It’s no secret many of us lost big bucks on investments that the bond rating agencies like Standard & Poor’s assured us were low risk.  So is there any hope you can avoid losing money again? The New York Times reports that  “corporate sleuth” Jules Kroll’s firm just got approved by the government to rate bonds.

It’s easy to be impressed reading that Kuwait and Haiti trusted Koll’s  “private CIA” to track down assets of dictators like Saddam Hussein and  Jean-Claude “Baby Doc” Duvalier.  But it doesn’t tell you what you need to know:  How can you spot lies before you get suckered by the next Bernie Madoff? After all, why trust the new ratings by this corporate sleuth?

Or why trust me? I’ve taught the science and art of lie detection, emotional awareness and negotiation to Homeland Security and to business people around the world, like Peter Thiel, the angel investor behind Facebook, and to students and faculty at Harvard and Columbia Business Schools.  And I’m about to teach JAMS, the world’s top arbitrators.

Let me share the key bad news and good new.  Bad: people on average simply cannot tell lies from truth. But the good news is that research shows that there are scientific ways to catch lies.  In this blog series, I will share some of them with you.

Problem one: You’re listening to the wrong person.  Remember you can’t catch a lie if you’re talking with another victim.  Even Bernie Madoff’s children claim they weren’t in on the game!  A top lawyer I trained in lie detection told me his negotiation secret.  “I never tell my team the number  I got from the CEO as our final offer.  And I’m pretty sure the CEO never tells me the truth either.”

Solution one: Get closer to the real decision makers.  It’s never been easier.  Under federal law, you can now access many of the conference calls when top executives talk with investment analysts.  A Duke University study found that one could predict the firms that would perform poorly by analysis not of what they said, but how they said it.

Solution two: On the other hand, remember the butler and the nurse know it all.  Rose Mary Woods, Nixon’s secretary, probably lied about the famous 18 minute gap in the White House tapes.  But she was the rare loyalist.  So talk with the people at the very bottom of the totem pole, too.  One investor in a start-up figured it was rigged by asking routine questions of one of the many “busy” people “working” in the office.  The person couldn’t answer basic questions.  It turned out the “worker” was an actor hired to fool investors into thinking there was a lot going on.

That may also explain why one study showed investors who put their money in local businesses outperformed the market as a whole.  If you’re investing locally, you can poke around at both ends.  Try to talk with executives.  Ideally see them in person.  And try to look around the business – or government project – and talk with anyone you can find.

What do you ask? What do you look for?  We’ll cover that in future blogs, but you can rest assured it’s not just their words.

Here’s one preview: there’s no magic bullet.  When people lie, their noses don’t always grow.  And, if someone’s pants are on fire, maybe they dropped a cigarette!  To find the truth, you need to look for clues or what I call soft spots. The soft spots don’t mean someone is lying.  But it means that something is going on, and it’s your challenge to figure out what.

Take eye contact.  A lot of people waste their time thinking that someone is lying if they look up and in one direction.  I was helping at a lie detection training with some spies when a former Canadian border patrol person said this. “Which direction?” I asked.  “It depends,” he said, “on whether you’re right or left handed.”  I said I was right handed.  He didn’t say anything.  “Well, really no one could remember, so we just pulled over anyone who looked up.”  Now at least you know to look ahead when you visit Canada.

Science tells a different story.  Researchers have found there’s no pattern between which way people look up and their truthfulness.  But looking up is a soft spot because it usually means the person is thinking harder.  That’s all.  It doesn’t mean someone is lying. On its own.  But if I ask your birthday and you look up, then that’s a problem – unless you don’t speak English or don’t hear.

Think back to the actor in that start-up.  I wasn’t there.  Here’s my guess.  When the investor asked specific questions about the business, the actor might have looked up.  It was a soft spot.  But it would only be a soft spot.  Maybe another person might look up because they were trying to think about how to explain a complex idea to a novice – or how not to give away genuine secrets.  We’ll learn more about that kind of hypothesis testing in future posts.

