Beyond Right and Wrong

Beyond Right and Wrong
Randall Kiser
Beyond Right and Wrong

The Power of Effective Decision Making
for Attorneys and Clients
Randall Kiser
DecisionSet1
550 Hamilton Avenue, Suite 100
Palo Alto, CA 94301
USA
rkiser@decisionset.com
ISBN: 978-3-642-03813-6 e-ISBN: 978-3-642-03814-3

DOI 10.1007/978-3-642-03814-3
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Acknowledgements
This book reflects thousands of interactions with judges, clients, attorneys, law
professors, insurance company executives, law students and mediators. I have a
sense of gratitude for every person who shared minutes or hours of their time to
relate their experiences and impart their insights.
Jeffrey Rachlinski expressed an early interest in my empirical research regarding
attorney-client decision making, and I recall distinctly his initial, lengthy email sent
at dawn on a Sunday morning. His analytical rigor and constructive criticism
refined the research later described in my Journal of Empirical Legal Studies
(JELS) co-authored article, Lets Not Make a Deal: An Empirical Study of
Decision Making in Unsuccessful Negotiations. Some of the key concepts in
the JELS article are carried over into Chapter 3 of this book, although I am solely
responsible for this substantively different treatment of legal decision making.
The legal communitys immediate and broad interest in the JELS article
provided fresh impetus to complete this book, a task started in 2004 and completed
about a year after the articles publication. I thank each individual who found the
article useful, thought the subject of attorney-client decision making deserved more
extensive attention, and encouraged me to finish the book.
Special thanks are due to Samantha Cassetta and three anonymous reviewers for
their review of and comments on portions of this book. I also thank Wiley-Blackwell and John Wiley & Sons, Inc. for permission to reprint some sentences
excerpted from the JELS article. All errors, of course, are mine.
The editorial and production departments at Springer-Verlag greatly facilitated
the metamorphosis from manuscript to book. Anke Seyfried, in particular, was
invariably efficient, knowledgeable, direct, and enthusiastic.
My wife, Denise, made a major contribution to this book. Her steadfast and
selfless support during the years spent on research and writing turned a daunting
endeavor into an enjoyable challenge.
Contents
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.1 Purposes and Premises of this Book . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.2 Organization and Philosophy of this Book . . . . . . . . . . . . . . . . . . . . . . . . . . . .
1.3 What Attorneys Think About Other Attorneys
Decision-Making Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part I
2
1
3
4
6
Evidence
Prior Research on Attorney-Litigant Decision Making . . . . . . . . . . . . . . .

2.1 The Paradox of Copious Lawyers and Scant Data . . . . . . . . . . . . . . . . . . .
2.2 Empirical Legal Research on Judge, Jury and Attorney
Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.1 Judge-Jury Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.2 Punitive Damages . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.3 Judges Assessments of Juries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.4 Attorney-Jury and Attorney-Attorney Agreement . . . . . . . . . . .
2.2.5 Attorney-Litigant Negotiation Positions, Assessments
and Outcomes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.6 Disparities In Same Case Evaluations and Outcomes . . . . .
2.2.7 Comparisons of Predictions and Outcomes . . . . . . . . . . . . . . . . . .
2.2.8 Damages Award Predictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
2.2.9 Overview of Judge, Jury and Attorney Decision Making . . .
2.2.10 Attorney-Litigant Decision Making in Actual Cases . . . . . . . .
2.2.11 Kiser, Asher and McShane Study of
Attorney-Litigant Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . .
2.3 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11
11
15
17
19
19
20
20
21
22
23
24
24
27
27
A Current Assessment of Attorney-Litigant Decision Making

In Adjudicated Cases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
3.1 The Fifty Percent Implication . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
vii
viii
Contents
3.2 New Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

3.2.1 The Four Datasets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2.2 VerdictSearch Publications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2.3 Case Database Selection Criteria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.2.4 Attorneys in Dataset . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3 Concepts and Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3.1 Negotiation Disparities and Decision Error . . . . . . . . . . . . . . . . . . .
3.3.2 Underpricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3.3 Overpricing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.3.4 Negotiation Disparities Without Decision Error . . . . . . . . . . . . . .
3.3.5 Effect of Negotiation Disparity on Decision Error . . . . . . . . . . . .
3.4 Overall California Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4.1 Costs of Decision Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.4.2 Negotiation Disparities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.5 New York Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6 40-Year Historical Study . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6.1 Historical Decision Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.6.2 Historical Cost of Decision Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7 Attorney-Mediator Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.1 Attorney-Mediator Decision Error . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.2 Attorney-Mediator Negotiation Disparities
and Settlement Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.7.3 Tentative Conclusions About Attorney-Mediators . . . . . . . . . . . .
3.8 Predictor Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.8.1 Context Variables Trump Actor Variables . . . . . . . . . . . . . . . . . . . .
3.8.2 The Five Major Context Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.8.3 Two Secondary Context Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.8.4 The Major Actor Variables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
3.9 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part II
4
32
32
33
34
35
36
38
39
39
40
41
42
42
44
45
46
46
47
48
49
51
51
52
53
54
71
76
85
Causes
Psychological Attributes of Decision Errors . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

4.1 Perceptions of Adversaries and Conflicts . . . . . . . . . . . . . . . . . . . . . . . . . . . . 91
4.1.1 Fundamental Attribution Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 92
4.1.2 Selective Perception and Memory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 97
4.1.3 Self-Serving Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
4.1.4 Reactive Devaluation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
4.1.5 A Practical Example Of Overcoming
Self-Protective Biases . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
4.2 Evaluations of Risk and Reactions to Perceived Risk . . . . . . . . . . . . . 108
4.2.1 Framing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 111
4.2.2 Anchoring . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
Contents
4.3 Reactions to Threatened Changes in Position and Status . . . . . . . . . .

4.3.1 The Endowment Effect . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3.2 Status Quo Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3.3 Overconfidence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3.4 Confirmation Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3.5 Representative and Availability Heuristics . . . . . . . . . . . . . . . . . . .
4.3.6 Hindsight Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.3.7 Discounting Of Future Payments and Costs . . . . . . . . . . . . . . . . . .
4.3.8 Sunk Cost Bias . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
4.4 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
120
120
122
124
126
129
132
133
136
139
Institutional Impediments to Effective Legal Decision Making . . . . .

5.1 Law School Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1.1 Separation of Legal Education from Legal Practice . . . . . . . .
5.1.2 Testing Law Students Reasoning Skills
and Moral Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.1.3 An Example of Law Student Decision Making . . . . . . . . . . . . . .
5.1.4 Deficiencies in the Case Method of Teaching . . . . . . . . . . . . . . .
5.1.5 Attempts to Change Law School Curriculum . . . . . . . . . . . . . . . .
5.2 Law Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2.1 Conflicts Between Efficient Problem Solving
and Billable Hour Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2.2 The Consequences of Avoiding The Big Picture . . . . . . . . . .
5.2.3 Due Process and the Elevation of Process
Above Results . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.2.4 Competitive Market Pressures, Undue Deference
to Client Expectations and Inappropriate Client
Involvement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.3 Mental Impairment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4 The Disappearing Civil Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4.1 Settling Without Benchmarks . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
5.4.2 Causes and Motivations for Pre-Trial Settlements . . . . . . . . . . .
5.5 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
141
143
144
Part III
6
ix
145
148
150
156
164
166
169
172
174
182
188
189
192
195
Consequences
Legal Malpractice Liability For Settlement Counseling

and Decision Errors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.1 Malpractice Claims Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.2 Competing Policy Considerations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.3 Malpractice Claims Arising from Settled Cases . . . . . . . . . . . . . . . . . . .
6.3.1 Inadequate Advice Regarding Settlement and
Trial Prospects . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.3.2 Client Coerced into Settlement by Attorney . . . . . . . . . . . . . . . .
199
200
202
204
206
209
Contents
6.3.3
Attorneys Mistakes Prevented Client from

Obtaining a Better Settlement or Prosecuting
Case to Trial . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.3.4 Attorneys Delays Caused Client to Forego
More Favorable Settlement Terms . . . . . . . . . . . . . . . . . . . . . . . . . .
6.3.5 Conflict of Interest, Fraud and Collusion with an
Adverse Party . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.3.6 Attorney Did Not Transmit Settlement Proposals
to Client . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.3.7 Failure to Conduct Adequate Legal Research,
Discovery and Investigation Before Settlement . . . . . . . . . . . .
6.3.8 Attorney Not Authorized to Consent to Settlement
Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.3.9 Settlement Agreement Defectively Drafted . . . . . . . . . . . . . . . . .
6.3.10 Client Misunderstood the Settlement Agreement . . . . . . . . . . .
6.3.11 Failure to Advise of Uncertainty of Law and
Anticipate Judicial Error . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.4 Malpractice Claims in Adjudicated Cases . . . . . . . . . . . . . . . . . . . . . . . . .
6.4.1 Attorney Remiss In Failing To Initiate Settlement
Negotiations, Solicit A Pre-Trial Settlement Offer
Or Otherwise Effectuate Settlement . . . . . . . . . . . . . . . . . . . . . . . .
6.4.2 Client Inadequately Apprised of Risk of
an Adverse Verdict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5 Defenses to Settlement Malpractice Claims . . . . . . . . . . . . . . . . . . . . . . . .
6.5.1 The Clients Consent Bars a Challenge to the Adequacy
of the Settlement Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5.2 The Clients Ratification of the Settlement Agreement . . . .
6.5.3 The Clients Failure to Prove Reliance on
the Attorneys Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5.4 The Judgmental Immunity Rule and the California
Model Limitations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5.5 The Client Cannot Prove Damages Proximately Caused
by the Attorneys Negligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5.6 Another Attorneys Negligence as an Intervening or
Superseding Cause . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.5.7 Reduction of Malpractice Awards by the Amount
of Attorneys Fees the Client Otherwise Would
Have Paid the Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
6.6 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7
211
214
215
218
219
223
225
226
227
231
232
235
237
238
240
240
241
243
245
246
247
Ethical Implications of Attorney-Client Counseling

and Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 249
7.1 A Profile of Disciplinary Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 250
Contents
xi
7.2 The Duty to Communicate all Material Facts and Events

to Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.3 The Duty to Exercise Independent Judgment and Render
Candid Advice . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.4 The Duty to Provide Adequate Advice to Enable Clients
to Make Informed Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.5 The Duty to Identify and Protect Clients with Diminished
Capacity . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.6 The Duty to Competently, Independently, Diligently
and Expeditiously Represent Clients . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.7 The Duty to Abide by Client Decisions . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.8 The Duty to Prevent Conflicts of Interest in Aggregate
Settlements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
7.9 The Duty to be Candid and Truthful in Communications
with Clients, Opposing Counsel and the Courts . . . . . . . . . . . . . . . . . . .
7.10 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
Part IV
252
257
260
262
266
270
272
274
279
Solutions
Obstacles to Becoming an Expert Decision Maker . . . . . . . . . . . . . . . . . . .

8.1 Defenses and Barriers to Sound Decision Making . . . . . . . . . . . . . . . . .
8.1.1 Defenses to Learning . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1.2 Distortions of Reality . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.1.3 Attorney Belief System Defenses . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.2 Myths and Misconceptions About Decision Making Expertise . . . .
8.2.1 Intelligence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.2.2 Education and Experience . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.2.3 Peer Ranking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.2.4 Intuition . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
8.3 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
283
284
285
288
293
295
296
298
302
303
307
Personal Expertise in Legal Decision Making . . . . . . . . . . . . . . . . . . . . . . . .

9.1 Phase One: Finding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1.1 Still The Messenger . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1.2 Bottom-Up Decisions Beat Top-Down Decisions . . . . . . . . . .
9.1.3 Challenge Your Perceptions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1.4 Give Vivid Pictures Time to Fade . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1.5 Credit Randomness its Due . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1.6 Deal with Attribution Errors Early . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1.7 Diversify the Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1.8 Time Does not Take Sides . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.1.9 Align Client Objectives and Attorney Incentives . . . . . . . . . . .
9.1.10 Consider Appointing Separate Settlement Counsel . . . . . . . . .
309
310
311
311
313
314
315
316
317
318
319
321
xii
Contents
9.2 Phase Two: Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

9.2.1 Start with Ideals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.2.2 Switch Sides to Debias Judgment . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.2.3 Think Divergently . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.2.4 Stop Pattern Matching . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.2.5 Work Well with Others . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.2.6 Consider Whether a Litigation Attorney
or a Trial Attorney is Required . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.3 Phase Three: Solving . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.3.1 Dont Follow Your Gut . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.3.2 Search for Disconfirming, Discrepant Facts . . . . . . . . . . . . . . . .
9.3.3 Pay Attention to Base Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.3.4 Prepare to Justify Your Case . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.3.5 When in Doubt, Act it Out . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.3.6 Step Off the Information Treadmill . . . . . . . . . . . . . . . . . . . . . . . . .
9.4 Phase Four: Testing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.4.1 Find Your Inner BATNA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.4.2 Separate Facts from Theories, Values and Beliefs . . . . . . . . .
9.4.3 Enlarge the Pie Before Cutting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.4.4 Subjective Fairness Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.4.5 Think and Communicate Affirmatively . . . . . . . . . . . . . . . . . . . . .
9.4.6 Depressed People Make Depressing Deals . . . . . . . . . . . . . . . . .
9.4.7 Fatigue Stifles Creative Problem Solving . . . . . . . . . . . . . . . . . .
9.4.8 Use Email Carefully . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.4.9 Get a Grip on Mongo . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5 Phase Five: Choosing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5.1 Perform a Premortem on Overconfidence . . . . . . . . . . . . . . . . . . .
9.5.2 Take the Outside View . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5.3 Keep Positions Aligned with Facts . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5.4 Separate the Primary Decision from the
Secondary Decision . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5.5 Assumptions Were Made to be Explicit and Tested
Continuously . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5.6 Walk Around the Sunk Cost Trap . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5.7 Past Performance Is No Guarantee of Future Results . . . . . .
9.5.8 Funny Things Happen on the Way to the Forum . . . . . . . . . . .
9.5.9 Linear Thinking Leads to Impasse . . . . . . . . . . . . . . . . . . . . . . . . . .
9.5.10 Appeals are Part of the Settlement Equation . . . . . . . . . . . . . . .
9.5.11 Moderate the Mediator . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.6 Phase Six: Checking . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.6.1 Pin Yourself Down for Some Real Feedback . . . . . . . . . . . . . . .
9.6.2 Dont Just Provide Feedback Discuss it . . . . . . . . . . . . . . . . . .
9.6.3 Learn from Surprises . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
9.7 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
322
323
324
325
326
327
328
330
330
332
333
334
335
336
337
338
339
340
341
342
343
344
345
347
348
349
350
351
353
354
354
355
356
357
358
359
362
363
364
365
366
Contents
xiii
10
Group Expertise In Legal Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . .

10.1 Deficiencies in Group Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . .
10.1.1 Elements of Defective Group Decisions . . . . . . . . . . . . . . . . . .
10.1.2 Group Polarization and Groupthink . . . . . . . . . . . . . . . . . . . . . . .
10.2 Characteristics of Effective Decision-Making Groups . . . . . . . . . . .
10.2.1 High Reliability Organizations (HROS) . . . . . . . . . . . . . . . . . .
10.2.2 Expert Teams . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3 Steps to Improve Group Decision Making . . . . . . . . . . . . . . . . . . . . . . . .
10.3.1 Ask For Multiple Opinions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3.2 Cross-Pollinate the Team . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3.3 Proliferate Team Leaders . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3.4 Appoint a Devils Advocate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3.5 Seed the Brainstorm . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3.6 Promote a Good Fight . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3.7 Build Trust . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
10.3.8 Reach a Consensus, Dont Build One . . . . . . . . . . . . . . . . . . . . .
10.3.9 Schedule a Last Clear Chance Meeting . . . . . . . . . . . . . . . . . . .
10.4 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
367
368
370
371
376
377
383
385
385
386
387
389
389
391
392
394
395
396
11
Peer Review, Client Evaluations and Law Firm Audits . . . . . . . . . . . . .

11.1 A Brief History of Quality Management in Law Firms . . . . . . . . . .
11.2 Peer Review in the Medical Field . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.2.1 The Inception of Medical Peer Review . . . . . . . . . . . . . . . . . . .
11.2.2 The Modern Medical Peer Review System . . . . . . . . . . . . . . .
11.2.3 Confidentiality of Medical Peer Review . . . . . . . . . . . . . . . . . .
11.3 Peer Review in Law Firms . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.3.1 Priorities in Law Firm Peer Review . . . . . . . . . . . . . . . . . . . . . .
11.3.2 Confidentiality of Attorney Peer Review Proceedings . . .
11.3.3 Professional Ethics and Attorney-Client Privilege . . . . . . . .
11.3.4 The Role of Confidentiality in Peer Review . . . . . . . . . . . . . .
11.3.5 The Structure of Law Firm Peer Review . . . . . . . . . . . . . . . . .
11.4 Client Evaluations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.4.1 Challenges of Evaluation Design and Analysis . . . . . . . . . . .
11.4.2 Sample Questions to Probe for
Decision-Making Skills . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.5 Assessments and Audits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
11.6 Chapter Capsule . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
397
399
400
401
402
403
404
404
405
407
410
412
413
414
12
418
419
422
Conclusion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 425
Appendix . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 431
Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 437
Chapter 1
Introduction
Let us endeavor to see things as they are, and then enquire whether we ought to complain.
Whether to see life as it is, will give us much consolation, I know not; but the consolation
which is drawn from truth if any there be, is solid and durable: that which may be derived
from errour, must be, like its original, fallacious and fugitive.
Samuel Johnson, Letter to Bennet Langton (1758)
Attorneys and clients make hundreds of decisions in every litigation case. From
initially deciding which attorney to retain to deciding which witnesses to call at
trial, from deciding whether to file a complaint to deciding whether to appeal a
verdict, attorneys and clients make multiple, critical decisions about strategies,
costs, arguments, valuations, evidence and negotiations. Once made, these decisions are scrutinized by an opponent intent on exploiting the consequences of any
mistake. In this intense and adversarial arena, decision-making errors often are
transparent, irreversible and dispositive, wielding the power to bankrupt clients and
dissolve law firms.
Although attorneys and clients may regard sound decision making as incidental
to effective lawyering, sound decision making actually is the essence of effective
lawyering. An attorneys knowledge, intelligence and experience are inert resources until the attorney decides how to deploy those skills to serve the clients
interests. Those decisions, in turn, largely determine a cases course and outcome.
Very few cases are lost because attorneys and clients do not understand the law;
losses are more often traceable to poor quality decisions than poor quality research.
The unfortunate consequence is that legally meritorious claims and defenses,
advanced by technically competent attorneys, can be lost through bad decision
making. As one major law firm declares in its Wall Street Journal advertisement,
Being a good lawyer takes more than being a good lawyer.1
In most cases with disappointing results, there is a point where an effective
decision could have averted an adverse financial outcome. The ability to identify
and seize that pivotal opportunity separates novice decision makers from experts.
1
(2007, December 3). The Wall Street Journal, p. A8.
R. Kiser, Beyond Right and Wrong,

