The Supreme Court and Arbitration

When we use a phrase like "alternative dispute resolution," we are usually referring to alternatives to bringing a lawsuit. Those who practice in the ADR field are often trying to persuade litigants to give up the right to sue, on the ground that the alternatives to court are better, cheaper or faster. Should ADR advocates be concerned when parties are compelled to give up their right to go to court even before a dispute arises? My answer would be yes, because I think arbitration or mediation should be freely chosen by the parties, not forced on them. And also because the word "alternative" loses all meaning if it is the only alternative. The right to jury trial should remain available if settlement negotiations fail. Maintaining the right to jury trial also provides parties with a powerful incentive to resolve their dispute before they have to let the court resolve it for them.

Recent arbitration jurisprudence, especially in the area of consumer contracts, has tended toward making arbitration the only alternative in many disputes. Most recently, in Compucredit Corp. v. Greenwood, the Supreme Court had to interpret the meaning of a statutory mandate enacted by Congress that credit repair companies disclose that consumers maintain the right to sue the companies. The Court held, 8-1, that this requirement did not preclude the credit repair companies from mandating instead that consumers arbitrate any disputes. So consumers are being told by these companies, yes you have the right to sue us, but sorry, you have to give up that right if you want to do business with us in the first place.

As a matter of statutory interpretation, the result is understandable. That it was decided by an 8-1 vote shows that it was not difficult for most of these Justices to wrap their heads around the concept that consumers are entitled to waive even fundamental rights. That is the whole point of the Federal Arbitration Act of 1925. We have the right to sue in many other circumstances, but we waive that right all the time. And if Congress had wanted to bar credit repair companies from requiring consumers to sign arbitration agreements, there were much more direct ways of accomplishing that than simply mandating disclosure of the right to sue. One could also interpret the "right to sue" as including the right to pursue claims in arbitration, although that may be a stretch.

On the other hand, you have to sympathize with the consumer's situation in being handed a contract with a credit repair company that on the one hand clearly guarantees the right to sue the company if the consumer is dissatisfied, and on the other hand, clearly requires that he or she waive that right. I believe the legal term for such a clause is "Catch-22."  Yet another example of how queasy we should feel in enforcing pre-dispute mandatory arbitration clauses that are contained in take it or leave it contracts that people are required to sign to engage in an increasing number of ordinary business transactions.  

Torture

As anyone who has made it through my four part series of posts on Aeschylus already knows, I've spent a little time thinking about the evolution of our legal system from earliest times. One can trace the history of our system of justice from a cycle of revenge killings, to a divinely-inspired system of earthly justice, to the beginnings of a third stage, interest-based approach represented by the growth of alternative dispute resolution. An article in this month's Atlantic magazine by Cullen Murphy, adapted from his new book on the Inquisition, makes some interesting points about the place of torture in this history, and our continuing connections to the methods developed during the Inquisition.

The legal debate over torture, which took place somewhere in the middle of the middle ages, did not view torture as something cruel or inhumane, but rather as taking the administration of justice from God's hands. That's because the system that torture replaced was equally if not more barbaric. As Murphy explains:

Torture as a tool of jurisprudence was little known in the darkest part of the Dark Ages. The ability of human beings to discover the truth was thought to be limited. Thus the reliance not on judges or juries but on iudicium Dei—the judgment of an all-knowing God—to determine guilt or innocence. This often took the form of trial by ordeal. The accused would be submerged in water, or made to walk on red-hot coals, or forced to plunge an arm into boiling water. If he or she suffered no harm, or if the wounds healed sufficiently within a certain period of time, then it was the judgment of God that the accused was innocent. This regime was common in Europe for many centuries. It was unquestionably primitive and certainly barbaric. In its favor, it was devoid of hubris about what mere mortals can ever really know.

