but simply to be a better player of the game. Technique and skill are often more important than a great hand. A good card player can improve his or her winnings

his or her client as part of the bargaining pro- cess, provided the trick is not a material mis- representation. Of course, the risk of misleading an opponent is both shame to the lawyer‘s reputation, and possibly an ethical violation.

WHAT ATTORNEYS RELY ON Within the typical negotiation process there are various forms of deception that attor- neys have come to rely on. Some examples include: concealing the willingness to settle

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or the bottom line; making inflated de- mands; exaggerating strengths and weak- nesses; concealing client intentions; claiming a lack of authority, and failing to volunteer relevant facts.

1. Concealing the willingness to settle/ bottom line. The most common technique for an experienced negotiator is to conceal the bottom line as long as possible. By keep- ing the other party in the dark about the bot- tom-line price, a negotiator maintains an element of doubt and uncertainty in the mind of the opponent. An attorney may state that a client will not accept less than one num- ber-yet be perfectly happy leaving with sig- nificantly less at the end of the day. By positioning himself at a certain high price level, the attorney is engaging the other side in a competitive match of numbers.

2. Making inflated demands. In this sce- nario, the negotiation often starts with both parties giving inflated demands which are implicitly understood to change over the course of the negotiation. Concessions usu-

more likely to accept less or offer more. An inaccurate assessment of the other party’s strengths will lead to more cooperative be- havior and larger concessions. The exaggera- tion technique is successful when used primarily on issues of speculation and “opin- ion of value,” specifics which often are un- known. Lawyers typically understand that exaggeration at some level will exist in any case because any matter is based in large part on the perceptions of the parties.

4. concealing client intentions. When a party is uncertain about what is important to the other side, it can be difficult to place a value on the case. Many times the clients place a higher value on certain nonmonetary items, and reaching this important goal is the pri- mary concern. When a party hides the im- portance of a goal, the other side does not know its true value. Concealing the client’s true intentions is a game of hide and seek, where each side is attempting to find out what is crucial to its adversary. At some point the client‘s intentions must be revealed in order

Concealing the client‘s true intentions i s a game of hide and

seek, where each side i s attempting to find out what i s

crucial to i t s adversary.

ally are calculated before the negotiation, de- signed to reach a settlement price at which they are comfortable.

If a party is seeking a $50,000 settlement, it may only offer $20,000 at the opening be- cause it knows the opposition is demanding $100,000. By conducting a negotiation in- volving a series of concessions, it can hope to reach it $50,000 limit by strategically mov- ing the numbers in correlation to its oppo- nents. Both parties rise and fall never really knowing the other side’s true number.

3. Exaggerating strengths and weaknesses. By making a case appear stronger, a negotia- tor puts pressure on the other side to make another concession. If one party overestimates the strengths of the opponent‘s case then it is

to test the probability of acceptance by the other side.

5. Claiming a lack of authority. A useful technique often found within litigated nego- tiations is the claim that the negotiator lacks full settlement authority. The attorney may state that he or she is still analyzing the case before the client is able to move past a spe- cific number. The negotiator claims that any- thing more than the “authorized” number requires approval from higher-ups.

This technique is used to force the op- ponent to lose confidence in himself or herself so that he or she will settle for less than they otherwise would. It is used to improve bargaining position without hav- ing to make another concession. Some at- torneys have been clever enough to tell their

clients not to give them authority to ac- cept a specific amount until the negotia- tion is nearing its end.

6. Failing to volunteer relevant facts. Professional ethics rules require parties to disclose certain information to the other side, but when the parties are not required to dis- close relevant facts, many attorneys will not give up information they are not required to reveal. If a party has a right to withhold certain information, most often it will not disclose the information to the other party. While this is not being fully honest, it is generally not considered unacceptable.

THE IMPACT O F MEDIATOR CHAMELEONS The deception that exists in negotiation is amplified when the structure of the negotia- tion is cloaked in confidentiality, such as in a mediation setting. This confidential environ- ment allows parties to make disclosures and responses to the mediator without the other party present. Mediation’s confidential nature prevents the mediator from disclosing, with- out consent, what has been said. Neither party knows what the other side has revealed or kept secret. Caucused mediation provides a breed- ing ground for deceptive techniques because the risk of being caught is substantially re- duced. There generally is an inverse relation- ship between the risk of being caught and the frequency of deception. When there is a lower risk of being caught, the use of deceptive tech- niques becomes increasingly tempting.

