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The use of brackets as a negotiation tool in mediation

by Deborah David on 26 Nov 2012

brackets in negotiation

"Bracketing" is a mediation term used to summarize the process of negotiating the high and low of the zone in which bargaining will take place.

Anecdotally, it appears that the explicit use of the bracketing exercise occurs more often in US mediations (where it is used frequently) than it does in the UK.

Origins of bracketing in mediation

What we now call bracketing has, to a certain extent, actually long been implicit in the negotiating process, as a matter will not settle until the parties are within the reasonable settlement range. Having received a name and thus recognition as a mediator's tool, it is now used extensively in US mediations, where the process developed in response to a problem that often infects the mediation process.

One side begins the bargaining discussion with an offer presumably intended to send a message of firm resolve, but which is clearly unrealistic given the nature of the dispute. The other side responds with an equally unrealistic offer. Both offers are well outside the range of numbers that is likely to lead to constructive bargaining and ultimately to resolution. The parties quickly fall into a pattern of reactive negotiation mirroring each other's small incremental movements, until the dialogue ends in frustration.

Until the parties find their way to a bargaining zone bracketed by reasonable numbers, resolution remains out of reach.

Bracketing as a mediation technique

Each party invariably complains that the other is unreasonable, with the claimant arguing that it has come down X pounds while the defendant has not matched the movement, and the defendant making similar arguments in reverse. They have missed the point that the measure of progress is not how far a party has moved from its initial, often unrealistic position, but how far it has moved toward a number that realistically has a chance to settle the matter.

By this point, the mediator has had in-depth conversations with the parties and their representatives, exploring not only the nature of the claim and the defence, but also the parties' needs, interests and priorities, as well as risks. As a result, she or he likely has sufficient information to initiate a discussion about the numerical zone within which constructive bargaining is most like to occur. The mediator introduces the concept of bracketing based upon her/his experience and knowledge of the parties' positions.

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The bracketing exercise is often introduced by the mediator, who proposes a conditional range: "If the other side will offer X, would you be prepared to counter with Y." Depending on the negotiation styles of the parties, it might also begin by the mediator asking where the parties see the reasonable negotiating range. As is so often the case, one or other of the parties complains that it is not going to counter at all, because the other's last number would effectively require the party to "bid against" itself. At that point the obvious question is: "What number would prompt you to counter?" And, so starts the process of negotiating the bargaining brackets.

The exercise allows the mediator and the parties to assess more accurately the true distance between them and to re-bracket the discussion.

A typical bracket settlement scenario

  • Defendant begins at £20,000; claimant at £150,000.
  • Defendant goes to £25,000; claimant to £ 145,000.
  • Defendant goes to £27,500; claimant to £ 142,500.
  • They are matching each other, going nowhere and increasing the tension and frustration of everyone involved. Each side claims that the other is outside the range of good-faith negotiation. Meanwhile, the mediator has completed a great deal of exploration about the dispute and the real interests and priorities of the parties.
  • The mediator suggests the claimant consider a conditional bracketed offer in order to reframe the negotiation. "If the defendant will come up to £40,000, will you consider countering at £125,000?" The question repositions the discussion within a more realistic range.
  • The claimant agrees to the concept, but adjusts the numbers. "We will come down to £125,000, if the defendant will go up to £50,000."
  • The mediator might present this as: "Claimant will drop £17,500, if you will come up £12,500.
  • Eventually, they agree to a bracket of £110,000 and £47,500, and negotiate within that range.
  • During this entire process the participants are continuing to re-evaluate their positions, confront risks and test realities.
  • Once they have agreed to new brackets, they are within a range that each side accepts—for the purposes of settlement discussion—as reasonable, and the end is in sight. The matter resolves at £72,500.

Mediation and bracketed offers

Whether or not a formal bracketing negotiation takes place during mediation, it is helpful in preparation for the mediation process to consider with the client the range in which productive bargaining is most likely to occur. This will help decide initial offers and responses and the rate and amount at which those numbers change as the bargaining takes place.

Negotiation during mediation is bracketed the moment an initial offer and response are made. However, the high and low of this bracket are not negotiated and are typically unacceptable to the parties. Negotiated brackets work because agreement on the bracketed numbers that will frame the bargaining reassures the parties and their representatives that the other side intends to make a reasonable effort to do a deal.

Legal representatives have several options when a conditional bracketed offer has been suggested.

  1. The party and its representative might counter with different bracketed numbers, adjusting both the high and the low;
  2. They might accept one of the bracketed numbers, but counter with an adjustment of the other number.
  3. They can continue the negotiation process using the same format of offering and responding to conditional brackets, or they can return to the more traditional format of bids and counter-bids.
  4. And, finally, in the flexible environment of mediation they may reject altogether the concept of a negotiated bracket and continue the negotiations as before—or end them entirely.

Bracketing is part of the process of finding common ground and ultimately a resolution. Agreeing to bracketed numbers does not lead inevitably to “splitting the baby” right down the middle, though it will usually end in a resolution that falls into a mid-range between the high and low of the bracket.

As a consequence, a critically important aspect of negotiating the brackets is determining one’s opening position by selecting numbers that move the other side toward an acceptable common ground. The numbers need to be a realistic reflection of the risks and realities that are attached to the case or conflict. Without giving away too much at the start, they need to be calculated to keep the discussion alive.

Once the brackets are agreed and bargaining is underway, the characteristics of skillful negotiation remain constant. Bargaining within negotiated brackets need not be an inexorable march to the precise middle. However, positions need to be rationally related to the circumstances with reasonably articulated grounds, and expectations need to be managed. Moving too far at the outset risks bringing a party too quickly to its bottom line, leaving too little room to maneuver.

The process of negotiation continues to require very careful calibration of offers and counter-offers. The amount of movement in a party’s offers as the bargaining unfolds within agreed brackets can be used effectively to communicate the degree to which a party is committed to a position. The history and culture of negotiation in the litigation context has created expectations about how the process will unfold. Unexplained departures from those expectations send unintended messages.

There is an important caveat that attaches to the use of “conditional” bracketed offers. Once the numbers—conditional or not-- have been communicated they have entered the negotiation environment where they create assumptions and expectations. The numbers a party communicates anchor that party’s position and inform the other side’s assumptions about where that party is willing to settle. While a party is not technically bound by conditional numbers, the numbers will never be forgotten.

Winning at mediation

Topics: Mediation

Deborah David

Written by Deborah David