Maybe the people who devised these ordeals lacked hubris about their own ability to determine the truth, but at some point they might have realized that it takes a bit of hubris to imagine that God will step in and cure people whose limbs we place in boiling water, just to prove to us that the victim is innocent. The use of torture can be seen as an advance in legal thinking because it proposed that people could actually ascertain the truth without God's help, by various familiar methods of obtaining a confession from the accused. What is striking in Murphy's article is  how similar are the descriptions, and the justifications, for using torture during the Inquisition, to our recent unfortunate resort to these methods during the so-called war on terror.

It seems that our methods of extracting information have not progressed much since the Inquisition. And even putting aside the most physically abusive forms of torture, which are generally forbidden in most places in the world, though of course they still occur, we can describe our ordinary court system as heavily reliant on various "enhanced" forms of interrogation. (Think for example of our reliance on imprisoning witnesses for contempt, or prosecuting them for perjury, as forms of coerced interrogation.) Anyone who thinks that sitting for a deposition in a civil case is not akin to torture either hasn't participated in enough depositions, or is merely quibbling about definitions. The ultimate purpose--forcing information from the subjects in an effort to ascertain truth--has not changed all that much since the Inquisition, and our methods of extracting such information are only slightly more civilized.

Murphy's conclusion is also striking: he suggests that the use of torture proceeds from a "sense of moral certainty."  This way of thinking also leads governments to imprison or kill political enemies, and to impose particular values or rules on the population. The antidote to that way of thinking is represented by liberal thinkers such as John Locke, who believed that we can never be too sure of ultimate truths, and therefore advocated tolerance and free expression.

Nowadays, we are filled with skepticism about our justice system's ability to ascertain truth. Judges are known to be fallible. Studies have cast substantial doubt on the reliability of eyewitness testimony, which our legal system nevertheless treats as the most reliable form of evidence. Experts are often seen as paid advocates for each side. And our understanding of human psychology has progressed to the point where we know that juries can also be fooled. And even when we can be fairly confident in ascertaining the facts, we often don't agree on what rules to apply. On issues ranging from abortion, to drug use, to the rules of copyright protection, and even to the enforcement of debts, our society is deeply divided on deciding what those rules should be, and how to apply them.

If our sense of moral certainty is leaving us, how do we administer justice? We're not about to turn the job back over to God. What we seem to be reaching for is an alternative to using the standards of truth and moral certainty. That means that we are increasingly resolving conflicts by trying to ascertain and satisfy the various interests held by the parties. We're willing to admit that truth may be impossible to ascertain. And we're willing to leave decisions about justice and morality to the parties involved. Murphy's article says this about John Locke:

He made the case for freedom of thought and expression—and a certain humility regarding one’s own cherished beliefs—on the grounds that, no matter how much certainty is in our hearts, human beings cannot know for sure which truths are true, and that believing we can leads us down a terrible path.

We can make the case for mediation and other forms of alternative dispute resolution, based on the same kind of acknowledgement of our limited ability to ascertain and apply ultimate truths. Our justice system may need to recover that sense of humility about our ability to ascertain the truth, a sense that we lost when we moved from ordeal to torture. If we admit that our system has limited ability to find truth and administer justice, we are more likely to accept the legitimacy of resolving conflict by negotiated agreement.

Our Two Selves

Daniel Kahneman's book Thinking, Fast and Slow concludes with a discussion of the difference between the experiencing self and the remembering self. It seems logical to Kahneman that people should care more about the quality and quantity of time they are spending engaging in pleasant or unpleasant activities, than they care about how they remember these activities. We should want to enjoy our vacations, rather than worry about the pictures we are taking while on vacation. Picture-taking might even diminish the actual experience, but we are willing to sacrifice some of the quality time spent on vacation in order to create memories. The way that an experience ends also strongly affects our perception of it. Someone told Kahneman that their experience of listening to a recording of a symphony was ruined, because there was a horrible scratch at the end of the record. He wonders how that could ruin the whole experience, when the actual experiencing self, while enjoying almost the entirety of the record, was unaffected by the ending.

