Romero Park P.S. is pleased to announce that Chris Powell has joined our San Diego, California office as an associate attorney. Chris graduated magna cum laude from California Western School of Law in 2012. While in law school, Chris served as Editor-in-Chief of the California Western Law Review. He also won numerous academic awards, including awards for attaining the highest grade in his class in Civil Procedure, Evidence, Business Organizations, Sports Law, and Legal Skills. Chris also wrote a scholarly comment, which was published in 2011 and won an award for its contributions to the legal community.

As some of you may know Chris was a law clerk at the firm before joining us. Chris will continue his practice of business law with an emphasis on contracts and dispute resolution. Chris also practices sports law, including premises liability and co-participant liability.

Chris brings a unique skillset to our firm. Prior to entering the field of law, Chris travelled the world as a professional mountain biker. He represented the United States at the 2004 World Mountain Bike Championships where he finished eighth. After retiring from cycling, Chris served as a coach and equipment manager for BMX cyclists who won Silver and Bronze medals at the 2008 Beijing Olympics.

From these experiences, Chris developed a unique understanding of the recipe for success: preparation, dedication, teamwork, and execution. This translates well to the practice of law, as Chris applies the same methodical approach he used to excel as a professional athlete to help his clients achieve their goals when entering into new opportunities or resolving disputes.

Please join us in welcoming Chris Powell to the firm. His contact info is (858) 592-0065. Chris can also be reached at cpowell@romeropark.com

We are proud to announce that as of May 2012, Romero Park & Wiggins P.S. has officially become Romero Park P.S. This name change reflects our recent departure of long-time friend a colleague, Michael Wiggins as he pursues other ventures. Michael has been a partner since 2006.

For further details about this change, please read the open letter from the firm’s managing partner, H. Troy Romero, posted on our blog. Also, please note that the firm’s e-mail address has changed consistent with the name change. From now on the firm’s e-mail address will be romeropark.com instead of rpwfirm.com. So, for instance, if you would like to contact Troy Romero by e-mail, you should now use the address tromero@romeropark.com. In order to provide our current and future clients with enough time to adjust to the firm’s name change, the firm has retained the rpwfirm.com address for approximately a year. Within that time, Romero Park P.S. attorneys and employees will be able to receive e-mails sent to that old address. We appreciate your patience as we undergo this change, and you can be assured that we will continue to provide the same quality legal services you have come to expect during this transition.

Thank you for continuing to stick with us through the years! We would not be who we are today without our clients.

Most people, including most lawyers, think of litigation simply as the adjudicating of a particular dispute before a judge (or some other authority) by applying the law to the facts of that dispute.

While many times that is true, more often it is not. Many business owners, again including lawyers, fail to recognize that the majority of commercial and business disputes arise in the context of larger, more broadly-defined relationships, transactions or economic/social environments. For these business owners, litigation has a way of narrowing their field of vision to that which is directly in front of them – the lawsuit with which they are faced.

Indeed, litigation has a way of giving people “tunnel vision.” As a natural result of lawsuit-induced “tunnel vision,” many business owners spend little or no time at all thinking about the context in which their disputes have arisen. They fail to consider how facts, issues and circumstances that fall outside the specific subject matter of their disputes might affect, either negatively or positively, the outcome of those specific disputes. Using business jargon, these business people are unable to “think outside the box.” Let me give you a simple example of thinking outside the box. Let’s say that your start-up company has, like many businesses, tried to grow in today’s climate of limited capital funding. Because your company is burning through cash faster than you can generate or acquire it, you decide that you need to relocate your company’s offices to another, less expensive location. The problem is your company has 2-1/2 years left on its 5-year lease. To make matters more difficult, you personally guaranteed the lease in order to acquire the office space in the first place, which means that you’re personally on the hook for any rental deficiencies. This is an all too familiar situation.

Faced with the decision to stay and continue hemorrhaging, or vacate the premises and be on the hook for the remaining value of the lease, you finally decide to close up shop and move. In the process, you let your landlord know that you are abandoning the premises and moving. Although the landlord is very polite and professional as you inform him of your decision, two months later, as you anticipated, you are served with a lawsuit for breach of lease. Naturally and understandably, you freak out, compose yourself, and then call your attorney.

