By: Iman Jaffari (JD/MBA) 

Prompt engineering is a nuanced technique that involves formulating precise queries to extract the most relevant and insightful responses from AI and large language models (LLMs) like ChatGPT, Co-Pilot, Bart, and Claude – among others. This method holds substantial significance across various domains, particularly in high-stakes negotiations where the specificity of language and strategic communication are crucial.  

Strategies to Negotiate Smarter with Generative AI

The following will explore how prompt engineering can evolve and transform negotiation dynamics for legal and business professionals by examining five key strategies. There will be practical applications illustrated through modified examples that demonstrate the potential of this approach beyond scenarios unique to the legal industry. By using prompt engineering to negotiate smarter, dealmakers can gain a competitive edge in critical conversations from the boardroom to the courtroom. 

1. Scenario Simulations 

The first strategy, scenario simulation, is invaluable in negotiations. It involves creating hypothetical negotiation scenarios to predict potential responses and outcomes. For instance, a business negotiator might use an AI model to simulate a situation where they offer specific terms in a high-stakes contract negotiation.  

The prompt might be structured as: 

“Simulate a negotiation response where I propose a 10% increase in annual supply quantities in exchange for a discount. What counterarguments and counteroffers can I expect based on standard industry practices?”  

This approach enables negotiators to anticipate the other party’s reactions and prepare more effectively, ensuring they are not caught off-guard by unexpected strategies. Moreover, by utilizing this strategy, negotiators can explore not just the immediate reactions to their offers, but also the long-term implications of their negotiation strategies. For example, as a use case, a negotiator considering a complex merger might use an AI model to simulate responses to different merger terms.  

They could structure a prompt like: 

“If we propose a merger with a focus on technology integration but with fewer management changes, what responses can we expect from the other party, and how might this impact the long-term success of the merger?”  

This kind of simulation helps in visualizing the ripple effects of negotiation decisions, providing a comprehensive understanding of potential outcomes. 

Moreover, scenario simulation aids in the development of more nuanced negotiation skills. It enables negotiators to practice and refine their techniques in a risk-free environment. By engaging with AI-generated scenarios, negotiators can experiment with various approaches, such as aggressive bargaining or cooperative strategies, and see how these might play out in real situations.  

For instance, a negotiator could ask the AI: 

“Show me how a negotiation would unfold if I start with a very high initial offer compared to a more moderate one.”  

Through these simulations, negotiators can better understand the art of pacing, timing, and strategic concessions, which are critical elements in successful negotiation outcomes. This iterative learning process, guided by AI-driven scenario simulation, ultimately leads to more effective and confident negotiators who are well-prepared for a variety of real-world negotiation situations. 

2. Strategy Prompting 

Related but separate from scenario simulation is strategy prompting. Specifically, strategy prompting focuses on obtaining AI-generated recommendations for negotiation approaches. In various contexts, this could mean asking the AI to suggest negotiation tactics tailored to specific scenarios or industries.  

For example, a prompt can be structured: 

“What are the most effective negotiation strategies for a high-value technology partnership?”  

The AI could analyze past successful negotiations and industry standards to offer strategies that have been effective in similar situations. This insight helps negotiators tailor their approach to the unique nuances of each negotiation, significantly enhancing the likelihood of a favourable outcome. Through this technique, negotiators can also access a breadth of historical data and insights that might otherwise be inaccessible or overwhelming to analyze manually.  

An example of a prompt, in the context of international trade negotiations, might be framed as, 

“What negotiation strategies have been most successful in past international trade agreements involving agricultural products?”  

By querying the AI in this manner, negotiators can tap into a wealth of historical data, extracting key patterns and strategies that have led to successful outcomes in similar negotiations. This information is not just limited to tactics but also encompasses broader strategies, such as how to build rapport, when to make concessions, and how to effectively communicate value propositions. 

3. Argument Prompting 

Argument prompting, the third strategy, concentrates on evaluating the strengths and weaknesses of different negotiation positions. Negotiators can use this to critically assess their stance before entering negotiations. Moreover, by presenting the AI with a summary of their argument, such as,  

“Analyze the strengths and weaknesses of pushing for an exclusive distribution agreement in this partnership,” 

negotiators can gain an external perspective on their arguments.  

The AI might highlight potential weaknesses or suggest areas for reinforcement, thereby allowing negotiators to refine their stance and enter negotiations with a more robust position. 