See for yourself.  Look at this video of Charlie Sheen on Good Morning America.

He’s asked when he last used drugs. When do his eyes move? What is he thinking about?  Do you agree with the interviewer that this is his most candid interview ever?

Now try again.  Look at this video of CNN’s Piers Morgan asking Sheen if he is under the influence during the interview.

Keep checking the comments on this post for my perspectives.  And stay tuned for more lie detection and negotiation tips in future posts.  What’s left of your 401k will thank you.

Clark Freshman is a tenured professor of law at University of California, Hastings College of Law, and teaches lie detection, emotional awareness, and negotiation around the world.  You can see videos and learn more at clarkfreshman.com.

It’s no secret many of us lost big bucks on investments that the rating agencies like Standard and Poors gave their top grades. The business “spy” who saved a kidnapped businessman is now joining the ratings game according to a huge story in the New York Times. http://www.nytimes.com/2011/02/27/business/27kroll.html. It’s a fun piece, but it doesn’t tell you what you need to know:  How can you spot lies before you get suckered by the next Bernie Madoff? After all, why trust this new agency?

Or why trust me? I’ve taught the science and art of lie detection, emotional awareness and negotiation to Homeland Security and to business people around the world, like Peter Thiel, the angel investor behind Facebook, and the meeting of federal administrative law judges.  And I’m about to teach JAMS, the world’s top arbitrators.

Let me share the  bad news and good news that I share with all those audiences.  Bad: people on average do no better than chance at catching lies.  But the good news is that research shows that there are scientific ways to catch lies.  In this blog series, I will share some of them with you.

Problem one: You’re listening to the wrong person.  Remember you can’t catch a lie if you’re talking to another victim.  Even Bernie Medoff’s children claim they weren’t in on the game!  A top lawyer I trained in lie detection told me his negotiation secret.  “I never tell the lawyers I send to negotiate for us what the bottom line is I got from the CEO.  And I’m pretty sure the CEO never tells me the truth either.”

Solution one: Get closer to the real decision makers.  It’s never been easier.  Under federal law, you can now access many of the analyst calls when top executives talk to investment analysts.  A Stanford study showed that one could detect the firms that would perform poorly by analysis not of what they said, but how they said it.

Solution two: On the other hand, remember the butler and the nurse know it all.  Rose Mary Woods, Nixon’s secretary, probably lied about the famous 18 minute gap in the White House tapes.  But she was the rare loyalist.  So talk to the people at the very bottom of the totem pole, too.  One investor in a start-up figured it was rigged by asking routine questions of one of the many “busy” people “working” in the office.  The person couldn’t answer basic questions.  It turned out the “worker” was an actor hired to fool investors into thinking there was a lot going on.

That may also explain why one study showed investors who put their money in local businesses outperformed the market as a whole.  If you’re investing locally, you can poke around at both ends.  Try to talk to executives.  Ideally see them in person.  And try to look around the business – or government project – and talk to anyone you can find.

What do you ask? What do you look for?  We’ll cover that in future blogs, but you can rest assured it’s not just their words.

Here’s one preview: there’s no magic bullet.  When people lie, their noses don’t always grow.  And, if someone’s pants are on fire, maybe they dropped a cigarette!  To find the truth, you need to look for clues or what I call soft spots. The soft spots don’t mean someone is lying.  But it means that something is going on, and it’s your challenge to figure out what.

Take eye contact.  A lot of people waste their time thinking that someone is lying if they look up and in one direction.  I was helping at a lie detection training with some spies when a former Canadian border patrol person said this. “Which direction?” I asked.  “It depends,” he said, “on whether you’re right or left handed.”  I said I was right handed.  He didn’t say anything.  “Well, really no one could remember, so we just pulled over anyone who looked up.”  Now at least you know to look ahead when you visit Canada.

