It remains to be seen how the saga in Greece will end, but whatever your view on the rights and wrongs of the approaches taken by Greece and its creditors, the recent negotiations provide an excellent case study for litigation settlement. The key things to bear in mind are:
- Settlement involves compromise. Deals only get done if both sides are prepared to move from their ‘ideal’ position. Unless each side feels that they have ‘won’ something from the negotiations, a deal will not happen.
- Decide you strategy early. Decide as early as possible what your red line issues are and what an acceptable deal looks like. As discussions progress, come back to that initial assessment so that the emotions of negotiations do not prevent you from concluding a settlement you would have accepted at the outset.
- If you’re in a hole, stop digging. If you are likely to lose, unless you have dominant bargaining power (see 4 below) it is generally best to settle early. Of course, you must present your position as forcefully as possible whilst negotiating, but the longer a dispute goes on, parties become more entrenched, more time and money is wasted and it can be harder to reach agreement.
- Understand who has the bargaining power. If you are in a much stronger financial position and/or will be less affected by ongoing litigation (even if it ultimately ends in defeat), use your position to pressurise your opponent to accept less than they want. Equally, if you are in the weaker position, recognise this and don’t get too hung upon the merits of your position.
- Last minute additions can scupper deals. Once the key aspects of a deal are in place, raising a new material issue (like holding a referendum) can kill the settlement. It can be a good idea to seek some small additional concessions late in the day when your opponent has decided on settlement, but don’t go too far or you will be back to square one (or worse!), especially if you have less bargaining power.