Betting the company : complex negotiation strategies for law and business

362 Pages·2013·1.485 MB·English

by  Andrew Trask, Andrew DeGuire

BETTING THE COMPANY
This page intentionally left blank
B E T T I N G T H E
C O M PA N Y
Complex Negotiation
Strategies for Law
and Business
Andrew Trask
Andrew DeGuire

1
3

Oxford University Press is a department of the University of Oxford. It furthers the University’s objective of
excellence in research, scholarship, and education by publishing worldwide.
Oxford New York
Auckland Cape Town Dar es Salaam Hong Kong Karachi Kuala Lumpur Madrid
Melbourne Mexico City Nairobi New Delhi Shanghai Taipei Toronto
With offi ces in
Argentina Austria Brazil Chile Czech Republic France Greece Guatemala Hungary
Italy Japan Poland Portugal Singapore South Korea Switzerland Th ailand
Turkey Ukraine Vietnam
Oxford is a registered trade mark of Oxford University Press in the UK and certain other
countries.
Published in the United States of America by
Oxford University Press
198 Madison Avenue, New York, NY 10016
© Oxford University Press 2013
All rights reserved. No part of this publication may be reproduced, stored in a retrieval
system, or transmitted, in any form or by any means, without the prior permission in writing of
Oxford University Press, or as expressly permitted by law, by license, or under terms agreed with
the appropriate reproduction rights organization. Inquiries concerning reproduction outside
the scope of the above should be sent to the Rights Department, Oxford University Press,
at the address above.
You must not circulate this work in any other form
and you must impose this same condition on any acquirer.
Library of Congress Cataloging-in-Publication Data
Trask, Andrew, author.
Betting the company : complex negotiation strategies for law and business/Andrew Trask,
Andrew DeGuire.
pages cm
Includes bibliographical references and index.
ISBN 978–0-19–984625–2 ((pbk.) : alk. paper)
1. Commercial law—United States. 2. Negotiation in business—United States.
I. DeGuire, Andrew, author. II. Title.
KF889.T73 2013
658.4'052—dc23 2012044824
9 8 7 6 5 4 3 2 1
Printed in the United States of America on acid-free paper
Note to Readers
Th is publication is designed to provide accurate and authoritative information in regard to the
subject matter covered. It is based upon sources believed to be accurate and reliable and is intended
to be current as of the time it was written. It is sold with the understanding that the publisher is not
engaged in rendering legal, accounting, or other professional services. If legal advice or other expert
assistance is required, the services of a competent professional person should be sought. Also, to
confi rm that the information has not been aff ected or changed by recent developments, traditional
legal research techniques should be used, including checking primary sources where appropriate.
(Based on the Declaration of Principles jointly adopted by a Committee of the
American Bar Association and a Committee of Publishers and Associations.)
You may order this or any other Oxford University Press publication
by visiting the Oxford University Press website at www.oup.com.
For Nikki, Eileen, & William and Kathleen & Alexandra
This page intentionally left blank
Contents
|
Acknowledgments xiii
1. Elements of Complex Negotiation | 1
1.1 When Good Deals Go Bad | 1
1.2 Th e Nature of Negotiation | 6
1.3 Th e Problem of Complex Negotiations | 11
2. Nonrational Judgments | 17
2.1 Heuristics—When Our Mental Shortcuts Get Us
into Trouble | 2 1
2.1.1 Priming and Anchoring—Taking Cues from
Context | 23
2.1.2 Hyperbolic Discounting—Birds in Hands | 2 6
2.1.3 Loss Aversion | 27
2.1.4 Herding Behavior and Normality Bias—
Th e Lemming Urge | 28
2.2 Professional Biases—How Training Colors
Our World | 31
2.2.1 Businesspeople | 32
2.2.1.1 Executives | 32
2.2.1.2 Entrepreneurs | 33
2.2.2 Lawyers | 34
vii
viii | CONTENTS
2.3 Personality and Emotion—Nobody Is Spock | 3 5
2.3.1 Personal Attraction—Don’t Fall in Love with
the Deal | 39
2.3.1.1 Charisma | 41
2.3.1.2 Trust | 45
2.3.2 Personal Animosity—“Th at F@$%ing Guy” | 48
2.3.2.1 Anger | 4 9
2.3.3 Overconfi dence—Everyone’s Above
Average | 52
2.3.3.1 Practical Implication | 55
2.4 Conclusion | 58
3. Multiparty Negotiations | 60
3.1 Multilateral Negotiations—More People,
More Problems | 63
3.1.1 Auctions—What’s Your Bet on the Future? | 66
3.1.2 Necessary Th ird Parties—You Can’t Avoid the
Tollbooths | 69
3.1.3 Spoilers—Th e People from Left Field | 71
3.2 Team Negotiations—I Love My Team/I Hate
My Team | 73
3.3 Negotiations with Organizational Constituents—
Behind the Table | 77
3.3.1 Board of Directors | 80
3.3.2 Lawyer-Client Relationship | 82
3.3.3 Shareholders | 82
3.3.4 Th e Other Side’s Constituents | 83
3.4 Practical Applications | 84
3.5 Conclusion | 88
4. Multiple Decisions | 89
4.1 Multiple Options | 94
4.1.1 More Options, More Problems | 94
4.1.2 Filtering | 96
4.1.3 Information Leaks | 97
Contents | ix
4.2 Multiple Issues | 98
4.2.1 Contingent Issues—Do Not Pass Go | 99
4.2.2 Linking Issues—Leverage | 101
4.2.3 Subtracting Issues—Making Th ings
Simpler | 106
4.3 Agendas—Th e Secret Weapon | 107
4.3.1 Sequential vs. Simultaneous Negotiations—
Chess vs. “Rock, Paper, Scissors” | 109
4.3.2 Strategic Ordering | 110
4.4 Practical Applications | 112
4.5 Conclusion | 114
5. Transactions Over Time | 115
5.1 Path Dependence—Starting Points Matter | 119
5.2 Time Asymmetries—Why Someone Prefers to
Go Slow | 1 23
5.3 Exogenous Shocks—What Happens When Stuff
Happens | 127
5.4 Learning—Why Some Confl ict May Not Be
So Bad | 131
5.5 Sequential Strategy—Why It Pays to Be Nice | 133
5.6 Practical Implications | 136
5.7 Conclusion | 142
6. Regulated Negotiations | 143
6.1 Information and Disclosure—Basic Concepts | 148
6.2 Obligations/Duties to Constituents
(Corporate Law) | 151
6.2.1 Th e Corporate Form | 152
6.2.1.1 Board of Directors | 153
6.2.2 Th e Duty of Loyalty | 156
6.2.3 Th e Duty of Care | 159
6.2.4 Th e Business Judgment Rule | 162
6.2.5 Other Duties to Constituents (Lawyers’ Duty
to Clients) | 163