Bracketing is becoming a popular strategy in mediation. Whilst mediation is sometimes considered less developed here in the UK, the Americans have spent many years perfecting negotiation strategies involved in mediation and alternative dispute resolution. We often find that US techniques find their way over here, with modifications to suit our own practices.
But who makes the opening bid? Who goes first is usually a decision the mediator makes based upon his knowledge and experience. Often, neither side wants to go first, as human nature will prevent one participant from wanting to give away his position before the other. The reason is that the other side can tell a lot about the party’s position by an opening bid. A claimant is going to open much higher than their walk-away position and a defendant will open much lower than theirs. In mediations where the negotiation is over money, the successful settlement number is almost always somewhere in the middle range between the two opening figures. So if a claimant opens with £50,000, a defendant might assume that claimant’s walk-away number is approximately £25,000. In dispute resolution, that is powerful knowledge to have, even if it is not accurate. Either way, to a defendant’s way of thinking, there is little incentive to start a bid far from zero.
This is where the tactic of bracketing can be useful. If a defendant has previously been adamant about zero or minimal liability, the claimant knows the opening bid on the defendant’s part will be extremely low. In order to get past this opening impasse, a mediator (or one of the participants) could switch to bracketing. Bracketing is a bid proposal framed as follows:
If you bid [X], we will bid [Y].
So, if I have a case moving slowly, where I have internally valued in the £40,000 area, I might go to each side and propose a bracket. For instance, if Defendant X starts out the process with an offer of £1,500 and Claimant Y’s opening bid is £100,000 and each side is moving their bids only in £500-1,000 increments, I know it’s going to be a painfully long day, and the parties will not be able to settle in the time allotted. If one party only moves in small steps, the other will often mirror this tactic.
So, it becomes necessary to find a way to move the parties together in a meaningful spirit of cooperation. Therefore, I might propose to either side the following:
What would you say if I could get Defendant X to move their next bid up to £25,000? If they are willing to do that, would you be willing to move your bid to £75,000?
If the answer is yes, I go back to Defendant X and say, “Claimant Y is willing to move their bid down £20,000 if you are willing to increase yours by £15,000.” This is quite enticing for a defendant to hear – that the claimant is willing to go down farther than they are required to move up. It can also work in the opposite manner, as well.
The point is, I now have both sides moving significantly. They have both made large strides forward and the case has a chance to settle by the end of the day. I can keep the process moving forward this way, using brackets, or we can return to the traditional bidding and negotiation. Either way, I’ve jump-started the process and it is much more likely that the case will settle.