Experiments described in the book prove that the remembering self is much more important to us than the experiencing self. Kahneman set up an elaborate experiment in which he asked subjects to immerse one hand in painfully cold water for 60 seconds. Then he had them do it again, this time for a total of 90 seconds, the other difference being that after the first 60 seconds was up, he added some slightly warmer water to the mix, so the subjects felt some lessening of the pain. Finally, he asked people which of these two experiences they would rather repeat. Logic tells us that the second experience must be worse, since it not only repeats the exact same 60 seconds of pain of the first method, but adds another 30 seconds of only slightly less unpleasant pain. But the vast majority of people said they would prefer to repeat the second test!

This is because two things are important to the remembering self. One is the intensity of the experience (positive or negative). The second is the way that it ended. If a painful experience ends in a less painful way, we are likely to think more highly of it, and are less afraid to repeat it. The duration of the experience, which matters only to the experiencing self, is less important.  (Here I could also go into Kahneman's discussion of colonoscopies, but I think readers can get the idea.)

As with almost everything else in this interesting book, I can see an analogy to conflict resolution. Most people find conflict to be an unpleasant experience. (There are some of us who thrive on it, but I'll just stick to talking about the majority, who dislike the experience of conflict.) Conflict starts off in a negative way, when someone else disputes your position, or prevents you from obtaining something you believe you are entitled to. When people attempt to resolve the conflict through litigation, it usually only gets more unpleasant, as the parties throw new roadblocks in each others' paths, and find new issues to disagree about. The courts encourage most disputes to end by negotiated resolution, perhaps for one reason because they know that for most litigants, settlement is going to provide a more satisfactory ending to an unpleasant experience than continued litigation. And that is crucial to the remembering self, as a mutually agreeable outcome may offset to some extent the bad memory of the unpleasant conflict. Even for parties who hate the idea of settlement, a negotiated resolution will probably provide a better ending than most of them would have obtained in court.

These insights might also provide some guidance as to how we conduct mediations. If mediators can teach participants in a dispute how to handle their disagreements in a more civil manner, we are going to provide a more pleasant ending to an unpleasant experience. If we can get participants to reconcile to some extent (for some mediators, the ultimate goal of mediation), we can change the whole experience of the conflict, since only the experiencing self participated in all the prior unpleasantness, while the remembering self will be left most strongly with the positive memory of reconciliation. That memory to some extent will erase whatever happened to the experiencing self. This theory would also seem to provide some support for the idea that we should not rush mediation sessions just to obtain what objectively appears to be a reasonable outcome for both sides. Because the outcome is not the only thing that is important. How we get there is important. How painfully we reach a conclusion is also important. And whether we end the mediation on a good note or a bad note is also important.

(Photo from Home Based)

Optimism

There is a lot in Daniel Kahneman's book Thinking, Fast and Slow of interest to mediators and other people involved in conflict. The book sums up a lifetime of work in psychology and economics, and serves almost as a catalog of cognitive biases we encounter in business, the legal system and elsewhere.

One chapter describes the optimism bias, which may be essential to making capitalism function, but which also leads to many costly decisions for individuals. For example, the optimism bias leads entrepreneurs to expect success in opening their own small business such as a restaurant, despite the knowledge that the majority of such businesses fail within a few years. Kahneman also describes a similar bias he calls the planning fallacy, which leads groups planning many kinds of projects to underestimate the time required to complete the project and overestimate the likelihood of its success. People simply cannot see, and therefore cannot plan for, unexpected obstacles or problems they may encounter in completing their project.

As an example, Kahneman describes a curriculum development project he was involved in years ago which aimed to produce a new course and textbook. At one point when the work seemed to be proceeding well, he asked the other members of the team to estimate how long they thought it would take to complete the project. Their estimates averaged about two years. Only then did he think to ask a co-worker about the success rates of projects similar to theirs, and learned that such efforts had a 40% risk of failure, and generally took 7 to 10 years to complete. The most amazing part of this story is that this information, while slightly discouraging, had no effect on the group's plans. They still thought they would complete their work within the time frame they estimated, and chose not to abandon the project. They of course encountered numerous unforeseen obstacles, took eight more years to complete their textbook, and it was never used.