DOI 10.1007/978-3-642-03814-3_1, # Springer-Verlag Berlin Heidelberg 2010
1 Introduction
An effective decisions capacity to circumvent a financial disaster, in litigation

phases ranging from pre-trial settlement negotiations to new trials in remanded
cases, is illustrated in the actual cases briefly described below.2 Each case presented at least one opportunity to insert a protective decision in front of a startling
outcome:
l
A plaintiff demands $13 million to settle a breach of contract case and refuses
to accept the defendants settlement offer of $500,000. At trial, the plaintiff
recovers nothing and the defendant is awarded $22 million under its crosscomplaint against the plaintiff.
An arbitrator issues an award against a defendant in the amount of $175,000. The
defendant rejects the award and exercises its right to a new trial before a jury.
The jury returns a verdict of $2,025,000 against the defendant, an amount nearly
12 times larger than the arbitration award that the defendant rejected.
A plaintiff declines a defense settlement offer of $100 million in a securities
class action case. After a four-week trial, the jury takes less than two days to
render a verdict in favor of the defendant.
A defendant employer rejects the plaintiff employees offer to settle a sexual
harassment case for $75,000 and a job transfer. Five years later, an appellate
court upholds a $2 million award in favor of the plaintiff employee.
In a legal malpractice action, the plaintiff demands $325,000 to settle. The
defendant law firm does not make an offer to the plaintiff until the day of trial,
at which time it offers $50,000. The plaintiff declines the $50,000 offer and the
jury later renders a verdict of $7 million against the law firm. Including interest,
the amount ultimately paid by the law firm to satisfy the judgment is $10 million.
A defendant successfully appeals from a $675,000 award entered against it. As
the defendant requested, the appellate court reverses the lower courts award and
remands the case for a new trial. Upon retrial, the jury finds against the defendant
and awards the plaintiff $2.2 million, roughly triple the amount of the original
award from which the defendant appealed.3
In each of these cases, attorneys and their clients passed a decision inflection
point and proceeded to a major, yet entirely avoidable, adverse outcome. Looking
back on cases that went awry, clients have claimed our lawyers did not do what
they were supposed to do, attorneys have blamed stupid jurors and runaway
juries, and both clients and attorneys bemoan the apparent vagaries of the civil
justice system. For readers whose reaction to these adverse outcomes is anything other than tough luck, this book presents compelling data, concepts and
2
Many decisions, of course, are high quality decisions with bad outcomes, i.e., good processes
accompanied by bad results. The emphasis here on effectiveness promotes closer scrutiny of both
poor quality decision making and arguably good quality decision making with adverse outcomes.
This emphasis also shifts attention from fault-finding to improvement.
3
Each case scenario is based on an actual case on file with the author. The outcome of subsequent
appeals, motions, and settlement negotiations, if any, and the existence and importance of noneconomic factors are unknown.
1.1 Purposes and Premises of this Book
correctives that could prevent their own cases from becoming exemplars of catastrophic decision making.
1.1
Purposes and Premises of this Book
This book is written for attorneys who aspire to become better decision makers,
clients who seek realistic guidance in making legal decisions and law students who
wish to spare clients the ordeal of trial and error training. Its objective is to
teach attorneys, clients and law students to make effective decisions in resolving
civil litigation cases. Its underlying premises are that ample room exists for
improvement in attorney-litigant decision making, trial outcomes can be predicted
with greater accuracy than is presently achieved, decision-making errors about case
strategies and pre-trial settlements can be reduced, and tough decisions about cases
are best made within an analytical framework rather than behind a courtroom
counsel table cornered by intuition, hunch, instinct, and hope.
To obtain maximum benefit from this book, attorneys may need to recognize that
their experience in decision making is not equivalent to expertise in decision
making, clients may need to acknowledge that their confidence in decision making
is different from proficiency in decision making, and law students may need to
discover that their knowledge of the law does not automatically impart competence
in decision making. Effective decision making, in short, is a distinct skill. Contrary to
popular perceptions, effective decision-making skill has little relation to experience,
intelligence, education and professional reputation. As Oliver Wendell Holmes
observed, some of the sharpest men in argument are notoriously unsound in
judgment. I should not trust the counsel of a smart debater, any more than that of a
good chess-player.4 Technically competent attorneys, therefore, are not necessarily effective decision makers, and many effective decision makers are not recognized as experts in any particular practice area. Knowing what and selecting
how are independent yet complementary skills.
In endeavoring to become expert decision makers, attorneys, clients and law
students inevitably will shift their focus from how to prevail in a trial to how to
resolve a case through settlement. This shift follows from the fact that about 95%
of all civil litigation cases are resolved without a trial. Making decisions about
whether to settle and the terms on which to settle, consequently, is more important
in the vast majority of cases than an attorneys trial skills. Although many clients
initially resist the idea of settling a case and prefer to vindicate their positions at
trial, the reality is that nearly every case is involuntarily dismissed or eventually
settled. In the vast majority of cases, clients have a greater likelihood of making a
devastating settlement decision in a mediation session than watching their attorney
4
Holmes, Oliver Wendell. (1858). The autocrat of the breakfast-table (pp. 1617). New York:
Dutton, Everymans Library.
1 Introduction
conduct a devastating cross-examination at trial. Because a settlement is the most

likely result in civil litigation, the critical factor that separates successful litigants
from unsuccessful litigants often is the quality of their decision making. Contrary to
legal stereotypes, the party most likely to win a case is not the one that can afford
the best trial attorney but rather the party that forms the best attorney-client
decision-making team.
This books emphasis on decision-making skills also promotes the ethical
practice of law and enables attorneys to fulfill their professional obligations, as
envisioned by the American Bar Association (ABA). In its Model Rules of Professional Conduct, the ABA demarcates four roles attorneys assume when representing clients: advisor, advocate, negotiator and evaluator.5 Only one of those roles
(advocate) requires conventional courtroom skills and tactics, while the other three
roles (advisor, negotiator and evaluator) mandate proficiency in the broader skill set
that underpins decision-making acumen.
1.2
Organization and Philosophy of this Book
Like any distinct skill, decision-making acumen is acquired by objectively assessing ones performance, identifying the impediments to superior performance,
evaluating the consequences of continued suboptimal performance and improving
performance through a rigorous and testable regimen. This book, accordingly, is
organized to address four questions critical to developing expert skills in legal
decision making:
l
Do attorneys and their clients make financially sound decisions about pre-trial
settlement offers in civil litigation cases?
What psychological and institutional factors affect decision making in civil
litigation cases?
What are the legal and professional consequences of making ineffective decisions about the settlement or trial of civil cases?
How can attorneys and clients improve their decision-making skills in all phases
of civil litigation?
Stated differently, this book examines the quality of decisions made by attorneys
and clients, explains why attorneys and clients make both effective and ineffective
decisions, outlines the legal malpractice and ethical implications of ineffective
decisions and shows how to make better decisions.
Part One of this book reviews prior research on attorney-litigant decision making
and the disparities between the predictions of attorneys and clients and their actual
case outcomes. It then summarizes recent research results regarding nearly 11,000
5
Center for Professional Responsibility. (2007). Model rules of professional conduct (p. 1).
Chicago, Illinois: American Bar Association.
1.2 Organization and Philosophy of this Book
pre-trial settlement decisions made by attorneys and clients in California and

New York. Part Two examines psychological factors that contribute to the decision-making shortcomings described in Part One and considers how institutional
factors (law school education, law firm culture, and the judicial system) may affect
attorneys forecasting and problem-solving skills. Part Three explains the legal and
ethical consequences of inadequate or inaccurate legal advice, showing how poor
quality counseling about settlement prospects can become actionable malpractice
and a breach of professional ethics. Lastly, Part Four describes why attorneys find
it difficult to learn better decision-making skills, how individual attorneys and
clients can improve these skills, what techniques groups employ to develop superior
decision-making skills, and how law firms can utilize peer review, evaluations and
audits to enhance their attorneys decision-making capabilities.
This book differs from other books and articles on settlement negotiations in that
it places greater weight on scientific evidence than the war stories of attorneys,
mediators and judges; it assumes that empirical studies are more instructive than
anecdotes and statistics are more dependable than surmise. The overall philosophy
of the book is to bump, when possible, the legal field from the narrative to the
empirical, from qualitative conjecture to quantitative proof. As a result, this book
may be less entertaining than popular books on negotiation and litigation and
actually will require considerably more work on the readers part. For the determined reader, the additional cognitive effort, hopefully, will be rewarded by a more
durable understanding of what really happens in litigation decision making and
what has proven effective in improving its quality.
This book defers to the time demands placed on busy, hyper-scheduled attorneys, clients and law students. Each chapter may be read without reading the prior
chapter, and the summary at the end of each chapter can be used as a snapshot of
that chapter. Attorneys who want to read only about improving their decisionmaking skills, for example, may move directly to Chapter 9. Reading the book in a
piecemeal or abbreviated manner conveys the key points to readers with very
limited time, but it is not recommended. Nevertheless, some readers have less
than an hour to read the material most pertinent to their needs, and this book is
structured to accommodate the narrowly focused as well as the broadly inquisitive
reader.
Two important clarifications are necessary. First, the term decision making
used throughout this book is a compact substitute for the more expansive set
of cognitive skills identified by psychologists as judgment, decision making
and problem solving.6 Non-psychologists might call these skills good sense,
Decision making has been defined as the ability to gather and integrate information, use sound
judgment, identify alternatives, select the best solution and evaluate the consequences. Salas,
Edward, et al. The making of a dream team: When expert teams do best. In Ericsson, K. Anders,
et al. (Eds.). (2006). The Cambridge handbook of expertise and expert performance (p. 441).
New York: Cambridge University Press. Cf. Tichy, Noel M., and Bennis, Warren G. (2007).
Judgment (p. 287). New York: Penguin Group. (We make a distinction between judgment and
decision making).
1 Introduction
practical, good judgment, or simply wisdom. Second, although this book

emphasizes empiricism over anecdotes, readers do not need a background in
statistics, mathematics or psychology to understand it. This book deliberately
excludes decision-making models, tables and charts that require familiarity with
probability theory, regression analysis, game theory, decision tree algorithms,
t-tests, p-values and Bayesian analysis. These complex methods and tests are highly
valuable tools for decision makers, but they are excluded here for a simple reason:
attorneys generally dont like them, dont understand them and wont use them.
Readers seeking a more scientific or statistical analysis of attorney-litigant decision
making may wish to review the authors article, Lets Not Make A Deal: An
Empirical Study Of Decision Making In Unsuccessful Settlement Negotiations,
co-authored with Martin A. Asher and Blakeley B. McShane of The Wharton
School, and published in the Journal of Empirical Legal Studies, Vol. 5, No. 3,
pp. 551591 (September 2008).
1.3
What Attorneys Think About Other Attorneys

Decision-Making Skills
If attorneys question the importance of decision making to clients or doubt that the
quality of decision making varies among attorneys, they may be surprised to see
what their colleagues say about the professions decision-making capabilities.
Recent advertisements in The Wall Street Journal, placed by the nations leading
law firms, appear to capitalize on the perceived inadequacy of their competitors
decision-making skills:
l
l
l
We believe that what separates us from the pack is not what we do, but how we
do it aggressive not conservative, team players not one-man-bands, problem
solvers not just legal practitioners.
I dont need theories from my lawyers. I need answers. Ever get a three page
memo from your lawyer when youre looking for quick, to-the-point advice? At
Nixon, Peabody LLP, we know that you prefer simple, clear and practical to
rambling and theoretical. Your world is complicated enough.
Major litigation is rarely straightforward. Working with your law firm
should be.
The best attorneys know how to balance aggression with delicate handling.
I dont need lawyers who win at all costs. I need them to win, but calculate the
costs.
You need lawyers who will simplify the process not complicate it further. At
Winston & Strawn were committed to helping our clients find the most direct
route to a successful outcome. When youre faced with complex litigation,
choose a law firm that will help you chart the right course.
If your lawyers seem more concerned about enumerating your options than
helping you choose among them, you might wonder whose interests are really
1.3 What Attorneys Think About Other Attorneys Decision-Making Skills
being served. At Nixon Peabody LLP, options are clear, advice is candid, and
your needs always come first.7
The message these major law firms deliver is compellingly persuasive to clients
who feel corralled by legal naysayers, precisionists and deconstructionists: were
not like other law firms; we communicate directly, dont waste time on papering the
file, give direct advice, avoid complicated and theoretical discourses, know better
than to use heavy-handed litigation tactics indiscriminately, provide counsel about
a realistic set of alternatives, and expeditiously guide clients to resolutions. They
appeal to the client declaiming in one advertisement, I need lawyers who are more
concerned about managing my risks than their own.8
When law firms direct advertisements like these to the nations largest and most
sophisticated consumers of legal services, criticizing the decision-making and
problem-solving skills of attorneys in other law firms, what weaknesses in the
profession are they trying to exploit? Why do these advertisements highlight client
dissatisfaction with the problem-solving capabilities, judgment and decisionmaking skills of their attorneys, while avoiding any criticism of their legal knowledge? What information do these law firms have that indicates clients are frustrated
with attorneys who are long on legal theories and short on practical solutions, quick
to generate alternatives but unable to rank them? These questions, central to a
profession ethically required to advance and protect clients interests, are addressed
in this book.
(2007, February 5). The Wall Street Journal, p. A4. (2007, September 13). The Wall Street
Journal, p. A4. (2007, September 18). The Wall Street Journal, p. A6. (2008, March 31). The
Wall Street Journal, p. A4. (2008, May 20). The Wall Street Journal, p. A17. (2008, September
23). Palo Alto Daily News, p. 6.
8
(2008, May 20). The Wall Street Journal, p. A17.
Part I
Evidence
Chapter 2
Prior Research on Attorney-Litigant Decision

Making
Nothing is more dangerous to a new truth than an old error.

Johann Wolfgang von Goethe, Proverbs in Prose (1819)
Despite the filing of 15 million new civil cases every year, little attention has been
given to the decisions made by attorneys and their clients in initiating, prosecuting,
defending and attempting to resolve those cases.1 The perceived litigation explosion has not ignited a commensurate investment in empirical studies to describe
the underlying reasons and motivations for filing and maintaining civil actions, the
psychological and financial obstacles to conflict resolution, and the economic utility
of decisions about settling cases or bringing them to trial. Academicians have
analyzed these subjects, but funding for their research is miniscule relative to the
impact of litigation on the nations economy. As Lela Love, a law professor and the
chair of the American Bar Associations Section of Dispute Resolution, notes, We
really know very little about conflict and its dynamics.2
2.1
The Paradox of Copious Lawyers and Scant Data
The dearth of data about litigation is perplexing in a country with the highest
concentration of attorneys per capita and a tradition of giving every citizen her
day in court. Although the legal services industry is a major force and business in
the American economy, affecting nearly every aspect of risk assessment from
automobile design to pharmaceutical research, from kindergarten field trip waivers
1
Ostrom, Brian J., Kauder, Neal B., and LaFountain, Robert C., Eds. (2001). Examining the work
of state courts 2001: A national perspective from the court statistics project (p. 16). National
Center for State Courts. (January 2008). Appendix Workload of the Courts. The Third Branch,
40(1). Administrative Office of the U.S. Courts Office of Public Affairs.
2
Love, Lela P. (March 2007). Voice of experience. Just resolutions eNews. ABA Section of
Dispute Resolution. Available June, 2007 at http://abanet.org/dispute/voice.html

11
12
2 Prior Research on Attorney-Litigant Decision Making
to Fortune 500 companies earnings guidance, the quality of data regarding one of
Americas greatest growth industries is distressingly poor and grossly disproportionate to the industrys impact on the national economy. Basic information regarding total national legal compliance and net litigation costs, for example, is not
available. The fund of basic information does not exist, law professor Marc
Galanter said in 1994. It is as if we had a medical establishment, he adds,
consisting entirely of practicing physicians with no research institutes like the
National Institutes of Health and no public health monitoring facilities like the
Centers for Disease Control.3 Fourteen years later, little had changed, as law
professor Theodore Eisenberg observes: Policymakers and interest groups regularly debate and assess whether civil problems are best resolved by legislative
action, agency action, litigation, alternative dispute resolution, other methods, or
some combinations of actions. Yet we lack systematic quantitative knowledge
about the primary events in daily life that generate civil justice issues.4
Although the nation cannot track key data regarding the civil justice system and
the legal services industry, its expenditures on legal services increase at rates much
higher than the nations inflation and GDP growth rates. Between 2000 and 2005,
total revenue for the legal services industry increased from $161 billion to $222
billion, and average profits per partner in the nations 100 top-grossing firms
increased from $800,000 to $1,060,000.5 To place these figures in perspective, in
2005 the total amount spent on legal services exceeded the total amount spent by all
American businesses on research and development and was more than twice the total
amount the federal government spent on research and development.6 Americans thus
paid more money for legal services than their businesses invested in securing a
competitive advantage in the future. Another perspective is that, although
1,400,000 Americans are diagnosed with cancer every year and cancer kills about
560,000 Americans every year, total annual expenditures on legal services are about
50 times the amount the National Institutes of Health spend on cancer research.7
Galanter, Marc, et al. (1994, JanuaryFebruary). How to improve civil justice policy. Judicature,
77(4), 185, 230.
4
Eisenberg, Theodore. (2008, November 12). The need for a national civil justice survey of
incidence and claiming behavior (p. 1). Available at SSRN: http://ssrn.com/abstract1305385.
5
United States Bureau of the Census. (2008). Table 1249, professional, scientific, and technical
services estimated revenue: 2000 to 2005. Statistical abstract of the United States 2008.
Washington, DC. McCoy, Blythe. (2006). Trends & business strategies in the legal industry . . .
the law firm perspective. Thomson West. Willing, Richard. (2006, May 1). Top law firms rake in
bigger bucks. USA Today. (2006, May). Prime movers. The American Lawyer. (2005, June 28).
The American Lawyer reports law firm revenues top $46 billion in 2005 am law 100 rankings.
Business Wire.
6
National Science Board. Chapter 4 Research and Development: National Trends and International Linkages. Science and Engineering Indicators 2008 (pp. 45, 413). Arlington, Virginia:
National Science Foundation.
7
American Cancer Society. (2007). Estimated new cancer cases and deaths by sex for all sites, US,
2007. Cancer Facts & Figures 2007. Atlanta: American Cancer Society. (2006, May 19). Cancer
Research Funding. National Cancer Institute Fact Sheet.
2.1 The Paradox of Copious Lawyers and Scant Data
13
The nations expenditures on legal services reflect its relatively large population
of attorneys. Nearly one in every 262 Americans is an attorney, and every weekday
morning 1,143,358 chairs throughout the nation await indentation behind a lawyers desk.8 By way of contrast, the total number of civil engineers in the United
States is 256,000, and the number of physical scientists is 199,600.9 There are
173,000 law offices around the country, compared with 55,000 engineering services
firms and 16,000 scientific research and development establishments.10 While more
than 1.1 million active attorneys provide legal services, medical care is available
from only 800,000 active physicians.11 Indigent citizens can avail themselves of
more civil legal aid programs than federally funded community and migrant health
care centers.12
Despite the large number of attorneys, the high demand for legal services and the
intensive legal regulation of modern life, scant data exist regarding the economic
benefits of legal services expenditures, the accuracy of attorneys advice and
judgment and the efficacy of their representation in lawsuits. As law professor
Douglas Rosenthal observes, we ourselves have no reliable information about how
competent, in the aggregate, lawyers actually are.13 This paradox is evident to
economists and psychologists:
The appropriateness of lawyers probability judgments has important implications for the
quality of their service decisions about whether to sue, settle out of court, or plead guilty
to a lesser charge, all depend on a lawyers judgment of the probability of success.
American Bar Association. (2007). National lawyer population by state. Compiled by ABA
Market Research Department, Chicago, Illinois. United States Census Bureau, Population Estimates Branch. (2006). Estimated Population by State: 20002006.
9
U.S. Department of Labor, Bureau of Labor Statistics. Engineers. Occupational outlook handbook, 20082009 Edition (p. 6). National Science Foundation, Division of Science Resources
Statistics. (2001). Scientists, Engineers, and Technicians in the United States: 2001 (NSF 05-313).
10
United States Bureau of the Census supra note 5, Table 1247, Selected service-related industries
establishments, employees, and payroll by industry: 2003 and 2004.
11
U.S. Department of Health and Human Services, Health Resources and Services Administration,
Bureau of Health Professions. Table 201, total and active physicians (mds) and physician-topopulation ratios, selected years: 19502000. National Center for Health Workforce Analysis: U.S.
Health Workforce Personnel Factbook. United States Bureau of the Census supra note 5, Table
1249, professional, scientific, and technical services estimated revenue: 2000 to 2005. Ratios,
selected years: 19502000. Cauchon, Dennis. (2005, March 2). Medical miscalculation creates a
doctor shortage. USA Today.
12
Houseman, Alan. (2007). Civil legal aid in the United States: An update for 2007. Center for
Law and Social Policy. Houseman, Alan W. (2005). Civil legal aid in the United States: An
overview of the program and developments in 2005. Center for Law and Social Policy. United
States General Accounting Office. (2000). Community health centers: Adapting to changing
health care environment key to continued success (p. 43). Rosenbaum, Sara, Shin, Peter, and
Darnell, Julie. (2004). Economic stress and the safety net: a health center update. The Henry J.
Kaiser Family Foundation.
13
Rosenthal, Douglas E. (1976). Evaluating the competence of lawyers. Law & Society Review, 11,
257.
14

