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Negotiation and settlement, what do they mean? These are not words some of our clients want to hear. These are not words some attorneys want to acknowledge. But these are ideas and actions necessary for the Workers’ Compensation system to exist and move forward.

Too often, we attorneys lose sight of our clients’ needs and goals. I believe that many times we do not communicate the goals of the case in a concise manner, thereby confusing our clients and limiting options for case resolution. Our clients and we put ourselves in corners, which prevents timely case closure.

From an applicant’s standpoint, what is the benefit to the injured worker by keeping the file open and languishing? Would it not be better to get these people out of the system and back to work, if possible? From the defense standpoint, keeping files open is one way of continuing a flow of income, but that is only for the short term. When clients believe the files are churned, they pull the files or stop sending new files. They lose confidence in their attorneys and in the system.

Negotiation is a process used to reach mutual agreement. It is an art, not a science. The process may be between two parties or several parties; it may be cooperative or competitive. But in either instance, the objectives must be based upon an understanding of the facts and law.

In a cooperative setting, the negotiation process satisfies the needs of the parties; attempts to provide the best value for each party; apportions risk to achieve the goals of each party. In a competitive setting, the parties evaluate the best value based upon a demand; evaluate various criteria for case resolution and evaluate conditions for settlement.

In the workers’ compensation setting, many times I see and hear attorneys attempting to use the competitive model of negotiation. However, many times either one or both of the parties have not thoroughly evaluated their cases and make demands without any objective basis. Other times, parties attempt to use the cooperative model without fully evaluating their clients’ needs and requirements.

In order to successfully negotiate and settle a claim, the goals need to be clear. We should analyze the underlying interests for the demand/offer, determine and communicate priorities, and assess our opponent’s priorities.

Negotiating settlements involves power, time and information. Power is the ability to exert control over another. One is able to use various options over an opponent’s options. Power involves legitimacy of position, expertise, judgment, credibility, confidence and persuasive communication. The party with more power needs to know when and how to use it. If you are not credible and not confident in your position, you put yourself behind the eight ball.

Time involves a party’s urgency to achieve a result. The party with more time may have an advantage over a party who is in a hurry to resolve the claim.

Information requires the parties to know the needs and wishes of each side. Is there an urgency to achieve a result? One can pick up clues of an opponent’s needs by the way they act, and by knowing the concession history of the other side.

In an earlier writing, we discussed civility and the lack of it at the WCAB. Conflict management is an important tool to resolve cases and move on to the next matter. Avoid reaction and do not take your opponent’s actions personally. Acknowledge your opponent’s message and seek clarification on parts of the message you do not accept. It is perfectly correct to agree with parts of your opponent’s message, if you agree with it.

In the cooperative settlement process, collaborative discussions amongst the parties avoid missing simple or advantageous solutions. Build up an investment in the process of other parties and use consensus and collaboration to settle your case. Unfortunately, in some instances, our own clients see this form of settlement process as weakness. They ask why we are not fighting hard enough. They ask why we are advocating for the opponent’s position.

This is not a form of weakness, but a tactic used to resolve conflict and cases. Our clients must understand the tactic is used to facilitate the goals which have been established.

In the competitive settlement process, one may exploit one’s strengths and the opponent’s weaknesses. However, at times it is advantageous to compromise your strengths to secure an agreement. Such an accommodation may be used as a basis for future settlement negotiations.

In settling our cases, we need to know our goals and the goals of our clients. We need to know the facts to support our positions and not run the risk of a loss of credibility. From a defense standpoint, support your position by providing notices, reports, letters, EOBs, bill review documents, witness statements, etc. If money is due, then acknowledge it and negotiate the sum using a process most likely to provide an advantage for you and your client.

Be civil and avoid personal attacks. Such tactics build walls which are difficult to overcome. In a recent case involving restitution, my opponent agreed to reimburse my client a substantial sum of money on the day of trial. Although there were many frustrating moments, knowing the law, providing a trial brief prior to the trial and outlining our position in an effective manner resulted in the settlement. Had the matter gone to trial, appeals would have kept the matter open for a long time and perhaps established some bad precedent that neither defense attorney wanted.

Keep the faith and see you at the Board.

Michael G. McDonald is the founder of McDonald Law Corporation in Concord, California and a Certified Specialist in Workers' Compensation Law, State Bar
of California. He is a Director for the California Workers' Compensation Defense Attorneys Association.

For more information, click here.

Michael G. McDonald, Esq.

McDonald Law Corporation
1800 Sutter Street, Suite 430
Concord, CA 94520-2563
Voice: (925) 363-4380
Fax: (925) 363-4352
Other locations: Sacramento, San Jose and Fresno

The Defense Perspective:
Negotiation and Settlement in
Workers’ Compensation
by Michael McDonald, Esq.

In this series, Michael G. McDonald, Esq. of the McDonald Law Corporation offers practical advice to WC lawyers and adjustors.
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