Parties involved in lawsuits or other kinds of conflict exhibit these same biases. People tend to think their situation is unique, and are not dissuaded by statistics applicable to similar cases. They believe in the rightness of their positions. They therefore frequently overestimate their chances of success. They also underestimate the costs and risks of pursuing their claims because many of these costs and risks cannot be discerned until they arise.

We can avoid some of the mistakes caused by cognitive biases simply by becoming more aware of them, which is the purpose of Kahneman's book. We can try to avoid the optimism bias and planning fallacies specifically by taking what Kahneman calls an outside view, that is by considering the base rate of success or failure that others experience in similar situations. Sometimes that kind of information is brought to bear in a mediation. But Kahneman's work suggests that hearing this information will have limited impact on parties involved in conflict. People resist applying statistical data to their own unique situation. And often, information about the success rates of similar cases may be unavailable or for some other reason is not taken into account. (Personal injury lawyers and insurance adjusters often rely on statistical jury verdict information, but lawyers in business cases tend to find that kind of information less available or applicable.) Another suggested idea is called a "premortem," in which someone practices giving an explanation of how the project at hand could ultimately fail. I would be cautious about trying that in a mediation, because people generally resist the idea of explaining how they might lose a case. In that setting, sometimes the only counter to one side's overly optimistic view of their position is hearing the overly optimistic view of the other side.

Kahneman's work also provides a good explanation for why many disputes do not get resolved until after parties have directly felt some of the costs and setbacks and delays that people typically encounter in the legal system. We are most impressed with what we experience ourselves, and apt to think that what happens to all the other fools who get involved in legal disputes has little bearing on us. It is usually only after parties have actually received court rulings that do not go 100% their way, and after they have had to pay some of the costs and fees associated with continued conflict, that they become receptive to the benefits of settlement.

Prospects for World Peace

The recent decision by the Lakers player formerly known as Ron Artest to change his legal name to Metta World Peace opens up immense possibilities for sportswriters and commentators to add layers of irony and nuance to their coverage. I'm not sure the sports community is ready to rise to the challenge. For example, although today's LA Times story, about Coach Mike Brown's decision to shift World Peace from the starting lineup to the second string, did lead off by saying that the coach is "giving World Peace a chance . . . to come off the bench," the article otherwise left these possibilities largely unexplored. Never fear. I am fully prepared to leap into the breach.

What kind of message does it send to bench World Peace? We have reason to be disappointed in such a conventional-seeming strategy of turning to World Peace only after exhausting the aggressive efforts of the Lakers' starters. Think about how much excitement the team could create if they instead activated World Peace at the beginning of the game.

Wouldn't we prefer to see the Lakers fully embrace World Peace by placing World Peace at the forefront of their strategy this season, instead of holding World Peace in abeyance? Wouldn't we rather hear the announcer herald the arrival of World Peace at the outset of every game, rather than bringing World Peace in as an afterthought? Don't we want to encourage fans to think of World Peace first, rather than calling for World Peace only after other resources are tired?

We all want World Peace to succeed. Fans should be urging the Lakers to exploit the full potential of World Peace. Of course we understand that the Lakers have to consider what World Peace can do to help the team, but they should also be thinking of what the team can do for World Peace. We have reason to worry now, at the start of this new season, whether the team will truly stand up for World Peace, or whether it will only turn to World Peace on rare occasions.

Mediation Confidentiality in California

 You know that mediation has hit the mainstream when the cover story of the Los Angeles Lawyer magazine (published by the Los Angeles County Bar Association) is about mediation confidentiality.  The scope of mediation confidentiality is not only a hot issue in the field, but important to every lawyer who encounters mediation, which is getting close to everyone nowadays.

Retired Judge Michael Marcus, now a practicing arbitrator and mediator, has published a helpful summary of the development of the law regarding mediation confidentiality in California in both the state and federal courts. I won't try to summarize his summary here, but am posting this for my own benefit and for anyone else who needs a handy link to all the main cases on this issue. There is even a quiz included for MCLE credit.