Surprisingly, then, there is relatively little research assessing the calibration of lawyers
probability judgments in their day-to-day practice.14
Like medical practice before the advent of national databases recording patient
outcomes, the legal services industry generally has eluded quantitative accountability and comparability in outcome assessment and peer benchmark performance
standards. Consistent with the professions lack of objective performance standards
and the absence of comparative quality measurements, the typical fee agreement in
a litigation matter contains a clarion disclaimer of responsibility for the primary
purpose of the retention: results.
The lack of data about legal services in general and litigation outcomes in
particular contrasts sharply with businesses rapidly expanding reliance on analytics. For more than two decades, businesses have evolved from subjective evaluations to quantitative analysis, from making decisions based on intuition and
hunches to relying on data and algorithms. As Ian Ayres, a law professor and
author of Super Crunchers notes, We are in a historic moment of horse-versuslocomotive competition where intuitive and experiential expertise is losing out time
and time again to number crunching.15 This shift to quantitative analysis has
occurred in virtually every major business sector except law. Even sports teams,
as shown in the popular book Moneyball, are more likely to employ analytics than
law firms.16 Companies that are data driven, from automobiles, to textiles, to
computer software, to baseball, explain Stanford University professors Jeffrey
Pfeffer and Robert Sutton in their book Hard Facts: Dangerous Half-Truths and
Total Nonsense, consistently outperform their competitors: Organizations can gain
competitive advantage if they take the trouble to substitute facts for common lore
and to test conventional wisdom against the data.17 The competitive advantage
of analytics-driven companies is reiterated by management professor Thomas
Davenport in his Harvard Business Review article, Competing on Analytics:
Virtually all the organizations we identified as aggressive analytics competitors
are clear leaders in their fields, and they attribute much of their success to masterful
exploitation of data.18
Apart from comparing gross revenue and profits per partner with competitors,
law firms are not competing on analytics. Despite the widespread use of analytics in
the business world, law firms are not running horse-versus-locomotive races, as
depicted by Ian Ayres, but are still pitting their thoroughbreds against another
14
Koehler, Derek, Brenner, Lyle, & Griffin, Dale. The calibration of expert judgment: heuristics
and biases beyond the laboratory. In Gilovich, Thomas, Griffin, Dale, and Kahneman, Daniel
(Eds.). (2002). Heuristics and biases: the psychology of intuitive judgment (p. 705). Cambridge:
The Press Syndicate of the University of Cambridge.
15
Leonhardt, David. (2007, September 16). Lets go to the stats. The New York Times.
16
Lewis, Michael. (2005). Moneyball. New York: W.W. Norton & Co.
17
Pfeffer, Jeffrey and Sutton, Robert. (2006). Hard facts: Dangerous half-truths & total nonsense
(p. 14). Boston, Massachusetts: Harvard Business School Press.
18
Davenport, Thomas. (2006, February). Competing on analytics. Harvard Business Review,
pp. 99, 106.
2.2 Empirical Legal Research on Judge, Jury and Attorney Decision Making
15
firms thoroughbreds. Law firm clients, consequently, have become accustomed to

working in two different realms. The first realm, outside their lawyers office, is
increasingly directed by data and requires quantitative justification for decisions
and objective evidence of accomplishment within budget. The second realm, inside
their lawyers office, is characterized by on the one hand this, on the other hand
that legal advice, lengthy narratives and memoranda, caveats that loom larger than
general propositions, and attorneys who submit a total fee projection and then
blow through it in half the time.19 Law firm clients who would be aghast if
their financial institution relied on a personal interview instead of a credit score in
making a $100,000 loan decision nevertheless are comfortable turning a
$50,000,000 case over to an attorney who will not employ a quantitative analysis
to assess case outcome probabilities and whose own record of trial losses, case
management, cost control and decision errors is unknown. Clients reluctant to
invest $5,000 in a mutual fund without checking its Morningstar rating retain
attorneys to purchase buildings, sell businesses, and license patents based simply
on a colleagues recommendation or another lawyers referral. This anomaly arises
not by client choice but rather by necessity; comparative performance data simply
are not available.20
2.2
Empirical Legal Research on Judge, Jury and Attorney

Decision Making
Although many aspects of legal practice remain in a pre-reformation mode their

language cryptic, their rituals opaque and their prefects autonomous one aspect of
the legal system sparked early and earnest quantitative research: decision making
by judges, juries and litigation attorneys. One prong of this research focused on
judge-jury agreement, i.e., whether judges and juries make similar determinations
of guilt, liability and damages. A second prong concentrated on attorney and
litigant predictions about case outcomes, i.e., whether attorneys and clients make
accurate or over-optimistic assessments of what a judge or jury will decide at trial.
As explained below, this research generally shows that judges and juries have
similar opinions about how cases should be decided, but attorneys and clients are
19
(2008, November 7). Interview with Craig Nordlund, General Counsel of Agilent Technologies,
reported in Silicon Valley: In the beginning. San Francisco Daily Journal, p. 1.
20
For the businesses and insurance companies that claim to employ quantitative methods for
selecting and evaluating law firms, one may question their usefulness when 54% of corporate
counsel report that they fired their primary law firms in the last 18 months and only 31% would
recommend their primary law firm to another company. Source: BTI Consulting Group. (2006,
March 3). Client Satisfaction with Law Firms Plummets [Press Release]. See also BTI Consulting
Group. (2008). The survey of client service: Performance for law firms: The BTI client service
A-team (reporting only 34.6% of corporate counsel surveyed in 2007 would recommend their
primary firm).
16
not particularly accurate forecasters of trial results. The neutral roles of judge and
jury are associated with relatively consistent and predictable case evaluations; the
roles of advocate and litigant, however, are marked by conflicting and inaccurate
case assessments.
The research regarding decision making in civil cases suggests that judgments
about risks and consequences are altered when attorneys and clients assume partisan roles. People whose judgment is otherwise sound and whose predictions are
otherwise accurate lose their acuity when they adopt the roles of advocate and
litigant. Because judges once acted as attorneys and jurors have been or may
become individual plaintiffs and defendants, it appears that attorneys and their
clients are not permanently misaligned decision makers but may act that way when
they become legal representatives or parties in actual cases. The fact that jurors
opinions are consistent with experienced judges opinions also indicates that jurors
verdicts are not wildcards but rather predictably reflect the values, rules and
decision-making processes judges employ. Judges and juries, in short, seem to
agree on what is the right result, but attorneys and clients in litigated cases
have seriously disparate views of how cases should and will be resolved.
David Donoghue, an intellectual property attorney and partner at Holland &
Knight in Chicago, reflects on attorneys difficulties in predicting case outcomes
and opines that law school education itself may contribute to the gap between
attorneys predictions and jurors verdicts:
As a child, my dad (a criminal defense attorney) routinely asked my family and me to
predict the outcomes of his trials. We were usually correct. My dad was not. At some point
during law school, I stopped being able to predict his case outcomes.The law changes how
you think. Perhaps lawyers become too clouded with burdens of proof and rules of evidence
to appreciate how a jury sees a trial. As a federal district court law clerk, I had a similar
experience. I saw a number of trials and as we waited for the jury, we would often try to
predict the results in chambers. The only people who reliably predicted the results were
those without law degrees.21
Noting that legal training hinders your ability to understand, persuade and communicate with juries and attorneys usually have little in common, socially or economically, with jurors, Patricia Steele, a jury consultant, voices a similar sentiment:
Lawyers are skilled at many things, but understanding and connecting to jurors is
generally not one of them.22
21
Donoghue, David R. (2007, July 6). Juries get it right 80% of the time. Chicago IP Litigation
Blog. Available at http://www.chicagoiplitigation.com/2007/07/articles/legal-news/juries-get-itright-80-of-the-time/
22
Steele, Patricia. (2006, Summer). To deal better with juries, stop thinking like a lawyer! Defense
Comment, 21(2).
2.2.1
17
Judge-Jury Agreement
The conventional wisdom is that attorneys and their clients cannot accurately
predict case outcomes because juries are unpredictable. Media coverage of celebrity trials bolsters this perception and invariably includes references to the
O.J. Simpson murder trial and the multi-million dollar verdict in the McDonalds
spilt coffee case. Empirical research, however, does not support the conventional
wisdom but rather demonstrates that jurors usually make deliberate, thoughtful,
and intelligent decisions that comport with a judges opinion of what the verdict
should be. Lawyers entertain longstanding perceptions of the jury as biased and
incompetent, relative to the judge, writes law professor Kevin Clermont. But,
after reviewing the extensive research regarding jury decision making, Professor
Clermont concludes that lawyers perceptions of jurors ineptitude are groundless: There is, however, no actual evidence that juries are relatively biased or
incompetent.23
Although the jury system may be a convenient scapegoat when trial strategies
and forecasts go awry, it does not deserve the invectives thrown at it. The fact that
some attorneys and clients do not comprehend how a jury will decide their cases
does not mean that a jurys methods and decisions are incomprehensible any more
than a medieval craftsmans inability to understand how the Romans built the
largest unsupported concrete dome over the Pantheon proves that the Romans,
too, had no idea of what they were doing. Although one may conclude that attorneys
and clients are often poor forecasters it does not follow that jurors are unpredictable
adjudicators.
During the last 40 years, studies consistently demonstrate that jurors understand trial evidence and the applicable law, and judges agree with their verdicts in
the large majority of cases. The first major study of judge-jury agreement, The
American Jury, was published in 1966 by law professors Harry Kalven and Hans
Zeisel. The study was based on questionnaires completed by more than 500 judges
in 4,000 civil trials throughout the United States. The judges recorded their opinions
of the difficulty of the case and how they thought it should be decided before the
jury rendered its verdict, avoiding the possible effects of hindsight bias. In 78% of
the cases, the judge agreed with the jurys verdict. The cases on which they
disagreed did not reflect any bias in favor of or against plaintiffs; in 10% of the
cases the judge would have issued an award for the plaintiff when the jurys verdict
favored the defendant, and in 12% of the cases the judge would have ruled in favor
of the defendant when the jury rendered a verdict for the plaintiff.24 The central
23
Clermont, Kevin M. (2008, March 22). Litigation realities redux (Legal Studies Research Paper
Series, Research Paper No. 08-006, p. 32). Cornell Law School.
24
Kalven, Harry, and Zeisel, Hans. (1996). The American jury. Vidmar, Neil. (1998). The
performance of the american civil jury: An empirical perspective. Arizona Law Review, 40, 849,
853. See Kalven, Harry. (1964, October). The dignity of the civil jury. Virginia Law Review, 50(6),
1055, 10651066.
18
findings from Kalven and Zeisels research, state law professors Neil Vidmar and
Valerie Hans, are that agreement between judge and jury was substantial and that
most instances of disagreement could not be ascribed to jury incompetence or
unwillingness to follow the law.25 The 78% agreement rate between judges and
juries is especially impressive when compared with decision making in other fields,
explains Kevin Clermont: this 78% agreement rate proves better than the rate of
agreement on dichotomous decisions between scientists doing peer review,
employment interviewers ranking applicants, and psychiatrists and physicians
diagnosing patients, and almost as good as the 79% or 80% rate of agreement
between judges themselves making sentencing decisions on custody or no custody
in an experimental setting.26
Kalven and Zeisels findings have been replicated in many other studies
conducted after 1966; and in one study conducted by the University of Chicago
Jury Project, the judges disagreed with the jurys finding of liability in only 1% of
the cases.27 Those other studies also show that a cases complexity and the amount
of expert witness testimony do not affect significantly the extent of judge-jury
agreement, indicating that juror comprehension and jury verdict concordance with
judges opinions do not diminish with case difficultness.28 Even in the specialized
area of child support awards, which are determined by judges, experimental
research shows that potential jurors reporting for jury duty follow a predictable
and rational course in their intuitive lawmaking when presented with hypothetical child support cases. In 89% of the hypothetical child support cases, the jurors
intuitive opinions about an appropriate amount of child support did not vary from
the state guidelines by more than 20% although the jurors were unaware of the
guidelines; and their average award in one hypothetical child support case
was coincidentally a perfect match to the amount established by the state
guidelines.29
25
Vidmar, Neil, and Hans, Valerie. (2007). American juries: The verdict (p. 149). Amherst,
New York: Prometheus Books.
26
Clermont supra note 23 at 31.
27
Vidmar and Hans supra note 25 at 149151. Galanter, Marc. The regulatory function of the civil
jury. In Litan, Robert E., Ed. (1993). Verdict: Assessing the civil jury system (p. 70). Washington,
D.C.: Brookings Institution Press.
28
Vidmar and Hans supra note 25 at 150. See Wissler, Roselle L., Hart, Allen J., and Saks,
Michael J. (1999). Decision making about general damages: a comparison of jurors, judges and
lawyers. Michigan Law Review, 98, 751. Heuer, Larry, and Penrod, Steven. (1994, February).
Trial complexity: A field investigation of its meaning and its effects. Law and Human Behavior,
18(1), 2952 (evidence complexity, legal complexity, and quantity of information were not
significantly related to judge-jury verdict agreement). Robbennolt, Jennifer K. (2005). Evaluating
juries by comparison to judges: A benchmark for judging. Florida State University Law Review,
32, 469, 477.
29
Ellman, Mark, Braver, Sanford L., and MacCoun, Robert. (2006). Intuitive lawmaking: The
example of child support. Papers presented at the Second Annual Conference on Empirical Legal
Studies, New York University, November 910, 2007. The potential jurors congruent opinions
about child support awards contrast sharply with attorneys perceptions of child support awards.
2.2.2
19
Punitive Damages
Empirical research also challenges the popular conception that juries are more
likely to award punitive damages or a higher amount of punitive damages than
judges. Comparing judges decisions in 101 cases with jury verdicts in 438 cases,
law professor Theodore Eisenberg and his colleagues concluded that juries and
judges award punitive damages in approximately the same ratio to compensatory
damages.30 Although he found some variability in the incidence of punitive
damage awards, Eisenberg concluded that the differences in punitive award rates
more likely are a function of case selection than of jurors relative harshness in
bodily injury cases.31 Eisenbergs conclusions are consistent with studies by
Thomas Eaton and Jennifer Robbennolt, who found that juries did not award
punitive damages more often than judges and made similar decisions about the
appropriate amount of damages.32 The empirical studies on juries decisions, in
sum, provide evidence of massive stability and consistency in jury decision
making.33
2.2.3
Judges Assessments of Juries
Judges not only agree with jurors verdicts in the vast majority of cases but they
support their deliberative processes as well. Multiple surveys of more than 1,400
state and federal court judges demonstrate that judges respect both jurors capacity
for objective evaluation and their sound judgment in rendering verdicts. The
surveyed judges, report professors Vidmar and Hans, gave very positive evaluations of the jury for its competence and its fairness and generally reported that the
juries had made the correct decision and had had no difficulties applying the
In interviews with attorneys representing parties in contested divorce cases, where child support
and property division were disputed issues, the attorneys report that they have difficulty discerning court standards and that they cannot predict the outcomes of court processes . . . Even the
lawyers in our sample who do think there are set standards and who do say they can predict
outcomes differ in their opinion of the content of those court standards; obviously, they cannot all
be correct. Erlanger, Howard S., Chamblis, Elizabeth, and Melli, Marygold S. (1987). Participation and flexibility in informal processses: Cautions from the divorce context. Law & Society
Review, 21, 585, 599, cited in Galanter, Marc, and Cahill, Mia. (1994, July). Most cases settle:
Judicial promotion and regulation of settlements. Stanford Law Review, 46, 1339, 1385.
30
Eisenberg, Theodore. (2006, July). Juries, judges and punitive damages: Empirical analysis
using the civil justice survey of state courts 1992, 1996, and 2001 data. Journal of Empirical Legal
Studies, 3(3), 293. Cf. Hersch, Joni, and Viscusi, W. Kip. (2004). Punitive damages: How judges
and juries perform. Journal of Legal Studies, 33(1), 136.
31
Eisenberg supra note 30 at 293.
32
Vidmar and Hans supra note 25 at 311.
33
Galanter, Marc. The regulatory function of the civil jury. In Litan, Robert E., Ed. (1993).
Verdict: Assessing the civil jury system, p. 83. Washington, D.C.: Brookings Institution Press.
20
appropriate standards to the case.34 The curious conclusion is that, although

attorneys and the public may perceive jurors as impressionable if not wayward,
the most authoritative sources the judges who actually weigh the evidence
alongside them consider their deliberations to be commendable, their verdicts fair.
2.2.4
Attorney-Jury and Attorney-Attorney Agreement
Shifting from the study of judge-jury agreement to attorney-jury and litigant-jury

agreement, one finds large disparities between what attorneys and their clients
expect to occur in a case and what actually happens at trial. These disparities are
evident in experimental studies of hypothetical cases as well as data compiled from
actual cases and are directly proportional to attorneys confidence levels. Attorneys
with the highest level of confidence in their assessments tend to be the most poorly
calibrated, i.e., most likely to be wrong in forecasting case outcomes. For cases that
are settled rather than tried to verdict, the studies also demonstrate that attorneys
have widely divergent views among themselves of what a case is worth and what is
the appropriate amount of initial settlement demands and offers. These discordant
case evaluations often reflect unrealistic settlement positions and ultimately break
the strategic link between skillful bargaining and probable case outcomes. When
negotiations collapse because settlement positions have no relation to likely outcomes, clients bear the cost of testing their attorneys case assessments at trial.
Hence the adage, Attorneys learn by trial and error the clients trial, the
attorneys error.
2.2.5
Attorney-Litigant Negotiation Positions, Assessments

and Outcomes
Two of the earliest studies of pre-trial negotiations and case evaluations were
completed in the 1960s. In the first study, entitled Predicting Verdicts in Personal
Injury Cases, Philip Hermann analyzed cases where the parties exchanged settlement offers and demands, failed to settle the cases, and proceeded to trial. Comparing the plaintiffs last settlement demand and the defendants last offer with the
actual trial verdict in 443 personal injury cases, they discovered that the attorneys
settlement posture bore little relation to the actual trial value of the cases. Only onesixth of the demands and offers were within 25% of the verdict. The attorneys and
the insurance companies, Hermann observed, were equally wild in guessing the
value of their cases.35
34

Galanter supra note 33 at 83.
35
21
In the second experiment, conducted by Douglas Rosenthal, the settlement

amount negotiated by attorneys in pre-trial settlements was compared with the
settlement valuation prepared by an independent panel of experts. The panel was
comprised of two lawyers who usually represented plaintiffs, two claims agents for
insurance companies, and one lawyer who was experienced in representing plaintiffs and insurance companies. Rosenthal thought that a comparison of the actual
recoveries with the mean panel evaluation would provide one relatively objective
empirical measure of the competence of professional service received by personal
injury claimants.36 He found that 40% of the cases were settled for less than twothirds of the cases settlement value, as determined by the expert panel, and overall
the settlement amounts varied from one-sixth of the panels valuation to twice their
valuation.37 Rosenthal concludes, In 77% of the cases (44 of 57) clients did worse
than they should have according to the arithmetic means of the values assigned to
their claims by each of the five panelists.
2.2.6
Disparities In Same Case Evaluations and Outcomes
Following Hermann and Rosenthals studies in the 1960s, empirical research

continued to demonstrate high variability among attorneys in evaluating cases
and negotiating settlements. Professor Gerald Williams experiment with practicing
attorneys, published in 1983, is regarded as one of the early and noteworthy
attempts to use the same case method to simulate actual settlement negotiations
among attorneys. In that experiment, designed to replicate pre-trial negotiations
between practicing attorneys in a personal injury case, Williams assigned 40
practicing lawyers to 20 teams and randomly designated the attorneys on each
team as the attorney for the plaintiff or the defendant. All attorneys read the same
case facts, were informed that the case would be tried to a jury in Des Moines, Iowa,
and were notified that the results of their negotiations, along with their names,
would be published. Each attorney, moreover, received copies of jury awards in
comparable cases tried to verdict in the Des Moines area.
Despite the fact that all attorneys received identical case information and could
have learned the outcomes in similar cases, their negotiation positions and settlements were astonishingly dissimilar. Attorneys assigned the plaintiffs attorney role
initiated settlement negotiations with demands ranging from $32,000 to $675,000,
and attorneys in the defense role made opening offers ranging from $3,000 to
$50,000. The amount of the ultimate settlement negotiated for their hypothetical
clients varied from a low of $15,000 to a high of $95,000 all for the same injuries
in the same case in the same jurisdiction.38
36
Rosenthal, Douglas E. (1974). Lawyer and client: Whos in charge (p. 59). New York: Russell
Sage Foundation.
37
38
22
2.2.7
Comparisons of Predictions and Outcomes
Five years after the publication of Williams results, psychology professors Elizabeth
Loftus and Willem Wagenaar studied actual predictions attorneys made regarding
civil cases they expected to proceed to trial. They asked attorneys to record what
they thought would be a good result for their client and the probability of obtaining
the desired result. After the cases were resolved and in many cases after considerable prodding the attorneys reported the actual results to Loftus and Wagenaar.
Comparing the attorneys goals and levels of confidence with the actual outcomes,
Loftus and Wagenaar concluded that attorneys forecasts were poorly calibrated
and in general lawyers were overconfident in their chances of winning, especially
so in cases in which they had been highly confident to begin with.39
Loftus and Wagenaar observed that forecasting accuracy is particularly important for attorneys and clients because we are concerned here with the possibility
that erroneous predictions about an uncertain future might lead a lawyer to make
the wrong decision about whether to proceed with further litigation or to settle.40
They posit five possible explanations why attorneys are confident yet inaccurate
forecasters: (1) few attorneys keep a record of their actual forecasting accuracy or
their trial win rates; (2) the few attorneys who do keep track of their performance
might record how often they lose, but fail to fully analyze what went wrong;
(3) attorneys may systematically neglect important predictors, relevant law precedents and the personality of the judge; (4) lawyers may need to feel and display
overconfidence in order to attract clients, and, later, to keep those clients convinced
that their interests are well served; and (5) lawyers may tend to recall a similar
case in which a favorable verdict was achieved and ignore similar cases in which
unfavorable verdicts were achieved.41 Overconfidence, Loftus and Wagenaar
hypothesize, may help lawyers maximize their courtroom performance and persuasiveness but adversely affects their settlement evaluations and negotiations.
A later study, also conducted by Loftus and her colleagues, tested the accuracy
of lawyers predictions about whether their client would prevail at trial. She found
that the lawyers judgments showed no predictive validity and were hardly
above chance.42 The attorneys generally exhibited a marked overextremity bias
(underprediction of success for low probabilities and overprediction of success for
39
Loftus, Elizabeth F., and Wagenaar, Willem A. (1988, Summer). Lawyers predictions of
success. Jurimetrics, 28, 437.
40
Id. at 441.
41
Id. at 450.
42
Goodman-Delahunty, J., Granhag, P.A. & Loftus, E.F. (1998). How well can lawyers predict
their chances of success? Unpublished manuscript. University of Washington. Cited in Koehler,
Derek J., Brenner, Lyle, & Griffin, Dale. (2002). The calibration of expert judgment: Heuristics
and biases beyond the laboratory. In Gilovich, Thomas, Griffin, Dale, & Kahneman, Daniel (Eds.).
(2002). Heuristics and biases: The psychology of intuitive judgment (pp. 705, 706). Cambridge:
The Press Syndicate of the University of Cambridge.
23
high probabilities).43 When she specifically analyzed the predictions of lawyers

