Think differently about the current negotiation framework
We have interviewed a lot of adjusters and managers in claims organizations nationally. We’ve also looked at countless files. These are all telling the same tale…..despite a changing landscape of personal injury claims, adjusters still use the same approach to negotiating. There are plenty of ways negotiations can be mismanaged. Here’s our top 3: – Number Trading – Using generalizations, not facts – Making offers by voicemail or email
While we’ve never seen number trading given a specific name
This exchange lacks reference to facts. Most commonly, negotiations conducted this way use generalizations about the nature of the case and the plaintiff and defendant. The problem with generalizations is that they do not reduce risk and uncertainty. They exaggerate it. Uncertainty benefits plaintiffs. The use of facts reduces uncertainty.
This problem isn’t helped by email or voicemail. If you are not able to deliver your position directly, the facts that drive your case are lost. So is your leverage.
The net result is this – neither party knows what was actually conceded…other than money. Money isn’t the concession. Money reflects the value of what was conceded. When there is no underlying concession “quid pro quo” rule of negotiation is broken – give something when you get something in return. The bottom line: start with facts to reduce uncertainty and increase your leverage.
Negotiate components to manage concessions
The value of a personal injury claim is the sum of its parts. Concessions can be managed at the “total value level.” So where do you start? Use each component of a claim – the emergency room bill, the pain and suffering for the neck, the lost wages….
There are two simple reasons for this. First, when you negotiate components you know, and can take off the table, what has been agreed to. This makes the gap between you and the other side transparent – it reduces uncertainty.
Second, you make concessions that matter. Let’s say you really want the plaintiff to reduce an emergency room bill as it is very inflated. You have to give something up to get that concession. This might be agreeing to give up what remains of your liability position, or agreeing to pay more for another provider’s bill where you believe you have less leverage.
Use component-level concessions to work your way toward a settlement. Keep track of what is on and off the table and the concessions that got you there.