The Law of Four

IN REVIEWING thousands of negotiations, both simple and complicated, we find that there are usually only four main issues to be decided in any negotiation. There will be many smaller issues, but there are usually only four main ones. Occasionally, there may be one, two, three, or even five main issues, but this law says that there are usually only four. Your job is to think through and identify what those four issues might be, both for yourself and for the other party, and what you can do to deal effectively with them.

There will be a primary issue that is most important to the individual, and there will be three minor issues, each of which is important, but not as important as the main issue.

When you buy a house, for instance, your first concern will be the house itself—its layout, attractiveness, and condition. Then, you will be concerned about price, financing and terms, what’s included in the purchase, when you can take occupancy, and other details. When you go to buy a new car, as another example, your primary issue is usually the model, color, and size of the car. But since the same car can be purchased from more than one dealership, the subjects to be negotiated will be price, value of trade-in, accessories, and/or terms of payment. Once you have decided on a particular car, your primary issue will probably be the total price of the car. Then, you will negotiate over the trade-in value of your existing car, the accessories, and the interest rate and payment terms.

Stalemate in Negotiating

In a negotiation, each party has a number-one issue that is different from the other party’s. If both parties have the same issue as their primary concern, it becomes extremely difficult to negotiate or to reach an agreement.

For example, since 1947 in the Middle East, there have been negotiations going on between the Israelis and the Palestinians. The major issue for both parties is the land of Israel and the existence of the state of Israel. The number- one issue for the Israelis is the continued existence of their state. The number- one issue for the Palestinians is the abolition of the Israeli state. As long as these remain the primary positions of both parties, negotiations can go on for decades, but no resolution is possible.

Your Primary Issue

The Law of Four is a tremendous mental tool in a negotiation. It gives you a greater sense of clarity. By identifying your primary issue, and the other party’s primary issue, you can often find a win-win understanding where both parties get the most important thing they want from the negotiation. You can then negotiate and concede on the smaller issues.
There is one final point about the Law of Four. It seems that the major issues for both parties are the ones that will be agreed to last. The 20/80 rule applies in negotiating. The last 20 percent of a negotiation includes 80 percent of the most important issues under discussion.

Agree on the Noncontroversial Issues

Previously, I described a real estate negotiation that involved a lengthy development agreement containing fifty-two changes. What I had found in negotiating this type of agreement is a technique or tactic that is extremely effective: Go through the entire agreement, from the first page to the last page, and discuss every clause, condition, term, and issue where there may be a difference of opinion or desire.

You will find that you and the other party will largely agree on about 80 percent of the terms and conditions in a contract, no matter how large. When you come to a term or a condition where there is disagreement, agree to pass over it for the time being and go on to the next clause or condition where you have no disagreement. When you’ve gone through the entire agreement, go through the agreement again, from front to back, and revisit the issues where there is disagreement. In the second iteration, you will begin to find ways to concede, compromise, and trade to resolve these issues. But there will still be issues that remain unresolved.

Then, you go through the agreement a third time, and a fourth time if necessary. At a certain point, you will come down to the “final four.” You will reach the stage where there are four issues, with one major issue that must be resolved, and three minor issues. Now, you are ready to do some serious negotiating.

Terms of Employment

In applying for a new job, your negotiation for salary and benefits can have a major effect on how much you earn and how happy you are at that job for years to come.

Most people start off thinking that their primary concern is to get the highest salary possible from the beginning. But many companies have constraints on how much they can pay for a particular job. Quite often, an employer will not be able to match your salary expectations. In that case, you shift gears. You negotiate for more benefits, such as a company car, better health plan, more time off than is required by law, flexible working hours, and other details that are important.

One of the best strategies is to agree with the salary offered, once you find out that the employer is inflexible, and then get agreement on what you will have to do or accomplish to get an increase in pay. It is important that you get the employer to agree to do a review within ninety days; if you have achieved certain benchmarks, which are identified in writing and defined numerically, then you will get an increase of a certain amount. This is a good negotiating strategy when you are taking on a new job of any kind.