retained on a contingency basis, she observed that their predictions of success were
especially biased by over-optimism. Although the contingency fee lawyers exhibited the same level of confidence about case outcomes as other lawyers, the
contingency fee attorneys in her study won only 42% of their cases compared
with an overall 56% win rate.
2.2.8
Damages Award Predictions
When researchers focus on projected damages awards instead of win/lose predictions, they discover that jurors opinions about damages are a close match with
judges opinions and, in some instances, jurors collective judgment is less variable
than the opinions of individual judges and attorneys. In two experiments conducted
by Neil Vidmar the same hypothetical case facts were presented to lawyers, judges
and citizens who had reported for jury duty, and they were asked to estimate the
appropriate amount of damages to award to the plaintiff. (Liability was admitted in
the hypothetical case). In both experiments, the jurors average estimated award
was less variable than the individual judges estimated awards. Overall, Vidmar
reports, the findings show variability among legal professionals and hint that juries
may produce more stable estimates of the communitys evaluation of the injury
than a single judge acting alone.44
About four years after the publication of Vidmars research regarding damages
awards, Roselle Wissler and her colleagues completed a large-scale study designed
to determine the degree of variability among judges, jurors and lawyers in assessing
liability and awarding damages. In Wisslers study, 1,060 judges, jurors and
lawyers in two different states were presented with 62 case summaries based on
actual personal injury cases. After hearing the case summary, the survey respondents were asked to state the amount of money they would award to the plaintiff, the
amount of the award they thought an average juror would award, and their rating of
the plaintiffs injury in five aspects, e.g., overall severity. Reviewing the data,
Wissler states, the dominant theme of these findings is one of considerable
similarity across the various groups of decisionmakers in the structure of thinking
about injury severity and awards. Most importantly, an impressive similarity exists
in the injury attributes that drive their decisions, the weight given to those attributes,
and the shared sense of vertical equity held by jurors, judges, plaintiffs lawyers,
and defense lawyers alike.45
43
Id.
45
Wissler, Roselle L., Hart, Allen J., and Saks, Michael J. (1999). Decisionmaking about general
damages: A comparison of jurors, judges and lawyers. Michigan Law Review, 98, 751, 812.
44
24
Wisslers study found that the most significant deviation in opinions about the
severity of plaintiffs injuries was not between juries and judges but between
defendants lawyers and the other respondents:
Indeed, if any one group emerges as being out of step with all of the others, it is defense
lawyers. This has somewhat paradoxical implications. When members of the defense bar
evaluate the performance of jurors, and gauge them to be off the mark, these lawyers no
doubt reach that assessment by comparing the jurors conclusions to their own. But their
own impressions of injuries are the ones that depart most from the pattern shown by the
other decisionmaking groups, at least in regards to judgments of injury severity.46
She notes that the severity of injury is consistently one of the strongest predictors of
monetary awards, and defense lawyers opinions about the amount of awards may
be less responsive to case details and more mechanical.47
2.2.9
Overview of Judge, Jury and Attorney Decision Making
The research regarding the decisions of judges, jurors and lawyers does not
substantiate the strong criticisms frequently leveled at jurors that, in Jerome
Franks accusation, jurors are uncertain, capricious, and unpredictable, ignorant
and prejudiced, poor factfinders, gullible and incapable of following complex legal
rules, thus making the orderly administration of justice virtually impossible.48
To the extent that studies compare the decisions of jurors with judges and attorneys,
the studies show considerable similarity in overall case assessments or, in some
instances, higher variability among attorneys than judges and jurors. When studies
compare attorneys case outcome predictions with actual trial results, attorneys
appear to be over-confident, inaccurate forecasters; and when attorneys negotiation
positions and settlement amounts are compared with those of other attorneys, the
variances are broad in scope and deep in implications. What, asks law professor
Marc Galanter, are we to make of this persistent and sizable variability and error in
lawyers readings of potential outcomes?49
2.2.10 Attorney-Litigant Decision Making in Actual Cases

Professor Galanters question is both answered and amplified by three studies
comparing trial awards with rejected settlement proposals to determine whether
litigants recovered more money at trial than they were offered in settlement
46
Id. at 805.
Id. at 758, 794.
48
Id. at 753.
49
47
25
negotiations. These studies assess whether, in deciding to try cases instead of

settling them, attorneys and their clients are making financially advantageous
decisions, and if not, what factors influence their decision to forego settlement.
The three studies are reported in law professors Samuel Gross and Kent Syveruds
1991 article, Getting to No: A Study of Settlement Negotiations and the Selection
of Cases for Trial, their 1996 study, Dont Try: Civil Jury Verdicts in a System
Geared to Settlement; and law professor Jeffrey Rachlinskis 1996 study, Gains,
Losses and the Psychology of Litigation.50
In these three studies the authors analyzed settlement behavior in actual civil
cases and concluded that the conventional model of rational decisions leading to
optimal economic outcomes is inapplicable, misleading, or inaccurate. Noting that
the absence of data on pretrial negotiations has handicapped development of this
topic, law professors Gross and Syverud first studied a nonrandom sample of 529
cases between June 1985 and June 1986. Their data showed that the main systemic
determinants of success at trial and in pretrial bargaining are contextual and
relational [e.g., litigants resources, reputations, insurance, fee arrangements, repeat
litigants] and that prior theoretical models of attorney/litigant settlement behavior
were quite alien to actual litigation.51 Attorneys and clients, Gross and Syverud
found, were not rational, utility-maximizing actors and win-win trials were rare.
Only 15% of the trials they studied resulted in an award for a plaintiff that was
greater than defendants settlement offer but less than plaintiffs demand, and in
some of these cases the entire gain for one side, or both, will have been consumed
by the trial costs.52
Gross and Syveruds study directly challenged a prior theoretical model of
litigation posited by law professors George Priest and Benjamin Klein: the fifty
percent implication.53 According to Priest and Kleins theory, trials occur primarily in close cases, plaintiffs and defendants are equally adept in predicting trial
outcomes, plaintiffs will win about 50% of the cases that proceed to trial, and
mistakes about outcomes will be evenly distributed between plaintiffs and
defendants. Priest and Kleins hypothesis, however, turns out to be inconsistent
with the data compiled by Gross and Seyverud:
Economic theories of trial and pretrial bargaining call to mind the standard image of a
competitive market: numerous individuals intelligently pursuing independent self-interests.
50
Gross, Samuel, & Syverud, Kent. (1991). Getting to no: A study of settlement negotiations and
the selection of cases for trial. Michigan Law Review, 90, 319. Gross, Samuel, & Syverud, Kent.
(1996). Dont try: Civil jury verdicts in a system geared to settlement. UCLA Law Review, 44, 1,
51. Rachlinski, Jeffrey. (1996). Gains, losses and the psychology of litigation. Southern California
Law Review, 70, 113.
51
Gross & Syverud (1991), supra note 50 at 330, 379.
52
Gross & Syverud (1991), supra note 50 at 379.
53
Priest, George L. & Klein, Benjamin. (1984). The selection of disputes for litigation. Journal of
Legal Studies, Vol. 13:1. Priest, George L. (1985). Reexamining the Selection Hypothesis. Journal
of Legal Studies, Vol. 14:215.
26

Social reality, as usual, is inconsiderate of global theories. In this case it provides a
competing image that is less susceptible to statistical prediction: stragglers picking their
way in the dark, trying to avoid an occasional land mine.54
Presaging a broader application of behavioral economics theories (discussed in

Chapter 4) to attorney-litigant settlement behavior, Gross and Syverud observed
that plaintiffs usually are more risk averse than defendants; plaintiffs and defendants attach separate values to each possible outcome; and their stakes may be
unequal (or equal) with respect to victories, or defeats or both.55
In their second study, Gross and Syverud added a sample of 359 cases reported
between 1990 and 1991. Their results again conflicted with the Priest-Klein litigation model. Instead of a 50/50 distribution of mistakes, Gross and Syverud
found that plaintiffs were more likely than defendants to make a decision-making
mistake, that is, rejecting a settlement proposal which turned out to be the same as
or more favorable than the actual trial award. Plaintiffs were clear losers in 61%
of the cases in their first sample (19851986) and 65% of the cases in their second
sample (19901991). The defendants, in contrast, made mistakes in only 25% and
26%, respectively, of the cases in the two samples.
In the third major empirical study of attorney-litigant decision making in
adjudicated cases, Rachlinski compared final settlement offers with jury awards
in 656 cases. His data showed decision error by plaintiffs in 56.1% of the cases,
contrasted with defendants decision error rate of 23%. Although plaintiffs decision error rate was markedly higher than defendants decision error rate, the
average cost of plaintiffs decision error ($27,687) was dramatically lower than
defendants mean cost of error ($354,900). Observing that litigants decisions are
suboptimal and may not comport with rational theories of behavior, Rachlinski
found that the consistently divergent risk preferences between plaintiff and defendant could be explained by behavioral economics framing theories.56 Litigants
risk preferences depend upon characterizing a decision as a gain or loss and vary
systematically depending upon whether they are in the role of plaintiff or defendant.57 Plaintiffs are consistently risk averse, while defendants are risk taking.
Consequently, plaintiffs generally benefited from litigation and defendants as a
class paid heavily for their decision to litigate: When settlement negotiations
failed, the plaintiffs were unwittingly forced to undertake a risk that, on average,
benefited them and cost the defendants dearly.58
54
Gross & Syverud (1991) supra note 50 at 385.

Gross & Syverud (1991) supra note 50 at 381.
56
Rachlinski supra note 50 at 114, 118, 120, 142.
57
Rachlinski supra note 50 at 119.
58
55
2.3 Chapter Capsule
27
2.2.11 Kiser, Asher and McShane Study of Attorney-Litigant

Decision Making
The continuing viability of the Gross and Syverud and Rachlinski studies was tested
in 2008 by a large-scale analysis of attorney-litigant decision making. The results of
that analysis appear in an article entitled, Lets Not Make A Deal: An Empirical
Study Of Decision Making In Unsuccessful Settlement Negotiations, co-authored
by Randall Kiser of the decision services company DecisionSet1 and Martin Asher
and Blakeley McShane of The Wharton School. The article, which describes the
results of the largest multivariate analysis of attorney-litigant decision making, was
published on behalf of Cornell Law School and The Society for Empirical Legal
Studies in the Journal of Empirical Legal Studies, Vol. 5, No. 3 (September 2008).
Six key findings of this study of 4,532 actual cases are: (1) 61% of plaintiffs and
24% of defendants obtained a result at trial that was the same as or worse than the
result that could have been obtained through a pre-trial settlement; (2) the average
cost of these decision errors was $43,100 for plaintiffs and $1,140,000 for defendants during the 20022005 period; (3) the incidence of decision errors increased
and the cost of these errors soared between 1964 and 2004; (4)Context variables
(systemic factors like case type) are more predictive of adverse trial outcomes than
Actor variables (personal factors like attorney experience and law school ranking); (5) statutory cost-shifting procedures, intended to encourage settlement by
financially penalizing parties whose trial result is worse than the settlement offer
made by an adversary, may provoke rather than deter risk-taking behavior; and (6)
parties who are represented by attorneys with mediation training experienced a
lower incidence of decision error. The results of the Kiser, Asher and McShane
study are remarkably consistent with the earlier results reported by Gross and
Syervud and Rachlinski, evidencing consistent patterns of high plaintiff decision
error rates and high costs of defendant decision error.
2.3
Chapter Capsule
Although the legal services industry assumes a large role in the American economy,
scant data exists regarding the economic benefits of legal services expenditures, the
accuracy of attorneys advice and the effectiveness of their representation in lawsuits. The legal industry has lagged behind other businesses and professions in
establishing metrics to measure costs and assess performance.
Limited research regarding attorney-litigant decision making indicates that
attorneys and clients are over-optimistic in evaluating their cases and predicting
trial outcomes. Four studies by three independent research teams found that, when
cases proceed to trial, most plaintiffs obtain an award that is less than the defendants settlement offer. Defendants, for their part, obtain a worse result at trial
than could have been achieved by accepting a plaintiffs settlement demand in
28
23% 26% of their cases. Although plaintiffs exhibit a higher incidence of adverse
trial outcomes, the average cost of defendants adverse outcomes is dramatically
higher than plaintiffs average cost.
Adverse trial outcomes often are blamed on unpredictable and erratic jurors, but
empirical research demonstrates that jurors generally discharge their duties faithfully, responsibly and intelligently. Although attorneys may hold widely divergent
ideas about case settlement values and likely trial outcomes, judges and juries have
similar opinions about how cases should be decided. The high degree of judge-jury
agreement suggests that case evaluation may be clouded when clients and attorneys
assume partisan roles.59
59
Some sentences in this chapter are excerpted with permission from the authors article, Lets
not make a deal: An empirical study of decision making in unsuccessful settlement negotiations
(co-authored with Martin Asher and Blakeley McShane), Journal of Empirical Legal Studies, 5(3),
551591, published by Wiley Periodicals, Inc.
Chapter 3
A Current Assessment of Attorney-Litigant

Decision Making In Adjudicated Cases
I often say that when you can measure what you are speaking about and express it in
numbers you know something about it; but when you cannot express it in numbers your
knowledge is a meager and unsatisfactory kind; it may be the beginning of knowledge but
you have scarcely, in your thoughts, advanced to the stage of science, whatever the matter
may be.
Lord Kelvin (William Thomson 18241907),
Lecture to the Institution of Civil Engineers (May 3, 1883)
This chapter tests the crapshoot theory of litigation, the popular belief that trial
outcomes are inherently unpredictable and litigants proceed to trial at their own
peril. In his article, Forget Fair; Its Litigation as Usual, New York Times business
columnist Joe Nocera epitomizes this widely held belief. Commenting on drug
manufacturer Mercks settlement of the mass tort litigation regarding the painkiller
Vioxx, he writes, And finally, when you get right down to it, litigation is a
crapshoot, and it can be cruelly unfair.1
The belief that trials are crapshoots is part of the American ethos. If judges and
juries were perceived to be predictable, fair, and dutiful, novels like John Grishams
The Runaway Jury would search desperately for a gullible reader instead of soaring
to the top of the bestseller lists. Cynicism about jurors deliberative processes and
the resultant suspicion that many verdicts are arbitrary, ill-considered, and tainted
with prejudice is so engrained in the national belief system that even a selfdescribed victim of the jury system can wax philosophical about his murder
conviction. Michael Quartararo, who claims he was wrongfully convicted of killing
a 13-year-old boy in 1981 by shoving pebbles down his throat, wrote this review of
The Runaway Jury from his jail cell:
Most trial lawyers will tell you that juries are completely unpredictable, that selecting a jury
is a roll of the dice, that you cant predict what theyll decide. And so, for completely
irrational reasons, it is increasingly possible that a jury could run away with a verdict.
Nocera, Joe. (2007, November 17). Forget fair; Its litigation as usual. The New York Times.

29
30
3 A Current Assessment of Attorney-Litigant Decision Making In Adjudicated Cases

Perhaps this is why most civil cases are settled out of court, and most defendants plead
guilty. They, like the characters in Grishams book, fear the Runaway Jury.2
Outside of his jail cell, Michael Quartararo would find an ideationally sympathetic
audience with corporate counsel, 57% of whom gave negative responses to the
question, Overall, how would you describe the fairness and reasonableness of state
court liability systems in America excellent, pretty good, only fair or poor?3 His
concerns also seem to be shared by the American public, the majority of whom
declared in an American Bar Association survey that the justice system needs a
complete overhaul.4
If trials truly are crapshoots and its impossible to accurately predict case outcomes, as business columnists, convicted murderers, corporate counsel and the
public seem to believe, trial outcomes would be randomly distributed. Chance
would determine trials wins and losses divided evenly between plaintiffs and
defendants and both plaintiffs and defendants would make a similar number of
mistaken settlement decisions. If verdicts are inherently unpredictable, plaintiffs
and defendants negotiation positions also would show equivalent deviations from
the actual outcomes, and they would bear equally the financial losses resulting from
mistaken settlement decisions. This follows from the fact that random adverse
events, by definition, wreak havoc indiscriminately on their victims. If, for instance,
aviation was inherently dangerous and plane crashes were wholly inevitable and
unpredictable, crashes would occur randomly, unaffected by weather conditions,
terrain, pilot experience, or air traffic controller training. Like litigants in a courtroom, airline passengers choosing to be seated in a dangerous and unpredictable
environment would simply pay their money and take their chances, knowing they
are powerless in the grip of fate.
After decades of intensive investigations and statistical analysis, however,
experts have learned that airplane crashes are not random and certain factors are
predictive of the frequency of crashes and the extent of passenger injury and death.
Because of this information and other advances in airline safety, the number of
fatalities in aircraft accidents has declined from 16.7 deaths per billion miles flown
in 19461950 to 0.14 in 19962000.5 Although judges and juries have been
deciding cases for centuries longer than pilots have been flying airplanes, surprisingly little effort has been made to ascertain the determinants and reduce the
Quartararo, Michael. Review, The runaway jury. Bookreporter.com, retrieved at http://www.