Science tells a different story.  Researchers have found there’s no pattern between which way people look up and their truthfulness.  But looking up is a soft spot because it usually means the person is thinking harder.  That’s all.  It doesn’t mean someone is lying. On its own.  But if I ask your birthday and you look up, then that’s a problem – unless you don’t speak English or don’t hear.

Think back to the actor in that start-up.  I wasn’t there.  Here’s my guess.  When the investor asked specific questions about the business, the actor had to look up.  It was a soft spot.  But it would only be a soft spot.  Maybe another person might look up because they were trying to think about how to explain a complex idea to a novice – or how not to give away genuine secrets.  We’ll learn more about that kind of hypothesis testing in future posts.

See for yourself.  Look at this video of Charlie Sheen.

He’s asked when he last used drugs. When do his eyes move? What is he thinking about?  Do you agree with the interviewer that this is his most candid interview ever?

Now try again.  Look at this video of another interviewer asking Sheen if he is using drugs now.

Keep checking the comments on this post for my perspectives.  And stay tuned for more lie detection and negotiation tips in future posts.  What’s left of your 401k will thank you.

Clark Freshman is a tenured professor of law at University of California, Hastings College of Law, and teaches lie detection, emotional awareness, and negotiation around the world.  You can see videos and learn more at clarkfreshman.com.

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Let’s take their advice step by step.

Step one: Don’t answer the question in writing.  They suggest applicants skip steps about how much they made.

Antidote: Beware avoiding in every form. It’s easy to flag the applicant who leaves blank spots on a form.  But beware, too, when people want to “talk in person.”  Maybe they want rapport.  And maybe they’re right: research suggests email negotiations often lead to less success.  But maybe they’re trying to hide something.  Case in point: I doubted someone really did ten hours of work.  I asked them for an itemizing of how they spent their time.  They said, “I’d rather talk in person.”

People also use “in person” to manipulate.  A client recently had a guard at work bar their assistance dog.  The head honcho talked about “the appropriate process” and referred to HR.  And HR wanted . . . “to talk.”  I coached the client just to keep saying California law required access.  Finally, we sent the law – it turned out also to include a $1000 penalty!  Within forty minutes, the employer was ready to write the check!

Beware subtler evasion in conversation.  Track the person’s language.  Are you starting to hear filler phrases like “as it were” and “if you please” and “so to speak.”  Of course, some people do that all the time.  So compare how they usually talk with how they answer specific questions.  This change in verbal style doesn’t mean they’re lying, but it’s a flag to probe more later.

Antidote two: If they won’t go on the record, put them on the record.  Send a short email seeking to confirm some things.  “Thanks, John, for talking today about the job.  Before I check your references, I just wanted to confirm a few things that I’m not sure I got down properly.  First, the salary at Starbucks was __.”  You can do this badly, too.  You could start to sound like one of those lawyers who sends confirming letters after all their calls.  What a jerk – and probably with some very happy clients!

Tactic two: “Inflate your numbers fairly.”  Money suggests you answer questions about salary with “total compensation” that includes “stock options, 401k match, bonuses, and upcoming raises.”  They also suggest you say “My total compensation is in the range of . . . “  But you already know “in the range of” is one of those avoiding phrases.

Antidote three: Ask very specific questions.  Change your forms to say “total cash salary” and “other compensation.”  And ask them to spell out the other compensation.  Who knows: you might even learn important facts.  Maybe you learn about paying someone partly in commuter money that saves you payroll taxes!

Lies can cost you.  Not just money, but even your health and life.  A friend called recently to tell me that she found out her new boyfriend was HIV-positive.  She didn’t get how she missed it.  “I asked,” she said.  First I found out she was okay.  Yes, she’d taken the viral load test that detects HIV accurately without having to wait months after exposure.

She wasn’t lying.  She had asked.  On the phone.  That left her no chance for her to look for the microexpressions we know reveal many lies.  That also left her boyfriend with the comfort that could let him lie more easily.  But the real problem was her question: “What’s your STD history?”  He said, “Crabs.”  When he finally told her the truth, she asked about this.  “I wasn’t lying.  I don’t think I got infected from sex.”

