Analysis of the Powerscreen Problem In our recent negotiation, my partner Dave and I assumed the roles of Alan Hacker, a computer software developer, and Alan Hacker’s lawyer. Being the lawyer in the negotiation my objective was to avoid litigation with my client’s partner Stanley Star and to aid in the continuation of my client’s co-owned company HackerStar. In addition, I would assist Hacker in coming to an agreement that would be satisfying for him both personally and financially.
I felt that Dave and I presented a reasonable argument on Hacker’s behalf and, since I was able to apply some of our class readings during the process, I was overall pleased with the outcome. My partner Dave and I met on 3 separate occasions to discuss the side of Alan Hacker in “The Powerscreen Problem” negotiation. Alan Hacker and his partner Stanley Star own a software company named HackerStar, which was financed solely by Star. Hacker, the key programmer, manages the company.
Even though they have had minor success with two other computer software programs, they recently had a major disagreement over the ownership of a new computer program that Hacker created called Powerscreen. After many failed attempts to convince Star to back Powerscreen, Hacker decided to seek out a third party for support. Hacker came to an agreement with third party, Jeremy Gates, to buy Powerscreen and for Hacker to receive a percentage of the royalties which is dependent upon the amount of the software that is sold.
Star argued that since Powerscreen was developed using HackerStar office equipment, any royalties should the owned by the company. Hacker disagrees with Star’s right to ownership and they get in a heated argument that quickly turns personal. My task as Hacker’s attorney in the negotiation is to avoid litigation and keep the company afloat. I am to advise Hacker during the course of the meeting as I see fit.
Dave and I decided early on that one of our main goals, besides the continuation of HackerStar, was to receive compensation for the hours that Hacker spent developing Powerscreen. We decided that since Hacker spent 2,000 hours working on the software, in which only 200 hours of that time was on office equipment, that he deserved compensation for at least 1,800 hours. We determined this to be a years worth of pay and we informed Star and his attorney that Hacker deserved to be compensated for his time in the amount of $34,000.
Our optimal outcome was to concede most Powerscreen royalties to HackerStar in order to receive payment for time invested, since that would help dissolve tension between Hacker and Star and be more financially beneficial to Hacker. We determined our BATNA to be compensation for at least some of the hours invested in Powerscreen and HackerStar receiving 100% of the royalties. “…maintaining your ongoing relationship may be more important to you than the outcome of any one deal.
This does not mean you should be less persistent in perusing your interests, but it does suggest avoiding tactics such as threats or ultimatums that involve a high risk of damage to the relationship. ” (Fisher and Ury, 1991, pp. 152) At the beginning of the meeting with Star and Star’s attorney (Mike and Theresa), both Hacker and Star apologized for their past behavior. “An apology may be one of the least costly and most rewarding investments you can make. ” (Fisher and Ury, 1991, pp. 2) This was definitely the case as tensions eased and Hacker and Star agreed that the continuation of HackerStar was a top priority. Dave stated the importance of Hacker receiving 100% of the royalties and was very avid about being paid for time that was spent on the development of Powerscreen. We were confident that Mike and Theresa did not know the monetary details of the percentages of the royalties, so we decided to withhold that information and concentrate on our goal of compensation for the time spent developing Powerscreen. This strategy is known as passive misrepresentation because a negotiator does not mention true preferences and allows the other party to arrive at an erroneous conclusion. ” (Thompson, 2009, pp. 176) Mike and Theresa did not dismiss the idea of paying Hacker for the time he spent developing Powerscreen but did not agree to it right away. Midway through the negotiation Mike offered to pay us a percentage of the gross sales of products sold by HackerStar, which was something that neither Dave nor I had given thought to. We decided to step outside, in private, to discuss their offer further.
We quickly estimated the amount that Hacker would receive if he accepted a percentage of HackerStar’s product sales and compared it to the amount that we asked for originally of $34,000. We decided that it would be financially more profitable if we got reimbursed for the time worked instead of a percentage of sales. When we reentered the meeting we did not immediately reject Mike’s offer but we stated that payment for time worked on Powerscreen was a priority. Since time was running short both groups sensed the urge to get down to the core details of our negotiation.
Dave and I said that we would consider giving 100% of the royalties of Powerscreen to HackerStar if Hacker was compensated for the time developing Powerscreen. Mike agreed that Hacker would be paid $35,000 dollars ($1,000 over our offer) if we would hand over the royalties of Powerscreen to HackerStar. Mike and Theresa both said that Hacker would have to sign a stricter Employment Agreement and it was unanimously decided that neither Hacker nor Star wanted to be in charge of marketing and someone would be hired to take over that role.
One of the things that caught my interest was that Mike and Theresa did not seem to be on the same page about the end result. Since time became an important factor in the negotiation Mike seemed to make the concession of the compensation to Hacker for time put in for the development of PowerScreen without discussing it with Theresa. After the negotiation, Theresa stated that she was not comfortable with the final outcome. If we had more time we may have came up with an outcome that was more satisfactory to each participant.
My main goal for the Powerscreen negotiation was to aid in the continuation of HackerStar and to avoid litigation. Since Dave and I accomplished those goals without difficulty, it became easier to concentrate on what would be most financially beneficial for my client. Although I am happy with the results of our negotiation I wonder what the outcome would have been in order for everyone to be satisfied with the results of the negotiation and without time constraints.
