Negotiating with Bullies - A Perspective Based on A Christmas Story

One of my all time favorite movies is A Christmas Story. It took place about the time I was growing up in the suburbs of Denver. Readers in their sixties and over should appreciate the town, the houses, the school, the neighborhood, the situations, and the characters that are portrayed in this classic.

One of my favorite scenes is that of dealing with the bully. We have all encountered bullies in our lives. Collectively we have one in Washington that looks a lot like the kid above. But I will leave that topic for a different forum.  About forty  years ago I attended a training session on how to negotiate hosted by Herb Cohen, the author of You Can Negotiate Anything.  I won't bore you with what he taught me and the group of commercial loan workout negotiators from across America.  It was the very best educational event I ever attended.

I encountered at least one bully in my life. It is not fun. In fact it is scary no matter if you are smaller than or bigger than the bully because small bullies can terrify some bigger guys. Not all. But some. Mr. Cohen taught me about a negotiation tactic bullies use to get their way. The stand up and say something outlandish and walk out of the room. That's it. And then he said what people in the room will inevitably do. And it is not to clap or to celebrate.

I was working for a really big bank that had loaned a lot of money to a west Kansas farmer who I will call King.  King owned or leased several sections (square miles) of land plus the family homestead. My bank's Ag lender gave King a huge unsecured loan. Lenders back then were paid commissions based on their loan production. The loan had to go through committee, so the Ag guy was not the lone screw-up involved. As soon as we (my department) got involved, we flew to Kansas and obtained mortgages on the owned land and obtained security interests on all the owned farm equipment but not his airplane.  We later attended creditor meetings in Omaha and still later Garden City, Kansas.

The group of lenders flew to a Garden City to hold a meeting attended only by his lawyer not King. His lawyer was described to me as a big shot Republican who ran for governor but lost. I don't know if he lost the election or simply did not get the nomination. But he still had his name recognition and his presence: just like the bully in A Christmas Story.

The creditors were asking for things the lawyer could not give because King did not the cash needed to satisfy the claims against him. I remember sensing the lawyer was about to erupt. Then he did. He quickly stuffed a bunch of papers in his briefcase, loudly said something, and quickly walked out of the room. All of the other lenders got up and chased him and begged him to come back - to negotiate.

I didn't go. I told the two other bank officers to sit and wait. I said the lawyer would return. What Herb Cohen had taught me was playing out in front of my eyes. The other lenders persuaded the lawyer to return. They lessened their demand and agreed to some kind of short term peace.

The three of us returned to Denver and initiated foreclosure on all of King's assets in which had a security interest. I am not claiming to have beat the bully. He was only the tough guy protecting his client. But we got a lot of money by liquidating King's assets.