Best and final offers are usually made at the very end of mediation after protracted negotiations. Either party can make a best and final offer or you can have competing best and final offers from each side.
End Game: Best and Final Offers
The evaluation of the best and final offer is what will result either in an impasse, an adjournment of the mediation to consider it more, or a settlement. The question is how and when to get to the best and final offer.
There are no right or wrong ways to convey your best and final offer. Ironically, before mediation begins, you already have that number but it often takes a long time to convey it.
Very rarely does anyone want to start a negotiation off with their best and final offer because they know the other side expects you to negotiate down from your first offer. So often you will see parties start with extremely high demands and extremely low offers to have space to move and to feel out the other side.
The downside to this strategy is that it could be extremely unsettling to one party, more so, if there were previous settlement negotiations and the offer conveyed at mediation is much higher or lower than the last offer made. This type of strategy can derail a mediation before it even begins. Under these circumstances, trust and rapport between the parties is challenged. To the extent that it can be saved, it will take a long time to just get the parties back to where they were in previous negotiations.
Mediation Efficiency with Best and Final Offers
In the end, the competing interests at mediation for best and final offers is efficiency versus getting what you perceive as the best deal. Getting quickly to best and final offers improves efficiency and reduces the time at mediation. Negotiating slowly with the traditional offer and counter offer over numerous rounds satisfies the perception and need for making progress and getting the best deal. I would suggest that it is possible to achieve both efficiency and getting the best deal at the same time.
Making Reasoned Offers
The way to do this is to start with reasonable offers that can be supported with credible arguments and verifiable facts. For example, if there were negotiations prior to mediation, any starting offer at mediation should not deviate much from prior offers unless there has been a substantial change in circumstances.
A substantial change in circumstances would include new information as to how liability or damages have changed. If that is the case, you must explain and show how liability or damages have changed, otherwise you run the risk of having your new offer seem unsubstantiated or unreasonable.
Similarly, any subsequent offer should be supported with a factual basis so it can be understood by the other side. An offer that does not include an explanation as to why and how it was calculated provides more questions than answers.
The Need to Share Information
When making a decision, people feel comfortable when they have information to consider. Good decisions can be made when you have information. When there is information, you can make a reasoned choice and justify it for better or worse.
When there is a lack of information, the opposite applies. People do not feel comfortable when they try to evaluate an offer without any supporting basis or facts. An offer without any reasoned and supporting basis appears arbitrary. In this instance, the unknown becomes an intellectual and psychological barrier to making a decision.
To achieve efficiency at mediation while getting the best deal at mediation, both parties should provide credible and reasoned offers that explain and show their supporting basis. To avoid protracted founds of negotiations at mediation, the parties should avoid making unnecessary offers that are arbitrarily high or low. When prior negotiations have taken place, the parties should no not deviate from those prior offers unless there is a substantial and verifiable reason for doing so.
When making offers be sure to back it up with information so the other party can fully evaluate the offer and it appears to be reasoned and made in good faith. Doing so builds rapport and trust. With rapport and trust, the parties are more likely to collaborate and can intelligently debate the merits of the offer. In the end, the goal is get as quickly as you can to where the rubber meets the road and a well-informed decision can be made.
Less conflict. More resolution.
Miami Florida Mediator