If served with such a lawsuit for breach of lease, the first thought that would come to most tenants’ minds would be, “My company cannot afford the accelerated rent! How do I get out of this?” While that would certainly be an understandable response, the best thing to do if faced with such a situation would be to inventory the facts and circumstances surrounding the lease dispute.

Doing so, you might soon realize that there is more to your dispute than a lease, a breach of that lease, and an accelerated amount of rent due.

Continuing on with our example, you inventory the potential externalities of your case (those things that are not directly related to the lawsuit but that could have an affect on its outcome) and you quickly recognize the following: 1) the local commercial real estate economy is extremely landlord-friendly; 2) you have had several business-customers who have recently commented on how much they like your space; and 3) you have an otherwise good working relationship, and an open line of communication, with the landlord.

Taking the above inventory can be beneficial for two reasons. First, the evidence that flows from the inventory can be used to establish that the landlord failed to mitigate its damages by finding a new tenant for the space your company abandoned. (The law requires that both residential and commercial landlords take reasonable steps to mitigate damages arising from an abandoned leasehold estate.) Second, the inventory could be used to establish a game plan and a timetable for negotiating a resolution to the dispute. In other words, for the specific example, it might make sense to do the following: 1) to approach your customers who commented favorably about your space to see if they would be interested in taking over the space entirely or at least subletting it; 2) to contact the landlord to let him know that you have some “potential tenants” that might be interested in taking over the space or at least subletting it, and recommend to the landlord that they follow up with those potential tenants; and 3) to remain in constant contact with the landlord to let him know about all that you are doing to replace yourself with another tenant, and to remind him about all he should be doing to find another tenant. (Remember, the landlord has a duty to mitigate its damages, which means that he is not permitted by law to simply lie on his haunches and collect damages!) As you can see, the inventory you take very well may allow you to approach a negotiated settlement from a position of greater strength or, if push comes to shove, mount a stronger defense at trial. Either option undoubtedly represents a better result than what might have appeared to be an insurmountable obstacle when you first received the landlord’s lawsuit.

Under the generally accepted principles of contract theory, parties to a contract are expected to and, many argue, should breach contracts when doing so would result in a more efficient flow of resources (e.g., time and money) and in the logical allocation of risk and reward. Applying this principle to our lease hypothetical, you as the tenant are not the only party with big decisions to make. The landlord, if he is smart, will recognize the same externalities and discount its claim by the possibility that he will be able to put a new tenant in your space at a rental rate commensurate with, perhaps, an increasingly favorable commercial real estate market. In other words, the landlord may have just as much incentive to get out of the lease as you do.

The lease hypothetical above is just one of many, many examples where it pays to inventory the circumstances surrounding a dispute in order to determine what externalities you might bring to bear in order to reach a more efficient, fiscally sensible resolution. As you conduct your business, you should constantly be looking for and identifying those issues, obligations, circumstances and factors that both directly and indirectly influence your business relationships and transactions.

For most business owners, identifying those issues, obligations, circumstances and factors is part of what they do on a day-to-day basis, so taking the time to do it is usually not a large investment of time. But no matter how much time it takes, most successful business owners are willing to put in the time because they understand that, in large part, their success in both peacetime and wartime comes from thinking creatively – thinking outside the box.

We are regularly faced with situations where a client went through a real estate transaction asking intelligent, necessary questions to the professionals involved and receiving answers that put their fears to rest. Later, they find out that those answers did not reveal certain deficiencies in the transaction, and a lengthy process of unwinding and/or repairing the damage ensues. Many times this difficulty comes because the questions were asked to the wrong person.

The question is where can you go in a real estate transaction to get real, helpful answers to your questions? We submit to you that the way to answer that question is to know who has the best information regarding your question, and knowing who is your advocate.

Each of the professionals involved in your transaction is hired for a specific purpose. Within that purpose, they are the best sources of knowledge. Outside of that purpose, you must be aware of who is really looking out for your best interest as an advocate for you, and who is not. Knowing this information will help you ask questions to the people most likely to help you, and to understand answers from others by viewing them through the lens of that party’s position.

