Bargaining Power, in a nutshell

Bargaining power is, at essence, a comparison between the following things:

• How badly the other side wants to make a deal with you
• How badly you want to make a deal with the other side

Between the outlines of those two phrases, there is a vast sea of gray area, populated by the unique facts and circumstances of your situation

In employment law, we deal with Bargaining Power in the hiring process, during employment, and during legal disputes

Bargaining Power in the hiring process

In most hiring scenarios, the applicant is unemployed and the employer has several applicants to choose from. Who do you think has the most bargaining power?

For potential employees, in a negotiation over the terms of your getting hired for a job, you might or might not have any real bargaining power. The easier it is to find an employee with your talents, the less bargaining power you probably have. The more desperate you are to obtain work, the less bargaining power you have - you want too badly to make a deal.

Companies hold the strongest cards in most hiring situations and well know it. Applicants are hungry and nearly broke, and Companies have several applicants to choose from, so they are virtually assured that someone will take the job under whatever terms they dictate.

In a specialty contract situation, such as I talk about in my article on Contracts for Gurus, the troubleshooter or expert or specialist might have a lot of bargaining power up front. The company may truly need his services, and be willing to meet his terms.

Lawyers can help you recognize the bargaining power that you might have in a particular situation. But more importantly, lawyers can help you translate your bargaining power into contractual protections and assurances.

Be careful when attempting to exercise your bargaining power. You might not be the best person to gauge the amount of bargaining power you possess. Another person, whether a lawyer or a business mentor, may be able to help you come to a reasonable realization of what power you might actually have. If you over-estimate your bargaining power, the deal could collapse. If you underestimate your bargaining power, the terms of your deal might be far from optimal. Carefully estimate your bargaining power, and work with a lawyer to try to translate that power into a good contract.

The more risk you can tolerate the greater the bargaining power you might have in the right circumstances.

Bargaining Power during employment

Problems that arise during employment cause employees to see lawyers. During a legal consult, the lawyer will be looking for sources of bargaining power to try to leverage a solution to your problem. Every case is unique, of course.

Bargaining power during employment can arise from the potential legal threat you pose to the company (which is a very complicated determination involving many many factors). Another important source of bargaining power during employment is the delicacy of the situation from a public relations or customer relations point of view. There are many many other considerations as well, some are legal and some are personal to you, which your lawyer will be watching for in trying to gauge the bargaining power you have.

If you have a Contract of any sort, you will need a lawyer’s help in determining whether the contract might give you extra bargaining power or detract from your bargaining power (for highly technical legal reasons).

When I consult with someone who is still employed and having problems, I talk about the importance of doing or saying certain things, or refraining from doing or saying certain things, in order to improve bargaining power later on, if this problem turns into a legal fight.

Bargaining Power during legal disputes

During legal disputes, bargaining power determines the quality of the settlement. Most legal disputes settle at some point in the process. A settlement is the convergence between your willingness to make a deal and the other side’s willingness to make a deal. Each side exercised its bargaining power in trying to get the best deal it could. Each side gauged the risks of not settling against the risks of settling. Eventually the two sides came to the same realization, and this is the point when the settlement occurred.

It’s very difficult to determine with any accuracy how much settlement-related bargaining power someone has. Each case is unique.

Bargaining power will ebb and flow during a case based on the things that occur during the case, and for many other reasons. Some reasons are simply secret, and the other side will never tell us. Perhaps there exists a secret “smoking gun” memo that the other side will not want to release to us, and so they might be quite willing to settle favorably to avoid disclosure. Sometimes I am surprised at how much bargaining power my side seems to have, for reasons unknown to me.

Sometimes I am surprised at how little bargaining power my side seems to have, despite signs that we should have lots of power. There is no law that says that the parties must settle - maybe the other side has decided it would rather pay its lawyers a large amount in legal fees than pay a reasonable settlement.

When I represent someone, I try to take steps from the earliest stage of the representation that will put us in a stronger bargaining position far down the road.

CONCLUSION

Bargaining Power in employment law and litigation is a case-by-case determination involving a large number of factors, including highly technical legal doctrines of many types that the lay public cannot be expected to know.

Lawyers deal with determining Bargaining Power all the time, and can probably help you determine the bargaining power you have in your situation.