• Boon Gan

Must We Meet in the Middle?

Updated: Mar 24, 2021

Settlement usually requires parties to compromise in the sense of moving towards the other party and away from his initial position. However it is not necessary that parties only compromise on the amount to be paid, and it is not necessary that parties must meet in the middle of their initial positions.

For example, lets say A and B want to divide an orange. The normal meeting-in-the-middle approach means that each person gets half an orange because it is "fair". But that assumes that both parties want both the skin and the pulp of the orange - what if A wanted only the peel to make marmalade, and what if B only wanted the pulp to make juice? By splitting the difference, A and B got less than what was optimal for themselves,.

In order to avoid the loss of benefit from a simple splitting approach, it is important for parties to be able to explain their motivations to each other. That's why mediation and private negotiations are more likely to produce settlements, because simple letters of offer rarely explain the underlying rationale for offering certain terms. In order to maximise your gain, you need to create the opportunity to move the conversation away from a simple sliding scale or spectrum.

Here is a case in point:

  1. A client who provided warehousing services had a customer who suddenly vacated the premises without paying the bills for the last 6 months.

  2. After an aborted attempt to stop the proceedings, the customer simply offered a flat figure to settle the dispute. This offer was less than a third of the amount which we had claimed on our client's behalf.

  3. The client was obviously not happy, and simply instructed me to counter-offer to have the full amount paid in several instalments.

  4. Surprisingly, the customer's reply was that if client was not willing to accept a lower amount, then it was not a real compromise. However, the customer was willing to pay for one particular type of service rendered.

From the exchange, I could see that instead of bargaining on the total amount, starting the discussion with the types of services that the customers would be willing to pay for would be more effective in obtaining the settlement. If the customer showed resistance towards paying for certain types of services, we could then address the specific objections.

In the end, we managed to obtain a mediated settlement for about 80% of the claimed amount (even after setting off the customer's counterclaim). Indeed, there were specific objections such as not knowing how much the client had sub-contracted and paid third parties for certain services, but being willing to pay client on a reimbursement basis, so we provided additional documents to prove client's expenses (and ironically the customer got worn out examining those documents!), which lead to the customer conceding certain categories, and offering a higher global amount on the rest. Best of all, client saved 5-digits in further legal fees to bring the dispute to trial, exceeding the 20% and costs incurred which client appeared to have given up as part of settlement.

So when someone appears to be lowballing or meeting in the middle of brackets, resist the temptation to get upset at an unbalancing attempt. Keeping the conversation going, by asking clarifying questions or making counter-offers, creates the opportunity to better understand what is up for negotiation, and a way out of the rut of splitting the price difference.

Receiving unproductive or insincere offers to settle? Contact me at or message me on LinkedIn (Boon Gan Ng) to find out how to obtain a better settlement.

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