bookreporter.com/reviews/0440221471.asp.
3
Taylor, Humphrey. (2002, February 20). Survey of lawyers finds big differences in their perceptions of courts, judges and juries in 50 states. The Harris Poll1 #9. Available at http://www.
harrisinteractive.com/harris_poll/index.asp?PID286.
4
Greenhouse, Linda. (1999, February 24). 47% in poll view legal system as unfair to poor and
minorities. The New York Times, p. A12.
5
Federal Reserve Bank of Dallas. Exhibit 10. In 2001 Annual Report: Taking Stock in America.
Between 1997 and 2007, accident rates dropped by 65%, from one fatal accident in about 2 million
departures in 1997 to one fatal accident in about 4.5 million departures in 2007. Wald, Matthew.
(2007, October 1). Fatal airplane crashes drop 65%. The New York Times, p. C1.
3.1 The Fifty Percent Implication
31
incidence of adverse litigation events. The belief persists that, while pilot and
mechanical error may be susceptible of rigorous investigation and precise analysis,
the decisions of judges, jurors, attorneys and clients are essentially idiosyncratic
and impenetrable by scientific methods and quantitative analysis. Unlike other soft
disciplines, law has never experienced physics envy.
3.1
The Fifty Percent Implication
The belief that trial outcomes are random and hence adverse verdicts and settlement
mistakes are evenly balanced among plaintiffs and defendants is so consistent with
intuition and conviction that it was embodied in an academic theory in 1984 and
named the fifty percent implication.6 The fifty percent implication, posited by
law professors George Priest and Benjamin Klein, is a logical outgrowth of the
assumption that the cases that proceed to trial are wildcards. According to Priest
and Kleins theory, trials occur primarily in close cases, and plaintiffs and
defendants are equally successful at predicting the outcomes of the cases.7 Therefore, plaintiffs will win and defendants will lose about 50% of the cases litigated to
verdict, and mistakes about outcomes will be evenly distributed between them.
Specific characteristics of the case, the parties and the attorneys, under the 50%
implication, should not affect the random distribution of settlement decision errors
and win rates.
Priest and Klein note that the most important assumption of the model is that
potential litigants form rational estimates of the likely decision, whether it is based
on applicable legal precedent or judicial or jury bias.8 This assumption implies that
litigants will consider not only how the case should be decided legally, as a matter
of legal precedent, but also how it will be decided practically, as a result of any
human biases. Their fifty percent implication further assumes that litigation costs
are relatively high compared to settlement costs, the application of legal standards
is predictable, both parties can evaluate outcomes with equal precision, and the
stakes are symmetrical to the parties, i.e., gains and losses from litigation are
equal to both parties.9 Possessing equivalent knowledge of likely outcomes and
burdened with equal costs and risks, plaintiffs and defendants, Priest and Klein
concluded, would experience the same number of trial wins and losses and make
erroneous settlement decisions with the same frequency and equivalent costs.
Priest, George L. & Klein, Benjamin. (1984). The selection of disputes for litigation. Journal of
Legal Studies, 13, 1. Priest, George L. (1985). Reexamining the selection hypothesis. Journal of
Legal Studies, 14, 215.
7
the selection of cases for trial. Michigan Law Review, 90, 319, 325.
8
Priest & Klein supra note 6 at 4.
9
Priest & Klein supra note 6 at 5, 12, 14, 19, 20, 24.
32
This chapter tests the validity of the fifty percent implication and attempts to
answer four questions:
l
l
l
l
Do plaintiffs win 50% and do defendants lose 50% of the cases that proceed to trial?
Are plaintiffs and defendants equally adept at predicting case outcomes?
Do plaintiffs and defendants bear equally the costs of adverse settlement decisions?
Do the settlement positions taken by plaintiffs and defendants reflect rational
assessments of case risks and strategic bargaining framed by mutually acknowledged outcome ranges?
In answering these questions, this chapter explains whether certain characteristics

of a case, the parties, and their attorneys are correlated with low win rates, suboptimal settlement decisions, disproportionate costs resulting from erroneous
decisions, and settlement positions grossly disproportionate to the ultimate trial
outcome. As will be shown below, the assumptions and predictive capacity of the
Priest and Klein model are challenged by the study data showing that win rates,
decision error rates and settlement negotiation positions vary widely with different
types of cases, clients, and attorneys.
3.2
New Data
To answer the key questions regarding settlement decisions and case outcomes, this
chapter analyzes 5,653 actual civil litigation cases in which approximately 14,250
attorneys represented the disputants. Since both a plaintiff and a defendant had to
make a decision to accept or reject an adversarys settlement proposal in each of the
5,653 cases, the total number of decisions dissected is 11,306.
This chapters reliance on 11,306 actual case decisions distinguishes it from most
other studies in nature and scope. Although scholars have produced hundreds of
excellent research articles regarding negotiation theory and simulated settlement
negotiations and trials, relatively few studies examine the characteristics and decisions of litigants and their attorneys in actual settlement negotiations, and none, to
date, analyze as many decision-making variables and how those variables relate to
case outcomes. Unlike most negotiation theories and studies, this study is empirical,
not experimental, and it endeavors to advance prior decision-making research by
examining settlement decisions made by individuals, governmental entities, and
businesses facing real financial consequences. The study compares settlement offers
and demands with the actual verdicts rendered in the litigants cases, revealing the
frequency, correlates and costs of ineffective settlement decisions.
3.2.1
The Four Datasets
The 5,653 cases analyzed in this chapter are divided among four different datasets.
The primary dataset consists of 2,754 civil cases adjudicated in California state
3.2 New Data
33
courts or decided by California arbitrators. These cases, reported in VerdictSearch

California during the 58-month period between November 2002 and August 2007,
include about 23% of all civil cases tried by juries during that period.10 The second
dataset serves as a shadow study for the primary dataset; it contains 524 civil
litigation cases filed in New York and reported in VerdictSearch New York during
the 12-month period between January 1, 2004, and December 31, 2004. This second
dataset allows the California litigants settlement positions and trial results to be
compared with the positions taken and results experienced by their counterparts in
New York during a shorter but comparable timeframe. The third dataset is a 40-year
survey of settlement decisions and trial results in California cases adjudicated
between 1964 and 2004. The 40-year survey provides an historical context to
evaluate whether attorney-litigant decision error rates are constant and whether
the frequency and costs of adverse outcomes in the 58-month California study and
the 12-month New York study are typical. The historical survey also seeks to
answer the question, Are attorneys and their clients getting better or worse at
predicting trial outcomes in cases that do not settle?
The fourth dataset differs from the other datasets by focusing on particular types
of attorneys instead of time periods or states. It consists of California cases where
attorneys who also serve as court-appointed mediators in other cases represented
the parties in the dataset cases. In most cases, these attorney-mediators are parttime mediators and continue to represent clients in their regular litigation practices;
in a small number of cases, the mediators now serve as full-time mediators but
represented clients in litigated cases before they became full-time mediators. The
attorney-mediators in this dataset met state-mandated mediator training requirements, including 30 minimum hours of classroom and experiential training in
conflict resolution, and served on their local courts panel of mediators. Because
these attorney-mediators presumably are more objective in case evaluation and
more skilled in conflict resolution than the average attorney, they may be expected
to exhibit lower decision-making error rates. Alternatively, if the attorney-mediator
decision error rates are similar to other practitioners, one may tentatively conclude
that mediation training and experience do not appear to affect attorneys case
evaluation skills or risk-taking propensities or that clients, not their attorneys,
call the shots and the attorneys themselves may be fungible.
3.2.2
VerdictSearch Publications
The cases in all four datasets were initially reported in the weekly trade publication
VerdictSearch California, previously titled California Jury Verdicts Weekly, and
10
The total number of civil cases tried by juries in California state courts between Fiscal Year 2002
03 and Fiscal Year 200607 is 11,208. Source: Administrative Office of the Courts 2008 court
statistics report statewide caseload trends. See Levey, Dhyana. (2009, February 13). For the
vanishing civil trial, report shows another down year. Daily Journal Verdicts and Settlements, p. 1.
34
VerdictSearch New York. VerdictSearch California and VerdictSearch New York

are published by New York Law Publishing Company, which is owned by American
Lawyer Media (ALM). Similar jury verdict reports are published by ALM for cases
filed in Texas, Florida, Illinois, New Jersey and Pennsylvania. (ALM also publishes
major trade magazines and newspapers like The American Lawyer, Corporate
Counsel, The National Law Journal, New York Law Journal, and Legal Times.)
These reports are available by subscription (hard copy and electronic), and older
paper volumes are bound and shelved in law libraries throughout the country.
VerdictSearch California is the primary reporting source for judgments and
settlements in California, and the reliability of its reports has been confirmed in
law review articles and by research studies.11 Gross and Syverud, for instance,
concluded that the information contained in the journal is reliable and found no
systematic bias among the errors by either plaintiff or defendant to misreport the
winning party, the size of the award, or the settlement offers.12 The RAND
Corporation also utilized the data reported in VerdictSearch California to prepare
its periodic reports on jury trials and verdicts in major metropolitan areas, including
its 1996 report, Trends in Civil Jury Verdicts Since 1985.13 As recently as
November 2007, Seth Seabury, an economist at RAND, was reporting on trends
in civil litigation awards, relying on data from the RAND Jury Verdicts Database
(JVDB). The data in RANDs JVDB is derived from the jury verdict reports.14
3.2.3
Case Database Selection Criteria
VerdictSearch California does not report every verdict rendered in California but
relies on voluntary submissions from attorneys and solicits reports based on court
dockets and trade publications.15 The information VerdictSearch California obtains
11
Gross & Syverud supra note 7 at 319. Rachlinski, Jeffrey. (1996). Gains, losses and the
psychology of litigation. Southern California Law Review, 70, 113. Peterson, M.A., & Priest, G.L.
(1982). The civil jury: Trends in trial and verdicts, Cook County, Illinois, 19601979 (Publication
No. R-2881). Santa Monica, California: RAND Institute for Civil Justice. Shanley, M.G., &
Peterson, M.A. (1983). Comparative justice: Civil jury verdicts in San Francisco and Cook
Counties, 19591980 (Publication No. R-3006). Santa Monica, California: RAND Institute for
Civil Justice.
12
Rachlinski supra note 11 at 149, fn. 133.
13
Moller, Erik. (1996). Trends in civil jury verdicts since 1985. Santa Monica, California: RAND
Institute for Civil Justice.
14
Seabury, Seth. (2007, July 5). Inferring beliefs from selected samples: Evidence from civil
litigation. Papers presented at the Second Annual Conference on Empirical Legal Studies,
November 910, 2007, New York University.
15
Contract cases appear to be under-reported, low monetary value cases presumably are underreported, and settlement demands and offers subject to confidentiality provisions or statutes are, of
course, not reported.
3.2 New Data
35
from attorneys, including the factual contentions, damages, results and settlement
offers, is compiled in a draft case report. To confirm the contents of the draft case
report, VerdictSearch California then attempts to contact counsel for all parties by
facsimile and telephone. All information received from the parties attorneys, VerdictSearch California affirms, is incorporated in the case report.
Cases reported in VerdictSearch California during the 58-month core study
period were included in the study database if they met five basic requirements:
(1) a jurys verdict, judges decision, or arbitrators award was entered in a specific
monetary amount; (2) the plaintiff submitted a settlement demand in a specific
monetary amount; (3) the defendant made a settlement offer in a specific monetary
amount or its settlement offer was described as none; (4) there was no reported
disagreement among the parties regarding the amount of the ultimate result and the
parties prior settlement positions; and (5) the parties were represented by counsel.
The core study database thus is limited to documented cases in which the parties
conducted unsuccessful settlement negotiations and the parties liability, if any, was
ultimately decided by a judge, jury or arbitrator.
The database excludes a few cases that otherwise might satisfy the five requirements above. Cases terminated on technical or procedural grounds, e.g., motions for
nonsuit, directed verdict, summary judgment, and judgment notwithstanding the
verdict, were excluded.16 The outcome in those cases is a matter of law, as opposed
to an attorney-client decision about mixed and disputed issues of both fact and law.
Class actions also are excluded from the database because the relationship between
attorneys and clients in those cases is too attenuated to assess attorney-client
decision making. Cases in which typographical or reporting mistakes appeared on
the face of the report or the parties settlement positions were not adequately
allocated among multiple parties were eliminated.
3.2.4
Attorneys in Dataset
What percentage of all California litigation attorneys is represented in the primary

dataset? The primary dataset includes 2,754 cases and 6,945 attorneys. The attorneys
are evenly divided between those representing plaintiffs (3,492) and those representing defendants (3,453). These attorneys represent an estimated 22% 27.5% of all
California litigation attorneys, although a precise count is elusive because the exact
number of litigation attorneys in California has never been ascertained. This task is
complicated by intra-profession disagreements as to whether attorneys who dabble
16
About 9% of all cases reported in VerdictSearch California during the subject period included a
reference to summary judgment, directed verdict, judgment n.o.v., judgment notwithstanding the verdict, or nonsuit, although the actual ruling in the case, if any, is undetermined. In a
different study of federal cases, Eisenberg found that summary judgment, judgment on pleadings,
motion before trial comprised 12.14% of all dispositions. Eisenberg, Theodore, & Lanvers,
Charlotte. (2008, November 21). What Is the Settlement Rate and Why Should We Care? Cornell
Legal Studies Research Paper No. 0830. Available at SSRN: http://ssrn.com/abstract1276383.
36
in litigation should be considered real litigators and whether real litigators are
something different from trial lawyers.
Although the State Bar of California does not maintain records regarding the
precise number of civil litigation attorneys in California, 16% of the attorneys
responding to its February 2006 survey identified civil litigation as their primary
area or field of practice.17 Forty-five percent of all surveyed attorneys indicated they
had a secondary area of legal practice, and among that group 14% designated
civil litigation as the secondary area. When asked what State Bar section the
members belonged to, however, only 7% of all surveyed members designated
litigation.18
Because the State Bar information is ambiguous, the data reported by MartindaleHubbell, the largest directory of attorneys, is helpful. In the Martindale-Hubbell
database, about 23% of all California attorneys designate litigation as their
practice area, but this figure overrepresents the number of attorneys who actually
represent clients at trials or practice civil litigation exclusively. Attorneys in the
Martindale-Hubbell directory are permitted to list more than one practice area, and
Martindale-Hubbell loosely defines practice area as an area to which an attorney
devotes a significant portion of professional time. Since practice area is an
expansive concept intended more for marketing purposes than demographic
research, it is not surprising that attorneys who list litigation as a practice area
also list an average of 2.78 practice areas in addition to litigation. (Similarly, 20% of
New York attorneys list litigation as a practice area, along with an average of 2.42
other practice areas). Hence, the litigation attorneys listed in Martindale-Hubbell
include attorneys who practice litigation exclusively and attorneys for whom litigation may be a secondary or tertiary practice area.
For the purposes of this study, acknowledging the limited data available and the
possibility that attorneys for whom litigation is a peripheral practice area do not
often try cases to verdict, the estimated percentage of California litigation attorneys
is 16%20% of the total 159,807 active members as of March 13, 2008. Thus, the
total estimated number of California litigation attorneys is 25,56931,961. Because
the total number of attorneys included in the primary database is 6,945, the study
attorneys represent an estimated 22%27% of all California civil litigation attorneys.
3.3
Concepts and Definitions
Although civil litigation may be expensive, protracted and seemingly imponderable, only three basic problems occur when trying to resolve a case. These three
problems direct the data analysis in the balance of this chapter and hence must be
described and understood before proceeding to the data analysis.
17
Hertz Research. (2006). Final report of results, member services survey, The State Bar of
California February 2006.
18
Id. at 17.
3.3 Concepts and Definitions
37
First, a litigant can sabotage settlement negotiations by demanding too much

money or offering too little money relative to the actual value of the case. In this
study, the actual value of a case is the amount of the judgment or award made by the
judge, jury, or arbitrator in that case. All of the cases in this study have a benchmark
award or judgment against which the parties settlement positions can be measured
because the parties declined their adversaries pre-trial settlement proposals and
proceeded to trial or arbitration. In litigation cases, however, neither the plaintiff nor
the defendant knows what the actual monetary value of the case is unless their
settlement negotiations fail and a judgment or award is entered. Consequently, their
settlement positions reflect, at least in theory, an estimate of the cases value, with
some allowances being made for attorneys fees, court costs, the possibility of an
appeal, the difficulty of enforcing a judgment, and other negotiation concessions.
The gap between the parties settlement positions and the actual value of the case
is called negotiation disparity, and the parties settlement positions are either
underpriced or overpriced relative to the actual case value. Like a sellers
determination of the listing price for a house or a prospective buyers offer to
purchase the house, underpricing or overpricing of a case may reflect strategic
bargaining or they may reflect overconfidence and unfamiliarity with market
values. Asking too much may turn away viable buyers ready to pay fair market
value, while asking too little may result in a sale below fair market value. For rational
negotiators, the objective is not to sell the house or settle the case at any price but to
negotiate a price close to fair market value and avoid the mistake of rejecting a
proposal that turns out to be better than the price ultimately paid or received.
The second basic problem a litigant can encounter is simply losing the case in
pretrial motions or at trial or arbitration. For plaintiffs, this means they recover
nothing and fail to obtain any relief sought from the judge, jury or arbitrator the
proverbial goose egg and may be required to pay the defendants court costs or
attorneys fees. For defendants, losing at trial or arbitration means being ordered to
pay some amount of money to the plaintiff or performing some act previously
deemed unacceptable or unwarranted. In this study, the term win rate describes
the frequency of verdicts and awards in favor of plaintiffs and against defendants
and serves as one indicator of the likelihood that a plaintiff or defendant will prevail
in a particular type of case.
The third source of consternation for litigants is that they can simultaneously win
and lose at trial or arbitration. A litigant can prevail at trial but actually sustain a net
financial loss because the award at trial is the same as or less than the settlement
proposal made by an adversary. Many trial victories actually are financial defeats
because the nominal winner could have obtained the same result or a better result by
accepting an adversarys settlement proposal. As law professors Gross and Syverud
state, Any plaintiff who was offered as much as the verdict or more, and any
defendant who could have settled for as much as the verdict or less, has lost.19
19
Gross, Samuel, & Syverud, Kent. (1996). Dont try: Civil jury verdicts in a system geared to
settlement. UCLA Law Review, 44, 4142.
38
These Pyrrhic victories are called decision errors in this study. A decision error
occurs whenever a party rejects a settlement proposal and the ultimate result at trial
or arbitration is the same as or worse than the demand or offer it declined. In
absolute terms, the attorney and/or client made a decision error and the client
sustained an unequivocal, quantifiable financial loss.20 Decision error is strictly a
mathematical calculation and does not mean that an attorney was negligent or
improperly advised a client. Many decision errors, moreover, occur because clients
do not follow their attorneys advice.
Although negotiation disparity, underpricing, overpricing, win rates, and decision errors are distinct concepts, they are often confused and at an intuitive level
become intermingled. Because an understanding of these distinct concepts is a
threshold requirement for analyzing the data in the rest of this chapter, these
concepts are further explained and illustrated below.
3.3.1
Negotiation Disparities and Decision Error
Negotiation disparities represent the mathematical differences between litigants

settlement positions and the ultimate judgment or award in the case. Negotiation
disparities occur when a partys settlement proposal is either (a) less than the
ultimate award at trial or arbitration; or (b) greater than the ultimate award at trial
or arbitration. In casual conversation, one would say a plaintiffs settlement demand
was too high (overpriced) or a defendants settlement offer was too low
(underpriced).
Decision errors and negotiation disparities are conceptually and mathematically
different. Decision error is determined by comparing the adverse partys settlement
offer with the actual trial result to test whether an opportunity to obtain a better
financial result was lost by proceeding to trial, while negotiation disparity is
calculated by comparing a partys own settlement offer with the actual trial result.
Decision error thus represents an economic loss caused by declining an adversarys
settlement offer, while negotiation disparity represents the mathematical difference
between a partys own settlement position and the award at trial. Although negotiation disparities often reflect mistaken assessments of trial outcomes, they do not
necessarily cause financial harm to the mistaken client. For that reason, they are
regarded simply as negotiation disparities and not decision errors. Because a party
obviously cannot decline or accept its own settlement proposal, whether overpriced
or underpriced, negotiation disparities alone do not cause financial harm. For a
financial loss to be sustained a party has to commit a decision error, i.e., declining a
settlement proposal that is equal to or better than the result at trial.
20
Parties, of course, may be motivated to litigate for reasons other than obtaining an optimal
economic outcome. Gross and Syverud (1996), however, interviewed 735 attorneys in their dataset
and reported that only three attorneys mentioned a desire for vindication as an explanation for
why their case went to trial, and a non-economic motive was highly infrequent. Id. at 57.
3.3.2
39
Underpricing
When a partys pretrial settlement offer turns out to be less than the amount
ultimately awarded at trial, it has underpriced its case. Underpricing by the plaintiff
may be a strategic or inadvertent discounting of its gain at trial; for the defendant
underpricing may be a crafty negotiating tactic or a careless discounting of its
liability at trial. For both the plaintiff and the defendant, though, underpricing
simply means that the amount of the demand or offer is less than the ultimate award.
If, for example, the plaintiff demanded $8 to settle the case, the defendant
offered $6, and the trial verdict was $10, both parties underpriced their cases
the plaintiffs demand underpriced its gain by $2, and the defendants offer underpriced its loss by $4. Although both parties underpriced their demands and offers,
only the defendant committed a decision error by declining the plaintiffs demand
to settle for the lesser sum of $8 and later being held liable for a $10 award. The
plaintiff did not commit decision error because it was in a financially superior
position as a result of rejecting the defendants offer.
The following case reflects this model of mutual underpricing and a defendants
decision error. In 2004, a consultant sued her former employer, alleging sexual
harassment, sex discrimination, fraud, breach of contract and retaliatory termination. She made a settlement demand of $2,900,000, and the defendant employer
offered to settle by paying her $58,000. Both parties rejected the other partys
settlement proposal and took their chances at trial. The jury awarded the plaintiff
employee $4,200,000. Although the parties settlement proposals displayed wide
negotiation disparities and both parties underpriced their settlement positions, only
the defendant committed a decision error by declining what turned out to be an
economically advantageous settlement demand.21
3.3.3
Overpricing
Conversely, when a party proposes a settlement sum more than the ultimate award,
it is considered to have overpriced its case. If the plaintiff submitted a settlement
demand of $14, the defendant offered to pay $12, and the award again is $10, both
parties overpriced their settlement demands and offers. The plaintiff overpriced its
demand by $4 and the defendant overpriced its loss by $2. Although both parties
made overpriced demands and offers, only the plaintiff committed a decision error
by rejecting an offer of $12 and recovering only $10 at trial.
An actual case illustrates this model of overvaluation and plaintiffs decision
error. In 1998, Dennis Berkla sued Corel Corporation for breach of a non-disclosure
21
Adapted from facts in Mayer v. CSC Consulting, Inc., as reported in VerdictSearch California,
December 13, 2004. The outcome of subsequent appeals, motions, and settlement negotiations, if
any, and the existence and importance of non-economic factors are unknown.
40
agreement regarding an alleged misappropriation of an image file database.22 Both

