Everybody knows one of the cardinal rules of negotiations is that you never “bid against yourself.” It shows weakness and a lack of commitment. It suggests an exploitable urgency to settle. And it demonstrates a willingness to concede ground to your opponent without even demanding, much less extracting, anything in return.

But are there times when “bidding against yourself” actually makes sense? And if so, are there ways to do it and not compromise your status and strength for future negotiations.

This article offers some possibilities.

First, let’s set the scene: You make a settlement proposal. The other side rejects it and makes no counteroffer, or tells you your proposal’s “an insult” or “a non-starter” and “there’s no point in us responding,” or more explicitly says, “Unless you can do better, negotiations are over.”

In response, you basically have four options:

Option #1: Tell them “I’m not bidding against myself.” Then wait and see if they’re bluffing. This always feels best. It says you won’t be pushed around, that you’re the one adhering to the normal protocols of negotiations even if they’re not, but that if they change their minds, you’re still open to negotiating. Problem is, it also cedes all control to the other side. If they won’t give you a counter, then all negotiations stop. Then what?

Option #2: Try to persuade them to change their mind and make you a counter. This is obviously the best option. It’s also entirely compatible with a tough stance under Option #1. But is also often proves futile. The other side dug in their heels because they perceive the problem as being with you and your proposal, not them. And if they’ve dug in by refusing to counter at all, it means you’re asking them to be the ones to back down, which many negotiators simply won’t do.

Option #3: Accept that negotiations and settlement are over and that the litigation (and whatever that means) is all that’s left. This also is an inevitable risk of choosing Option #1 or Option #2.

Option #4: Bid against yourself, which means unilaterally making the other side a more attractive proposal than your last one. This Option, of course, always feels wrong, for the reasons initially noted.

But what if you learned that the facts, law or client interests on which you premised your rejected proposal have since changed, and in way that diminishes your position. Maybe a witness or document is no longer available or is no longer as meaningful as it once was. Or you learned some law that hurts your case. Or realize your case assessment is no longer accurate. Or maybe your client tells you they’re more willing to accept less, or pay more, than they’d previously said. Does it still make sense to dig in your heels, anyway, just so you’re not bidding against yourself? Or might it make more sense to offer a new proposal more consistent with those changed circumstances?

And what if your client just really, really wants to settle? Or really needs to settle? If waiting or trying to get the other side to budge doesn’t work, might it make more sense to accept the downsides of bidding against yourself rather than permanently saying, No, to any possible settlement for your client?

In either of these difficult circumstances, bidding against yourself still isn’t a great option. But in both, the alternative might be worse.

Yet, even when “bidding against yourself” seems like the best of two bad options, there’s still those inevitable downsides: You look weak. Uncommitted. Desperate to settle. So question: Are there strategies for “bidding against yourself” which can reduce those negatives?

Yes. Try these:

Strategy #1: Cop to the changed circumstances, and tie them to your new proposal.

If your rejected proposal no longer makes sense, even to you, because of changed circumstances. . .admit it. Talk about the change, and acknowledge that it is what’s driving you to bid against yourself. You many not like to volunteer that kind of inside baseball about what’s behind your settlement positions. But in this instance doing so says, “I’m only doing this because I negotiate first and foremost on the merits, and the merits changed.” Going forward, that’s not a weak position. It re-starts negotiations. It doesn’t say you’re desperate to settle. And it allows you to still credibly communicate negotiation strength where the merits are on your side.

Strategy #2: Tell them this is a one-time show of good faith.

Let them know re-bidding is a one-time thing you’ll never repeat, that the move you’re unilaterally making is one you would have been willing to make eventually, anyway, but that you’ll offer it now, as a show of good faith, and that if they don’t respond in kind, then the consequences are on them, not you.

Strategy #3: Ask them what your next move should be.

Since your opponent didn’t like your initial or last proposal, ask them: “Okay. Then what would be an acceptable proposal from me?” This can be a very powerful move. Obviously, you don’t have to embrace the number they give you. All you’re really looking for is for them to give you some number, because, once they do, the dynamic of negotiations will have subtly changed in your favor. Why? Because it gets the two of you talking solely about your anchor point, not theirs, and anchors tend to exert an inevitable, gravitational pull on the final settlement number. In other words, the more the negotiations focus on your anchor, not theirs, the better off you are.

Strategy #4: Offer a bracket.

Suppose you’re the defendant. You offer 100 and plaintiff says, “Too low, it’s a non-starter, we’re not responding.” You decide to bid against yourself. But instead of re-bidding at, for example, 150, you offer a bracket. Tell plaintiff you’ll go from 100 to 150, but only if they go to X. To them, it seems like you’ve negotiated against yourself. You unilaterally moved from 100 to 150. But your reality is different. If they accept, you’ll have gotten them to counter your 100 with X, to which you’ve now re-countered at 150. That’s progress. What if they turn down your bracket and offer you a counter-bracket instead? You can simply reply by offering your own counter-bracket, and look what’s happened: You’re back to normal negotiating protocols, each taking turns offering alternative brackets. Even if they reject your bracket altogether and refuse to substantively respond, you can always offer another bracket incorporating an acceptable (to you) move toward the center by both sides. And then keep doing that until eventually they either finally respond and you get back-and-forth negotiations back on track, or they never respond, which tells you that you never had a negotiating partner, or anything to lose, in the first place.

Bidding against yourself is rarely the right thing to do.

But sometimes. . .it is.

And if you find yourself in one of those rare situations, hopefully the above strategies will help you minimize the downsides of playing that difficult hand.

David Simpson
Mediator
www.simpsonADR.com