Dr. Joseph Klatt

Dr. Klatt attending the Strauss Institute For Conflict Resolution at the Pepperdine University School of Law

Recently I was reflecting on the disputes I have mediated. I looked for commonalities throughout the array of cases. In all of these cases, whether private Commercial Mediations or Court Mediations, I recognized that, for the most part, I utilized the Commercial Mediation Model with its Four Functional stages:

I noted in each case that the power of the Mediation Model operated as a dynamic force. I searched for other commonalities.

Suddenly I spotted it. I was doing something else. I was using a Real Estate negotiation technique I had developed many years ago to identify areas of Agreement, Non-Disagreement Non-Agreement and Disagreement between the parties. I call this technique "Slice and Dice." Viewing mediation as a structured assisted negotiation, the Slice and Dice technique becomes a powerful tool for the Mediator.

To Slice and Dice is to break a body of information down into smaller parts or to examine it from different viewpoints so that a person may understand it more easily. In data analysis, the term generally implies a systematic reduction of a body of data into smaller parts or views that will yield more information. The term is also used to mean the presentation of information in a variety of different and useful ways.

Agreement: the conscious acceptance of a specific provision contained in an offer.

Non-Disagreement: the conscious withholding of disapproval of a specific provision contained in an offer.

Non-agreement: the conscious withholding of approval of a specific provision contained in an offer.

Disagreement: the conscious rejection of a specific provision contained in an offer.

Generally speaking, negotiations for the sale and purchase of Real Estate follow this sequence:

3. The Offer is presented to the Seller and is Accepted, Rejected, Counter-Offered, OR, the Seller may not respond at all effectively "pocket vetoing" the Offer. There can be and often are multiple Counter-Offers made between the Seller and Buyer.

4. An Agreement is reached which is acceptable to both Seller and Buyer, OR, NO Agreement is reached and negotiations cease.

Slicing and Dicing begins when a written Offer is received and a "good faith presentation" is made to the Seller.

In California, the most frequently used standard Offer to purchase has 32 sections and most sections contain subsections. I will spare you an explanation of each item. The reader need not have an understanding of the form.

When I present the Offer, I systematically discuss each section with the Seller. As I discuss the offer item by item, I listen very carefully to the seller's response. Take note that I use the word, "listen." The socialization process teaches people to disguise their facial expressions in negotiations. It is very difficult to disguise one's voice. I carefully listen to tone of voice, rate of speech, and nervous tendencies such as clearing the throat, word choice, tempo, timbre and timing. I take careful note of silences. There are silences due to hesitation, silences due to reflection, silences due to an effort to control anger, elation, frustration, joy, nervousness and rage. Non-verbal sounds such as shuffling feet often indicate nervousness. These auditory observations allow me to mentally evaluate the level of response and thereby assist me to move the negotiations forward more precisely than I would otherwise be able to move them.

If the Seller says, "The price is too low, do they think we are nuts?" I interpret that as a point of Disagreement. I calmly say, "Let's move on and come back to that one." If the Seller does not indicate his or her opinion concerning the price Offered, I treat their response as either Non-Disagreement or Non-Agreement. If the price being offered is Acceptable to the Seller, I actively confirm that fact with the Seller, "The purchase price is acceptable, lets go through the rest of the Offer."

The Cash Balance of Purchase Price to be placed into Escrow prior to close of Escrow

If the Buyer wants a certain date and if the Seller indicates other dates are preferable, I note that and say, "We will counter that point."

Use of shorthand codes is common in the Real Estate Profession. A few common terms of art are:

including Escrow, Title, Pest Control, Inspection, and minimum government retrofit charges.

For each item I ask, "Is that acceptable?" If the Seller agrees, I confirm that fact and mentally note page one as Agreement OR, if the Seller is NOT in agreement with the Offer, I mentally note the level of the Seller's response as Non-Disagreement, Non-Agreement or Disagreement. My goal is to identify for the Seller the key areas of Disagreement or Non-Agreement so that we can focus on those areas. Careful attention to the level of response is very helpful in moving the negotiating process forward.

Page Two contains entries made by the Offeror or his agent. If the second page is completed as I would, I make a mental note to simplify the presentation. If there are any variations, I point them out as I review the second page with the Seller. Usually, this is a very brief process.

