Liar, Liar! How to Handle Lies in Negotiation

Ace learns how to handle dishonesty in negotiations

This article is focused on how to handle being lied to by a counterparty.  While it seems simple at first glance, this is a complex situation and deserves a professional approach.

I know the problem – the negotiation is going along; information is being shared, but you realize your counterparty has provided false or misleading information.  What do you do now?  I’ve been there many times and know the right response depends upon the context of the situation.  You want to have reliable information, but you don’t want to jump the gun to create conflict or wreck a deal if you don’t have to. 

This article describes a systematic approach to understanding and handling situations where you believe your counterparty has lied to you.  With us and the Malloy Method, you can master the skills of analyzing and responding to these situations.  Click here to sign up for a free webinar to learn more!

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Information Flows

Managing information delivery is a big part of negotiation and you cannot trust your counterparty to be 100% forthcoming or even accurate with all relevant information.  It is your responsibility to receive the information you need for making decisions in a negotiation.  Unless there is some external obligation to disclose information (for example, in the sale of a franchise, or lending transaction, etc.), your counterparty will not have any inclination to provide you with everything unless you ask for it.  So, be careful to know what you need to know – that’s part of planning for negotiation and part of the Malloy Method for negotiation success.

Good decisions run on good information, and it is your responsibility to obtain the information you need.  Be vigilant about the accuracy of information you receive from your counterparty and verify what you can from external sources.

Unfortunately, though, you will confront inaccurate, incomplete, misleading and untrue information in negotiation.  We will help you prepare to handle this right.

Using a Systematic Approach?

Properly handling untruths in negotiation depends upon the nature of the lie, the subject matter of the lie and the context.  As with everything in the Malloy Method for negotiation success, a systematic, professional methodology is best.  I take a four-step approach:

·      Determine whether it is a lie, spin or opinion;

·      Categorize the type of lie;

·      Consider the importance of the lie;

·      Consider the intent of the lie; and

·      Figure out how to use it to my advantage

Was it Really a Lie?

You need to be 100% clear as to the nature of the suspected statement or information and how it differs from the truth.  Ask yourself, “how do I know it was a lie?”.

The first distinction is whether the statement was about facts or opinion.  Something like “I believe this is the best value for your money” is really an opinion dressed up as a fact.  A statement of fact would be “This automobile is ranked as the No. 1 value by the leading publication.” 

The next step is to consider whether the statement was actually untrue.  What makes you so sure the statement or representation was not true?  Be careful to consider the full context and content of the statement.

There are different forms of untrue statements, and it is important to understand what you are dealing with before you react.  Here are essentially three kinds of untrue statements you will encounter:

·      Mistake;

·      Careless Untruth:

·      Super Careless Untruth;

·      White Lies;

·      Malicious Lies; and

·      Serious Lies

Mistake

Mistake is the most common type of untruth.  A reasonable and “honest” mistake of fact happens all the time.  This could be due to any number of reasons, but it does not usually indicate more than simple error.  For example, if you are buying a house and the seller tells you the appliances were replaced five years ago, but it turns out to have been six years ago.

Mistaken information can be important, though, so you need to figure out how the mistake was made and get to the truth.  The key point is to correct the mistake and be sure you can get reliable information going forward.

Pro Tip – understand the information source and process used by your counterparty which led to the mistake.  If there is a fundamental problem with the information sources or processes, get to the bottom of that to ensure you get better information going forward.

Pro Tip – watch out for patterns of bad information.  This can indicate systemic problems or incompetence and can be important in terms of continuing the negotiation (can they reliably even finish the deal?) and in working with them in the future (if that is relevant).

Careless Error

A counterparty will sometimes provide untrue information due to a careless error.  This is similar to a simple mistake but is a bit worse in that the counterparty really should have been more careful. An example of a careless error could be providing financial information from the wrong period (providing 2023 information and saying it came from 2025) or something else which does not indicate dishonesty but is still a dumb mistake.

The first thing is to identify the nature of the error and then the actual truth, just as with simple mistakes.  The difference here, though, is you will need to understand a bit more about how the mistake happened and why the counterparty was so careless. 

Look out for patterns.  One careless error is one thing but several careless errors can be an indicator of incompetence or perhaps even bad faith.

Super Careless Error

A super careless error is what is called gross negligence, in law,.  This is not just a mistake or even a careless error, but instead is an error made with recklessness, implying an indifference to the actual truth. 

For example, if the seller of a business provides information with a mathematical error, that could be a simple error.  If the information involves mistakenly providing 2023 information as 2025 information, that’s a careless error. Simply making up numbers without reference to actual facts, is a super careless error (at best).

You should treat super careless errors differently than mistakes and careless errors, as super careless errors indicate your counterparty is not really trying to provide you with accurate and honest information.  This is an indicator of incompetence at best, and often of bad faith.  In some ways, a super careless error is no less serious than an outright lie.

White Lies

A “white lie” is an untrue statement made about something the counterparty believes is not important.  For example, years ago, I was buying a car.  The seller told me the owner was a nice grandmother who only drove the car to church on Sundays.  Of course, this wasn’t true, but it wasn’t important. A white lie.