The professionals in a real estate transaction all have a very specific role, and that role defines what information they can and cannot provide to you. It is unfair to these professionals to put questions to them that are outside of their area, and which they may not have the knowledge to answer, or to which they may have an ethical obligation not to answer. You want every professional in your transaction doing their job as well as possible, and so it is important to know their roles and to respect them.

With that in mind, let’s examine each of the professionals in your transaction.

THE ESCROW OFFICER

Escrow officers are generally competent and helpful. But who do they represent? The answer is that, technically, escrow represents neither you nor the other party in the transaction, they represent the “money.” They are simply charged with impartially preparing the necessary paperwork to close the deal, and with transferring all the monies to the right place. They ethically cannot be an advocate for you without violating their role as escrow.

For that reason, it is important to know that the escrow officer is not equipped to answer much regarding your closing documents. They prepared their Settlement Statement based on figures provided by the parties. The deed is prepared using information from others as well. They do not prepare the loan documents.

What does this mean for you? It means that when you sit at the closing table signing documents, the person from the escrow office can tell you what a document is, but you should not and cannot rely on them to tell what a document means. So, asking the escrow officer whether a document accurately does what you want it to do is beyond their knowledge and their duty, and can be unfair to the escrow officer, who is usually trying to do their job as best they can. Most of the time, they will be helpful, but you should not rely on the statement of an escrow officer regarding the nature of any document.

TITLE INSURANCE

Another necessary, usually helpful, and knowledgeable party in your transaction is the agent of the Title Insurance Company. But what is their role? The Title Professional works for an insurance company that is issuing you a policy.

Their job is to accurately describe the title to the real estate so that you can be certain that you (or your buyer) are getting what you pay for. A good title professional will want to help you in this way. But be aware that the benefit to the title company of doing this job well is that it allows them to disclaim up front all the situations where they might have to pay a claim. Title insurers are writing a policy that they hope will ensure that they will never face a claim.

What does this mean for you? Usually only good things, as your title professional is motivated to be thorough in his/her search of title, which protects you from unseen issues. But knowing that they are not signed on to work as your advocate means that any question you ask them will be answered from their position of ensuring that no claim against the insurance will result.

LOAN BROKER

Loan Brokers are critical to your transaction (especially if you are buying). Their job is to pair you with a lender (and a loan program) that is compatible with your situation and needs.

This is the limit of their involvement and knowledge. Many brokers have years of experience in real estate deals, and so can advise you on various issues based on that experience, but relying on your loan broker for advice outside of issues surrounding their loan is not a good idea. Such questions are unfair to the loan broker, as they are outside their knowledge.

Also important is the fact that loan brokers are working to bring you and a lender together, so they are not advocates for you or for the lender, just a facilitator. So the loan broker can tell you the about the words on the loan document, but not advise you on whether you should sign anything. What does this mean for you? Depend on your loan broker to find you a loan that is compatible with your financial condition, and ask them questions about that issue and the loan papers. They will be your best source for that information. But for the questions of the legal effect of loan documents, or the ultimate question of what is best for you, you should look to a party who is your advocate, not a facilitator between two parties.

INSPECTORS/SURVEYORS/ CONTRACTORS

These professionals are hired by you for a specific purpose. Be sure your questions to them fall within that purpose. Within their expertise, they are your best source of information. Rely on them for those issues, but not for others.

REAL ESTATE AGENT

Your agent is on your side. Their objective is to match you with a buyer or seller. The way a good agent does this is to make certain that everything in the transaction is going to happen in the way that you want it to happen. They will usually do their very best to guide you and to help you in any way they can.

Once again, it is important to know their limits. Agents are your advocate, but just like the other professionals in your transaction, their knowledge is limited to their training and experience. You know you have a good agent when they will answer questions (when they do not know the answer) with advice to talk to another professional (either one we have listed or someone else). A good agent knows that getting you in touch with the right person to answer your questions is the most likely way to get your transaction closed.

YOUR LAWYER

I am a lawyer, and so I am definitely biased in writing this article. But the fact is that your lawyer is usually the only professional involved in a transaction whose payment is not in some way conditioned on the transaction closing. That allows the lawyer a certain freedom to advise you of the legal effects of the decisions you are making. We can act as your advocate, keeping your best interest in mind at all times.