The entire Offer is presented in this systematic way. After the "good faith presentation" is made, I review the points of Agreement, Non-Disagreement, Non-Agreement and Disagreement with the Seller. The process of categorizing each item in the Offer is the "Slice" and the analysis that follows is the "Dice".

Areas of Non-Disagreement are discussed further to confirm the Seller's negotiating position. Those areas of Non-Disagreement are further refined.

Those that may be classified with the areas of Agreement and those that are Other THAN Agreement are further refined.

At this point I may still have different issues in each of the four categories. Most times there are fewer items in the "Non-Disagreement" category,

The procedure is repeated for the category of items in "Non-Agreement' and discussion follows on each item. More recategorization ensues and a fifth category is generated as a result.

The fifth category is 'Items-To-Be-Counter-Offered'. If the process results in very little to Counter-Offer, I point that fact out to the Seller. For example, "What we are really looking at here is the Home Warranty and whether the Escrow period will be 45 days, which is your preference, or, 60 days which is the Buyers preference. As close as you are to an Agreement here, is it worth fussing over a $400 Home Warranty that has benefits for you as a Seller and whether the Escrow is 45 days or 60 days?" I wait for the reply. Stated objectively, the Sellers choices are simplified. As their agent, I must allow them to make the final decision. If they still wish to make a Counter Offer, I write it with them.

I humbly offer the "Slice and Dice" technique to the Mediation Community. This technique cuts across a broad range of negotiations and has particular application to mediation. Feel free to use it often.

The author wishes to acknowledge Gregg f. Relyea, Esq. for his comments and suggestions as a reviewer of this article. Professor Relyea is a lawyer, mediator, law professor at Cal Western University school of Law, and, the University of California at San Diego. Professor Relyea is recognized internationally as a mediation educator and trainer.

ABOUT THE AUTHOR: Dr. Joseph Dean Klatt is a California Real Estate Broker and a Mediator. Licensed as a Real Estate agent in 1972 he worked for James M. Becker Realty, Inc. until he opened his Real Estate Brokerage in 1978 at 1124 Wall Street in La Jolla, California. In 1991 Dr. Klatt was awarded the R- K Smith Broker of the Year Award. He is currently serving his third term as President of the La Jolla Real Estate Brokers Association, Inc., a multiple listing service founded in 1924. Dr. Klatt is serving his first term as a Director of the Association for Dispute Resolution-San Diego, a San Diego professional organization of mediators.

I noted in each case that the power of the Mediation Model operated as a dynamic force. I searched for other commonalities.

Suddenly I spotted it. I was doing something else. I was using a Real Estate negotiation technique I had developed many years ago to identify areas of Agreement, Non-Disagreement, Non-Agreement and Disagreement between the parties. I call this technique, "Slice and Dice." Viewing mediation as an assisted negotiation, the slice and dice technique becomes a powerful tool for the Mediator.

Generally speaking, negotiations for the sale and purchase of Real Estate follow this sequence:

4. An Agreement is reached which is acceptable to both Seller and Buyer, OR, NO Agreement is reached and negotiations cease.

Slicing and Dicing begins when a written Offer is received and a "good faith presentation" is made to the Seller.

When I present the Offer, I systematically discuss each section with the Seller. As I discuss the offer item by item, I listen very carefully to the seller's response. Take note that I use the word, "listen.” The socialization process teaches people to disguise their facial expressions in negotiations. It is very difficult to disguise one's voice. I carefully listen to tone of voice, rate of speech, and nervous tendencies such as clearing the throat, word choice, tempo and timing. I take careful note of silences. There are silences due to hesitation, silences due to reflection, silences due to an effort to control anger, elation, frustration, joy and rage. Non-verbal sounds such as shuffling feet often indicate nervousness. These auditory observations allow me to mentally evaluate the level of response and thereby assist me to move the negotiations forward more precisely than I would otherwise be able to move them. Page One deals with:

For each item I ask, "Is that acceptable?" If the Seller agrees, I confirm that fact and mentally note page one as Agreement OR, if the Seller is NOT in agreement with the Offer, I mentally note the level of the Seller's response as Non-Disagreement, Non-Agreement or Disagreement. My goal is to identify for the Seller, the key areas of Disagreement or Non-Agreement so that we can focus on those areas. Careful attention to the level of response is very helpful in moving the negotiating process forward.

