What is the best way to deal with difficult people?

The answer lies in Stephen Covey's Habit # 5 of The 7 Habits of Highly Effective People: "Seek First to Understand, Then to Be Understood".

Empathic listening to a difficult-to-deal-with-person is powerful because it gives you accurate data to work with. "Projection" happens when we project our own autobiography (through evaluation, probing, advising, or interpreting) on to others.

When we filter everything through our own paradigm, we miss empathic listening. Instead, rephrasing their content and reflecting their feeling offers a transformational opportunity for them to see themselves in a different light...and that may be the change you're seeking.

I witnessed this, personally, when I was voluntarily working with inmates in a correctional facility. We had a rather difficult-to work-with inmate that we saw transform before our eyes!