Hybrid Proceedings

One of the touted benefits of ADR is that it allows parties to design their own dispute resolution process specially suited to their needs. Problems can arise, however, if a court is subsequently called upon to try to figure out what to call the process the parties have invented. A court might need to do that to decide what rights and obligations the parties have assumed under their process. A recent Federal Circuit case, Kimberly-Clark v. First Quality Baby Products, provides a nice illustration of this problem. (Thanks to the Disputing blog for bringing it to my attention.) In a series of patent infringement disputes between two consumer products giants Kimberly-Clark and Proctor & Gamble, the parties crafted a series of dispute resolution agreements whereby they submitted issues for hearing before panels of arbitrators. Unlike an arbitration, however, the panels' decisions were non-binding and were designed to facilitate settlement. Their decisions did have certain legal consequences, though, such as obligating the "losing" party to pay the arbitrators' fees. Those ADR proceedings apparently worked, enabling Kimberly-Clark and Proctor & Gamble to settle.

The issue before the Federal Circuit was whether to allow discovery in a subsequent case involving a different party (First Quality), of these panel decisions and the underlying proceedings in the disputes between Kimberly-Clark and Proctor & Gamble. Kimberly-Clark attempted to rely on a "mediation privilege" to prevent disclosure, but the Court of Appeals held that these proceedings were arbitrations, not mediations. On that basis, the Court affirmed the order requiring disclosure, and did not need to decide whether there is a federal mediation privilege.

This case points up the need for the Federal Courts to define more clearly the confidentiality rules pertaining to mediation. In the Central District of California, for example, local rules have recently been revised to more closely resemble the confidentiality protections protecting mediation proceedings in California state courts. But a lot of uncertainty still remains.

This case also might serve as a cautionary tale for parties designing their own dispute resolution procedure. As a practical matter, parties who get as creative as Kimberly-Clark did about their dispute resolution needs still probably can't think of every possible contingency. To do that might require them to re-invent their own complete code of civil procedure for every case. Parties should realize that if a court ever needs to interpret what they have done, the court is going to need to pigeon-hole their designer process into categories that a court can understand. In the Kimberly-Clark case the court had to consider proceedings that combined some aspects of arbitration and some aspects of mediation, and decide whether they were one or the other. It might have helped if the parties had better labeled their own process and had included provisions on the confidentiality rules and other rules that should apply if a court ever had to interpret their agreement.

(Liger photo from Listverse)

Truth and Settlement

(Wikimedia Commons)

Judge Jed Rakoff of the Southern District of New York today rejected a proposed consent judgment and  $285 million settlement of an SEC enforcement action against Citigroup. The SEC alleged that Citigroup had defrauded investors in a fund comprised of toxic assets, but was willing to accept a monetary settlement and injunction without requiring Citigroup to admit the truth of these allegations. In this case, the court disapproved this longstanding practice, in its words, "hallowed by history, but not by reason." The court's opinion determined that

the proposed Consent Judgment is neither fair, nor reasonable, nor adequate, nor in the public interest. Most fundamentally, this is because it does not provide the Court with a sufficient evidentiary basis to know whether the requested relief is justified under any of these standards. Purely private parties can settle a case without ever agreeing on the facts, for all that is required is that a plaintiff dismiss his complaint. But when a public agency asks a court to become its partner in enforcement by imposing wide-ranging injunctive remedies on a defendant, enforced by the formidable judicial power of contempt, the court, and the public, need some knowledge of what the underlying facts are: for otherwise, the court becomes a mere handmaiden to a settlement privately negotiated on the basis of unknown facts, while the public is deprived of ever knowing the truth in a matter of obvious public importance.

In my practice both as an advocate, and as a mediator, I always find it somewhat disconcerting when a judge takes it upon himself to impose a result on the parties that neither side sought or wants, in this case forcing both parties to assume the extraordinary costs and risks of trial in a case that both sides would prefer to settle. At the same time, I do understand that the court must consider the interests of the public as well as the parties. Evidently, this has been deemed one of those cases where the public is entitled to a public accounting of Citigroup's conduct. This decision could therefore be justified as a means of educating the public about the complexities of these financial transactions, as well as satisfying the public's need for the cathartic experience of seeing banking officials called publicly to account for their actions.

