GUEST-POST | Cognitive Errors in Ligation

By Don Philbin

As a student of decision errors in litigation, I was happy to see another empirical study come out this week confirming what we already know with increasing confidence – even well-trained lawyers are subject to the cognitive errors that throw humans’ calibrations off target. We all have to be confident to get out of bed. Parties assigned to buy or sell a house, car, or lawsuit reach different valuations depending simply on which side of the trade they are assigned. And if we think we have some measure of control over the outcome, of course our chances of reaching it are increased. Add to that the ethical obligation of zealous advocacy and you have the caldron from which overly optimistic case assessments flow.

In Insightful or Wishful: Lawyers’ Ability to Predict Case Outcomes, four psychologists (one is also a law professor) make a series of observations based on collected research and their own sample of 481 attorneys across the country. Each attorney was asked to state a minimum goal for cases set for trial in six to 12 months, and to self measure their confidence in reaching that outcome. The well-written statistical paper dove into the following areas:

• people establish goals
• they assess the probability of achieving those goals
• lawyers make predictions in their cases
• litigation is risky, time consuming, and expensive
• decision errors can be costly for the lawyer and client
• attorney’s estimate of the probability of success is the most important variable in shaping the decision to settle or litigate a case
• overconfidence is ubiquitous
• overestimation is more common on more difficult tasks
• lawyers need to feel and display overconfidence to attract clients
• a certain outcome may seem more probable simply because of a desire to reach it
• when an event is perceived to be controllable, overconfidence is even more likely
• lawyers may underestimate the extent to which situational factors may rob them of the ability to control the outcome
• 64% of female and 55% of male attorneys achieved their minimum goals
• there was no difference in calibration accuracy based on lawyer experience
• 18% of lawyers were very or somewhat disappointed with the case outcome, even though 43% failed to achieve their stated minimum goal
• biased assessments came with high confidence
• we anchor on first numbers – we make biased assessments and fail to adjust sufficiently for uncertainty, even when specifically asked to do so
• merely imagining an event can increase subjective probability assessments that it will occur
• mediators and other third-parties can help temper metacognitive biases

The authors agree in the context of litigation with another famous study: “It can be argued that people’s willingness to engage in military, legal, and other costly battles would be reduced if they had a more realistic assessment of their chances of success. We doubt that the benefits of overconfidence outweigh its costs.”

This study found clear evidence of unrealistic litigation goals with no calibration improvement when ask to consider case weaknesses that could derail those goals. Mediators and settlement counsel help offset these rosy assessments and tools are being developed that allow attorneys and parties to check their assessments against historical data and known decision error rates. More about that soon…

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Don Philbin is an AV-rated attorney-mediator, negotiation consultant and trainer, and arbitrator. He has resolved disputes and crafted deals for more than 20-years as a commercial litigator, general counsel, and president of communications and technology-related companies. Don has mediated hundreds of matters in a wide variety of substantive areas and serves as an arbitrator on several panels, including CPR’s Panels of Distinguished Neutrals. He is an adjunct professor at the Straus Institute for Dispute Resolution at Pepperdine Law School, Chair of the ABA Dispute Resolution Section’s Negotiation Committee, and a member of the ADR Section Council of the State Bar of Texas. Don is a Fellow of the American Academy of Civil Trial Mediators and is listed in The Best Lawyers in America (Dispute Resolution), Texas Super Lawyers (2010), The Best Lawyers in San Antonio, and the Bar Register of Preeminent Lawyers.