I am not advocating that you need a lawyer in every single real estate transaction. In fact, many transactions will proceed to closing with no attorneys involved, based on solid and wise information provided only by the professionals discussed above. But should a question arise in your transaction about the legal effect of the transaction or the overarching question of “should” you sign a document, we are equipped to answer that question.

We are proud of the relationships we have with real estate professionals. Many of our clients are such professionals. They do their jobs with integrity and a high level of skill. They deserve our respect and that means not only trusting them to do their jobs well, but understanding those jobs so that we do not put them in the uncomfortable position of dealing with issues that should be brought to someone else.

2009 is here, and what can I say: 2008 was a tough year all the way around! Like most of you, we at Romero Park P.S. have spent a great deal of time over the past several weeks reflecting back on the previous year, trying to figure out what we, as a business, did right and what we can improve on. As we have gone through this process, one thing, one topic of conversation, has come up over and over again. That topic is you, our clients.

In my career, I’ve seen many businesses come, but I have seen many, many more go. I have watched as small mom-and-pop shops have accomplished feats far beyond their highest expectations. But on the sad, other side of that coin, I’ve seen first hand one hundred million dollar-a-year corporations fall by the wayside in the relative blink of an eye. Witnessing these stories of success and failure are the hundreds and hundreds of people that our firm has represented either directly or by way of the businesses they own or manage.

Ask any B-School professor or student and they will tell you that a successful business is defined by how well it maximizes profits. Well, that certainly leaves a lot of grey area now doesn’t it! How a business not only defines success but accomplishes it is as much a matter of preference and ethics as it is a matter of pseudo-scientific principles such as accounting, marketing, supply-chain management and so on and so forth. To see what I mean, pick up any business or financial newspaper, on any day of the week, and I almost guarantee that you will find yourself watching one company race along in the throes of prosperity while another one, seemingly doing the same fundamental things, bellows out its final breath of life. It has been this way ever since people began trading goods and services, and it is difficult in this day and age to find any commonality between successful businesses and unsuccessful ones. At the end of the day, you can analyze profit and loss statements, expense reports, marketing feedback and revenue models; but at best, that information will tell you only so much about how “successful” a company really is. There has to be something more than just “good numbers” and attractive looking pie charts.

As I drive home at the end of each day, and often as I fall asleep at night, I spend little to no time thinking about our firm’s marketing plans, recently-issued Supreme Court opinions or the various other matters related to the performance, profitability or administration of my business. (Although I spend a very significant amount of dedicated time thinking about those things.) If I am thinking about anything work related at all, it is limited to my clients and how I can best help them achieve their goals. Now, when I use the word clients, I don’t mean businesses. I mean the people, either personally or on behalf of the companies they own or run, to whom I dedicate my time, talents and effort. I mean the people who rely on me to help Northwest Office: 155 – 108th Avenue NE, Suite 202 Bellevue, WA 98004 Phone: (425) 450-5000 Facsimile: (425) 450-0728 E-mail: info@romeropark.com California Office: Excel Centre 17140 Bernardo Center Drive, Suite 206 San Diego, CA 92128 Phone: (858) 592-0065 E-mail: info@romeropark.com www.romeropark.com them solve their legal issues when they cannot solve those issues themselves. I mean people not businesses. Why do I make that distinction, you might ask? That’s easy. I make the distinction because it solidifies to me the import of what I do and the impact I can have on the lives of others. I make that distinction because, in my mind, I know that businesses don’t lose their jobs or livelihoods, people do. Businesses are not thrown out on the street when they cannot afford to pay their rent, people are. Businesses do not lie awake at night worrying about how they are going to pay their employees, put food on their tables or send their kids to college, people do. Business is nothing more than people and the relationships they develop, and that is why I make the distinction when I think about who I represent.

Through my experience in 2008 and all the years past, I’ve realized that a business is only as successful as the relationships of its owners and employees are strong. I know this to be true beyond a shadow of a doubt, and that is why I am especially grateful in this new year for all of the wonderful people that I have the privilege to call not only clients but friends. I’m grateful that I have a career that puts me in an ideal position to help others overcome what very well may be some of the most troubling and difficult times in their lives or in the lives of their companies. As you reflect on the year past, and begin to move forward into the year anew, I encourage you to pay special attention to fostering those relationships you and your business so heavily rely upon. As we here at RP have done that, we have become ever-increasingly grateful for all of you who have afforded us the opportunity to assist you in your legal affairs. Looking back at all of the relationships we have developed over the years with the people we serve, there is no doubt that Romero Park P.S. is truly successful! Thank you for being a part of our success.