Consider white lies in the proper context.  It was not a problem in the car sale, but if the white lies come with other untruthful statements or questionable behaviors, these white lies can become red flags.

Pro Tip – in negotiations in executive or legal situations, even white lies are very bad form.  Watch out for any untruthful statements, as they are more likely an indicator of something serious. 

Malicious Lies

A malicious lie is an untruthful statement made with the knowledge that it is untruthful and with the intention to deceive you.  These are not errors – they are intentionally designed to deceive you.  This is serious, not only in terms of the substance of the lie (obscuring the truth) but often even more so in the mindset of your counterparty. Malicious lies are absolutely a sign of bad faith negotiation, indicating dishonesty and a lack of respect.

When confronting a malicious lie, first determine that the statement is untrue – that you are not looking at it in your own error or out of context.  You need to know the truth first.

From there, consider whether the lie is about an important issue.  For example, in a corporate transaction, if your counterparty wants some more time to consider the negotiation, they might offer a lie such as feigning illness or “I need to check with my board of directors” to reschedule a deadline in the negotiation.  This seems like a white lie, but the difference is that it involves an intention to deceive you.  So, there is some malice involved, but the context and subject matter may not be particularly important.  But if the lie involves something important like warranty provisions on complex technology in a technology transfer deal, the situation changes.

At a minimum, discovery of any malicious lie, even if it seems unimportant, should trigger an automatic distrust mechanism in your mind.  Your counterparty is trying to manipulate you with false information. That’s a serious thing to know and from that point forward, you should always take anything they tell you with a grain (or pound) of salt. You should not trust a liar.

Serious Lies

A serious lie is one where the counterparty knowingly makes an untrue statement to you with the intention of deceiving you into taking a decision or action on an important issue.  The most serious of these issues would be what I call “deal critical” issues, or those issues which would make or break your intention to make the deal.

Imagine you are opening a restaurant and are negotiating a lease for what looks like a great location.  The landlord tells you that the premises is perfectly set up for food service and has been approved by all authorities for food service operations, as the last tenant had operated a restaurant there.  You later find out none of this is true – it would take months and huge financial investments to prepare the premises to operate as a restaurant.  The delay and expense change everything for you in the deal, and the landlord knew it.  This was a serious lie made in the attempt to get you to commit to a lease when you would not have done so if you knew the truth.

Serious lies are obviously an indicator of fundamental dishonesty and unreliability.  In most cases (but perhaps not all), you would want to discontinue negotiation with a counterparty engaging in serious lies, as you will never be able to trust them.

Opinion and Weasel Words

You should always expect negotiations to be filled with spin and management of information and impressions, so you need to be alert to subtle and overt manipulation, even if this falls short of untruth or lies.

You must first master telling the difference between fact and opinion.  This can be obvious, but is sometimes it can be obscure.  In some cases your counterparty will try to establish an opinion as fact to affect your negotiations. We’ll teach you to be an expert in handling this.

            Opinions and Weasel Words

A factual statement is a specific and usually verifiable statement. “This car is a 1965 Corvette, so this is considered to be an antique automobile” is a statement of fact.  It describes a specific thing and refers to a standard for categorization of automobiles (vintage, antique and classic are specific categories of automobiles). 

In contrast, a statement that “This is a 1965 Corvette, and I believe it is a vintage car” looks like a statement of fact, but the inclusion of “I believe” makes it a statement of opinion, even if it looks like a fact. There can be an argument as to whether that person believed it is a vintage car, but the relevant issue is not the belief but the status of the car.  In this case, a 1965 car is not old enough to be a “vintage” car (cars made after 1930 are “antiques”, not “vintage”), the statement is not really a lie because it is a statement of opinion.  Watch out for “I believe” and other qualifiers or “weasel words” as I call them, as these words are often used to trick you into treating opinions as facts.

Here are some common weasel words changing a statement of fact into an opinion:

“I believe”

“In my opinion” (obvious, but it is used all the time)

“In my experience” (watch out whether the statement is made by someone claiming to be an “expert”)

“It seems to me”

Watch out for any qualifier in a statement to change it from a statement of fact to a statement of opinion.

For example, “I believe this 1965 Corvette is undervalued at $100,000” is not a statement that the 1965 Corvette is worth more than $100,000, but rather a statement that this person believes it is.  Of course, though, the statement is intended to manipulate you regarding the valuation.

            Other Qualifiers

In addition to opinions, there are other weasel words used to obscure a statement of fact.  Watch out for qualifiers like this:

“Many people say”

“It is believed that”

“This is considered”

“Usually”

These change the statement to being about something else.  For example:

“Many people say that a 1965 Corvette is a great vintage car” is not really a statement that a 1965 Corvette is a vintage car, but rather that many people say it is.

Likewise, “It is believed that the 1965 Corvette is the most collectable vintage car” is not a statement that the 1965 is collectable, but rather that someone believes that it is.