On the other hand, the court may simply be questioning the amount of the monetary settlement in relation to the scale of the investors' losses, and Citigroup's profits. From the perspective of a mediator, I prefer to assume the parties to a negotiated agreement are in the best position to assess the strengths and weaknesses of their case, and that such an agreement is generally going to represent a fair approximation of the costs and risks to both sides of going to trial. To assume otherwise, as Judge Rakoff does, amounts to second-guessing the careful calculations of what are most likely, in such a high profile case, some very competent attorneys.

Mainly I have to question the assumption, repeated several times in the court's opinion, that a public trial is going to allow the public to know "the truth," as well as the assumption that knowing "the truth," if indeed truth is ascertainable at trial, is a more important value to the public than peace. Many factors at trial can impede the discovery of "the truth." What if, for example, a crucial witness for either side presents a poor appearance? Or an especially strong appearance? What if a crucial witness disappears? What about the contradictory comments that always show up in the voluminous documentation involved in a case like this one? There may be other important considerations that militate against pressing forward with a full-blown trial, even in a case as important to the public as this one. Think, for example, of potentially millions in costs and legal fees each side must now incur. Would it be more productive for Citigroup to avoid those costs? Does the government have other more pressing priorities to devote its scarce enforcement resources? Then there are the delays inherent in insisting on a full-blown trial. Is finding out "the truth" worth the wait until next summer's trial? Not to mention potentially years of appeals after that.

Even when a case settles for a much different amount than an outside observer expects or thinks should be justified, nobody--not even the judge--should assume that the parties have miscalculated the value of the case. Instead, it makes more sense to assume that the parties are each aware of factors that could cause their case to blow up. Maybe we think this particular case should be worth a billion dollars, not a paltry $285 million. But suppose the parties know of potential defenses that might allow the defendants to walk away scot free. Given that risk, a $285 million verdict could represent a much better result for the government, and the public, than at least some of the possible outcomes at trial. (See this Wall Street Journal piece quoting the SEC's own assessment of some of these costs and risks.)

It is because these kinds of weaknesses and uncertainties are present in every case, that parties are generally encouraged to settle for a sum that attempts to weigh the likelihoods of a whole range of possible outcomes at trial. If the parties make a reasonable effort to negotiate a resolution, I as a mediator am reluctant to question their result, because I am often not privy to the parties' knowledge of all of the strengths and weaknesses of their case.

And it is because a whole range of outcomes is possible at trial that I also have to question whether a trial can be assumed to allow "the truth" to emerge, as Judge Rakoff assumes. Certainly, a public trial will allow the public to make its own assessment of a mountain of possibly conflicting facts and competing versions of the truth. But we have also seen plenty of very public trials where most of the public's assessment of "the truth" turns out to be directly contrary to the jury verdict. In those cases, what trials prove to the public is that they are exactly the opposite of a method for finding "the truth." When this particular trial is over, my guess is that the public will still be arguing over the meaning of "the truth" of this matter.

Numbers

Numbers are endlessly fascinating. Sometimes numbers take on mystical significance. Often numbers can mislead us. The number 99, for example, seems to be an order of magnitude less than 100, while a number like 22 seems almost equivalent to its neighbor 23 (even though the difference between the two smaller numbers is proportionately almost five times larger).  Ones and twos sound smaller than sevens and eights, meaning that a number like 31 can sound smaller than a number like 28. In negotiations, people place so much significance on the magic properties of numbers that they can declare victory if they obtain a slightly larger value than they expected, and feel defeated if they settle for a tiny bit less (or vice versa for the defendant).