The entire Offer is presented in this systematic way. After the “good faith presentation” is made, I review the points of Agreement, Non-Disagreement, Non-Agreement and Disagreement with the Seller. The process of categorizing each item in the Offer is the "Slice" and the analysis that follows is the "Dice".

At this point I may still have different issues in each of the four categories. Most times there are fewer items in the "Non-Disagreement" category. The procedure is repeated for the category of items in "Non-Agreement" and discussion follows on each item. More re-categorization ensues and a fifth category is generated as a result.

The fifth category is "Items-To-Be-Counter-Offered". If the process results in very little to Counter-Offer, I point that fact out to the Seller. For example, "What we are really looking at here is the Home Warranty and whether the Escrow period will be 45 days, which is your preference, or, 60 days which is the Buyers preference. As close as you are to an Agreement here, is it worth fussing over a $400 Home Warranty that has benefits for you as a Seller and whether the Escrow is 45 days or 60 days?" I wait for the reply. Stated objectively, the Seller's choices are simplified. As their agent, I must allow them to make the final decision. If they still wish to make a Counter Offer, I write it with them. I humbly offer the "Slice and Dice" technique to the Mediation Community. This technique cuts across a broad range of negotiations and has particular application to mediation. Feel free to use it often.

The author wishes to acknowledge Gregg F. Relyea, Esq. for his comments and suggestions as a reviewer of this article. Professor Relyea is a lawyer, mediator and law professor at Cal Western School of Law and the University of California at San Diego.

You Have To A-S-K For An Offer To G-E-T a Settlement
by Joseph Dean Klatt PhD

I have been a professional negotiator for more than 32 years. Throughout those years I learned a fundamental principle of negotiation. The principle is that you have to a-s-k for an offer to g-e-t an offer. Simple, yes... but it is not one of the concepts contained in the mediation model as it is now taught.

As I move professionally towards becoming a full time mediator I have had opportunities to observe mediations, co-mediate and mediate solo. I note with interest that many mediators do not observe the fundamental negotiation principle that you have to
A-S-K for a settlement offer to G-E-T a settlement offer.

Ever-present traps for mediators include allowing themselves to become absorbed in the facts of a case, absorbed in the legal issues of the case, absorbed in the emotional issues of the case, absorbed in the consequences of settling and not settling, etc. ad nauseam.

A negotiating imperative is that, at what the mediator hopes is an appropriate time, to a-s-k for the offer. Applied to mediation this means to ask for settlement offers.

As a negotiator and as a mediator I have found that it is preferable to ask for the offer earlier rather than later in the process. In the mediation construct I have found that when disputing parties have made the effort to come to the mediation table, they want to settle the dispute. In fact, I presume that they want to settle the dispute. This is a different mind-set than some mediators have when they mediate. One of the key signs a mediator should watch for is when they are backing up in a negotiation. By backing up I mean that the mediator is going over a portion of the mediation again. Of course, it is necessary to confirm portions of a mediation with the parties. this is not to be confused with backing up. An example may clarify my point.

In one co-mediation we had progressed through the introduction, we were almost finished with the joint session and were about to go to the caucus phase when my co-mediator began to go over the facts and issues with the parties again. At this point in the mediation, this was completely unnecessary. There was no memory lapse on the part of my co-mediator. He had fallen into the trap of replaying the mediation. I listened to him replay the facts including the dollar amount of the lawsuit. In so doing, he was reinforcing the dispute and losing the settlement focus. The mediation was moving backwards. At what I hoped was an appropriate moment, I interjected that we had reached the point in the mediation when we needed to move into the caucus phase. My
co-mediator was a little surprised at my pro-active move. I knew that we were running out of time. The Court normally gives mediators 40 to 60 minutes to settle a dispute before the Court tries the case. We were already past the 35 minute mark. I noted that the bailiff was restless.

We first caucused with the Plaintiff. I took the lead by simply asking the Plaintiff, "You are asking for X dollars. What would you accept right now to settle and not have to try your case?" The Plaintiff's answer was equal to X minus one third. I asked, "May I make that offer to the Defendant?" "Yes," was the reply. Now the process began to move. There was a swift settlement ending to this mediation, but, this is not the point. The practice point is that mediators must be mindful to "ask" for the settlement offer in order to "get" a settlement. In Real Estate purchase contracts the parties are reminded in writing that, "TIME IS OF THE ESSENCE OF THIS AGREEMENT" and time is of the essence in a mediation setting also.

