Brackets—A Negotiation Tool

There are all sorts of “tools” used in negotiation.

They seem transparent. But for one reason or another they work.

And when I write “work” I mean that they help determine whether settlement is possible.

There’s a technical term for whether “what’s possible” is going to result in a settlement. It’s ZOPA (Zone Of Possible Agreement).

It’s the range where the defendant’s and plaintiff’s acceptable settlement ranges overlap.

Brackets are one of the tools used to find out whether there’s ZOPA.

Here’s how they work and when they’re employed.

The parties negotiate. The plaintiff comes down by $X. The defendant comes up by $Y. This goes on and on.

Neither side wants to make a big move because they’re worried it won’t be reciprocated.

A bracket helps parties get past this fear of unrequited movement.

Let’s say the plaintiff deploys the first bracket. Before the bracket the plaintiff was at $935,000 and the defendant was at $115,000. It will sound like this: Plaintiff will move to $750,000 if defendant moves to $300,000.

That doesn’t mean the plaintiff has dropped to $750,000. It means that plaintiff will drop to $750,000 if the defendant comes up to $300,000.

There are four ways the defendant can respond:

1. Accept. Then the parties are negotiating between $750,000 and $300,000.

2. Reject. The parties are still at $935,00 and $115,000.

3. Propose a Counter Bracket: The defense may propose a bracket indicating they will move to $150,000 if plaintiff moves to $300,000.

4. Just move $X. Even though it’s basically negotiating against themselves, some insurance adjusters will move $X every time regardless of what the plaintiff does just to dole out their authority (or, more likely, a portion of it).

When structured the right way and deployed at the right time brackets can be really effective because they help assuage the fear and insecurity that can get in the way of negotiating a deal.