123rf11932059-smallThe Law of Four says: There are four main issues to be decided upon in any negotiation; everything else is dependent on these.

There may be dozens of details to be ironed out in a complex agreement but the success or failure of the negotiation will rise or fall on no more than four issues. I have spent two and three days in negotiating sessions with teams of skilled business people on both sides of the table, discussing 50 pages of small and large details, only to have everything boil down to four key issues at the end.

The first corollary of the Law of Four says: [quotes]’Eighty percent or more of the content of the negotiation will revolve around these four issues.’ [/quotes]

This Law of Four and this factor of 80 percent turn out to be true in almost every case. No matter how long or complex the negotiation, no matter how many clauses, sub-clauses and different details, terms and conditions, at the end, most of the discussion, and the most important points of the negotiation, revolved around four basic items.

The second corollary of the Law of Four says: [quotesright] ‘Of the four main issues in any negotiation, one will be the main issue and three will be secondary issues.’ [quotesright]

For example, you may decide to buy a new car. The four main issues to be decided might be price, trade-in value of your existing car, color and accessories. Warranty and service policies will be important but secondary.

According to normal car buying patterns, if you are going to buy a new car, you will probably consider about 10 different cars and visit 10 different dealerships. You will eventually settle on one model of car and approximately three dealerships that sell it. You will then make your decision based on the combination of these four elements, with price probably being the main issue, and the other three varying in importance according to your individual situation and personal preferences.

[quotes]The Law of Four can be extremely powerful if the other party’s order of importance of the four issues is different from yours.[/quotes] One party may be more concerned about price and the other party may be more concerned about terms. This can lead to an excellent win-win solution that satisfies the most important needs of each party.

How you can apply this law immediately:

  1. Think of something expensive and complex that you have purchased in the past. What were your four key considerations? What were the considerations of the other party? How did you finally reach an agreement?
  2. Think of an upcoming negotiating situation in your work. Make a list of all your considerations and then order them by importance to you. Make a list of the other party’s considerations in order of importance. How can you use this information to get a better deal?