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What Is a Negotiation?

Negotiation is a process where two or more parties attempt to reach an agreement. Negotiations typically involve the parties exchanging something they have with something they want. The exchange doesn’t have to involve physical objects; services or statuses can be obtained or surrendered just as readily. Negotiations can be used in all fields of the law to resolve a dispute.

Negotiation can replace costly litigation in resolving disputes. Negotiation proceedings are informal, inexpensive, and much less stressful then a lawsuit. Both sides can talk freely about their differences without involving other people. Even if a lawsuit is pending, negotiations between parties often take place continually (to reach a settlement).

What Does a Negotiation Look Like?

The first step is to consider what you want from the negotiation and what you have to offer to the other parties in return. This offer could be money, services or anything else that may seem valuable. The next step is to present the offer. The offer should be clear and sincere.

Once the other parties receive the offer, they can consider if they want to accept, decline or present a counter-offer. If the parties decline, then the negotiations end. If the parties counter-off though, it is usually to make adjustments to the original offer. The party which made the first offer then has the opportunity to make a counter-offer of his or her own. This process can continue until all parties involve accept the offer or declines.

If all parties are in agreement, the consenting parties can create a contract to establish the terms of the agreement. Note that if any party declines an offer or counter-offer, then the negotiation will never reach this stage. 

What If the Other Side Refuses to Cooperate?

Obviously, not everyone will cooperate and engage in negotiations. If they did, there would be no lawsuits! When a party refuses to engage in negotiations, it does not mean the negotiation process is dead. "Assisted negotiation" can facilitate negotiations even if the other party is uncooperative. Some examples of assisted negotiation:

Obviously, not everyone will cooperate and engage in negotiations. If they did, there would be no lawsuits! When a party refuses to engage in negotiations, it does not mean the negotiation process is dead. "Assisted negotiation" can facilitate negotiations even if the other party is uncooperative. Some examples of assisted negotiation:

  • Mini-trial - Here, an independent third party with expertise on the situation acts as a judge while attorneys for both sides present arguments. The "judge" then gives his/her expert opinion on the likely winner (if the lawsuit was real). The opinion is not binding, but it can jolt an uncooperative party to negotiate.
  • Early neutral case evaluation - A third party with expertise about the dispute is hired to evaluate the position of both sides. This evaluation then becomes the basis for negotiating a settlement.
  • Conciliation - A third party is hired to ensure that the two parties make progress. The two parties do not even need to meet face to face if a conciliator is hired. Conciliators do not recommend solutions; they only make sure that negotiations continue between the parties.

How Is Negotiation Different from Litigation?

As mentioned above, negotiations are almost always cheaper then litigation. Negotiation takes significantly less time than litigation because unlike litigation, negotiation takes far less preparation for the attorney. Negotiation is also conducted on the parties’ schedule rather than on a court’s schedule. In other words, there is no waiting for a judge to settle another case before getting to the party’s case. This saves significant amount of money, as many attorneys charge their services by the hour, even if the time is being used to wait for a hearing to begin.

Just as negotiation happens on the parties’ own time, negotiation also gives power to the disputing parties rather to a judge. All parties must agree with the outcome before a negotiation is settled, while a judge can give a ruling which none of the parties are satisfied with. The negotiations can be personalized to the parties’ needs while a court is focused on providing the appropriate remedies as proscribed by the law.

How Is Negotiation Different from Mediation?

A mediator presides over the mediation proceedings, gives advice, and works with the parties toward a mutual agreement. The negotiation process does not always have a mediator. Even if there is, the parties are the only ones that decide the issue. A mediator in a negotiation process only makes sure that negotiations continue in a fair manner.

How Is Negotiation Different from Arbitration?

Arbitration is much more like a lawsuit then negotiation. Whereas negotiations involve informal meetings, arbitration has set rules and guidelines for all disputes. Negotiations are much less complex and formal then arbitration proceedings.

Do I Need an Attorney to Participate in a Negotiation Procedure?

Negotiations are not lawsuits; however, this does not mean it is pointless to have a business attorney assist you in negotiations. Attorneys are trained in negotiations and they can address all your needs to the other party. If you are participating in a negotiation process, contact an experienced attorney to ensure an appropriate agreement is reached.

Photo of page author Ken LaMance

, LegalMatch Law Library Managing Editor and Attorney at Law

Last Modified: 11-25-2014 12:35 PM PST

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