Art Buchwald, Paramount Pictures, and the Cost of Litigation Instead of Negotiation

Learn how expensive litigation can be compared to dispute resolution processes from ADR like mediation

By PON Staffon / Business Negotiations

litigation

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?

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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

Claim your FREE copy: Business Negotiation Strategies: How to Negotiate Better Business Deals

Discover step-by-step techniques for avoiding common business negotiation pitfalls when you download a copy of the FREE special report, Business Negotiation Strategies: How to Negotiate Better Business Deals, from the Program on Negotiation at Harvard Law School.