Like the main character in the Woody Allen movie “Zelig,” the mediator becomes a chameleon that models behavior after the liti- gants and transforms his or her thinking pat- terns after theirs. In private caucuses, the mediator begins to take the form of each party to get in harmony with their goals and aspi- rations.

By engaging the parties like this, the me- diator begins to develop trust and rapport. The neutral listens and becomes a library of information. Because the mediator has no stake in the agreement, parties are able to communicate concessions in a way that pre- vents them from being vulnerable. Parties are free from consequence to communicate truth- fully or deceptively. They can signal to the nonadversarial third-party their willingness to participate in the negotiation dance.

Mediators also become time managers by maintaining the proper pace and flow of in-

(continued on following page)

You need a quick answer about a consumer

ADR policy question. Here’s how CPR’s

Alternatives can help: 0 . .

Go to your bookshelf and check “Consumer ADR” in the

Alternatives index appearing every February.

Log onto the CPR Web site, www.cpradr.org.

Click on PUBLICATIONS, then ALTERNATIVES, then click on

INDEX TO VOLUME 14 (1996), INDEX TO VOLUME 15 (1997), INDEX TO VOLUME 16 (1998), INDEX TO VOLUME 17 (1999), INDEX TO VOLUME 18 (2000).

OR INDEX TO VOLUME 19 (2001).

You will find entries for Consumer ADR articles.

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GO to LEXIS-NEXIS (www.lexis.com), elect the ADR library, then enter

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The Truth About Using Deception In Mediation (continued from previous page)

formation. Mediators use information, time and instinct to orchestrate the negotiation movement. By moving in a series of steps with each other, the parties feel encouraged to gravitate toward the central theme or bargain- ing range adopted by the mediator. One party

The lack of guidance by the

profession a 1 rules has created a self = po li ci ng

standard . Deception i s

tolerated and used, but at what cost?

makes a concession and the other party fol- lows in turn.

If the steps are rushed, the mediation can fall apart and one of the parties may feel that it left something on the table. If a party makes too large of a concession early on, it could end up paying for it later. When one party attempts to short circuit the dance by mak- ing too drastic of a jump, the mediator often intervenes to keep the flow smooth.

Once trust and rapport have been estab- lished, the mediator might use the “FUD” factor-Fear, Uncertainty and Doubt-to gradually challenge the parties’ beliefs. The mediator will confront unrealistic beliefs and stimulate the parties to reevaluate their po- sitions. A realistic party is able to make bet- ter value judgments and more acceptable offers.

The parties’ opinions about the truth may change several times throughout the media- tion process, while the mediator is repeatedly challenging them to interpret new informa- tion. This causes all parties to negotiate with

more reasonable demands and offers, mak- ing settlement more attainable.

The mediator also acts as a filter, receiv- ing information from all parties, then pro- cessing that information in a way that will lead to a deal. The mediator might soften a threat or bolster an argument when deliver- ing it to the opposing side. While mediators makes sure not to materially change what was said, it is generally acceptable for them to change the delivery in order to position the parties in the best place for agreement.

ET H I C A L CO N SI D E RAT1 0 N S The ethical challenge in negotiating litigated cases is that the professional ethics rules sim- ply require negotiators to abide by the mo- rality of the marketplace, as opposed to the rules of law.

Rules are an attorney’s lifeblood. They clearly impose limitations that allow us to understand how to behave toward each other. They provide visible boundaries for the con- duct of our affairs.

This is not so in the negotiation of liti- gated cases. The only visible boundaries are set forth in the aspirational ethical guide- lines in our professional rules of conduct. While these rules set some parameters of ap- propriateness, they don’t provide clear guide- lines. In fact they provide more questions than answers. Consider the American Bar Association’s Model Rule of Professional Conduct 4.1, which states that a lawyer shall not knowingly:

(a) make a false statement of material fact or law to a third person;

(b) fail to disclose a material fact to a third person when disclosure is necessary to avoid assisting a criminal or fraudulent act by a client, unless disclosure is pro- hibited by confidentiality requirements.

Rule 4.1 does not prohibit all deception, it only prohibits an attorney from lying about material facts or law. There is little guidance as to what constitutes materiality. Comment 1 to Rule 4.1 requires a lawyer to be “truth- ful” when acting on a client‘s behalf, but notes that an attorney generally has no “affirmative duty to inform an opposing party of relevant facts.” Unacceptable deception occurs only if the lawyer affirms a statement known to be false or fails to act where required. Comment 2 explains that estimates of price or value as well as party intentions are not material. Be- yond this, the standards are vague.

