In 2014, prosecutors for the United States alleged that Jesse Litvak, a former bond trader for Jefferies & Co., of using a hardball strategy that included lies and deception to defraud investors of more than $2 million. At the trial in U.S. District Court in New Haven, Conn., prosecutors argued that Litvak defrauded investors by behaving deceptively in his trades of mortgage-backed securities in the aftermath of the 2008 financial crisis. In one bond negotiation, Litvak is alleged to have falsely claimed that a third party was selling bonds that his firm, Jefferies, actually held.
Such deception, if it occurred, may hardly be limited to Litvak. At the trial, former customers of Litvak’s testified that lies and misrepresentation are common in bond negotiations, as reported by Bloomberg News. One customer admitted to lying to Litvak about how much he valued a bond, adding, “Generally, I try to be truthful.” Another customer stated under oath that encouraging a negotiating counterpart to believe something false is a hardball strategy commonly used in his business.
The type of deception that Litvak’s customers describe is unfortunately not unique to bond trading. In your own negotiations, you may have caught counterparts in lies or been highly suspicious of certain claims.
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Be prepared for what a hardball strategy may look like
Lying is just one difficult tactic that negotiators face at the bargaining table. Others include “take it or leave it” offers, bluffs, threats, warnings, personal insults, and dirty tricks.
Take the efforts of trial lawyers in California to raise the $250,000 cap on damages for pain and suffering in medical malpractice suits. Working for the lawyers’ group Consumer Attorneys of America, Chris Lehane, a former adviser to President Bill Clinton, created a video calling for random drug-and-alcohol tests of doctors (an idea from a focus-group member). Then Lehane played hardball: He had the video air on the side of a truck that circled the hotel where the California Medical Association was meeting in 2013.
“Everyone has a game plan until you punch them in the mouth,” Lehane told the New York Times when asked about his overall strategy. “So let’s punch them in the mouth.”
How should you respond to those who believe that (figuratively speaking) punching you in the mouth is the best way for them to get what they want? How can you convince those who view lies and threats as necessary evils that focusing on shared interests offers richer rewards? Experts from the Program on Negotiation at Harvard Law School have outlined several strategies that can help you defuse a hardball strategy and foster a more collaborative mind-set.
Prepare for difficult tactics
When we are confronted with a difficult tactic, from an insult to an apparent lie, it can be hard to respond rationally. Difficult tactics knock us off balance, upset us emotionally, and often threaten our feelings of self-worth and competence, according to Harvard Law School professor Robert C. Bordone. The sense that we are being mistreated often leads us to replace reasoned analysis with hotheaded reactions.
Difficult tactics also narrow our perceptions of the options available to us in negotiation, according to Bordone. Feeling trapped by an unappealing offer or a threat, we typically identify only a few responses: Give in to the other person’s demands, reciprocate with difficult tactics of our own (and risk escalating the situation), or exit the negotiation altogether.
Through careful preparation, we may be able to head off the common tendency to overreact to difficult tactics. Bordone advises us to ask ourselves the following questions before beginning an important negotiation:
- What might this person say that would knock me off balance?
- What might I say in response?
- If I do lose my cool, what will I do to regain my balance?
Planning how you’ll respond to a hardball strategy lessens the odds that you will have a strong emotional reaction that will heighten conflict.
Diagnose the tactic
Thinking about the ways you might be challenged by the other party sets you up to diagnose the tactic you are facing rather than simply reacting to it.
Begin your diagnosis by considering the assumptions you hold about the possible motivations behind the threat, apparent lie, or other hardball tactic. A common conclusion, for instance, would be that your counterpart is simply not a nice person. But wait: What if she is used to working in an industry where “shading the truth” is the norm? What if her company rewards her based solely on the price she negotiates? What if she is under stress and having trouble staying focused? Clearly, there is a whole host of reasons someone might resort to difficult tactics—and it’s up to you to identify which one (or more) it is.
Active listening is one tool that can help you uncover a counterpart’s motivations and turn talks in a more productive direction. By drawing information out of the other party, you will begin to identify a range of responses beyond retaliating, backing down, or walking away.
How to reframe a hardball strategy in a negotiation
Difficult tactics often reflect a focus on positions, not interests. A budget director who tells a department head that he won’t accept anything less than an across-the-board 5% budget cut this quarter is stating a clear position, but the interests that underlie the demand remain murky.
As you know, identifying each side’s interests in a negotiation is a crucial step toward collaborating to identify new sources of value to be divided. But how can you convince a hard bargainer to reframe the negotiation—that is, to move beyond a shallow focus on positions to a deeper consideration of interests?
To reframe, begin by treating the other side’s hardball strategy as important information rather than rejecting it, writes William Ury in his book Getting Past No: Negotiating in Difficult Situations (Bantam, 1993). By doing so, you can avoid an argument over positions and enlist the other party as a creative problem solver.
