Monday, January 13, 2020

Negotiations a Primer



Negotiations a Primer 
As many of our clients and colleagues know, at Shenwick & Associates we do a lot of negotiating and to date we have had many successes.
First, client’s ask what is an “out-of-court” settlement? An out-of-court settlement is a settlement that is obtained without Court intervention and without the use of a mediator or an arbitrator. Simply stated, an out-of-court workout is a negotiation between a party that owes money ( a debtor) and a party who is owed money ( a creditor).  The benefit of an out-of-court negotiation is that they can be cheaper, quicker and more effective than litigation, mediation or arbitration.
People often ask what is the secret of our success or the “secret sauce”? 
Provided below is a “blueprint” that we use in negotiating. 
  1. Preparation, preparation and more preparation! Many attorneys believe that since they do not need to draft a motion or file a legal brief, in a negotiation, all they need to do is pick up the phone and call their adversary and begin talking. Experience has taught us that nothing could be further from the truth. Prior to commencing a negotiation, a lawyer should engage in extensive fact gathering or due diligence, gathering as much information as they can from various sources about their adversary, counsel for their adversary and the nature of the conflict. 
For example, is the dispute related to a divorce where inflicting pain is more important than the dollars involved in the case? Does the dispute involve former partners one or both who may feel that a trust was breached as well as money being owed? 
If you skip the preparation step you are shortchanging your client and undermining your chance of success in the negotiation. At Shenwick & Associates we have developed a “negotiation worksheet” which we complete before we commence any negotiation.
Additionally, during the preparation step an attorney should formulate their strategy or tactics for the negotiation. 
2.                  Before we pick up the phone and call our adversary to begin the negotiation, we also review our client’s assets and liabilities and we engage in asset protection planning, to the extent possible (consistent with the law). Very simply we want to make sure that the client’s property and assets are protected as much as possible from creditor collection actions if the negotiations fail.

3.                  We also advise our client that in every negotiation there are two adversaries, our opponent and the “clock”. Timing is crucial in many negotiations and the pace and timing of a negotiation can often affect the outcome or be the difference between success or failure. 
If a client is anxious for a negotiation to be concluded quickly, oftentimes they will concede points and end up on the losing side of a negotiation, rather than allowing a professional to determine the pace of the negotiations. For example, does the negotiation involves a foreclosure (with a fixed day for the judgment of foreclosure), or is it a garden-variety debtor-creditor dispute where litigation has not yet been commenced and there are no deadlines pending?
4.                  We then commence the negotiation and negotiate aggressively on our client's behalf. As an experienced bankruptcy attorney (having filed hundreds of cases), we will often advise our adversary that if there is no settlement, our client will consider a bankruptcy filing and we will advise our adversary on what their likely recovery will be if a bankruptcy case is filed. This factor alone can often times affect the outcome of a negotiation. 

5.                  Also remember to consider the tax consequences of a settlement and specifically section 108 of the Internal Revenue Code.  “Relief of indebtedness” income can be taxable income and that issue must be discussed with the client and factored into the settlement. James Shenwick, Esq. has an LLM in Taxation from New York University Law School and is very familiar with this issue. 
Finally, while there is no guarantee of success, our 20 plus years of negotiating for clients has shown that using the above “blueprint” will often result in a successful outcome for a client. Client’s or attorneys who have questions about negotiations or negotiation strategy are welcome to contact Jim Shenwick at 212-541-6224 or jshenwick@gmail.com




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