We hope that, in 2009 and in the years to come, you and your company experience the same kind of success; and we sincerely hope that we can be a part of it.

To help us know what we are doing right and how we can improve, please take a moment to complete the Client Survey enclosed with this newsletter.

We very much appreciate and value your feedback.

Happy New Year!

Are contracts set in stone? While most people think so, what happens when parties make a mistake as to what a particular contractual term means? Can the parties amend the contract to make it consistent with their intent, that is can they reform it? If they can, what are the requirements for doing so? These are the very issues Romero Park presented to the United States, 9th Circuit Court of Appeals in the case of Caliber One v. Wade Cook Financial Corporation, 491 F.3d 1079 (9th Cir.

2007) (reh’g denied) . And the manner in which the appellate court addressed these issues is significant to all businesses that deal with recurring or renewable contracts, businesses such as yours.

Background

In 1998, Wade Cook Financial Corporation (“Insured”) purchased a comprehensive commercial property insurance policy (the “Policy”) from Caliber One Indemnity Company (“Carrier”). Among its various terms and conditions, the Policy provided for $5 million in earthquake coverage.

When the Insured’s Policy came up for renewal at the end of 1999, its broker, Crump Insurance (“Broker”), contacted the Insured in order to renew the Policy.

The Insured informed its Broker that it wanted to renew its Policy under exactly the same terms and conditions.

When it came time for the Carrier to actually renew the Policy, through a simple scrivener’s error it inadvertently issued the renewed policy (the “Renewal Policy”) with earthquake coverage of only $500,000 rather than the intended $5,000,000. Unfortunately, neither the Carrier, the Broker nor the Insured caught this mistake, which perpetuated itself through two subsequent renewal policies (the “Second Renewed Policy” and the “Third Renewed Policy”).

On February 28, 2001, a magnitude 6.8 earthquake shook the greater Puget Sound region causing what the Insured claimed to be at least several million dollars in damages to both its south Seattle headquarters and to its business in general. Upon reviewing the Insured’s initial loss claim, the Carrier confirmed with the Insured that its losses would be covered under its Second Renewed Policy. Despite its assurances, however, the Carrier sued its Insured for declaratory judgment, claiming that the Third Renewed Policy’s limits were $500,000, not $5 million.

Proceedings

Before the Federal District Court for the Western District of Washington, the Carrier admitted that it had mistakenly, inadvertently omitted a zero from the earthquake coverage when it prepared the Renewal Policy and forwarded that policy on to the Insured’s Broker at the end of 1999. But nevertheless, it argued that the District Court should not reform the Renewal Policy, the Second Renewed Policy and the Third Renewed Policy because either the insured or its broker should have noticed the original omission. Unfortunately, the District Court agreed with the Carrier and, granting summary judgment in the Carrier’s favor, ruled that a party to a contract cannot reform the contract to include an inadvertently omitted term if the party, or its agent, negligently failed to detect the omission at the time it was made.

Appealing the District Court’s summary judgment to the 9th Circuit Court of Appeals, the Insured, represented by RP lawyers Troy Romero and Michael Wiggins, argued that the District Court should have not only denied the Carrier’s summary judgment, but conversely should have granted judgment for the Insured instead. After extensive briefing and oral argument, the 9th Circuit agreed with RP&W and the Insured, holding that a party to a contract containing a mistakenly erroneous term can compel the reformation of that contract even if it notices the erroneous term. In other words, the doctrine of reformation applies even if one party notices the erroneous term but, even if negligent, does not know that the term is erroneous. The Appellate Court reversed the Carrier’s judgment and remanded the matter to the District Court with a finding that the Policy included $5,000,000, not $500,000 in earthquake coverage.