parties were represented by attorneys from highly regarded law firms with extensive
intellectual property experience. Berkla initially demanded $1.6 million to settle,
and Corel offered $200,000. After a court-facilitated settlement conference, Corel
raised its offer to $400,000. Berkla declined Corels settlement offer and later
countered at $900,000. Corel rejected Berklas counter-offer and the case proceeded to trial.
Berkla prevailed at trial, convincing a jury that Corel indeed had breached the
non-disclosure agreement. The jurys verdict was in favor of Berkla and against
Corel in the amount of $23,502. Although Berkla prevailed at trial, he overpriced
his case by $876,498, about 37 times the ultimate award, and made a decision error
by forgoing a $400,000 settlement offer. Corel, for its part, overpriced its liability
by $376,498, a comparatively conservative figure only 16 times the ultimate award.
Despite its generous, overpriced settlement offer, Corel did not commit a decision
error. It was far better off declining Berklas overpriced demand and benefited from
Berklas consequent decision to reject Corels $400,000 offer. The verdict of
$23,502 demonstrates that both parties had vastly overpriced their settlement
positions, but only Berkla committed a decision error.
3.3.4
Negotiation Disparities Without Decision Error
As previously explained, decision error is defined and measured differently from

negotiation disparity. Consequently, a negotiation disparity can exist in the absence
of a decision error. Another example illustrates this point. If the verdict was $10, the
plaintiff submitted a pre-trial demand of $12, and the defendants pre-trial offer was
$8, both parties positions displayed negotiation disparities plaintiff overpricing
and defendant underpricing but neither party committed a decision error. Plaintiff
overpriced its demand by $2, defendant underpriced its offer by $2, and both parties
achieved a better financial result at trial than could have been obtained by accepting
the adversarys settlement proposal. Thus, despite their respective overpricing and
underpricing, neither the plaintiff nor the defendant committed a decision error.
This paradigm of mutual negotiation disparities without decision error is shown
in the following negligence case.23 The plaintiffs, a father, mother, and their
children, were standing near an entrance/exit door at a Costco Wholesale store
when two gunmen started shooting AK-47 assault rifles at an armored truck
messenger exiting the Costco store from the same door. A stray bullet hit the
plaintiff husband in his abdomen and hip; his spleen and part of his pancreas had
22
Berkla v. Corel Corp., 302 F. 3d 909 (9th Cir. 2002). The outcome of subsequent appeals,
motions, and settlement negotiations, if any, and the existence and importance of non-economic
factors are unknown.
23
Adapted from facts in Chau v. Sectran Security, Inc., as reported in VerdictSearch California,
June 7, 2004. The outcome of subsequent appeals, motions, and settlement negotiations, if any,
and the existence and importance of non-economic factors are unknown.
41
to be surgically removed. His wife was shot in the abdomen, leg and hip, requiring
partial removal of her stomach and intestines.
Alleging that the armored truck messenger used an improper entrance/exit and
violated his employers security procedures, the plaintiffs sued the messengers
employer for negligence and made a settlement demand of $19 million. The
defendant security company offered $3 million $16 million less than the plaintiffs demand. The plaintiffs declined the offer and proceeded to trial; the jury then
awarded $3,372,887 to the plaintiffs. In this case, the plaintiffs settlement demand
was overpriced, while the defendants offer was underpriced. Despite these mutual
negotiation disparities, neither party committed a decision error, as they were both
in financially superior positions after rejecting the others settlement proposal.24
3.3.5
Effect of Negotiation Disparity on Decision Error
Under two conditions, it is important to note, one partys underpricing or overpricing always results in the other partys decision error. First, whenever a plaintiff
underprices its demand a defendant commits a decision error, as the plaintiffs
underpriced demand, by definition, is less than the award the plaintiff obtains at
trial. A defendant invariably would have been in a financially superior position had
it accepted an underpriced plaintiff demand. Second, a defendants overpricing
always results in decision error by the plaintiff, as the defendants overpriced offer,
by definition, is more than the award plaintiff obtains at trial. A plaintiff invariably
commits decision error by declining a defendants overpriced settlement offer.
These concepts of decision error, negotiation disparity, overpricing and underpricing are used throughout this chapter to explain negotiation behavior and trial
outcomes in the actual cases described below. All possible sets of decision errors
and negotiation disparities are presented in Table 3.1. By identifying decision
errors, measuring the range of negotiation disparities, and discovering the case
factors associated with those errors and disparities, the study results, described
Table 3.1 Examples of decision errors and negotiation disparities
Case Plaintiff
Defendant Award Decision Plaintiff Negotiation
Demand Offer
Error
Disparity
1
$8
$6
$10
Defendant Underpriced
2
$10
$8
$10
Defendant None
3
$10
$10
$10
Both
None
4
$12
$8
$10
Neither
Overpriced
5
$12
$10
$10
Plaintiff
Overpriced
6
$14
$12
$10
Plaintiff
Ovepriced
24
Defendant
Negotiation Disparity
Underpriced
Underpriced
None
Underpriced
None
Overpriced
The parties legal costs, the results of appeals and post-judgment discounts of awards generally
are unknown and hence usually are not included in the calculation of decision error. See Appendix.
42
below, may serve as statistical guideposts to assist litigants and attorneys making
tough choices under uncertainty.
3.4
Overall California Results
Two cardinal findings emerge from the primary dataset: plaintiffs make decision
errors more often than defendants, but the cost of defendants decision errors is
dramatically higher than the losses plaintiffs sustain. As shown in Table 3.2, the
decision error rate for plaintiffs is 60%, compared to defendants decision error rate
of 25%. In other words, plaintiffs would have achieved better financial results if
they had flipped a coin to decide whether to settle or try a case, and defendants made
a decision error in one out of every four cases. In only 15% of the cases did both
parties obtain a superior economic result by rejecting each others settlement proposal
and proceeding to trial; out of every 100 trials in the dataset, only 15 trials resulted in
a nominal win-win award after the parties walked away from the negotiating table.
This distribution of decision error persists in cases where the amount at issue is
relatively high and the parties and their attorneys may be expected to exhibit a
superior level of experience and sophistication. When the dataset is limited to cases
in which a plaintiffs demand is between $1,000,000 and $50,000,000, the incidence
of plaintiff error is 58%, compared with 28% for defendants. The no error cases
constitute 14% of all cases in the high-end dataset.
3.4.1
Costs of Decision Error
For the plaintiffs, the average cost of decision error the difference between what
they received at trial and the amount they could have received through settlement is
$73,400. The defendants average cost of error, in comparison, is $1,403,654, about
19 times the loss sustained by plaintiffs. When the dataset is narrowed to relatively
large cases in which plaintiffs demand is between $1,000,000 and $50,000,000, this
pattern persists; the average cost of plaintiff error in the high-end cases is $327,158,
compared with defendants average cost of error of $5,325,785.
Table 3.2 Overall results for
primary dataset (2,754 cases)
Total Attorneys
Decision Error Rate
Mean Decision Error Cost
Mean Decision Error Cost/Mean Award
Mean Demands/Offers
as % of Mean Award
Overpriced Demands/Offers
Underpriced Demands/Offers
Plaintiffs
3,492
60%
$73,400
11.93%
Defendants
3,453
25%
$1,403,654
228.07%
121%
75%
25%
21%
42%
40%
3.4 Overall California Results
43
The total financial loss sustained by all plaintiffs making a decision error is
$120,890,536, compared to an aggregate loss of $981,154,097, nearly one billion
dollars, for all defendants committing a decision error. Because the attorneys fees
and court costs are unknown in most of these cases, those costs would have to be
added to these aggregate financial losses to calculate the actual total loss.25 If the
total cost of attorneys fees and costs were ascertainable, the percentage of no
decision error cases would decline, and both the incidence and magnitude of
decision error would increase. (In the extreme circumstance where the parties
incur attorneys fees and costs for both a trial and an appeal, one prominent mediator
says he has never seen a case where either party realized a net gain after factoring in
the attorneys fees).
For every party that commits a decision error, an adverse party necessarily
benefits from that error. When an erring plaintiff foregoes a $10,000 settlement
and recovers only $6,000 at trial, a defendant saves the additional $4,000 he was
willing to pay to settle the case; conversely, when an erring defendant declines a
plaintiffs settlement demand of $13,000 and is hit with a $20,000 judgment at trial,
the plaintiff gains an additional $7,000. In a sense, some attorneys argue, there is
no net financial loss from decision error in litigation cases because the money that
might have gone into one partys pocket simply ends up in the other partys pocket.
From some advocates perspective, a foregone financial benefit is not a decision
error but simply an episodic, unintended distribution of assets among morally
neutral parties with competing claims. Because the permanent players in the
litigation system earn the same fees regardless of the clients results and attorneys
cannot be expected to foresee trial outcomes that are inherently unpredictable, some
attorneys and academicians assert, the whole idea of decision error is wrong and
irrelevant. Steve Brill, the founder of Court TV and the American Lawyer magazine, noted this attitude while covering trials earlier in his career; he calls it the Im
getting $500 an hour no matter what these goober jurors say and well win on
appeal anyway smugness.26
The who cares what happens to the gamblers as long as the card shufflers get
paid attitude overlooks three basic problems. First, for most litigants the objective
is to make a financially sound decision, assisted by the advice of counsel. Although
parties also may attempt to vindicate a principle in litigation, they invariably desire
to vindicate the principle in addition to making a financially sound decision. When
that party commits a decision error, its litigation objectives are defeated; and it
takes no more solace in the fact its adversary has profited from its decision error
than it would when informed that its stockbroker is enjoying the upscale house
purchased with the commissions obtained from churning its account. Second, the
25
Other tangible factors that would affect the incidence and cost of decision error are costs of postjudgment collection, bankruptcy of the judgment debtor, inability to collect the entire amount of
the judgment from an evasive or impecunious defendant, and the time value of money. Intangible
factors that nevertheless hit the bottom line include the diversion of an organizations key
resources and damage to reputation and business relationships.
26
Brill, Steven. (2008, March 30). Uncivil action. The New York Times.
44
argument ignores the attorneys fees, court costs, public resources, and intangible
assets like time and attention diverted from the litigants core business and personal
relationships and unnecessarily expended by all parties for months, sometimes
years, after a settlement would have yielded a superior economic result. The
party saving $100,000 when an adversary declines a $200,000 pre-trial offer
and recovers only $100,000 at trial, may well have spent the $100,000 savings on
its attorneys fees between the dates of the offer and the rendition of a verdict. Third,
the argument perpetuates the luck of the draw philosophy of litigation, absolving
attorneys of any responsibility for realistically determining a trials likely outcome
and learning how to use the decision making tools employed by other professionals
and managers with equivalent private and public responsibilities.
3.4.2
Negotiation Disparities
The settlement negotiation positions that preceded the decision errors in the primary dataset are archetypal, evidencing strong patterns of risk aversion by plaintiffs
and risk taking by defendants. The average plaintiffs demand is 121% of the
ultimate award, while the mean defendants offer is 21% of the ultimate award.
Plaintiffs mean demand rests on a narrow margin above the actual adjudicated
outcomes, arguably reflecting strategic bargaining and a relatively modest degree of
overconfidence. Defendants mean offer, in contrast, falls far below the mean award
and appears to be more consistent with behavioral economics theories of risk taking
in the losses frame than strategic negotiation behavior. Offering 21 cents on the
dollar seems, on its face, to be more aggressive than deliberative. Comparing the
mean cost of error with the mean award also reveals the degree of defendants risk
taking. For defendants, the mean cost of error ($1,403,654) is more than twice the
amount of the mean award ($615,436); for plaintiffs, meanwhile, the mean cost of
error is only 11.9% of the mean award amount.
The parties patterns of underpricing and overpricing settlement demands and
offers also are consistent with behavioral economics theories. Plaintiffs overprice
their demands (relative to the ultimate award) in 75% of the cases, and the mean
overpriced demand is $649,069 above the actual award. Plaintiffs underprice their
demands in the other 25% of the cases, but the magnitude of their underpricing is
more severe than the magnitude of their overpricing. When plaintiffs underprice,
i.e., discount their own cases by demanding an amount less than the ultimate award,
the average underpriced demand is $1,447,130 below the actual award. The magnitude of plaintiffs underpricing thus is more than double the magnitude of their
overpricing.
For defendants, the pattern of overpricing and underpricing is reversed.
Although defendants offers are roughly split between underpriced and overpriced
offers (40% and 42%, respectively), the mean amount of underpricing is $1,326,684
below the mean award, while the mean amount of overpricing is a relatively meager
$103,858 above the mean award. Thus, the apparent balance between defendants
3.5 New York Results
45
underpricing and overpricing of offers masks the enormity of defendants discounting and the relatively small amount of defendants overpricing.
Ironically, when plaintiffs underprice their own demands, the magnitude of their
underpricing roughly matches the discounting by defendants. Underpricing plaintiffs discount their demands $1,447,130 below the mean award, while their underpricing counterparts on the defense side discount their offers $1,326,684 below the
mean award. The risk averse, underpricing plaintiffs give their own cases the same
haircut offered by their adversaries.
3.5
New York Results
The New York dataset replicates the overall results observed in the primary
California dataset. As shown in Table 3.3, the plaintiff win rate in New York is
48%, compared to 49% in the California dataset. Plaintiffs decision error rate in
New York is slightly lower than in California (56% vs. 60%), but the New York
defendants error rate is slightly higher than the California defendants error rate
(29% vs. 25%). Due to these offsetting decreases and increases in error rates, the
incidence of no decision error is 15%, exactly the same percentage in both the
New York and California databases.
The disparities between the cost of plaintiff decision error and the cost of
defendant decision error are similar in New York and California. The New York
database shows that plaintiffs mean cost of error is $52,183, compared to defendants mean cost of error of $920,874, roughly 18 times the cost of plaintiffs error.
In California, defendants mean cost of error is 19 times the mean amount of
plaintiffs decision error.
The New York parties settlement negotiations reflect the same patterns of
plaintiff risk aversion and defendant risk taking as the California dataset. Plaintiffs
mean demand, as a percent of the mean award, is 118% (New York) and 121%
Table 3.3 Comparison of New York and California Data

Total Cases
Mean Award
Plaintiff Win Rate
Plaintiff Decision Error Rate (%)
Defendant Decision Error Rate (%)
No Decision Error Rate (%)
Plaintifff Mean Cost of Error
Defendant Mean Cost of Error
Plaintiff Mean Cost of Error As % of Mean Award
Defendant Mean Cost of Error as % of Mean Award
Plaintiff Demand as % of Mean Award
Defendant Offer as % of Mean Award
New York
525
$596,282
48%
56%
29%
15%
$52,183
$920,874
8.75%
154.44%
118%
23%
California
2,754
$615,436
49%
60%
25%
15%
$73,400
$1,403,654
11.93%
228.07%
121%
21%
46
(California), while defendants mean offer, as a percentage of the mean award, is

23% (New York) and 21% (California). These patterns of relatively modest
demands by plaintiffs and de minimis offers by defendants result in major financial
losses for the defendants in both states. Plaintiffs mean cost of error, as a percentage of the mean award, is 8.75% in New York and 11.93% in California. In contrast,
defendants mean cost of error, relative to the mean award is 154.44% in New York
and 228.07% in California.
Overall, plaintiffs in both states are risk averse in their settlement negotiations
and sustain relatively minor financial hits when they make a decision error, while
defendants in both states display aggressive, risk-taking positions in settlement
negotiations and sustain major losses as a result of decision errors in roughly onequarter of their cases. Defendants settlement positions appear to be more autonomic
than economic, and the costs of their decision errors, when compared to mean
awards, more closely reflect framing biases (risk aversion in the gains mode and
risk taking in the losses mode) than strategic bargaining in the shadow of the law.
3.6
40-Year Historical Study
To provide an historical context for the California and New York results, a third
dataset was compiled, representing cases negotiated and adjudicated during the
40year period between 1964 and 2004. The results of this 40-year study are
remarkably similar to the results derived from the primary California dataset and
the New York dataset in all categories win rates, negotiation disparities, and
decision error rates. The plaintiff win rate in the historical dataset is 50%, compared
with 49% in the primary California dataset and 48% in the New York dataset.
Plaintiffs settlement demands exceed the actual award in 78% of the historical
dataset cases, compared with overpricing rates of 75% and 71% for the primary
California and New York datasets, respectively. Defendants, on the other hand,
made underpriced settlement offers in 39% of the historical dataset cases, contrasted with defendant underpricing rates of 40% and 39% in the primary California
dataset and the New York dataset, respectively.
3.6.1
Historical Decision Error
The decision error rates for plaintiffs during that 40-year period ranged from a low
of 49.7% in 1969 to a high of 67.9% in 1994, with an overall decision error rate of
61%. The historical plaintiff decision error of 61%, as shown in Table 3.4 is similar
to the plaintiff decision error rate in the primary California dataset (60%) and the
New York dataset (56%). For defendants, the historical dataset shows decision error
rates ranging from a low of 19.0% in 1964 to a high of 26.2% in 1984; and the
overall defendant error rate for the entire 40-year period is 22%. This overall
3.6 40-Year Historical Study
47
Table 3.4 Decision error and cost of error historical samples

Year
Error Type
% of Cases
1964
1964
1964
1969
1969
1969
1974
1974
1974
1979
1979
1979
1984
1984
1984
1989
1989
1989
1994
1994
1994
1999
1999
1999
2004
2004
2004
No Error
Plaintiff Error
Defendant Error
No Error
Plaintiff Error
Defendant Error
No Error
Plaintiff Error
Defendant Error
No Error
Plaintiff Error
Defendant Error
No Error
Plaintiff Error
Defendant Error
No Error
Plaintiff Error
Defendant Error
No Error
Plaintiff Error
Defendant Error
No Error
Plaintiff Error
Defendant Error
No Error
Plaintiff Error
Defendant Error
27.20
53.80
19.00
25.20
49.70
25.20
14.70
65.40
19.90
19.30
57.90
22.80
11.30
62.40
26.20
15.00
63.00
22.00
10.20
67.90
21.90
17.50
60.10
22.40
14.00
65.70
20.20
Mean Cost of
Error ($1,000s)
NA
1.2
5.9
NA
1.8
27.3
NA
5.7
42.6
NA
6.6
67.7
NA
18.4
628.4
NA
38.4
546.5
NA
22.4
1,120.60
NA
45.7
2,259.80
NA
40.8
649.1
decision error rate of 22% is lower than the error rate in the primary California
dataset (25%) and the New York dataset (29%), showing an increased incidence of
defendant decision error over time. Interestingly, the incidence of plaintiff decision
error over the 40-year period is never less than the incidence of defendant decision
error, varying from two to three times the incidence of defendant decision error.
Despite some volatility over time, the frequency of decision error is greater at the
end of the 40-year period than at the beginning. The number of cases in which no
decision error occurs drops from 27.2% and 25.2% in 1964 and 1969, respectively,
to 17.5% and 14.0% for the years 1999 and 2004, respectively, revealing a rise in
aggregate plaintiff and defendant decision error. If lawyers and their clients were
physicians and patients, one would conclude that diagnostic error fluctuated but
ultimately increased during the last 40 years.
3.6.2
Historical Cost of Decision Error
The financial consequences of decision error in the historical dataset are shown in
Table 3.5. As that table indicates, the cost of decision error for both plaintiffs and
48
Table 3.5 Mean cost of error

