It is rarely a waste of time to try to negotiate a compromise with the other party. Indeed, many states all but require you to make the attempt. You can do this by writing a formal demand letter. But, first things first. Before you reach for pen and paper, try to talk to the person with whom you are having the dispute. The wisdom of trying to talk out a dispute may seem obvious. But apparently it isn't, since I am frequently consulted by someone with an "insurmountable dispute" who has never once tried to discuss it calmly with the other party. I suspect the reason for this is that many of us have a strong psychological barrier to contacting people we are mad at, especially if we have already exchanged heated words. If you fall into this category, perhaps it will be easier to pick up the phone if you remind yourself that a willingness to compromise is not a sign of weakness. After all, it was Winston Churchill, one of the 20th century's greatest warriors, who said, "I would rather jaw, jaw, jaw than war, war, war."
A compromise offer is not binding. It's important to know that an offer of compromise–whether made orally or in writing–does not legally bind the person making it to sue for that amount if the compromise is not accepted. Thus, you can make an oral or written demand for $2,000, then offer to compromise for $1,500, and, if your compromise offer is turned down, still sue for $2,000. If the person you are suing tries to tell the judge you offered to settle for less, the judge will not consider this to be relevant.
In an effort to help you arrive at a good compromise, here are a few of general negotiation rules, which, of course, you should modify to fit the circumstances:
Why it's rarely wise to split the difference. Often, an inexperienced negotiator will quickly agree to the other party's offer to split the difference or settle a claim for 50 ¢ on the dollar. It's rarely wise to do this. After all, by proposing to split the difference, your opponent has all but conceded he or she will pay that amount. Better to counter by reducing your first offer by a smaller amount and leave the next move up to your opponent.
EXAMPLE: In a dispute my business had with a phone company, we originally asked for $5,000. The phone company admitted some liability and offered to compromise. After considering the value of the time our compnay would invest bringing the dispute to court, we decided that it would make sense to compromise for $3,500. And although we were sure we had a strong case, we had to admit that there was some possibility the judge would not agree, so we decided to subtract another $500 and accept a settlement for $3,000. Unfortunately, after several conversations and letters, the phone company wouldn't offer a dime more than $2,000. Since this was too low, we decided to go to court. As it happened, the small claims judge awarded us the entire $5,000. But then the phone company appealed and received a new trial. After the case was presented over again, the second judge reduced our final award to $3,500. Considering that it was easier to prepare the case the second time, we still probably came out ahead of the game, as compared to accepting the $2,000. In truth, however, given the time needed to prepare for two court presentations, we probably netted only about $500 more.
If you settle, sign a written agreement, pronto. If you talk things out with your opponent, write down your agreement as soon as possible. Oral settlement agreements, especially between people who have little confidence in one another, are often not worth the breath used to express them. And writing down an agreement gives each party a chance to see whether they really have arrived at a complete understanding. Often one or more details must still be hashed out.
Learn more about negotiating. On several occasions when I have been involved in important negotiations, I've gotten help by rereading Getting to Yes: Negotiating Agreement Without Giving In, by Bruce Patton, Roger Fisher, and William Ury (Penguin). I also like Getting Past No, by William Ury (Bantam). Neighbor Law: Fences, Trees, Boundaries & Noise, by Cora Jordan and Emily Doskow (Nolo), has excellent advice on negotiating neighborhood quarrels.