Lessons Learned

So what lessons can we learn from this particular coverage dispute? For starters, a business should review each renewal contract just as carefully as it does the original. Although the 9th Circuit in Caliber One case held that a party’s negligence in failing to discover a material mistake in the terms of a renewal contract does not later on bar reformation of that contract, the Insured in that case had confirmed with the Carrier in advance of the executed renewal contract the terms that should be included in that contract. Had that not happened, the Appellate Court very well might have reached a different decision.

Here is the point, if you renew a contract without any previous discussions with the other party about what the renewal terms are supposed to be, be it the “same terms and conditions” or otherwise, take extra care to review the renewal contract line by line. Better still, confirm the key terms of the renewal in writing before executing the actual agreement. That way, if an issue comes up later on, you will at least have written evidence that the parties intended a term different than what was ultimately put on paper.

Besides contractual issues, the above case should remind us also to pay attention to the acts and omissions our agents and fiduciaries undertake on our behalves.

Most businesses, including my own, hire insurance brokers, real estate agents, financial advisors and so on and so forth because those agents have specific expertise we do not possess.

Many owners, executives and managers, however, view agency relationships as an opportunity to farm out work without the need to oversee what their agents are doing. Unfortunately, that way of thinking has cost many companies dearly.

Although outsourcing or contracting can make you a more efficient, more profitable company, from a liability perspective, your business is legally liable for your agents’ and contractors’ acts and omissions.

You don’t need to be a commercial real estate agent to know whether or not the commercial real estate market in your area is robust, flat or in a slump, and you certainly don’t need to be a CPA to know when your business taxes are due. As successful business owners, we are by nature somewhat sophisticated in many areas outside of our own particular expertise, and because our agents’ acts and omissions are imputed upon us so long as those acts and omissions fall within the scope of their agency relationship, we would do better for ourselves and our businesses to apply that sophistication and exercise a little oversight. Although there is no need to be heavy-handed (what would be the point of hiring agents if we were), we should certainly be informed.

If you have any questions or concerns about your company’s recurrent contracts or agency relationships, please contact Romero Park P.S. for a consultation. Our experienced business litigation lawyers will help you navigate the legal landscape pertaining to those issues.

I know, I know, it is cliché; but yes, I had a lemonade stand when I was little boy. (Well actually, it was a Kool-Aid® stand because I really didn’t care for the taste of lemonade.) I recall spending many a summer weekend manning that stand, and despite my rather tight-fisted supplier (mom and dad), an unimproved infrastructure (two milk crates and a wooden plank), and often times discouragingly small margins, I was able to squeak out enough money over any given Saturday afternoon to buy me a cherry Slurpee® and a pack of Bazooka Joe® bubble gum at the local 7-Eleven.

“25¢ per cup,” I’d advertise, only to have my friend from school and his brother rebut me with a counter-offer of two cups for 25¢. Not realizing that tendency to protect the bottom line had already kicked in, I eagerly acquiesced to their counter, quickly poured two cups of syrupy, lukewarm Kool-Aid®, and sent my friend and his brother on their way with a wave and “see you at school on Monday.” I can remember to this day chuckling to myself as my friend and his brother walked away with two half-filled cups of syrupy, lukewarm Kool-Aid®.

I would like to think that, as a negotiator, I have come a long way since my childhood days of pandering Kool-Aid® on the neighborhood street corner. Since then, I’ve come to believe that the desire to negotiate, if we have it, to some extent seems to be hard wired into us. (My four-year-old reminds me of this every night as I’m trying to get him into bed.) Over the years I’ve been fortunate to have had the opportunity to negotiate hundreds of disputes and business transactions, some much more notable than others. For instance, one of my very first clients as a new lawyer was a very wealthy, elderly man who could not drive his insanely low-riding Dodge Viper down a communal drive because his equally wealthy, equally elderly neighbor constructed make-shift speed bumps out of 5 ft. tall mounds of deformed concrete.

Based on how hard those two fought during settlement negotiations, you would have thought they were negotiating the 1995 Middle East Peace Accord.

More recently, I represented a client who wanted out of a multi-national distributorship agreement that was diminishing day by day in value. (Interestingly enough, this dispute settled much faster than the speed bump dispute!)

