You hear it all the time: “Let’s put some serious pressure on the other side. Let’s offer them $1 million if they accept before the close of business today, and then our offer is going down by $50,000 a week after that, because we’ll spend that much preparing for trial. That’ll put the squeeze on ’em!”
What happens?
First, it’s a bluff. No one in the history of the world has actually stood by one of these offers. Maybe you’ll be the first, but don’t count on the other side believing it. So if you make one of these offers and stand by it, your case won’t settle.
Second, this type of offer annoys the other side. When the other side doesn’t accept your offer by the close of business today, and instead counters, you must then withdraw the money and offer less. But that’s not the way settlement negotiations work.
The other side will be annoyed: “We demanded $2 million. You offered $1 million. We countered $1.5 million. And now you’re offering $950,000? You gotta be nuts. When our demand comes down, then your offer goes up! That’s the way settlement negotiations work.” Followed by a few expletives.
Third, even people who occasionally say that they want to make a constantly shrinking settlement offer are offended when they’re on the receiving end of one of these bids. I’ve seen an awful lot of cases settle in my time. I’ve seen a fair number of people insist that making a shrinking settlement offer would be a good idea. I’ve seen some of those people be on the receiving end of increasing settlement demands: “My demand is $1 million if you accept today. It’s going up to $1.1 million next week.”
How do people who want to play this game react to being on the receiving end? “He doesn’t mean it. No one means it. And he’s a jerk, anyway. Anybody who thinks we believe that his demand will increase over time doesn’t live in reality. Screw him.” Followed by a few expletives.
Which ain’t exactly a good way to settle your case.
I know you’ve considered the idea of constantly shrinking offers. I know older folks with a lot of experience have suggested that it puts pressure on the other side.
But it doesn’t.
No one believes you when you play this game. And you’ll annoy people by trying.
Mark Herrmann spent 17 years as a partner at a leading international law firm and is now deputy general counsel at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Inside Straight: Advice About Lawyering, In-House And Out, That Only The Internet Could Provide (affiliate links). You can reach him by email at inhouse@abovethelaw.com.
Our Offer Is A Million Bucks Today, And It’s Going Down Every Week After That curated from Above the Law
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