This conversation started with my post about planned early dispute resolution (PEDR). My friend, Peter Benner, and I exchanged comments in that post. Here are links to Part 2-ish, Part 3, Part 4, and Part 5 in this conversation. I had some questions about Peter’s last post. Here I pose the questions and Peter responded.
John: From your post, Peter, I don’t get a clear sense of how much you think that top executives and inside counsel have power to control or influence litigation. The impression I got from your post is that most of them feel powerless after they turn litigation over to the outside counsel (except perhaps for the really big cases). Is that an accurate impression of your impression?
Conversely, is all the talk about clients taking more control (though bidding, budgeting, auditing, using multiple firms, setting fee arrangements etc.) not typical of most big companies and their litigation practices?
Also, the impression I get from your post is that people shouldn’t try to make predictions because they often make systematic errors. Or, perhaps you are saying that we should avoid cognitive biases? Can you clarify this?
Peter: I think company managers, by and large, do feel they have control, which is, as you say, reflected in increasingly tight litigation management, which does predominate and persist, as well as loosened loyalties to a particular firm. Beating up lawyers on fees is now considered part of the relationship. The issue is one of culture and disposition rather than control. As I said in one of the posts, business people (really, just like lawyers) who have been around a while and are in the highest levels of seniority and setting tone and direction, were brought up within a culture in which disputes, particularly those that reach the point of potential litigation, are “for legal to handle.” They just don’t see the business or strategic opportunity that a dispute could present if handled in a way that looks for solutions early on, rather than squaring off to show their muscle.
For managers who might be inclined, and even firmly convinced, otherwise, the embedded interests of in-house and outside counsel present resistance, which ranges from subtle to overt. One phenomenon about which I am firmly convinced having worked with corporations for decades, and it’s not getting much, if any, better, is the personal risk to internal stature and success in playing corporate politics—the politics that has allowed the leaders to get to where they are. That’s why I really like the brief Kahneman/Rose YouTube clip. Kahneman uses the phrase “they are naked.” I agree, although I think about it more in terms of being exposed to politically lethal second guessing within their own organization.
The point I am making in the post is that decision research and theory has a lot to offer for understanding the problem of why adoption of PEDR is so difficult. The initial case assessment, generally performed by lawyers, evaluates facts, law and positions, looking to the future outcome as a guide to developing strategy in the present. The matter is turned over to the litigator, who probably participated in the assessment, to handle on that basis. Interests and business opportunity, both for the company and the “opponent,” are not the focus, and can be ignored altogether. That’s just not optimal decision-making because it relies on making predictions, which are most often wrong, and disregards what the company knows that it wants and needs out of a dispute from a business perspective.
Also, I am not saying we should or can avoid cognitive biases. Better thinkers than I counsel that we cannot avoid them because they are an innate manifestation of how our brains process information. What we can do is recognize that they are there and affect decision making in ways that can lead to “irrationality,” to use Kahneman’s word. More rationality (i.e., better decision making) comes from stepping back to examine how biases may be affecting a decision and to adjust for that as best we can.
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