(continued on page 133)

or

(continued from previous page) putting a stop to the immediate flare-up (whatever its form) tends to short-circuit a longer-term resolution. Employing coercion to stop escalation may work against a sustain- able resolution because it lowers the costs to the parties of continuing contention, and hence sows the seeds for future eruptions. This tension arises because:

Coercion can control disputants’ behav-

There usually is a limit to an intervener’s

ior, but can’t change their attitudes.

“staying power” to police settlement terms.

There is a limit to the intervener’s abil- ity to observe the actions of the disputants.

Interveners with coercive power also ex- perience a classic methods dilemma concern- ing ends and means. They may suppress conflict but use means that damage their credibility or reputation or set unfortunate precedents.

The accompanying chart on page 132 il- lustrates these goal-and-methods dilemmas in terms of the intervention-role grid. In the middle of the grid, mediators-with-an-inter- est-and-muscle must manage all of these goal- and-methods-related tensions. B

How the Olympics Relies on a Fast-Track Arbitration Process (continued from page 129)

not open to a player to complain about a “field of play” decision simply because he or she disagrees with that decision.

QUICK DECISION At the conclusion of testimony and brief ar- guments by the KOC, the ISU, and the U.S. and Canadian Olympic Committees, the panel adjourned to a separate room. The ap- plicable rules stipulate that the panel “shall give a decision within 24 hours of the lodg- ing of the application.”

After a 10-minute deliberation, the panel orally denied the KOC application. The hear- ing was closed at 1:30 a.m. on Saturday, Feb. 23. Later that day the CAS ad hoc Division issued a nine-page “Final Award stating the facts, issues and its decision denying the KOC application.

The CAS ad hoc Division, operating on-site at the Olympic Games, provides swift, universal, binding decisions on ur- gent athletic disputes. Under the appli- cable rules, the awards of the CAS ad hoc Division “may not be appealed against or otherwise challenged.” Of course, the de- cision may or may not be the one the ap- plicant, athlete or respondent had hoped to obtain, but the swift finality of such decisions brings official closure to emo- tionally charged conflicts that could oth- erwise persist over months and years to the detriment of positive sporting activi- ties and the reputation of the Olympic movement. B

The Truth About Using; Decemion In Mediatiin (continued from page 124)

Against this backdrop, consider the role of an attorney-turned-mediator. Does he or she have an affirmative duty as a person who must follow Rule 4.1 to inform the parties of relevant facts learned in a mediation? How does this concept reconcile itself with the re- quirement that a mediator maintain confi- dentiality of all information provided to him?

The lack of guidance by the professional rules has created a self-policing standard. Deception is tolerated and used, but at what cost? While deceptive techniques might ini- tially bring in greater settlement dollars, there are severe consequences to being untruthful while negotiating a litigated case. Damage to one’s reputation is first in line, making it dif- ficult to conduct business in the future. A negotiator who has been identified in the marketplace as dishonest has every claim closely scrutinized by his or her opponents and often wastes valuable time proving each fact and contention.

On the other hand, negotiators who have a history of being truthful and trustworthy of- ten are given the benefit ofthe doubt on ques- tions of fact and law. Indeed parties can save time, money and profits by negotiating with an attorney who puts truth before deception.

Simply because the rules are silent as to standards of truthfulness, it does not mean deception is acceptable in every situation. Ambiguity does not always carry a license. The truth is that while deception can pro- vide a bargaining advantage, it often comes

* at a cost. - 11111

You need a quick answer about a consumer

ADR policy question. Here‘s how CPR‘s

Alternatives can help:

Go to your bookshelf and check “Consumer ADR” in the

Alternatives index appearing every February.

Log onto the CPR Web site, www.cpradr.org.

Click on PUBLICATIONS, then ALTERNATIVES, then click on

INDEX TO VOLUME 14 (1996), INDEX TO VOLUME 1 5 (1997), INDEX TO VOLUME 16 (1998), INDEX TO VOLUME 17 (1999), INDEX TO VOLUME 18 (2000).

OR INDEX TO VOLUME 19 (2001).

You will find entries for Consumer ADR articles.

0 . .

0 . .

GO to LEXIS-NEXIS (www.lexis.com), elect the ADR library, then enter

“ altern.” Search “Consumer ADR” for all Alternatives

references dating back to 1993 or for the specific titles you

found in an index.

Go to WESTLAW (www.westlaw. com), enter “d b ALTHCL.” Search “Consumer

ADR” for all Alternatives references dating back to 199 1

or for the specific titles you found in an index.

0 . .