            Expert Opinions

What about experts?  An expert opinion is something of a special case, but still an opinion, the value of which depends upon from whom it is offered and the precise context in which the opinion is given.  The dangerous thing about expert opinions is they feel like facts, but are still opinions.  There is a lot to be said about expert opinions and that is covered in another article, but for now, in building the skill to distinguish between fact and opinion, keep in mind that an expert opinion is still just an opinion, and while perhaps persuasive, it is not a fact.

            Lying Weasels

As discussed above, weasel words can be used to present an opinion used to present an opinion as a fact, but even those weasel statements are statements of facts themselves.  While these weasel statements are sometimes honest, they are usually meant to mislead you.

In the example of the 1965 Corvette, the statement “In my opinion, this car is undervalued at $100,000” is a statement that this person holds this opinion.  While in practice, few negotiators press the issue, you could challenge this statement with questions like “Why do you believe this?” or “How did you reach that opinion?”.  This challenge forces your counterparty to clarify their statement, giving you more information, or it discredit the statement.  If handled properly, you can use this kind of follow up questioning to your advantage.

Pro Tip:  Follow up weasel word statements with polite, friendly and inquisitive questions.  Come across as naturally inquisitive and ask honest questions.  This will disarm the counterparty and make it more likely they will respond honestly.  If someone says “this is considered to be”, follow up with a question like “who considers this?”  If they say “in my opinion” ask them about the factual basis for that opinion.  Focus on the statement and follow up in a friendly way.  At a minimum, you will get some good information.  Alternatively, you can discredit the weasel statement and take that off the table for the negotiation.  Here’s a more specific example:

A seller says, “My 1965 Corvette is considered to be a highly collectable vintage automobile worth in excess of $100,000, so we’ll start the discussion on that basis.”  You should follow up on each of the weasel words:

“Who considers this?”; 

“How is this car classified as vintage?”; and

“What is that valuation based upon?”

With these questions, you will either get information from the seller telling you more about the car and its valuation or you will force the seller to concede that the statements and valuation are not really solid, and you will then remove the presumption about the $100,000 price as a base line for the negotiation. 

Pro Tip:  Watch out for weasel words used to set presumptions or frame terms of negotiation, especially for price.  In the example just above, the seller tried to set the presumption that the Corvette is worth more than $100,000 by using a weasel word statement that “it is considered” to be worth more than that.  This is a very common trick, and you will see (or even use) it.

Determine Importance

Once you understand the statement is an untrue statement of fact (not opinion), the next step is to consider the effect or importance of the statement. 

If the untrue statement is trivial or you are not affected by it (you have determined it is not true and are not falling for it), you have some options. 

You can say nothing and beware future future statements might not be truthful.  For example, in buying the car where the seller told me the nice grandmother only drove it to church, there was no need to confront the statement, and the discussion continued.  There would have been more difficulty in confrontation than it was worth.

In most cases where the statement is important, you can raise the inaccuracy without making any accusations. Avoid bringing drama into the negotiation – keep it about the deal.

This is a very common response in legal and executive deal negotiations.  You point out the truth and signal to the counterparty that you are skeptical, but you don’t create a conflict over it.  Just deal with the truthfulness on an objective basis.  For example, if the counterparty presents income figures in a business purchase and you determine that these figures are inaccurate, just note that the figures are inaccurate and either replace them with what you believe is accurate or ask to have them recalculated.  Keep the drama out of it.

Determine Intent

If the untruthful statement is made by mistake or careless error, treat it as such.  There might be something gained by asking the counterparty to be more careful, but in most cases, the error is obvious and should just be corrected with truthful information.

If a super careless error is involved, it is wise to note that you need reliable information and ask the counterparty to provide better information. Where an ongoing information flow is part of the negotiation, it could be useful to discuss the processes for providing the information and even get involved with the counterparty to prepare information together.  The point is to ensure that you get reliable information and to note that there is possibly a systemic problem on the part of the counterparty.

If you believe the super careless error indicates the counterparty’s lack of good faith commitment to the negotiation, you should either raise that point directly (and firmly – be clear about it) or simply disengage from the negotiation.  This is a judgment call – if you believe the negotiation is worth saving, then try to save it, but if it is not likely to improve, consider moving on to other options.  I am going through exactly this in a negotiation right now and have determined to drop the negotiation over this very point.

If you believe there is malicious intent – an intentional attempt to deceive you, you should strongly consider discontinuing the negotiation, unless you are involved in the kind of deal where this kind of intent does not matter and you already know what you need to know.  As a general matter, though, it is usually best to avoid dealing with dishonest and manipulative counterparties.

Pro Tip:  Do not waste time on drama. You gain nothing by getting into an emotional conflict by pointing fingers or calling people liars, etc.  You are not there to correct behavior or dispense justice.  You are there to achieve your strategic goals, so stick to your objective strategies.  If you are confronted with a dishonest counterparty and don’t want to continue, just end the negotiations politely and move on.

Going Forward

Information flows, including receipt of misleading and untrue information is a natural part of negotiation.  You can learn the skills to handle these situations through our courses and the Malloy Method.  Take a free webinar to get started on your path to becoming an Ace negotiator with us!

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