People rely on the properties of our base 10 system, and our ability to picture certain values, to set up artificial boundaries--"I won't take a penny less than $100,000," or " I'll pay anything in the $40,000's, but won't go into the $50,000's."  Those numbers make sense to us, but imagine how those values would look if we translated them into computer language (base 2): Instead of saying $100,000 is my bottom line, which somehow appears logical, I would be saying that I won't go below 11000011010100000, which sounds completely arbitrary and absurd.

We also use numbers to measure the distance each side has traveled toward the other side's position. Parties in negotiations say things like "They only came up $10,000, but I showed good faith by dropping $50,000 from my opening demand." Is that meaningful? That might depend on how reasonable your opening demand was.

Numbers can also allow us to represent parties' negotiating positions in a pictorial fashion. We can depict their opening bids as the goal posts on an imaginary football field, for example, and tell them they get to kick the ball toward their goal, but then the other team is going to run it back somewhat. (That way they understand that if they do well in the negotiations, they might end up on the other side's 30 yard line, but if the other side is more powerful, they might end up on their own 30.) Or we can draw graphs representing the probability of various outcomes at trial (the curve drawn by the defendants generally bulges up on the left, close to a zero verdict, while the plaintiff will usually draw a curve skewed way to the right, representing the high probability of a million dollar verdict). We can draw a zig-zag pattern tracing the parties' offers and demands. We can also draw partially overlapping circles to represent possible areas of overlap in the parties' predictions or positions, or potential settlement ranges. (I also like bar graphs and pie charts, but unfortunately don't find much use for them in mediation.)

In mediation, after we spend a while talking about facts and issues and problems, we sometimes end up spending a lot of time talking about numbers. Especially when the dispute is difficult to resolve, for whatever reason, the discussion of numbers can also become protracted. This discussion can serve as a shorthand for expressing the strong feelings the parties still have not resolved. One side doesn't want to move down from their eight: that's because they feel strongly about their position or interests. Or they feel insulted by the other side's three. Why, I might ask, when someone is offering you money, do you feel insulted? You don't have to accept it. What does that number represent for you that makes you want to head for the door?

During the negotiation end game, when the numbers get reasonably close to each other, there may be no material difference between the parties' positions. Yet even when both sides already know they are probably going to settle, and cannot explain why one side's number makes any more sense than the other's, it can still be difficult to bridge that last remaining gap. Why? Maybe because there's still a final reluctance to let go of the dispute. Or maybe because whichever side can make the other side blink last will feel like they "won." People sometimes care about doing well in the negotiation as much as they care about resolving the dispute.

I remember one of my former New York law partners telling me about a big Wall Street player he used to run into on the train platform from their Westchester suburb. Once he asked the guy, "Why do you do it? What motivates you to keep going to work, when you have already put away enough to retire and live however and wherever you want?" The player answered that it was all a game to him at that point. He enjoyed the game, and money was how you keep score. We care about numbers because that's how we keep score. People aren't content just to say they achieved peace, and feel much better now that they have eliminated a troublesome dispute from their lives. Even if that is how they feel, they still have to answer the inevitable question: How much? (How much did you get? Or how much did you have to pay?) We need to quantify the result. Maybe we learned how to do that way back when the teachers first started handing out our test scores. Or when we argued about the results of baseball or basketball games.

I handled a mediation recently in which the defendant asked me at one point, why do you keep trying to get me to pay more? As if my request showed that I doubted the soundness of his calculations, or the strength of his arguments. I had to explain that that was my job: to use all the tools the other side was giving me, and all my persuasive powers, to get him to pay more. But I also assured him that when I went to talk to the other side, I would use all the tools he was giving me, and all my powers, to persuade the other side to take less. Then I told him it was all the same to me whether he paid 5 or 6 or 7 (put whatever suffix you want on these made-up numbers).  Any of those numbers to me seemed better than the alternative of spending a lot of money on nasty litigation. A light seemed to go on when this guy realized that it didn't matter to me what number the case settled at. And another light popped on in my head as I realized that that particular case was about to settle. Because now this guy wasn't so invested in his particular boundary line either. He just had to decide the simple question of whether he wanted to resolve the dispute or not. (It settled very close to 6.)