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

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