in constant 1964 dollars
Period
1964, 1969, 1974

1979, 1984, 1989
1994, 1999, 2004
Plaintiff Mean
Cost of Error
($1,000s)
2.6
5.9
7
Defendant
Mean Cost of
Error ($1,000s)
20.5
122.5
300.6
defendants is substantially greater at the end of the 40-year historical period. When
the cost of error for this period is adjusted for inflation (the nominal values in Table
3.4 are converted to real values (in 1964 dollars)), one observes a dramatic rise in
the magnitude of the parties decision errors. From the earliest period (19641974)
to the latest period (19942004), plaintiffs experienced nearly a threefold real
(inflation-adjusted) increase in mean cost of error. During that same period, defendants experienced in excess of a 14-fold real increase in mean cost of error. The
mean cost of plaintiff decision error rose from $2,600 to $7,000 (in constant 1964
dollars), while the cost of defendant decision error soared from $20,500 to $300,600
(in constant 1964 dollars). In the medical context, similar outcome data would be
interpreted as showing an increase in diagnostic error accompanied by startling
increases in morbidity and mortality rates of 314 times previous levels, depending
on the type of patient undergoing elective surgery. In hospitals, however, a mere
twofold increase in mortality rates could lead to suspending a program, closing a
department or terminating staff privileges.
This surge in the cost of error defies legislative and judicial efforts to expand pretrial discovery, broaden the scope of information exchanged by litigants, and
compel pre-trial disclosure of documents and contentions regarding damages.
Civil discovery in California changed significantly during this period due to liberal
interpretations of the Civil Discovery Act of 1957 and the enactment of the Civil
Discovery Act of 1986. These changes were intended to encourage settlements,
reveal the strengths and weaknesses of an adversarys case, eliminate surprise, and
generally end the trial by ambush era.27 Although the California cases that settle
may well have achieved those objectives, the historical sample indicates that, for
non-settling parties, the surprises are neither less frequent nor less costly.
3.7
Attorney-Mediator Results
Although the primary dataset includes 6,945 attorneys roughly a quarter of all
California litigation attorneys and the decision error rates in that dataset, the New
York dataset, and the historical dataset are remarkably consistent, one may question
27
See Fairmont Insurance Co. v. Superior Court, 22 Cal. 4th 253 n. 2, 92 Cal. Rptr. 2d 70 (2000).
Greyhound Corp. v. Superior Court, 56 Cal. 2d 355, 15 Cal. Rptr. 90 (1961).
3.7 Attorney-Mediator Results
49
whether the attorneys in the dataset are trial junkies, determined to take cases to
trial regardless of the odds. Skeptics may ask whether the attorneys in these datasets
had singular risk-taking propensities that impeded a negotiated settlement and
ultimately resulted in significant decision errors.
The issues of selection bias or dispositional bias, unfortunately, can never be
resolved conclusively because researchers cannot compare the decision error rates
in the study datasets with decision error rates in negotiated settlements. Settlements
effectively eliminate any financial markers by which one can compare the negotiated settlement sum with the amount that would have been obtained at trial. Like
responsible campers, settling parties leave no traces when they move on. But
researchers can very roughly probe for selection bias by learning whether the
arguably over-confident attorneys in the datasets exhibit higher decision error
rates than attorneys who possess strong conflict resolution skills and are trained
to be objective, settlement-seeking professionals.
To identify attorneys with strong dispute resolution skills and substantial experience in negotiating pre-trial settlements, lists of California attorneys serving on
Superior Court mediator panels, affiliated with private dispute resolution companies, or designated as members of the Southern California Mediation Association
were reviewed. From these sources a total of 939 attorney-mediators were
identified. Each attorney-mediators name then was entered in the VerdictSearch
electronic database, limiting the search to California cases reported between 1985
and 2006. The search was further limited to cases in which the attorney-mediator
had represented a plaintiff or defendant in a case tried through verdict or arbitration
award. (Not all of the 939 mediators were necessarily litigation attorneys at any
time during that period, since the courts lists include some non-attorneys, former
judges, and non-litigation attorneys). The search initially yielded 672 cases reported
during the 19852006 period, of which 369 met the case selection criteria used for
the primary study dataset. Of the remaining 303 cases, 150 were settled and 153 did
not meet the selection criteria for other reasons.28
3.7.1
Attorney-Mediator Decision Error
As indicated in Table 3.6, the presence of an attorney-mediator generally is

associated with a reduced decision error rate.29 Table 3.6, Panel 3.6a summarizes
28
The attorney-mediator dataset spans a 21-year period (19852006), while the primary study
dataset covers a 58-month period (November 2002-August 2007). Whether a party is represented
by an attorney who also serves as a mediator is not a fact separately reported in VerdictSearch
California and hence was not a variable coded in the primary study dataset.
29
Rachlinski suggested that framing effects might be mitigated by the intervention of attorneys
familiar with framing biases: The framing theory suggests another positive influence attorneys
may have in reducing the costs of litigation. An attorney may have some power to reframe a
settlement offer, sparing the client the most costly aspects of framing . . .. Thus, the framing model
of litigation poses a powerful role for the attorney. The attorney can control the clients frame,
50
Table 3.6 Decision error and cost of error (attorney-mediator sample)

Error Type
% of Cases
Mean Cost of Error ($1,000s)
Panel 3.6a - All Cases
No Error
21.1
NA
Plaintiff Error
52.6
48.4
Defendant Error
26.3
900
Panel 3.6b - Attorney-Mediator Represents Plaintiff
No Error
19.5
Plaintiff Error
48.5
Defendant Error
32.0
NA
68.4
908.6
Panel 3.6c - Attorney-Mediator Represents Defendant

No Error
22.5
Plaintiff Error
56.0
Defendant Error
21.5
NA
33.8
889.2
the experience for 369 cases in which one of the parties was represented by an
attorney-mediator. Total decision error in this sample is less relative to the primary
dataset presented in Table 3.2; no error in attorney-mediator cases is 21%
compared to 15% in the primary dataset. Ironically, the percentage of no error
cases in the attorney-mediator dataset is similar to the percentage of no error
cases for all litigation attorneys in the 1960s, a period when litigation attorneys
judgment may have been sharpened by spending more time in actual trials than
laboring over pre-trial motions.30
In cases where attorney-mediators represented plaintiffs, plaintiffs win rate is
higher (62% vs. 49%) and plaintiffs decision error rate is lower (48% vs. 60%) than
the win rates and decision error rates in the primary dataset. The overall incidence
of decision error is lower for the plaintiff attorney-mediator set than the primary
dataset; no error cases comprise 19.5% of the plaintiff attorney-mediator set
relative to 15% of the cases in the primary dataset.
In cases where defendants were represented by an attorney-mediator, summarized in Panel 3.6c, the incidence of defendants decision error is similarly reduced.
The decision error rate for the defendant attorney-mediator cases is 21.5%, compared to 25% in the primary dataset. The percentage of cases with no decision
error is again higher in the attorney-mediator set (22.5%) than the primary dataset
(15%).
Specific case types were examined to assess the incidence of decision error in the
attorney-mediator cases. Because the sample of attorney-mediator cases, when
classified by case type and whether the mediator represented a plaintiff or a
thereby influencing settlement decisions in either direction. Rachlinski supra note 11 at 1712.
See Korobkin, Russell, and Guthrie, Chris. (1997). Psychology, economics and settlement: A new
look at the role of the lawyer. Texas Law Review, 76(1), 77.
30
See Galanter, Marc. (2004). The vanishing trial: An examination of trials and related matters in
federal and state courts. Journal of Empirical Legal Studies, 1(3), 459570.
3.7 Attorney-Mediator Results
51
defendant, was small compared to the primary dataset, this study focused on
personal injury cases, the most common type of cases in the primary sample.
Consistent with the overall findings of reduced decision error in attorney-mediator
cases, the study found that personal injury cases in which the parties were represented by attorney-mediators showed a lower decision error rate than those in the
primary sample. Plaintiffs decision error rate in personal injury cases was 45.2% in
the attorney-mediator sample and 53% in the primary sample. Defendants decision
error rate in personal injury cases showed a similar pattern 16.8% in the attorneymediator sample and 26% in the primary sample.
3.7.2
Attorney-Mediator Negotiation Disparities

and Settlement Rates
Although representation by an attorney-mediator is associated with lower decision

error rates, their clients negotiation patterns are not markedly different from the
patterns evident in the primary dataset. In the plaintiff attorney-mediator sample,
plaintiffs mean demand is 122% of the mean award; in the primary dataset, the
mean demand is 121% of the mean award. (Plaintiffs represented by attorneymediators, however, are less likely to submit overpriced demands; 68% of the
demands in the plaintiff attorney-mediator set are overpriced, compared to 75% of
the demands in the primary dataset). The negotiation positions taken by defendants
in the attorney-mediator set also reflect the same negotiating styles displayed in the
primary dataset. The average offer made by defendants represented by attorney
mediators is 22% of the average award, compared to 21% in the primary dataset.
In addition to analyzing decision error rates and negotiation strategies, the study
compared the settlement rates of attorney-mediators with those of other attorneys
reporting cases during the primary dataset period. (VerdictSearch California
reports settlements as well as trial and arbitration awards). The purpose of this
comparison was to determine indirectly whether attorney-mediators were more
likely to settle than litigate their cases and to test whether attorneys reporting
cases during the primary dataset period exhibited an anti-settlement bias. This
analysis revealed that a settlement was reported in 22% of all cases in which an
attorney-mediator represented a party; for the primary dataset period, a settlement
was reported in 29% of all cases. Thus, the attorney-mediators were not more likely
to settle their cases than the ordinary attorneys reporting cases during the primary
dataset period.
3.7.3
Tentative Conclusions About Attorney-Mediators
What tentative conclusions can be drawn about the decision-making qualities of

attorney-mediators? First, because decision making about case settlement is a joint
52
attorney-client effort, one cannot discern whether the reduction in decision error is
caused by the attorney-mediators themselves or their clients. It is entirely possible
that those clients who make financially better decisions choose to be represented by
attorneys who have undertaken mediation training and endeavor to reach negotiated
resolutions; representation by an attorney-mediator may be incidental to the clients
superior decision-making skills, not a cause of the lower decision error rates.
Second, despite completing a minimum of 30 hours of mediation training and, in
some instances, functioning as a neutral for many years, the attorney-mediators did
not achieve a dramatic reduction in decision error rates; their superior performance
is noteworthy but essentially incremental. For plaintiffs, representation by an
attorney-mediator reduced decision error rates from a worse than chance incidence to a same as chance incidence. Third, the decision error rates evidenced by
the ordinary attorneys in the primary, historical and New York datasets do not
appear to be attributable to distinctly litigious dispositions, anti-settlement bias or
aberrational risk-seeking behavior. Even attorney-mediators, committed to achieving pretrial settlements, find it difficult to settle cases and effectuate major reductions in decision error.
3.8
Predictor Variables
What case factors are predictive of decision errors or correlated with high win rates
and extreme negotiation disparities? To answer this question, cases in the primary
dataset were analyzed and coded to identify every publicly reported, verifiable
factor that could affect decision making. These variables generally can be classified
into two groups: Actor variables and Context variables. The Actor variables
can be thought of as the personal characteristics of the attorneys and their clients,
while the Context variables depict the external conditions that may affect or reflect
the actors decisions. An attorneys gender, for instance, is an Actor variable, while
the type of case handled by the attorney is a Context variable. Some of the Actor
variables describing attorneys include the number of years an attorney has practiced
law after admission to the bar, the academic and diversity ranking of the law school
from which the attorney graduated, the attorneys gender, and the size of the law
firm in which the attorney practices. Actor variables describing the parties themselves include the type of party, e.g., corporation, unincorporated business, insurance company, governmental entity, or individual, and, if a party is an individual,
the individuals gender.
The Context variables include the type of case being litigated, the forum in
which the case was adjudicated (jury trial, judge trial, or arbitration hearing), the
types and amounts of settlement demands and offers exchanged between the
parties, the degree of disparity between the plaintiffs demand and the defendants
offer, and the type of damages being sought (out-of-pocket damages already
sustained, future damages expected to be sustained, and punitive damages). Context
3.8 Predictor Variables
53
variables also include whether a defendant has insurance coverage and whether the
alleged wrong was an act of commission or an omission. (A full description of all
variables and coding methods is contained in the Appendix).
After all of these variables are ascertained from a variety of sources and then
coded and entered in the dataset, different models of multivariate analysis are
utilized to assess correlations between these variables and the three measures
critical to litigants: win rates, decision error rates, and negotiation disparities.
Because this is not a technical book and some statistical models were described
previously in the Journal of Empirical Legal Studies article,31 it is sufficient to
explain that a multivariate analysis attempts to determine the independent effect of
a variable. If, for instance, graduation from an elite law school is correlated with
relatively low decision error rates, is the low decision rate really affected by the
elite law school variable, or is another variable actually affecting this correlation? If
most litigation lawyers who graduate from elite law schools also are employed by
large law firms, are predominantly male, handle only the types of cases correlated
with low decision error, and have practiced for 20 years, which variable is significant school, firm size, gender, case type or experience? That kind of question is
answered by multivariate analysis, which can include regression analysis generally
and logistic regression specifically. In light of the traditional antipathy between
attorneys and statistics, probably too much already has been said on this subject.
Lets turn, then, to results.
3.8.1
Context Variables Trump Actor Variables
Despite the popular emphasis on star trial attorneys, the multivariate analysis
indicates that Context variables have a stronger effect on decision errors, negotiation disparities and case outcomes than Actor variables. In real life, Perry Masons
success would depend more on the type of case he accepted than his experience or
law school. (Not surprisingly, the author who crafted the Perry Mason stories, Erle
Stanley Gardner, attended law school for less than a month; he was ejected from
Valparaiso University for cuffing a law professor and passed the bar about four
years later after studying law under various practicing attorneys). The British bar
seems to have recognized the importance of Context variables long before empirical research confirmed that star power is more often a product of background
lighting than personal luminosity.32 Taking a somewhat sardonic view, the British
bar appraises an individual attorneys contribution to the case outcome with
31
Kiser, Randall, Asher, Martin, and McShane, Blakeley. (2008). Lets not make a deal: An
empirical study of decision making in unsuccessful settlement negotiations. Journal of Empirical
Legal Studies, 5(3), 551591.
32
Groysberg, Boris, Nanda, Ashish & Nohria, Nitin. (2004, May). The risky business of hiring
stars. Harvard Business Review, p. 93.
54
mathematical precision: of every hundred cases, ninety win themselves, three are
won by advocacy, and seven are lost by advocacy.33
The eminent American trial lawyer, Edward Bennett Williams the magic
mouthpiece with the affidavit face34 expressed a somewhat similar opinion
about whether lawyers make cases successful or cases make lawyers successful.
After a lifetime of representing clients like Frank Sinatra, Jimmy Hoffa, and The
Washington Post, Williams opined that an individual attorney made a difference in
only 20% of the cases. Given 100 cases and assuming that 50 should be won and 50
should be lost, he mused, the countrys best attorney would win 60% of the cases.
Turn the same case over to the most incompetent trial man, Williams continued,
and he will win forty and lose sixty.35 When he reviewed every case he had lost
and noted next to each case all possible reasons for the loss bribed jurors, biased
judges, unethical opposing counsel, racial prejudice he could find only one
common factor among the cases he lost: bad facts. Like the British bar, Williams
concluded that facts trumped personalities.
3.8.2
The Five Major Context Variables
The five Context variables that appear to exert a relatively strong effect on decision
errors, win rates, or negotiation disparities in the primary dataset are (1) the type of
case; (2) the service of statutory settlement demands and offers which raise the
monetary risks of not settling before trial; (3) the forum (whether the case is decided
by a judge, jury, or arbitrator); (4) the type of damages claimed by the plaintiff; and
(5) the degree of disparity between the plaintiffs demand and the defendants offer.
Playing a lesser, but nonetheless notable role are other Context variables like the
existence of insurance coverage for the defendant and whether the alleged wrongful
act is an act of omission (usually negligent behavior), commission (intentional or
willful conduct), or both.
The Actor variables generally exert a secondary effect on win rates, decision
errors and negotiation disparities. On a spectrum of Actor variables, characteristics
like the type of defendant (corporation, individual, or governmental entity), attorney experience and attorney gender usually would be ranked higher than the
academic ranking of the law school from which a defense attorney graduated, the
size of the defendants law firm, and the type of plaintiff.
33
Bradford, Glenn. (2002, July-August). Losing. Journal of the Missouri Bar, 58(4), quoting
Mayer, Martin. (1968). The lawyers (p. 44). New York: Dell Publishing Company, Inc. and
Shragger, David, & Frost, Elizabeth. (1986). The quotable lawyer, Chester, Connecticut: New
England Publishing Associates.
34
Thomas, Evan. (1991). The man to see (p. 17). New York: Touchstone.
35
Bradford supra note 33 at 5.
55
To some extent, establishing which variables are less important is as valuable as

ascertaining which variables appear to be most important. Some clients, for instance,
may believe that an attorneys graduation from an elite law school or her employment in an elite law firm is the critical element in trial outcomes, but this conclusion
is not substantiated by the limited information in the primary dataset. Among the
many variables found to be of lesser consequence in predicting win rates, decision
errors and negotiation disparities are the type of plaintiff, the size of the defendants
law firm, the academic ranking of the law school from which the defendants
attorney graduated, the diversity ranking of the law school from which the plaintiffs
attorney graduated, and whether the parties participated in non-binding arbitration
or mediation before trial. Although some attorneys may be more effective forecasters and counselors than other attorneys, the key to their effectiveness may be
found beyond the traditional icons of law school rank and law firm size.
The most important variables and their correlation with win rates, decision error
rates, and negotiation disparities are discussed below. Although every variable may
appear to be important, the discussion below is limited to the variables that have
relatively strong predictive value in a multivariate analysis. Stated differently, an
individual variable may show intriguing and statistically significant differences if
studied separately from the other variables in the dataset, but it is excluded from the
discussion below if it has relatively little predictive value in the context of all other
variables. Client representation by a defense attorney who graduated from a Top
20 law school, for example, might be associated with a higher decision error rate
than representation by a defense attorney who graduated from a non-Top 20 law
school, but the defense counsel law school variable is omitted from further discussion because it shows relatively little predictive value in a multivariate analysis.
3.8.2.1
Case Type
Under the Priest and Klein fifty percent implication, one expects win rates and
decision error rates to be balanced between the parties and unaffected by the case
type. Plaintiffs theoretically would win 50% of their cases, regardless of case type,
and with respect to decision error, plaintiffs and defendants would be equally
successful at predicting the outcomes of the cases.36 The assumptions and predictive capacity of the Priest and Klein model, however, are challenged by the study
data showing that both win rates and error rates vary widely with different types of
cases, as shown in Table 3.7.
In general, high plaintiff error rates are associated with cases in which contingency fee arrangements are common, e.g., medical malpractice (80% error rate) and
products liability (70% error rate), while low error rates are associated with cases in
which contingency fee arrangements are less common, e.g., contracts (31% error
rate) and eminent domain (33% error rate). The higher error rates attendant to
36
Gross and Syverud supra note 7 at 325.
56
Table 3.7 Win rates and decision error rates by case type
Case Type
Plaintiff Win Plaintiff Decision
Rate (%)
Error Rate (%)
Contract
73
31
Contract/Tort
58
49
Eminent Domain
100
33
Employment
52
51
Fraud
52
48
Intentional Tort
31
72
Medical Malpractice
21
80
Negligence (Non-PI)
42
63
Personal Injury
52
53
Premises Liability
40
65
Products Liability
32
70
Defendant Decision
Error Rate(%)
60
36
47
34
44
17
17
21
26
19
23
No Decision
Error (%)
9
15
20
15
8
11
3
16
21
16
7
plaintiff contingency fee cases may reflect optimistic overconfidence, according to

an earlier study. In that study, lawyers retained on a contingency basis showed the
same level of confidence about case outcomes as other lawyers, although the
contingency basis attorneys won only 42% of their cases compared with an overall
56% win rate. In general, that study found that lawyers predictions regarding
whether they would win their case showed no predictive validity and were
hardly above chance. The lawyers, the study concluded, exhibited a marked
overextremity bias (underprediction of success for low probabilities and overprediction of success for high probabilities).37 For the clients themselves, the contingency fee agreement may present an economic incentive to forego settlement and
litigate cases to a final verdict, as the client ultimately decides whether to settle the
case and may incur little or no additional cost for trial.38
On the defense side, high decision error rates are noted in cases where insurance
coverage is generally unavailable, e.g., contract cases (60%) and fraud cases (44%),
while low error rates are associated with cases in which insurers are more likely to
represent defendants, e.g., medical malpractice (17% error rate) and premises
liability (19% error rate).
37
Goodman-Delahunty, J., Granhag, P.A. & Loftus, E.F. (1998). How well can lawyers predict
their chances of success? Unpublished manuscript. University of Washington. Cited in Koehler,
Derek J., Brenner, Lyle, & Griffin, Dale. (2002). The calibration of expert judgment: Heuristics
and biases beyond the laboratory. In Gilovich, Thomas, Griffin, Dale, & Kahneman, Daniel (Eds.).
(2002). Heuristics and biases: The psychology of intuitive judgment (pp. 705, 706). Cambridge:
The Press Syndicate of the University of Cambridge. For other results regarding attorneys
predictive capabilities, see Loftus, Elizabeth F., and Wagenaar, Willem A. (Summer 1988).
Lawyers predictions of success. Jurimetrics, 28, 437.
38
Contingency fee agreements typically provide for an increase in the percentage of the net
recovery paid to the attorney, as the case gets closer to a trial date. A typical agreement may
increase the attorneys payment from 33% to 40% of the recovery within 3060 days before trial.
If the parties settlement negotiations occur during the specified pre-trial period, the clients share
of any net recovery remains the same whether the case is tried or settled, although the client likely
will incur some additional court costs (e.g., jury fees) for the trial.
57
In general, an inverse relationship exists between plaintiff decision error rates

