VI. Qualify Interests

Suppose that parties to this hypothetical begin negotiating without SmartSettle. DEC says that they should require Riverside to shut down for several months while a scrubber is installed. However, if they agree to install the new Technoclean, that requirement could probably be waived. In this vein, DEC declares that the following proposal is generous in order to encourage Riverside’s use of the Technoclean.

• Riverside will install a Technoclean scrubber.
• DEC will guarantee the scrubber and subsidize $10,000.
• DEC will provide $100,000 liability insurance.
• Riverside will not be required to shut down the paper and pulp operations.
• DEC will spend $50,000 on a positive public relations campaign.
• DEC will give Riverside a compliance incentive of $100,000.

— to be signed and dated —

Riverside does not have confidence in the Technoclean Scrubber technology and responds with a proposal based on the tried and proven Rotoblu Scrubber. Because DEC wants Riverside to close down for several months while a scrubber is installed, Riverside offers a compromise of a two-month closure to appease DEC’s constituency. Riverside bluffs a lot about the great burden of that concession, but in private in-house discussions Riverside has decided that they could actually make good use of the down time.

• Riverside will install a Rotoblu scrubber.
• Because the Rotoblu is proven technology, DEC need not guarantee the scrubber or subsidize it.
• DEC will provide $200,000 liability insurance.
• Riverside will close down for two months.
• DEC will spend $100,000 on a positive public relations campaign.
• DEC will give Riverside a compliance incentive of $150,000.

— to be signed and dated —

• A. Building a Single Negotiating Form

Compare the two proposals above and especially notice the differences in bold print. DEC and Riverside have been concentrating on the quantitative aspects of their negotiation. With SmartSettle, the parties are encouraged by the facilitator to first rather build an SNF such as the following.

• Riverside will install ___________(a Technoclean, a Rotoblu, no) scrubber
• DEC ___________ (will/will not) guarantee the scrubber and subsidize $______________.
• DEC will provide $_________ liability insurance.
• Riverside will close down for _______ months.
• DEC will spend $_________ on public relations.
• DEC will give Riverside a compliance incentive of $___________.

— to be signed and dated —

The difference between this SNF and the proposals illustrated previously is that there are blanks representing the unresolved issues. It is relatively easy to agree to the use of this form. Each party can readily say, “That’s fine with me. Just fill in the blanks with what I want.”

The process of qualifying interests is far from trivial, and the complexity of the process depends on many factors, including the following:

• Type of case (e.g., commercial, environment, personal injury)
• Number of issues
• Interrelationships among issues
• Number of parties
• Number of party representatives
• Types of parties (e.g., corporations, individuals, institutions, governmental, etc.)
• Whether third-party or constituency ratification is required
• Customs, bargaining styles, and experience of the parties
• Degree of cooperation among the parties
• Value of outcome to parties
• Risk tolerance of the parties
• Degree of litigation uncertainty
• Resource limitations (e.g., time, money, deadlines, quality of technical and legal support)

Fortunately, there is much good literature on the above listed subjects. Not surprisingly, every author presents their process steps somewhat differently, depending on their assumptions about the character of the negotiation. The following list of steps, for a typical complex case, is compiled and adapted from several sources; Raiffa (footnote 7), Hansen (footnote 8), and Brin (footnote 9), as well as the experience of the authors.

1. 1. Identify interest groups
2. 2. Structure participation (contracting)

1.      a. Appoint facilitator
2.      b. Discuss process guidelines and goals
3.      c. Arrange financing for the process
4.      d. Select party representatives
5.      e. Reach agreement on the process to be used

1. 3. Conduct training

1.      a. Establish proficiency in support tools
2.      b. Convey physical and legal reality of the context

4. Share information, interests, and visions
5. Create value without claiming in a search for all possible resolutions

1.      a. Paraphrase the issues
2.      b. Brainstorm resolutions
3.      c. Find new associations and arrangements
4.      d. Look at the issues and resolutions from the broadest perspective

6. Develop Single Negotiating Form
Among the references listed, only Raiffa includes the final step of developing the SNF (footnote 10). However, developing this form is a critical component required for compatibility with the rest of the SmartSettle process. Referring back to the SNF developed for the DEC vs Riverside case, the following issues must be resolved:

• Type of Scrubber
• Gurantee provided by DEC
• Subsidy provided by DEC
• Liability insurance provided by DEC
• Plant Closure
• DEC funded Publicity
• Compliance Incentive provided by DEC

The facilitator will play a key role in assisting the parties in the process of building the SNF, ensuring that parties both assert their settlement needs and listen to the needs of the other parties.

• B. Entering Shared Information into SmartSettle
  

Having completed an initial draft of the SNF, the parties or facilitator can enter the information from the SNF into SmartSettle’s Shared Information window, as illustrated in Figure 2 (footnote 11). The Shared Information window organizes three aspects of a negotiation case; parties, issues and versions. The most important thing, however, is missing, i.e., our goal; the final resolution. A final resolution is achieved by all parties (in this case, two) agreeing on a decision to be implemented on each of the issues. Each combination of the possible outcomes is called a package. Any party may form a package that can become an offer or counteroffer from that party.

 Figure 2 Shared Information

Smartsettle’s Shared Information window has three panes; one for listing Parties, one for Issues or case variables, and one for Versions. There is no theoretical limit to the number of parties or issues that can be added to a negotiation case.

• C. How the Smartsettle Process uses ‘Packages’

In cases such as the one illustrated in this paper, with many issues and many possible options for each issue, thousands or even millions of significantly different packages are possible. In fact, research shows that there are often so many combinations that parties rarely find an optimal one. The ultimate goal of Smartsettle is not to merely find a good package, but rather to find an optimal one, i.e. fair, efficient and acceptable to the parties. Because the “package” concept is key to understanding how Smartsettle works, the use of packages in the Smartsettle process is summarized below, highlighting (with bold print) each reference to a package.

After the entry of the Shared Information, the negotiating parties work privately with Smartsettle to better understand their negotiation problem, enter their confidential preferences, and create packages for use in the negotiation process. Through analysis of private and confidential preferences for outcome, the Smartsettle software learns how a party becomes satisfied on issues. With that information, Smartsettle can calculate a rating for each package.
A party might initially create private packages to compare with other packages in order to form and refine ideas about its confidential negotiation aspirations or its minimum acceptable levels of resolution. Various types of published packages are also created during the process. When a package is ‘published’, it is sent to every other negotiating party and displayed on their screen so that each party can see the issue values that compose it. A party may publish a package for discussion purposes only, and optionally declare a confidential acceptance. If two parties accept the same package, they have a deal.

If a party openly declares a package as acceptable for implementation, it is called a proposal. Using the Internet to exchange proposals and counter-proposals, the parties can make and seek concessions. If parties reach an impasse, Smartsettle might be able to solve the impasse by generating an equivalent for each party. The goal of this part of the Smartsettle process is to reach a baseline and then look for improvements in search of an optimal that will become the final agreement.

Next: VII. Quantify Satisfaction