Bracketing

A bracket is a conditional offer when movement by one party is conditioned on movement by the other. With a bracket, one party offers to move to X if the other side moves to Y.

Picture a rather familiar scenario where the parties remain far apart after hours of negotiation. Each side believes the other side is not serious and therefore makes small, incremental moves, resulting in even smaller moves by the other side – a pattern called reactive negotiation. The mediation appears stalled.

Say, for example, that the demand is $400,000 and the offer is $50,000. By deploying a bracket, the plaintiff might offer moving down to $300,000 if the defendant agrees to move up to $150,000, resulting in a proposed bracket of $300,000/$150,000. The defendant has the option of rejecting the bracket and may propose an alternative bracket; if plaintiff comes down to $200,000, defendant will go up to $100,000.

While a substantial gap still remains, the significance of the bracket is that the plaintiff is signaling that the settlement range is between $300,000 and $150,000, while the defendant is signaling a range of $200,000 and $100,000. By examining the midpoint of the two brackets, the plaintiff may be signaling a willingness to settle at $225,000 whereas the defendant may be willing to settle for $150,000.  Whereas the parties were originally apart by $350,000, the difference is now potentially $75,000.

What is the utility of bracketing?  Brackets can signal settlement positions through conditional offers that help the mediator end a pattern of reactive negotiation. The mediator may now have an opening to facilitate a resolution. Bracketing also enables parties to overcome the frustration of smaller and smaller moves by either side, which inevitably lead to threats to end the mediation. 

Brackets are not suited for every mediation. They are often most effective as a last resort, when the negotiation between the parties is stalling and the mediation appears doomed.  Brackets can be brought by either the parties or by the mediator.