My Dad Can Beat Up Your Dad, Part II

A year ago, I told you about a file on which I was working.

My client (a family business) quoted and did work for a customer.  The customer (a big company) didn’t want to pay.

We sued for about $14,500.  The customer requested a settlement meeting and we agreed.  

We asked them to explain their problem with paying.  The customer had problems with four jobs.  On three of them, it was the amount invoiced, despite the written quote for that amount.  On one job, they claimed quality issues, amounting to $5,750.

On the quality issue, they had claimed they paid $5,750 in February 2002, for another company to fix the problems.  Interestingly, the only invoices that they could produce to back up that claim were invoices for about $2,500, dated December, 2002.  That was a discrepancy that I was saving for trial.

They offered to pay $7,500 and if we did not accept it that day, then the offer would be $5,000.  Then came the kicker: Their lawyer said that his client was a bigger company and had more money to spend than my client, so my client would be smart to take the money now. 

Bad move.  They figured that my client would be afraid to take on the big company and would crawl away with whatever scraps we could get. In fact, they had succeeded in steeling my client’s resolve and ensuring that he would not take a lousy offer.

Our offer was $13,500.  As far as we were concerned, we had written quotes for three of the jobs and they had poor evidence on the quality issue, so there was little reason to compromise further. 

I said last year:  “I very much doubt that this case will settle now, unless the other side comes up with a lot more money.  Maybe they will realize that my client will not be bullied and be more realistic with another offer.”  I wrote that I would let you know how it turned out.

The case demonstrated one element of negotiation:  you don’t make counteroffers when the other side is being unrealistic.  You ignore their bad offers and wait for them to come back to the table with a better one. 

There is a saying that, when negotiating parties are at an impasse, the first person who talks loses.  Our offers were far apart, and we simply moved the matter to trial. 

As trial loomed closer, they offered $7,500 again.  We ignored it.  Then came $9,000, which was a “final offer”, then $11,000.  Then, a week before trial, came $13,500.  I went back and then asked for costs, as our offer required some payment of costs. 

They paid $14,500.  I am not gloating, but my client is sure enjoying the moment.  On every occasion, it was the other party who flinched first. 

Litigation 101:  NEVER underestimate the other party.  Both the other party and their lawyer forgot that, underestimated my client, and paid for it.