More specifically, argument analysis through prompt engineering transforms the way negotiators prepare for discussions by providing an objective, data-driven evaluation of their positions. Compared to the previous two types of prompt-engineering, this strategy is particularly useful in complex negotiations where multiple factors and parties with different interests must be considered.  

For instance, in a negotiation involving a large-scale supply chain agreement, a negotiator might use the prompt, 

“Evaluate the feasibility and potential drawbacks of demanding accelerated delivery schedules in our supply agreement.”  

Here, the AI can dissect the argument to identify potential logistical challenges, cost implications, and risks associated with such a demand. The AI’s ability to process vast amounts of data and previous case examples enables it to provide a comprehensive analysis that might reveal insights or considerations that were previously overlooked and allows negotiators to fine-tune their arguments. 

In another instance, in a negotiation about a strategic partnership, a prompt can be formulated as: 

Assess the persuasiveness of proposing a joint venture as opposed to a merger in our partnership discussions.”  

Such brainstorming significantly enhances the negotiator’s ability to gauge the strength of their proposal before it is actually made. Additionally, this strategy helps in identifying areas where additional information or clarification might be needed, thereby preventing miscommunications and misunderstandings during the negotiation process.  

4. Counteroffer Prompting 

As the name suggests, counteroffer prompting, the fourth strategy, involves anticipating potential counteroffers from the opposing party. In negotiations, understanding the range of possible counteroffers can significantly impact the chosen strategy.  

A negotiator might prompt and ask: 

“If we initiate with a high pricing strategy, what are the likely counteroffers, and how should we prepare our response?” 

Predicting these counteroffers enables negotiators to prepare comprehensive responses and avoid being caught off guard, saving time and positioning them as well-prepared and formidable negotiators. Counteroffer prediction is not just about foreseeing responses, but also about crafting a negotiation pathway that considers the likely moves of the other party. This foresight is critical in negotiations where each party’s response can significantly alter the course of the discussion.  

For example, in the previous scenario involving a complex merger, a negotiator might use counteroffer prompting and ask, 

“How might the other party counter our proposal for asset acquisition, and what strategic concessions should we be prepared to make given the information and non-negotiable terms I provided you earlier?” 

By anticipating these counter responses, negotiators are not only preparing themselves for potential rebuttals, but they are also strategizing on how to steer the negotiation towards a mutually beneficial outcome. This level of preparedness demonstrates not only tactical acumen but also a deep understanding of negotiation dynamics, greatly enhancing the probability of reaching a successful agreement. 

5. Cultural Considerations Prompting 

A fifth and final useful strategy, cultural considerations prompting, is useful in international negotiations. This is especially important for negotiators who want to be cognizant of cultural nuances that could affect the dynamics of negotiation.   

Specifically, a prompt like, 

“Describe key cultural considerations when negotiating a trade deal with a company from Germany," 

can yield AI insights into communication styles, decision-making processes, and negotiation etiquette in different cultures. 

Understanding these aspects is vital for negotiators to avoid misunderstandings and build trust with international partners and counterparts. But cultural considerations also extend beyond this to the nuances of decision-making hierarchies, time perception, and conflict resolution styles in different cultures. For instance, in Latin American business culture, relationships and personal connections often play a crucial role in negotiations.  

A prompt like, 

“Analyze the role of personal relationships in business negotiations in Latin American cultures,” 

could guide negotiators to strategies that can better assist them invest time in relationship-building activities, which are fundamental to establishing trust and credibility in these regions.  

This deep understanding of cultural dynamics not only helps in navigating the immediate negotiation process but also fosters long-term business relationships, crucial for success in a global business environment.  

The Future of Negotiations 

Taken together, prompt engineering and utilizing AI and large language models, represents a significant but underutilized advancement in the field of negotiation for business and legal professionals.  

This method, through its precise query formulation, unlocks a new dimension of strategic communication, crucial in high-stakes scenarios where the exactness of language is paramount. By exploring five key strategies – scenario simulation, strategy suggestion, argument analysis, counteroffer prediction, and cultural considerations – this approach demonstrates a transformative potential beyond traditional negotiation methods. It equips negotiators with insights and tactics that were previously unattainable, allowing for smarter, more prepared, and tactically advanced negotiations. As this technology continues to evolve, its integration into negotiation practices is not just enhancing current methodologies, but it’s also setting a new standard in negotiation tactics. In essence, AI-prompt engineering is not just a tool for today’s negotiators; it’s shaping the future of how business and legal negotiations are conducted.