Renegoitating the facts

I gave a speech yesterday up in Iowa City. At the end one gentleman asked a very interesting question. How do you deal with someone who is lying about the facts of the situation? My question is are the facts that important to creating a solution. My third principle of Renegotiating is to Transcend the Details. Here is a perfect example of where that principle is effective.

In these kinds of situations you have two choices, you can continue to argue the facts or you can just ignore the facts and put your attention on the needs of each side. If you focus on the needs of each the facts are not really important.

I would love to hear your opinions on this subject.