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Client Psychology

Employment attorneys always have been charged with steering their clients through the complex legal and factual issues that are inherent in litigation. Before mediation emerged as a settlement tool, clients’ participation in the negotiation process typically was limited to considering settlement offers relayed by their attorneys. As the use of mediation in employment law has expanded, so has the clients’ participation in the process of negotiating resolution. However, the majority of clients do not have experience in negotiation; thus, attorneys (as well as mediators) should be familiar with principles of negotiation psychology.

Following are selected principles of negotiation psychology that may assist employment attorneys in guiding their clients through the negotiations that occur in the mediation conference.

Reactive Devaluation

The adversarial nature of litigation tends to engender irrational rejection of reasonable settlement offers made by the adversary party.  This response has been identified as “reactive devaluation” and defined as “a psychological process whereby a proposed settlement . . . appears less desirable simply because an adversary has offered it. [R]eactive devaluation serves as a barrier to conflict resolution, particularly in direct negotiations.  Mediators can reduce the intensity of this response by obscuring the source of proposals.”  (DCR at 372 (citation omitted).)

Mirror Image

The operation of “mirror image” is similar in effect to reactive devaluation.  In negotiation, “mirror image” describes the “[p]artisan perception of each party regarding the other's position as exactly opposite and wholly inimical to his own.  This perception makes it difficult for parties to recognize opportunities for accommodation or compromise.”   (DCR at 299 (citation omitted).)  As with reactive devaluation, mediators can diminish this response by moderating the parties’ perceptions of the other party’s position.

Risk Preference

All clients have risk preferences that inform their resolution expectations.  Ascertaining a client’s risk preference allows the attorney to conform negotiation strategies to the client’s preferred risk.

Risk preference is the “[d]egree to which a person is willing to accept the possibility of suffering a loss.” 

A party could be risk neutral, risk averse, or risk prone depending on how they rank their options.  A risk-neutral party ranks options in order of their perceived values, without adjustment for substantive preferences favoring one more than another.  A risk-averse party prefers an option with a lower expected value because of the higher risk (stakes or uncertainty) involved with the other choices.  A risk-prone party prefers those options that include more risk.

Applying the concept in negotiation, a risk preferrer would demand a premium to settle in lieu of the expected value to be possibly gained outside of a negotiated agreement. 

In negotiation, a risk-averse person would accept less than might be gained outside of negotiation, such as in litigation, rather than risk an unfavorable jury verdict.  A person with little or no risk aversion would be willing to reject any offer that does not approach or equal the expected value obtainable in a non-negotiated solution.  (DCR at 382 (citations omitted).)

Isolation Effect

As resolution options develop during the mediation conference, the client should identify the most important attribute(s) associated with the resolution of the dispute.  Identification of important attributes is a function of the phenomenon known as the “Isolation Effect.”    This effect describes [h]ow individuals evaluate a set of potential options in decision making.  Making choices among options typically follows a sequential process of elimination in which individuals choose the most important attribute of an option and eliminate alternatives that do not include this attribute.”  (DCR at 237 (citations omitted).) 

Entrapment

Many clients approach mediation conferences with virtual certainty that the case will not settle.  This attitude may be explained as a process known as “entrapment.”  Entrapment occurs when a party continues litigation because substantial time, money, or other resources already have been invested in the litigation.  “This process makes it difficult for people . . .  to negotiate settlement of a lawsuit in which they are heavily invested, especially late in the litigation process after incurring much of the cost.”  (DCR at 167.)  This process militates in favor of early resolution. 

* All citations to “DCR” are to the Dictionary of Conflict Resolution, compiled and  
   edited by Douglas H. Yarn, Jossey-Bass Inc. (1999)