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In his latest UK200Group blog post, Jonathan Russell of member firm ReesRussell, discusses the art of negotiation.

Jonathan Russell
Somewhere I am sure in the media there will be some comment about Brexit – the state of negotiation, the concept of what ‘no deal’ is and other deeply exciting stuff to those either interested in politics or economics. The problem is however we have a series of conundrums in the various factions trying to balance their own vested interests and ultimately let us be honest it is usually the interests of the individual which gets least air time.

Let us start with the simple process of negotiation. As an experienced mediator I have seen many different negotiating styles, but ultimately the process can be broken down into three phases and two outcomes. I always say that a good negotiation/mediation is where the agreement leaves both sides equally unhappy. I say unhappy because in no negotiation should, or will, one party get everything they want. So let us look at the phases:-

• Initial phase – this is the posturing stage. Parties are adamant that they are right and they have the most arguments in their favour and the other side is totally unrealistic in their position and essentially the two parties start from a position which they probably accept is unrealistic, on the basis that they know they will have to give ground.

• The negotiation phase – this is the longest phase and may or may not lead to a settlement. Here the technique is to give ground to the other party; ideally things which mean absolutely nothing or little to your side but you can sell as a great concession. It is hoped that with sides both giving and taking, the negotiation will ultimately reach the main issues. During this phase many offers of settlement will be made and rejected and varied.

• The conclusion – this is when either you accept there is a deal, or that a deal is not possible. In simple terms, each party will have a point beyond which they will not pass – now if those points overlap then a deal is possible; if they don’t cross then there can be no deal.

The problem we have is that of timing; and this comes from conducting many negotiations and mediations. The initial phase can be controlled – the opening statements so to speak but the negotiations will last as long as they possibly can. This is because both sides will be wanting to wring out every little bit of ground they can, and don’t want to ‘give up’ just in case they can ‘win’ a little more. Therefore, most mediations have a time frame, and it will be as that time runs out movement accelerates.

Think of it as a car journey where you have just about enough fuel to reach your destination. At the start of the journey you will be relaxed, but as the fuel level drops, the proximity of the next fuel station will become more important. There are those (like my wife) who would enter panic mode early on, whereas others will still be happy with the fuel light blinking and the distance to empty in single figures.

So I sit here thinking of the Brexit negotiations which in theory should take 2 years, and we are not yet halfway – I wouldn’t expect to really see much movement at all yet, and true to form we haven’t. What we already have is the idea of a transition phase, (in my car analogy the equivalent of a quick stop and put a few litres in) which, of course, takes the pressure off the negotiations.
So in normal negotiations we might consider everything normal, but we have too very major factors that cause a problem. Politics and business.

Politics
For politics you can also include media, because they go hand in hand. Politicians have a mind-set which is geared around the electoral cycle and their own job preservation – so no matter how much we hear we must all work together for the good of the country, that will always be tempered by the individual politician’s personal position. We also have the political position of a minimum of 28 different countries, with a minimum of 2 political (usually many more) factions in each country, and all running to different timetables. So we have politicians working to their electoral timetables against their need for media coverage which is in their favour – in short a recipe for disaster.

Business
Business generally has a much longer timetable than political cycles, but that causes bigger issues as they need to be planning further in advance, and the one thing business hates is uncertainty. Article 50 has been triggered, so that is 2 years which in business terms is something that needs to be planned for now, but the negotiating process suggests nothing until close to the deadline, and even the deadline could be put back. The plus side however, is that ultimately big businesses can lose patience with political process, and exert so much pressure things happen – for instance the departure of Sterling from the ERM was finally driven by the City.

So, as of today we have an increasingly vocal UK side to be ready for no deal – quite right that is the least popular position for the EU, (and for UK but this is negotiation) and if UK does not talk about and prepare for it, it is hard to convince the EU we might accept it. On the other hand, we have the EU saying that they would make life difficult for 20 years if there was no deal – quite right, again they don’t want no deal so emphasise the issue for the UK. EU want more money on the table before they will talk trade; the UK won’t offer more money until they know what they will get in return; actually, here UK probably has the better argument.

So, we remain, and probably will remain stuck in phase 2 until such time as business makes something happen and, of course, that is dependent upon business wanting that to be the case.


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