In Getting Past No, Ury offers numerous strategies to persuade the other party to share valuable information. Here are five of them:
1. Ask “Why?” questions. Open-ended questions such as “Why is it especially important that we cut our budget by 5% this quarter?” display an interest in your counterpart’s concerns that can deepen the conversation.
2. Ask “Why not?” As Ury notes, people who are reluctant to reveal their concerns may be only too happy to criticize yours. Therefore, asking questions such as “Why don’t we cut the marketing budget instead?” may provoke your counterpart to reveal a wealth of information about his concerns (such as the likely effect on sales, his reputation, etc.) in the process of shooting down your idea.
3. Ask “What if?” Engage the other party in a brainstorming session by posing questions, such as “What if I could help you convince the CEO that my department’s new initiative will save the company well over 5% this quarter?”
4. Ask for advice. It may sound surprising, but you can often disarm a hard bargainer simply by asking for her guidance. If you need an administrator’s approval for an exception to company policy, for example, ask her how she would recommend that you proceed. She is likely to be flattered by the request and offer some helpful ideas.
5. Ask “What makes that fair?” If the other party’s position strikes you as unreasonable, Ury suggests that you say something such as this: “You must have good reasons for thinking that’s a fair solution. I’d like to hear them.” Then mention any fairness standards that you consider to be more relevant to the discussion, such as market practice or past precedent.
Be a more active listener
At a ward meeting in a Chicago suburb, discussion of an initiative to add new bike lanes to a busy street was under way. An older gentleman stood up and became agitated as he argued repeatedly that he considered the lanes to be a waste of money. A few minutes into the man’s speech, the alderman interrupted him, thanked him for his opinion, and called on someone else to speak.
After the meeting, a bike activist approached the man. “I can tell that you feel really strongly about the bike lanes,” she said. “Can you tell me more about why?” The man repeated his view that he thought the lanes would be a waste of money.
“I hear you saying that you think the lanes aren’t essential,” the bike activist said. “It sounds like you’re concerned about how city funds are being spent.”
The man agreed. He then revealed that his wife was wheelchair-bound. In his experience, the street under discussion was already too dangerous for her to cross. “Adding bike lanes will only make it worse,” he said.
“So, I hear that you’re very worried about your wife’s safety,” the bike activist said. The man agreed. The activist shared her own fear of riding her bike on the busy street with her toddler in tow. The two commiserated about careless motorists and ended up talking to their alderman about how they might address their shared concern.
In this exchange, the bike activist engaged in active listening, which involves three key components, according to Robert C. Bordone:
1. Paraphrase. Restate your counterpart’s main ideas as accurately and thoroughly as possible, resisting the urge to address only the points that you find meaningful: “I hear you saying that you think the lanes aren’t essential.”
2. Inquire. Ask open-ended questions that require elaboration, with the goal of encouraging the other person to reveal the reasoning behind his positions, demands, and conclusions: “Can you tell me more about why?”
3. Acknowledge. Listen for the feelings underlying your counterpart’s message and reflect them back to convey your understanding: “So, I hear that you’re very worried about your wife’s safety.” Don’t fear strong emotions: Bringing pent-up feelings to the surface typically helps dissipate them and allows parties to engage in joint problem solving.
Sometimes a negotiator will be so attached to her hardball strategy that you may need to confront her directly about the game she’s playing.
Naming the tactic that you’ve observed shows the other party that it is transparent and thus less effective than she might think, explain Deborah M. Kolb and Judith Williams in their book Everyday Negotiation: Navigating the Hidden Agendas in Bargaining (Jossey-Bass, 2003).
Naming must be executed with care: Talk about the person’s behavior, not her character, lest the discussion degenerate into name-calling, caution Kolb and Williams. Moreover, whether you make a joking aside about the tactic or deliver a serious challenge, use a label that the other party is likely to recognize and accept as valid.
Because most negotiators will abandon a tactic that is backfiring, naming can be as simple as pointing out that a strategy is ineffective. Kolb and Williams tell the story of Gloria, a media executive who had a difficult time reaching a literary agent on the phone to discuss TV rights for one of his writer’s books. To her shock, when she finally got through to the agent, he started attacking her competence. Rather than getting angry, Gloria kept her cool and said, “Obviously you are having a bad day. Why don’t I get back to you?”
Several days later, Gloria learned that the agent’s attack had been a stalling tactic: He didn’t have the TV rights yet and, in a panic, went on the offensive. She was right to disengage and postpone a potential negotiation until another day.
After you name a difficult tactic, it’s crucial to listen actively to your counterpart’s reaction. Consider how you might respond if a colleague says she will replace you on an assignment if you don’t give her full credit for work you engaged in jointly. “I feel as if you’re implying that you may take me off the case, but maybe that’s not your intention,” you could say. “Please tell me more about what you’re trying to convey.” If your tone is respectful and nonthreatening, you should be able to open up a conversation about how to meet both your needs.
How have you handled a hardball strategy in your negotiations?
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