Yes, over the years I have had my fair share of interesting, engaging and sometimes downright bizarre negotiations. All along the way, I have learned a few things about what many call the “art of negotiating.” If you set side-by-side all of the books that have ever been written about negotiating, I’m sure that you could fill a good-sized library from top to bottom. From selfmade millionaires to Harvard professors to captains of industry, everyone seems to have something to say about how best to negotiate business and personal affairs.(I guess I am no different!)

Although I have read dozens of these books and have learned a great many insightful things from them, one concept seems to be lacking from them all. That concept is the role, better yet the hindrance the “self” plays in being a proficient, successful negotiator.

The “self” -in my experience, is one of the most fatal characteristics an executive or business owner can have in trying to successfully negotiate. When I say “self,” what I mean to point out is the natural tendency humans have to fall in love with our own ideas and perspectives. When the self gets in the way, that is when a person is unable to step back from his own ideas and ways of thinking, he often finds it difficult to successfully negotiate for the betterment of his company. More often than not, he is interested only in making sure that everyone else knows what he, not necessarily his company, thinks, needs or wants.

Let’s look at a cinematic example of how the self, or ego, can get in the way of successfully negotiating a business deal or dispute. In the legal drama, “A Civil Action,” Jan Schlichtmann (played by John Travolta) is a very successful plaintiff’s tort lawyer in Boston, Massachusetts.

As the film opens, he has agreed to represent dozens of families from a small, upstate town who have, over the years, become mysteriously ill with various forms of cancer and other diseases.

Upon discovering that the owner of the local leather tannery has been dumping the tannery’s toxic bi-products into the watershed, Schlichtmann sues the tannery owner on behalf of the families, many of whom have lost their fathers, mothers and children. Knowing the impact suffering can have on a jury, Schlichtmann begins to see a potentially lucrative case for both the families and his firm. If only he can get the families on the stand in front of a jury; the jury will have no choice but to rule in his clients’ favors.

Prior to trial, the tannery company submits several offers to Schlichtmann, each subsequent one being significantly larger than the one before. But because he believes that his clients’ case is fullproof, he convinces his clients to turn down every offer. Frustrated with Schlichtmann’s hardheadedness, his partner, played by William H. Macy, looks at Schlichtmann in disgust and points out that the only offer Schlichtmann is prepared to accept is the one tannery is not willing to make! At that point in the movie, it becomes clear that Schlichtmann has stopped negotiating with respect to his clients’ goals and values and instead has begun negotiating a mere position. That is what the “self” does. It makes you argue for arguing sake, with no real objective or purpose in mind.

As many of us can attest, arguing a position is one of the most surefire ways to submarine what could otherwise be a successful negotiation. In Schlichtmann’s case, his failure to acknowledge that fact forced his clients’ case to trial, where due to some very good, very unanticipated lawyering by the tannery’s lawyer (played by Robert Duvall), Schlichtmann’s clients never made it to the stand. With the crash of the judge’s gavel, Schlichtmann’s clients’ very large, multi-million dollar award went down the drain, along with Schlichtmann’s legal career.

As any good lawyer will tell you, Schlichtmann’s goal, his value, should have been to achieve the best result he could for his clients. As his lawsuit unfolded, that “best result” was arguably his and his clients for the taking on several different occasions. But because he could not see beyond himself, because he could not get past his own position, he had predisposed himself to rejecting every offer the tannery owner was willing to make.

What is worse, he convinced his clients that his way of thinking was right, and as a result he recovered far less for his clients at trial than he could have recovered had he accepted any one of the tannery owner’s offers. Not a good result.

When you negotiate, do you focus on maintaining or advancing a position, or do you focus on maintaining or advancing a value that is important to your business? While Roger Fisher and William L. Ury encourage the “value perspective” in their book “Getting to Yes,” I would add that, in order to have that perspective, you must be able to take yourself out of the equation to a degree greater than you might otherwise think. That is not to say that you cannot be assertive or aggressive in your negotiations, and it certainly does not mean that you cannot bring your own unique style to the negotiating table; but it does mean that you must put the interests of your organization, in front of you as you sit at that table.

Many people continue to negotiate thinking that they are good negotiators. While you may feel like a savvy, hard-nosed barter jockey, at the end of the day you have to ask yourself, “do my owners and employees look to me to satisfy an ego or do they look to me to advance the company’s values and achieve its goals?” I think we would all answer that question the same way, or at least we should.