Bracketing Your Way to Settlement

/ Clayton Mediation/

You either love brackets or hate them. For many years while I was representing clients in mediations, I thought bracketing was a waste of time. Now, in my role as mediator, I have come to believe that bracketing can play an important role in the negotiation process. Here’s why.

What is a Bracket?

Let’s take a familiar scenario where parties start far apart in a mediation. Each side thinks the other needs to “get serious” and tries to emphasize the point by making limited moves. Small moves beget smaller ones and soon the negotiation is headed nowhere. The gap between the parties seems insurmountable.

One approach to address this situation is a bracket, which is no more than a conditional offer: “We will make a significant move to X if you promise, in return, to make a significant move to Y.” Movement by one side is conditioned upon movement by the other.

Bracketing in Practice

Consider the situation where the demand is $200K and the offer is $25K. The plaintiff might suggest moving down to $150K if the defendant agrees to come up to $75K, creating a proposed bracket of $150K/$75K. The defendant, in turn, might reject that bracket and instead propose that the plaintiff come down to $100K if the defense goes up to $50K, resulting in a counter-bracket of $100K/$50K.

At this juncture the two brackets seem irreconcilable, but something important is occurring. The plaintiff is suggesting that the landing area for settlement is between $150K and $75K. The defense is suggesting, in response, that the landing area is between $100K and $50K.

If we compare the mid-points of the two brackets, the plaintiff might be signaling a willingness to go to $112,500 to settle while the defendant might be signaling a willingness to go to $75,000. If we look at the mid-points (bracketing the brackets), the parties might only be $37,500 apart.

If we now consider the mid-point of the mid-points (the mid-point between $112,500 and $75,000), is there a possibility the case might resolve at $93,750? Perhaps.

What Can Bracketing Accomplish?

  • Signaling Settlement Positions. As seen in this example, bracketing allows the parties to signal to each other and to the mediator where they hope to end up, but under the protection of a conditional offer. It is a way to share information with the other side in the face of an impasse. Whether any bracket is accepted is less important than the protected signaling it allows.

  • Ending a Stalemate. When the parties are stalled in a pattern of reactive negotiation, where making a point seems to be more important than making progress toward settlement, bracketing breaks the pattern and changes the discussion. It can instill hope into an otherwise hopeless negotiation.

  • Opening the Door to a Discussion about Settlement. In situations where brackets are exchanged, the mediator now may have an opening to talk frankly with each side about the “end game” of the mediation. As settlement ranges become clearer, settlement becomes an easier discussion.

  • Speeding up the Negotiation. There are times when a bracket proposed by one side is accepted by the other without modification or with a modest revision. This moves the case closer to resolution without a pattern of smaller and smaller moves, saving time and expediting resolution.

  • Keeping Parties at the Table. When parties to mediation get frustrated by smaller and smaller moves by the other side, they tend to get angry and talk about leaving the negotiations. Bracketing allows everyone to re-engage in the settlement process, diffusing anger and encouraging a sense of hope. All of this may allow a skilled mediator to find a path to resolution.

A Mathematical Trick

To use brackets effectively you have to be able to calculate mid-points quickly in your head. It took me a long time to figure out the simplest way to do this.

To find a mid-point, you add the two numbers together and divide the total by half. With a $150K/$75K bracket, the two numbers add to $225K and half of that is the mid-point of $112,500. With a $100K/50K bracket, the two add to $150K and half of that is $75K. While this may be obvious to many, it certainly wasn’t to me.

Conclusion

Brackets are not suited to every negotiation and they are not suited to all negotiators. However, they can be an important tool for moving a mediation forward and helping a stalled negotiation get back on track.

Reprinted with permission from the New Hampshire Bar Association. Originally printed in the New Hampshire Bar News on October 17, 2018: https://www.nhbar.org/wp-content/uploads/fliphtml5/42/flipbook.html#p=28