“We’re just being reasonable”; “Come on, be rational!”; “You’re not thinking clearly!”
Lawyers and parties often make or hear statements such as these in the course of litigation — especially when attempting to negotiate a settlement with the opposing side at mediation. Yet how do people really know when they are engaging in rational thinking? Do lawyers unconsciously enable their clients to engage in poor reasoning leading to poor decisions?
Rolf Dobelli, a Swiss writer and entrepreneur, compiled a list of 99 “systematic cognitive errors” over the course of his career and put them into a bestselling book titled The Art of Thinking Clearly. Many of the errors will be instantly recognizable to anyone who has taken an introductory psychology course (i.e., cognitive dissonance, the halo effect, confirmation bias) and others are newer and come from other disciplines.
Devoting two to three pages to each error of thought, Dobelli has written an ambitious, informative, and entertaining tome. It serves as a “checklist decision tree” when facing important choices in order to help avoid ingrained thinking patterns, many of which served us well in our simpler evolutionary past, but now hurt us when faced with the complexities of 21st-century life.
Dobelli’s book is not about litigation or mediation per se — other than his advice to “never pay your lawyer by the hour.” However, after reading it, I was struck by how the errors he identifies and describes — and his suggestions for how to avoid them — can assist lawyers and litigants and the mediators who, in turn, work with them to try to resolve cases. For example:
The overconfidence effect
Dobelli demonstrates how we systematically overestimate our knowledge and our ability to make predictions. Experts and men are especially susceptible to this error.
The author cautions us to be skeptical of expert predictions and to “favour the pessimistic scenario. This way, you have a chance of judging the situation somewhat realistically.” Thus litigants and lawyers should never assume they will win at trial — which is always inherently risky — and should engage in “reality testing” at each stage of a case, especially at mediation.
They must always be mindful of the worst-case scenario and its costs. Relying too heavily on one’s own expert report on liability or damages can also be risky given the other side may have, or will ultimately have, its own expert report that reaches the opposite conclusion. In the end, the trial may come down to a “battle of the experts” over which a lawyer and party have little or no actual control.
Self-serving bias and the illusion of control
On the subject of control, are you a lawyer or a party who has won your last five trials in a row? Or do you assume you will never go to trial because the other side always capitulates at the last minute? Lucky you, but you may be a victim of either or both of the self-serving bias and/or the illusion of control.
The first error describes how “we attribute success to ourselves and failures to external factors.” The second is “the tendency to believe that we can influence something over which we have absolutely no sway.”
Applying both to the litigation process, it is critical not to overstate our past triumphs or the previous behaviour patterns of others when it comes to assessing the likelihood of future success. Factors that are beyond our control — such as an opponent’s unique motivations, the performance of witnesses at trial, and a particular set of jurors — have a greater role in how a particular case will ultimately play out.
Wise lawyers and mediators identify these factors when others appear to be ignoring them at their peril.
At mediation, one side often accuses the other of cherry picking the facts in its mediation brief or opening statement. Dobelli describes this phenomenon as “selecting the most attractive features and hiding the rest.”
He shows how “anecdotes are a particularly tricky sort of cherry picking. . . .To rebuff an anecdote is difficult because it is a mini-story, and we know how vulnerable our brains are to those.”
This is precisely why counsel engage in storytelling at mediations and trials. As Dobelli points out though, thinking clearly requires one to ask about “‘leftover cherries,’ the failed projects and missed goals.”
On the surface, there is nothing wrong with cherry picking in litigation. It can be an important tool in the art of persuasion. However, in private, lawyers and their clients must be aware of when they’re doing it, otherwise they may fall victim to what we mediators call “smoking your own stuff.” Mediators can help lawyers and parties notice the leftover cherries and, in the process, stop the smoking.
The winner’s curse describes how the winner of an auction can turn out to be the “loser” by overpaying for an asset. The reason, according to Dobelli, is the “real value of many things is uncertain . . . [and] we want to outdo competitors.”
In litigation, we always have to ask: “What is the cost of winning” a lawsuit? Will the client collect on her judgment? Even if she collects, will she overpay in legal and other costs compared to what she will actually receive in the end? What about the cost and risk of an appeal? In litigation between family members, will reconciliation be possible if the case continues beyond mediation?
Even if we have checked our overconfidence, illusion of control, and tendency to cherry pick, an apparently good result may not be everything we hoped for. Dobelli’s (and, interestingly, Warren Buffet’s) advice for avoiding the winner’s curse in auctions is “don’t go,” but if you do go then “set a maximum price and deduct 20 per cent from this to offset the winner’s curse.”
Therefore, lawyers and mediators should help parties avoid litigation — especially a trial — if possible. If not, setting realistic budgets and not straying from them is the next best option.
The above are just some of the cognitive errors identified in The Art of Thinking Clearly that can be applied to help us “litigate clearly.” The book is essential reading for lawyers, litigants, and mediators.
However, lawyers may benefit the most from checking their thinking against Dobelli’s list of errors. They are in the precarious position of having to simultaneously provide passionate advocacy and support to clients in crisis, but at the same time manage the client’s expectations from the beginning of the retainer — a difficult balancing act and one that demands clear thinking.
Postscript — On Sept. 10, 2013, approximately a week after I originally wrote the above article, thinker and bestselling author Nassim Nicholas Taleb (The Black Swan and Antifragile: Things That Gain from Disorder) published “side-by-side” quotations from his and Dobelli’s writings for the public to consider.
On his Twitter account the next day, Taleb stated “I am not bringing charges of plagiarism” and “I am not interested in the legal system [for now].” Ironically, Taleb’s apparent celebration of Dobelli’s “imagination and realism,” which appears on the front cover of the edition of The Art of Thinking Clearly I purchased, led me to have a look at the words contained inside! It would appear the two have had a recent falling out. Should they ever litigate, I sincerely hope both Dobelli and Taleb will do so “clearly,” remembering the cognitive errors described above, regardless of any issues of authorship.
Mitchell Rose is a mediator and lawyer with Stancer Gossin Rose LLP in Toronto. He believes in the art of skilled advocacy in both the courtroom and the boardroom. Mitchell can be reached at [email protected].