The Clearinghouse at PON offers hundreds of role simulations, from two-party, single-issue negotiations to complex multi-party exercises. The following role simulation explores client/attorney relationships and the complexity of information exchange.
SCENARIO: Downtown Realty, Inc. owns the historic Bullard Houses, a set of 51 attached brownstones in the city of Gotham. The Houses, occupied for decades by the city’s wealthy elite, have fallen into disrepair and are currently occupied only by a few low-income families. Downtown Realty has been prevented from demolishing the Houses by the Gothic Landmark Commission. Consequently, Downtown is eager to sell the property, and has several offers on the table. One offer proposes to convert the Houses into apartments, another into townhouses, and a third into a sophisticated marketplace. Downtown has not yet seen the offer of a fourth developer, Absentia, Ltd. Absentia is unfamiliar with Downtown’s other offers, but is confident that its offer will be appealing, although it is unwilling to reveal its exact plans. Each of the four offers presents a quite different financial package, each of which must be evaluated by Downtown in terms of present value. Both sides must take into consideration financial needs, tax implications, personal interests, and future dealings with the city Zoning Board. The negotiation involves attorneys representing Downtown Realty and Absentia, Ltd.
MECHANICS: This case is essentially a one-on-one negotiation, but can be run effectively using teams of two. Individual preparation takes several hours, and involves extensive, but simple, present value calculations. Playing time can run from 40 minutes to one hour. Debriefing time should not be less than 30 minutes; substantially more is possible, up to 90 minutes.
For all parties:
Confidential Instructions for:
All of the above
Draft Teaching Note
PROCESS THEMES: attorney/client relations; BATNA; confidentiality; information exchange; lawyering; message analysis; misrepresentation; objective criteria; political constraints, dealing with; preparation; quantitative analysis; undisclosed principles
One of the main issues in this case is whether to settle at all. The complexity of information exchange may impede settlement in a single negotiation session. This situation brings up the general point that the best outcome of a negotiation sometimes is not to reach an agreement.
Several interesting questions of confidentiality are raised here, since the sellers have promised one of the developers not to reveal information about their offer, and the buyer’s agent is under strict orders not to discuss his principal’s plans. Under what circumstances, if any, can the attorney reveal information, and what other ways are there to avoid suspicion?
This case requires careful analysis of the available information both before and during the negotiation. Beforehand, negotiators should work through a variety of simplified, but reasonably realistic financial structures (bonds, mortgages, loans, etc.) to make a judgment about the relative worth of the various offers and possible alternatives. During the negotiations, while much information cannot be revealed, what can has important, probably unforeseen, but not obvious implications for the other side.
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