Robert Adler on "Negotiating with Liars"What to do with bad actors? In the case of people who lie during negotiations, Robert S. Adler, Luther H. Hodges Sr. Scholar in law and ethics at the University of North Carolina's Kenan-Flagler Business School, has several suggestions.
In his article, "Negotiating with Liars," in the Summer 2007 issue of the MIT Sloan Management Review, Adler explains protective steps you can take prior to and during a negotiation.
Prior to the negotiation
- Due diligence "If suspicions arise about the other side's bona fides or good faith, asking that person to disclose credentials, credit record or personal history forces the individual to prove his or her legitimacy as a bargaining partner."
- Ground rules "... some experts have argued that parties (especially lawyers) should consider entering into pre-negotiation agreements whereby they commit themselves to negotiate according to higher standards [than the legally required minimum]; specifically, they might agree to disclose all material information, abstain from unreasonable delays and abstain from imposing hardships on the other party to force favorable settlements."
- Look for potential signs of deception "Despite evidence that there are no reliable behavioral 'giveaways' of lying, the reality is that some individuals are incompetent liars."
- Ask questions in different ways "If the questioner isn't convinced that the complete story is forthcoming, he or she can try another approach."
- Ask the other party to come clean If "one feels that the other side is not being forthcoming, one should push the other party to reveal all relevant information. To do that, one needs to ask whether there are any material facts that have not been disclosed in effect to come clean about knowledge."
- Ask questions to which you already know the answer a time-honored technique for uncovering lying.
- Take notes "Expert negotiators typically take good notes on critical points to remove any potential ambiguity. Some read the other side's words back to them and ask them to confirm [the wording] for accuracy. Others go so far as to bring another party in as a witness to the discussion."
- Include written claims in the final agreement "In cases where the other party's representations about facts are fundamental to making the deal acceptable, it makes sense to insist that the relevant representation[s] be included in the written terms of the deal."
- Use contingent agreements "... a 'contingency' provision in the contract ... provides specific protection should the [other party's] representation turn out to be false. In contingency agreements, the parties agree in advance on consequences and remedies (including monetary damages) if and when certain events unfold." In a note, Adler adds, "Contingent agreements are often used in circumstances in which the parties have different and irreconcilable visions of the future. Rather than argue endlessly about what the future holds, the parties can simply put a contingency in the agreement that provides different outcomes depending on which version of the future proves accurate."
- Trust but verify "Society has developed a number of legal and regulatory tools (including performance bonds and escrow agents) to help provide protections against dishonesty and bad faith in bargaining. Depending on the circumstances, negotiatiors should always consider whether such mechanisms are appropriate for achieving their objectives."