A final note: Specific questions are great, but general ones can also help.  She finally got him to tell the truth when he talked about an impending trip he planned before they met.   She felt something weird during the conversation.  “On the way back,” she told me, “I said something that sounded strange. I asked, ‘Are you feeling complete about all this?’”  That’s when the boyfriend confessed.

You can use this same general tactic in business negotiations as well.  Don’t just ask for numbers on salaries.  Try to get any questionable information.  You might even try the common confess and ask strategy.  “You know,” I often say, “I think everyone has bad matches with work.  I know that I hated my first job because the person was very controlling and obsessive.  I imagine he probably thought I needed to be more detail-oriented.  What about you?”

Bottom line:  Should you ask general questions (“Anything to know about this house”) or specific (“any rumors about new construction around here”).  The answer: Yes.  Ask both.  Often!

Clark Freshman is a tenured professor of law at University of California, Hastings College of Law, specializing in negotiation and dispute resolution.  He  teaches lie detection, emotion, and negotiation worldwide to lawyers and organizations  such as GE Oil and Gas, the National Association of State Bar Counsel, Homeland Security, Clarium Capital, Vector Capital, Harvard Business School, and Columbia Business School.  Visit clarkfreshman.com for classes and more information.

Part 1
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Part 2
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Very timely move by our host Mike McIlwrath, because the discussion uses as an example the public dialogue, before Congress, of Justice Thomas’s 1991 confirmations.

Either Thomas or his accuser, who is now a Brandeis law professor, was lying. Which one was it?

Clip length/Date: (15:10min – 10/19/10)

Download .mp3

IDN 38 – Detecting Lies and Concealing Emotions: The Ekman Group’s Clark Freshman on Negotiating
Clip length/Date: (27:09min – 8/8/08)

Summary: Bay area educator and consultant Clark Freshmen discusses how he trains people to spot emotions in negotiation. “It’s like mind reading,” says Mike McIlwrath. It’s also about lie detection. Freshman is a consultant at the noted authorities on the subject, Oakland, Calif.’s Paul Ekman Group. This week’s podcast discusses facial muscles, eyebrows, early indicators of anger, and other signs of “universal expressions of emotions.”

IDN 93 – Expressions in Negotiations, Part I: Fear and Contempt (Sept. 13)
Clip length/Date: (14:53min – 09/13/10)

Summary: In the first of three parts, Prof. Clark Freshman of Hastings College of the Law and a consultant with the Paul Eckman Group LLC, both in San Francisco, explains how he trains people to spot emotions in negotiations. This week, Freshman discusses with IDN host Mike McIlwrath provocations that make negotiators afraid, and which breed contempt. Next episode, he will examine how negotiators conceal their emotions, including dishonesty. And Part III will conclude with a discussion of happiness in negotiations, and what it can mean—which isn’t always happy.

IDN 94 – Expressions in Dispute Negotiations, Part II: Happiness (Sept. 22)
Clip length/Date: (11:38min – 09/22/10)

Summary: From fear to happiness: Prof. Clark Freshman of Hastings College of the Law and a consultant with the Paul Eckman Group LLC, both in San Francisco, returns to discuss how he trains people to spot emotions in negotiations.

In Part I, posted Sept. 13 and available in the International Dispute Negotiation archives, Clark told IDN host Mike McIlwrath how fear in negotiators plays out, and devolves into contempt.

In this Part II, Clark explains how to distinguish between genuine happiness, and insincerity, in a negotiating setting. You’ll find out what to look out for, as Clark describes the parts of your adversary’s face that indicate the emotion going on behind the words.

Next week’s concluding Part III: How liars lie, and how to detect they are doing it.

1. Look them in the eyes
2. Do this and that
3. Never look them in the eyes