Back in 1998 when Art Buchwald sued Paramount Pictures over the Eddie Murphy movie Coming to America, the widely reported outcome was seen as a win for the late, beloved humorist. But Buchwald actually lost — and so did Paramount. There was a huge cost accrued by entering into litigation instead of negotiating.
Buchwald and his partner Alain Bernheim sued for nearly $6.2 million, claiming Paramount had based the movie Coming to America on their screen treatment called King for a Day. Buchwald was awarded $150,000 but, after three years of litigation, he was already out of pocket $200,000 … and Paramount was in the hole for nearly $3 million. There were no winners here, unless you count the lawyers.
In a litigation dispute like this, some say lawyers can do more harm than good. But when big dollars — not to mention big reputations — are at stake, how can you do without lawyers?
At the Harvard Program on Negotiation, we’d contend that’s the wrong question. A better one might be: How can you get the most out of your lawyer(s)?
In Beyond Winning: Negotiating to Create Value in Deals and Disputes (Belknap Press of Harvard University, 2000), Professor Robert Mnookin and his co-authors Scott Peppett and Andrew Tulumello argue that lawyers and clients often miss chances to turn disputes into deals:
1. Some cases (like Buchwald’s) are tried when they ought to be settled. Posturing often takes place in early stages — ‘Your case has no merit!’ — that makes it hard to try something else without fearing you’ll lose face.
2. When cases do settle, it may be after costs have passed the point of no return. A tactic used by many lawyers is to wage a war of attrition, running costs up during pre-trial discovery. That’s a game two sides can play. While that may be smart in a win-lose situation, it doesn’t make sense where both sides stand a chance to win.
3. Focusing on dollars may blind opponents to deals they might otherwise make — deals that could grow the pie for all sides. In a sexual harassment case, for example, the plaintiff may seek thousands in damages — but what she really wants is an apology and an improved workplace environment.
If you face a situation like Buchwald’s, consider handling it another way:
- Look at dispute resolution. Before the lawyers go to court, make them show how a lawsuit will be better for you than mediation.
- Seek ways to turn a dispute into a deal. Don’t focus merely on the dollars — identify all your interests, as in the sexual-harassment example above.
- Use tools to analyze potential outcomes, like dependency diagrams and decision trees. If the tool indicates there’s a 90% chance the judge will admit a crucial report, you might sue; but if the tool says 45%, perhaps you’ll negotiate instead.
- Open up to your lawyers. Ever hear the saying, ‘To a hammer, every problem looks like a nail’? Lawyers file lawsuits. But certain disputes — between family members who are business partners, say — may have key emotional dimensions too. Make sure your lawyer understands all your interests and concerns.
- Incentivize your lawyers. Don’t be afraid to say, ‘Work out a settlement in 120 days and I’ll triple your hourly rate … but take more than a year and I’ll fire you.’
- Use separate lawyers to settle. When the war ends, the soldiers go home and the diplomats take the field, so … after your lawsuit is worked out, why not send your attack dog back to his kennel, and hire a lawyer who specializes in settlements?
- Find low-cost ways to exchange vital information. Lawyers have admitted that 10% of the discovery process typically yields 90% of the important information. Rather than spend a fortune on discovery, why not negotiate an information trade?
Sometimes you must sue in litigation — to look tough, to uphold a “principle” — but far more often, negotiation produces better outcomes.
Negotiation is not a talent you are born with.
It’s a skill that you can learn.
Is there a time you have avoided litigation by using a mediator? Share you experience in the comments.
Related Business Negotiations Article:Finally, A Win-Win Deal from Congress
I’m not sure the Buchwald case is the best example you could use of the wastefulness of litigation. I doubt that a negotiated resolution would have produced a better outcome for Buchwald, because Buchwald was not really interested in money. He already had plenty of money. What he was really seeking in the lawsuit was recognition and vindication. He was trying to make a point. I think he also craved publicity, which he got plenty of from the lawsuit. Likewise, his lawyers did not make any money from the case, but they also gained a lot of publicity for Pierce O’Donnell’s fledgling entertainment practice. On the other side, Paramount was not as concerned with this particular claim as they were with the much larger issue of the fairness of the net profits definitions in their contracts. That issue was worth spending millions to litigate, quite apart from Buchwald. You could argue that Paramount might have been better off paying off Buchwald rather than continuing to litigate over the validity of its net profits formulas, but it is not clear that Buchwald was ever interested in settling, given his goals, and Paramount also felt it needed to resolve this issue in a very public way, given the hundreds of similar contracts it has entered into with talent.
Paramount is now in another Buchwald type lawsuit with another writer on a very great movie which they have failed to release the film for reasons unknown. They have failed to pay anyone involved in the writing, directing, acting or production of this western biographical film. It has been 3 years since completion and Paramount is just now trying to pull a “Buchwald” again Although even now the Judge has ordered them to pay immediately, they clearly are again rebelling and in contempt. Paramount needs to be slapped hard to get this corporate bullying to stop..