In conclusion, my fellow mediators, remember to A-S-K for the offer to G-E-T a settlement.

The author wishes to acknowledge James Dean Klatt as a reviewer of this article. James is my son. He has attended several mediation courses with me as my reader including the Strauss Institute at the Pepperdine University School of Law. Dr. Joseph Dean Klatt

About the author: Dr. Joseph Dean Klatt is a California Real Estate Broker and a mediator. First licensed as a Real Estate Agent in 1972 he worked for James M. Becker Realty, Inc. until he opened Joseph Dean Klatt Realty, Inc. at 1124 Wall Street in La Jolla, California in 1978. In 1991 Dr. Klatt was the recipient of the La Jolla Real Estate Brokers Association's R. K. smith Broker of the Year Award. Currently, he is COMPLETING his third term as President of the La Jolla Real Estate Brokers Association, Inc., an organization of Real Estate professionals founded in 1924. In November 2004 Dr. Klatt was re-elected as the 2005 President of the La Jolla Real Estate brokers Association, Inc. Dr. Klatt is completing his first term as a Director of the Association for Conflict Resolution - San Diego, an organization of San Diego professional mediators. Dr. Klatt is the President-Elect of the newly formed Association for Dispute Resolution - San Diego, Inc., an autonomous public benefit corporation organized to meet the needs of San Diego area dispute resolution professionals. Dr. Klatt is a member of the California Dispute Resolution Council, a statewide organization of professional mediators. He is also a member of the nationwide Association for Conflict Resolution. Dr. Klatt lost his eyesight in an auto accident in 1967 at age 19.

As currently used in information technology, to drill down (verb) is to focus in on something. A drilldown (noun) is the act of focusing in. The term is sometimes used when referring to moving down through a hierarchy of folders and files in a file system like that of Windows. It may also mean clicking through a series of dropdown menus in a graphical user interface.

In a particularly intransigent mediation a technique a mediator may consider using is a method I call "drilldown." The graphic term "drilldown" affords a visual concept of the technique. In a mediation the joint session is when the facts and issues emerge. In the caucuses the parties’ motivations to settle emerge. Thus, it is in these two phases of mediation, that drilldown is an effective tool for the mediator.

In the Joint Session and in its most basic sense, a drilldown is asking probing and even more probing questions of the intransigent party. If both parties are intransigent, then drilldown is applied to both parties. So a mediator asks questions, even probing questions, of what importance is it other than for fact finding and determining settlement motivation?

Keep in mind that the focus here is the intransigent mediation... things are not going well. As the mediator begins the introduction he or she senses rigidity in the attitudes of both parties. The mediator notices that his or her well-modulated golden-throated voice is not relaxing the parties.

Allow me to describe a mediation in which drilldown was used to allow me to understand the dispute, unearth the settlement motivations and assist the disputing parties to reach a settlement agreement.

Imagine a dispute involving an encroaching fence. Two contiguous parcels of land share a lot line extending several hundred feet. The Plaintiff, hereinafter "P", owns an income producing property on which there are multiple commercial units. P's property is at the end of a block and has public streets on three sides. The building is sited on the property so that it faces the side of the lot I will describe as the bottom of a squared U. At the top of the U the shared lot line runs from top to top of the U. Visualize, if you will, the property owned by the Defendant, hereinafter "D", as a rectangle which extends above the top of the U with D's property area being approximately 75% the area of P's property. For many years P has used the back of his property (the top portion of the U) for patron parking spaces. This area was not paved and was merely a dirt parking area. The area was sufficient to park 40 to 50 cars and trucks. When D purchased his property it was an unimproved lot zoned for multi-family residential use. After purchasing the property, D obtained the required building permits from the appropriate local agency and constructed multiple residential units on the property. D's property was large enough that he provided entry and exit automobile access to both streets. Each residential unit was built with its own two-car garage.

After passing his final building inspection and thus obtaining his occupancy permit, D and his family moved into one of the residences and leased the others. It became apparent that the view of cars in P's parking lot was not particularly attractive and that a fence should be erected to create a visual barrier and to prevent D's tenant's children from roaming into the parking lot. D then goes to the appropriate City officials and obtains a permit to construct a fence along the shared lot line. D then constructs a sturdy, attractive fence. D paints the fence white. D's tenants are pleased at the added visual and safety improvement.

P visits his commercial property once a month on the first of the month to collect rents. P observes the fence and examines it carefully. P concludes that the fence is encroaching onto his property by seven feet, marks the location where he believes the lot line to be and so advises D. Surprised at the information D agrees to move the fence as no encroachment was intended and asks the City to show him the proper lot line location and where to move the fence. The City representative identifies the lot line at a point that would reflect a six-foot encroachment, not a seven foot encroachment. At D's sole expense the fence is moved to the line marked by the City official, not to the mark made by P. Thus, D has moved the fence six feet, not seven to accord with P's belief regarding the location of the lot line. When P visits his tenants to collect the next month's rents he examines the fence in its new location. P notices the mark that he made and another mark that corresponds with the new location of the fence. P contacts D and informs D that the fence is still encroaching on his property. D explains how he arrived at the proper location for the fence. Thus, we have the basis for the lawsuit.

Recognizing that his opinion concerning the lot location is not sufficient in a court of Law, P hires a licensed, bonded surveyor to locate and mark the correct lot line. When the surveyor is finished he marks the correct lot line at the midpoint between the six and seven foot marks already in place. Thus, the fence is encroaching onto P's property by six inches. Both P and D have photos of these three marks. P requests D move the fence again. D declines to move the fence again. P files suit and the Judge refers the case to me for mediation.

P's complaint asks the Court to order D to remove the encroaching fence, asks the Court to award P damages in an amount equal to the surveyor's fee that P paid for the survey and costs.

During the joint session D offers to pay half of the cost of the surveyor's fee but does not want to move the fence. P is intransigent and wants the fence moved or at a minimum wants the fence taken down by D, wants to be reimbursed the full cost of the surveyor's fee and wants his Court costs.

In caucusing with P, I identified his interests as 1. Money... the full cost of the surveyor's fee and 2. Eliminating the encroachment because he has plans to sell the property.

In caucusing with D, I identified his interests as not wanting to move the fence again. It had been a very expensive fence to build and to move it the cost had been about 60% of the original construction cost. He would rather pay something to resolve the case, but he was willing to battle it out in Court if he had to do so.

Allow me to pause here to answer a question you may have. The question is, "How did the mediator elicit all of this information in the joint session and two caucuses with each party? The answer to that question is to go against the normal mediation downstream flow of asking open-ended questions. The drilldown technique involves asking very specific, closed end questions. Underlying my specific questions is the attitude I display to the parties; i.e. this is not a question of right and wrong, it is a question of obtaining the facts. For those who remember the starring role in the Dragnet radio and television series, Joe Friday, you will remember his mantra, "Just the facts, Ma'am, just the facts."

After caucusing with each of the parties twice, I sensed a swift agreement could be reached and I brought them back into a joint session. I thanked the parties for being forthright with me both in the first joint session and the caucuses. Knowing that P and D had multiple pictures of the fence I asked P to look at one of his photographs of the fence. P selected one of the photos and said, "I'm looking at it." I asked the closed end question, "Is it a nice fence?" P replied, "It's a very nice looking fence." Turning to D I asked, "Would you be willing to pay P the surveyor's fee and give the fence to P if he agreed to maintain it in place?" Surprised, D replied, "Yes." Turning to P I asked, "If D gives you the cost of the surveyor's fee and the fence would you agree to maintain it in place and waive Court costs?" Surprised, P replied, "Yes." "Gentlemen," I said, "You have an agreement... would you like to write it up." The parties completed the form required by the Court, signed the form and I walked with them to the Courtroom where the Judge reviewed the settlement agreement, verified with the parties that the signatures on the form were theirs and that they understood the terms of the agreement as... The parties confirmed the settlement agreement in its entirety and the Judge made it an Order of the Court.

Thus, the essence of drilldown is asking closed end questions to determine the facts, asking closed end questions to determine the interests of the disputing parties and bluntly presenting the parties with a resolution to their dispute that they, with their tunnel vision, are not able to see.

The author wishes to acknowledge Mike Stalsby for his comments and suggestions as a reviewer of this article. Mr. Stalsby is a Real Estate agent who works in La Jolla, California. Mr. Stalsby is my tireless reader. I am totally blind.