and plaintiff win rates. Plaintiff decision error is lowest in cases with high plaintiff
win rates and highest in cases with low win rates. Contract cases, for instance, have
a 31% plaintiff decision error rate and a 73% win rate, while medical malpractice
cases have an 80% plaintiff decision error rate and a 21% win rate. For defendants,
the pattern generally is reversed; high defendant decision error rates are evident in
high plaintiff win rate cases. Defendants commit decision errors in 60% of the
contract cases, where the plaintiff win rate is 73%, but they make decision errors in
only 19% of the premises liability cases, where the plaintiff win rate is only 40%.
For defendants, calibration deteriorates as the risk of monetary loss increases.
The decision error rates, when classified by identical case types, appear to be
roughly consistent with Gross and Syveruds data for 19851986 and 19901991
cases. In Gross and Syveruds study, for instance, plaintiffs in medical malpractice
cases were clear losers in 71% (19851986) and 78% (19901991) of the cases,
compared with a 80% plaintiff decision error rate for medical malpractice actions in
the primary dataset. Defendants decision error rate for medical malpractice cases
in Gross and Syveruds study was 17% (19851986) and 16% (19901991),
compared with 17% in the primary dataset. The results in products liability cases
are more disparate, but reflect similar qualitative differences between plaintiff and
defendant decision error. Gross and Syveruds data show plaintiffs in products
liability cases either recovered nothing or less than the defendants offer in 64%
(19851986) and 61% (19901991) of the cases, compared to plaintiffs decision
error rate of 70% in the primary dataset. Defendants, on the other hand, committed
decision error in 25% (19851986) and 32% (19901991) of the Gross and Syverud
product liability cases, contrasted with 23% in this study.
The type of case appears to affect not only decision error rates but negotiation
disparities as well. The parties negotiation positions, when segregated by case
type, elude rational, utility-based explanation. Plaintiffs mean demand, as a percentage of the mean award, is highest in intentional tort cases, where plaintiffs have
a 31% chance of prevailing, and lowest in fraud cases, where plaintiffs have a
significantly higher chance of prevailing (52%). Similarly, the incidence of plaintiff
overpricing is highest in intentional tort and medical malpractice cases (83% of
demands in both case types are overpriced), where plaintiffs have a relatively small
chance of prevailing, and lower in contract cases (40% of demands are overpriced)
and mixed contract/tort cases (53% of demands are overpriced) where plaintiffs
have relatively high win rates. Plaintiffs, in short, are inclined to discount their
strong claims and inflate their weak claims.
Defendants negotiating strategies display similar patterns of risk aversion when
facing gains and risk taking when facing losses. Defendants offers, as a percent of
average awards, are low in many cases that defendants are likely to lose and high in
many cases which defendants are likely to win. In both fraud and employment
cases, for example, the plaintiff win rate is 52%, and the average defendant offer is
about 6% of the average award. For the two types of cases with the lowest plaintiff
win rates (medical malpractice 21% and intentional tort 31%), the mean
defendant offers are 15% and 34% of the mean awards, respectively. Defendants
58
offers suggest that they are gracious winners and ignoble losers, offering outsized
settlement offers to likely losers and serving their cheapest offers to likely victors. If
no good deed goes unpunished in the larger world, no good claim appears to go
undeterred in the litigation world, at least for the cases that proceed to trial.
3.8.2.2
Statutory Offers of Compromise
The multivariate analysis indicates that the presence or absence of a statutory

settlement offer, called a 998 offer by California practitioners, is correlated
with wide variations in win rates, decision error rates, and negotiation disparities.
A 998 offer, which refers to settlement demands and offers made under California
Code of Civil Procedure Section 998, is a statutory cost-shifting mechanism
designed to encourage settlement and penalize unreasonable settlement positions.
Any party can serve a written 998 offer to the other party while a case is pending, up
to 10 days before trial commences.39 A party who does not accept an adverse
partys 998 offer and obtains a worse result at trial may be liable for the adverse
partys court costs, expert witness fees and, in personal injury cases, interest from
the date of the offer. Although a party prevailing at trial usually is entitled to
recover its costs from the losing party, the service of a 998 offer prevents a
prevailing party from recovering costs if the award in its favor is less than its
adversarys 998 offer. The purpose of section 998, the court held in Taing v.
Johnson Scaffolding Co.,40 is to encourage the settlement of lawsuits before trial
by penalizing a party who fails to accept a reasonable offer from the other party.
Decision Error. The multivariate analysis indicates that 998 offers are salient
predictors of decision error for both plaintiffs and defendants. The results of the
four possible 998 conditions (plaintiff alone serves a 998 offer on defendant,
defendant alone serves a 998 offer on plaintiff, both parties serve 998 offers on
each other, and neither party serves a 998 offer) are shown in Table 3.8. In general,
serving a 998 offer reduces both decision error and mean cost of error for the
serving party, but increases decision errors and the cost of errors for the recipient
party. Total decision error also increases in the presence of a 998 offer, i.e., no
error is always a lower percent when 998 offers are served. This increase in total
decision error occurs because the reduction in the serving partys decision error is
more than offset by the rise in the recipient partys decision error.
39
The offer of compromise under Section 998 must expressly refer to the statute or otherwise
notify the offeree that costs otherwise allowed to a prevailing party may be reduced or augmented
if the offer is not accepted. See Stell v. Jay Hales Development Co., 11 Cal. App. 4th 1214, 1231,
1232, 15 Cal. Rptr. 2d 220 (1992). An oral offer purportedly made under Section 998, even if
placed on the record during a deposition, does not satisfy the statutory requirements. Saba v.
Crater, 62 Cal. App. 4th 150, 153, 72 Cal. Rptr. 2d 401 (1998). Cf. Berg v. Darden, 120 Cal. App.
4th 721, 727, 15 Cal. Rptr. 3d 829 (2004).
40
9 Cal. App. 4th 579, 583, 11 Cal. Rptr. 2d 820 (1992). Taing was distinguished in Bihun v. AT&T
Information Systems, 13 Cal. App. 4th 976, 6 Cal. Rptr. 2d 787 (1993).

Table 3.8 Win rates and decision error rates by 998 offer of compromise
Party Serving
Defendant Decision
Compromise Offer Rate (%)
Error Rate (%)
Error Rate (%)
Plaintiff
65
39
50
Defendant
36
83
8
Plaintiff &
58
56
30
Defendant
None
46
59
23
59
No Decision
Error (%)
11
9
14
18
A plaintiff 998 offer reduces both decision error and cost of error for plaintiffs,
but it raises decision error and the cost of error for defendants. Plaintiffs service of
a 998 offer appears to provoke or at least is correlated with more risk-taking
behavior by defendants. Plaintiff decision error is reduced from 59% in the no
998 offer condition to 39% in the plaintiff serves 998 condition; defendant
decision error rises from 23% in the no 998 offer condition to 50% in the
plaintiff serves 998 condition. Plaintiffs service of a 998 offer thus is correlated
with a 34% decrease in plaintiff decision error and roughly a twofold increase in
defendant decision error.
When a defendant serves a 998 offer on a plaintiff, a similar effect is observed.
A defendant 998 offer is correlated with a reduction in defendant decision error from
23% in the no 998 condition to 8% in the defendant serves 998 condition, while
plaintiff error rises from 59% in the no 998 condition to 83% in the defendant
serves 998 condition. Defendants serving a 998 offer reduce their decision error
rate by 65% while raising plaintiffs decision error rate by 40%.
Service of a 998 offer also is correlated with higher overall decision error.
Eighteen percent of the cases showed no decision error in the no 998 offer
condition, but the percentage of no decision error cases declined to 11% in the
plaintiff serves 998 condition and 9% in the defendant serves 998 condition.
Omitting the cases in which a 998 offer was submitted would roughly double the
instances in which neither party made a decision error. Ironically, eliminating the
cases where a party utilized a statutory procedure intended to deter unreasonable
settlement positions would result in a lower overall incidence of decision errors in
this dataset of cases with adjudicated outcomes.
Cost of Error. Parties serving a 998 offer also display a dramatically lower mean
cost of error compared to the mean cost of error sustained when they receive a 998
offer. Plaintiffs serving a 998 offer incur a mean cost of error of $21,671, which
doubles to $43,153 when they are on the receiving end of a 998 offer. For
defendants, the mean cost of error is $857,454 when they serve a 998 offer and
$1,574,129 when they receive a 998 offer. For both plaintiffs and defendants, the
mean cost of decision error is substantially higher when they are a recipient of a 998
offer.
Dual 998 Offers. In the dual 998 offer condition when both parties serve 998
offers the results are mixed. Plaintiffs in the dual 998 offer condition show a slight
reduction in decision error compared with the no 998 offer condition (56% v. 59%)
60
and a reduction in the mean cost of error ($56,525 v. $94,828). Defendants in the
dual 998 offer condition exhibit an increase in decision error compared with the no
998 offer condition (30% v. 23%) and a more substantial decrease in the mean cost
of error ($920,546 v. $1,528,599).
Negotiation Disparities. Apart from its correlation with increased decision error
and higher mean cost of error for parties receiving a 998 offer, the existence of a
998 offer is associated with extreme negotiation disparities. Service of a 998 offer is
correlated with relatively conservative demands by plaintiffs and generous offers
by defendants, while receipt of a 998 offer is associated with extremely high
plaintiff demands and low defense offers. The mean amount of a 998 offer served
by a plaintiff upon a defendant is 54% of the mean award, but the mean amount of a
plaintiffs demand soars to 331% of the mean award when a defendant serves a 998
offer upon a plaintiff. The average amount of a defendants offer is 47% of the
average award when it serves a 998 offer upon a plaintiff, but when a defendant is
on the receiving end of a 998 offer from a plaintiff, the average amount of a
defendants offer is reduced to 19% of the average award.
Plaintiffs overprice their demands in 50% of the cases where they serve a 998
offer, but plaintiffs receiving 998 offers from defendants overprice their demands in
92% of the cases. Defendants overprice their offers in 76% of the cases where they
serve a 998 offer, but their incidence of overpricing falls to 17% when plaintiffs
serve a 998 offer upon them. When defendants underprice their offer, moreover, the
average amount of underpricing, relative to the average award, varies dramatically
depending on who has served a 998 offer. The mean amount of underpricing by a
defendant who receives a 998 offer from a plaintiff is $1,753,131, but the mean
amount of defense underpricing drops to $505,675 when a defendant serves a 998
offer upon a plaintiff. Both plaintiffs and defendants, on average, are magnanimous
when serving a 998 offer and penurious when receiving one.
Limitations on 998 Data. The correlation between 998 offers and increased risk
taking has at least two major limitations. First, this study is limited to adjudicated
cases; 998 offers may be effective in promoting settlement and facilitating reasonable settlement positions in settled cases. As observed earlier, decision error and
negotiation disparities cannot be tested in settled cases because they lack a benchmark award. Second, one may argue that a 998 offer does not cause the risk-taking
behavior but rather is propounded to curb or penalize extreme settlement positions
after an adverse party has manifested unreasonable settlement behavior. Under this
argument, a 998 offer may be a reaction to, not a cause of, an adverse partys risktaking behavior. The weakness in this second argument, though, is that it overlooks
the underlying intent of the 998 statutory procedure: to promote reasonable settlement behavior by imposing a financial penalty on unreasonable settlement positions, whether the recipient party is a reckless or a rational decision maker.
Although 998 offers may have a salutary effect on those cases that settle, in this
study of adjudicated cases the service of a 998 offer is correlated with significantly
higher risk taking and decision error by the recipient party.
Four Corroborative Studies. The legislative intent underpinning the Section
998 offer of compromise procedure, as previously explained, is to encourage
61
settlements by imposing financial penalties on parties who take unreasonable

settlement positions. This study of 998 offers of compromise, however, indicates
that this cost-shifting statutory scheme may actually induce risk taking by litigants.
The possibility that punitive measures in general and cost-shifting statutory
schemes in particular are ineffective or may actually provoke the gambling mentality they are intended to curb is demonstrated by four other studies, two of which
are empirical and two of which are experimental. These corroborative studies,
which raise questions regarding the effect of tort reform propositions, are briefly
described below.
First, law professor Jeffrey Rachlinski studied the effect of loser pays legislation, enacted to deter meritless lawsuits and increase settlements. He analyzed the
research conducted by Snyder and Hughes on medical malpractice claims filed
before and after Florida adopted reform legislation requiring the losing party at
trial to pay the prevailing partys litigation costs. (Loser-pays is also known as the
English Rule). Comparing the before and after results, Snyder and Hughes
found that a case was less likely to be settled under a loser-pays system and
defendants spent much more on litigation under a loser-pays system.41 These
findings, Rachlinski observes, are consistent with behavioral economics models
showing that the propensity to take risks increases as the stakes are heightened.
Increasing the risks associated with litigation, Rachlinski observes, increases the
attractiveness of wasteful litigation to risk-seeking defendants.42 He further notes
by raising the stakes at trial, the loser-pays system makes litigation itself more
valuable and can discourage settlement.43
Second, the instant study separately analyzed the effect of a different statutory
cost-shifting procedure under California Code of Civil Procedure Section 1141.21.
That section applies when the parties participate in a non-binding arbitration
hearing before a trial and, dissatisfied with the arbitrators decision, one party
exercises its right to a trial after the arbitration. Under Section 1141.21, a party
who requests a trial after non-binding arbitration but fails to obtain a better result at
trial may be required to pay specified expert witness fees, court costs, and the
arbitrators fees. Like the 998 procedure, this statutory scheme is intended to
discourage trials by financially punishing over-confident plaintiffs and defendants.44
41

43
44
The court explained the background and purpose of Section 1141.21 in Phelps v. Stostad 16 Cal.
4th 23, 65 Cal. Rptr. 2d 360, 939 P.2d 760 (1997): To encourage parties to accept reasonable
arbitration awards, the Legislature enacted Code of Civil Procedure section 1141.21, which
provides that if a party elects a trial de novo following judicial arbitration, and fails to obtain a
judgment that is more favorable than the arbitration award, that party shall pay the costs incurred
by the opposing party following the election of the trial de novo and shall not recover his or her
own costs incurred following the election of the trial de novo. Section 1141.21(a)(ii) creates an
42
62
Analysis of the Section 1141.21 variable, however, reveals no statistically

significant difference in plaintiff or defendant error rates between cases where the
parties requested a new trial after non-binding arbitration and those cases where the
parties proceeded directly to trial without non-binding arbitration. Nor is there any
statistically significant difference in error rates between parties who requested a
new trial after arbitration, exposing themselves to a monetary sanction if they failed
to obtain a superior award at trial, and parties who participated in pre-trial mediation and had no exposure to monetary sanctions if the trial award was inferior to
what they could have obtained in mediation. Thus, as applied to the adjudicated
cases in this study, Section 1141.21 and its cost-shifting sanctions do not appear to
decrease risk taking or decision error by either plaintiffs or defendants.
Third, an experimental study published in November 2007 by Kevin McCabe
and Laura Inglis at George Mason University simulated litigation settlement negotiations and specifically evaluated the effects of 998 offers on negotiation outcomes.
Overall, McCabe and Inglis found that in 46% of the cases that went to court in our
experiments, both parties had received settlement offers that would have made
them better off than the expected court outcome. Based on experiments controlling
for 998 offers of compromise, they concluded that the Section 998 cost-shifting
mechanism provides no significant improvement in settlement rates. They further
note that the English Rule, requiring an unsuccessful litigant to pay both sides
court costs, is actually less effective at promoting settlement than the American
Rule.45
Fourth, writing in the journal Nature four months after publication of the
McCabe-Inglis study, Harvard professor Martin Nowak and his colleagues noted
that punitive measures do not promote cooperative behavior and are correlated with
the least successful negotiation results. Their study, entitled Winners Dont Punish, tested the premise that punitive measures can be successful in forcing parties
to cooperate in one-time competitive interactions. Based on outcomes recorded in a
modified version of Prisoners Dilemma, a game in which the players compete
against anonymous opponents and choose among cooperation, betrayal or punishment, Nowak concluded that winners are those who resist the temptation to
escalate conflicts, while the losers punish and perish. His co-author, Professor
David Rand, specifically observes that the players who most frequently invoked the
punishment option earned the lowest playoffs in the game. As Rand explains,
Punishment can lead to a downward spiral of retaliation, with destructive outcomes for everybody involved. The people with the highest total payoffs do not use
costly punishment.46
exception to the usual rule that the prevailing party in an action is entitled . . . to recover costs.
The purpose of this statute, the Phelps court stated bluntly, is to discourage trials de novo.
45
McCabe, Kevin, and Inglis, Laura. (2007, November 30). Using neuroeconomics experiments to
study tort reform. Arlington, Virginia: Mercatus Center at George Mason University.
46
Dreber, Anna, et al. (2008, 20 March). Winners dont punish. Nature, 452(7185), 348351.
3.8.2.3
63
Forum
The three forum variables are jury trials, bench (judge only) trials, and arbitration
hearings. Each of the forum variables is correlated with distinct decision error rates,
negotiation disparities and win rates. Decision error rates and win rates for each
type of forum are presented in Table 3.9. Defendants committed substantially fewer
decision errors in jury trials relative to bench trials (23% v. 39%). By contrast,
plaintiff decision error was considerably higher in jury trials relative to bench trials
(62% v. 45%). In arbitration cases, decision error rates for both plaintiffs and
defendants differed substantially from their rates in jury cases. Defendants decision error rate in arbitration cases (48%) was higher than their error rate in bench
trials (39%) and roughly double their decision error rate in jury trials (23%).
Plaintiffs decision error in arbitration cases (27%) was notably lower than in either
bench trials (45%) or jury trials (62%). The total amount of decision error, moreover, is much lower in arbitration cases than in either bench or jury trials, with no
error cases comprising 25% of all arbitration cases relative to 16% of bench trials
and 15% of jury trials.
The cost of error for both plaintiffs and defendants shows a similar progression
from arbitration to bench and jury trials. Plaintiffs and defendants sustain the lowest
mean cost of error in arbitration cases ($17,264 and $692,614, respectively), the
next lowest mean cost of error in bench trials ($25,140 and $972,313, respectively)
and the highest mean cost of error in jury trials ($61,875 and $1,495,184, respectively). Regardless of the forum, however, defendants mean cost of error is always
higher than plaintiffs mean cost of error, ranging from a high of 40 times plaintiffs
cost of error in arbitration cases to a low of 24 times plaintiffs cost of error in jury
trials.
Defendants also exhibit extreme negotiation disparities in arbitration cases.
Defendants mean offer in the arbitration cases, as a percentage of the mean
award, is 6%, compared with 21% in jury and bench trials. Defendants also are
more likely to underprice their settlement offers in arbitration cases; 73% of
defendants offers are underpriced in arbitration cases; but the incidence of defendant underpricing is reduced to 55% and 38% in bench and jury trials, respectively.
The relatively low amount of defendants offers in arbitration cases suggests that
defendants have a diminished incentive to avoid adjudicated outcomes in arbitration cases. Plaintiffs, in contradistinction, do not exhibit the same degree of
negotiation disparity in the three different forums. Plaintiffs mean demand, as
Table 3.9 Win rates and decision error rates by forum

Forum
Rate (%)
Error Rate (%)
Arbitration
74
27
Bench (Judge)
58
45
Jury
47
62
Defendant Decision
Error Rate (%)
48
39
23
No Decision
Error (%)
25
16
15
64
a percentage of the mean award, is 110% in arbitration cases, 96% in bench trials,
and 113% in jury trials.
Consistent with behavioral economics theories of loss aversion in the gains
frame and risk taking in the losses frame, plaintiffs decision error rate decreases
as the probability of a trial victory increases. Plaintiffs exhibit the highest decision
error rates in jury trials (62%), where the win rate is lowest (47%), and the lowest
decision error rates (27%) in arbitration cases, where the win rate is highest (74%).
Defendants display a similar pattern, evidencing a high decision error rate (48%) in
arbitration cases, where they win only 26% of the cases, and a low decision error
rate (23%) in jury trials, where they win 53% of the cases. For both plaintiffs and
defendants, the incidence of decision error increases as the likelihood of prevailing
decreases; they are most likely to reject a settlement demand or offer that is proven
to be superior to the ultimate award when they have a relatively lower chance of
prevailing at trial. Like losing bettors at a racetrack, litigants are more likely to bet
on long shots as their financial prospects dim.
The pattern of risk taking in the losses mode and risk aversion in the gains mode
is again reflected in the parties settlement posturing. As noted above, the average
defendants offer is a miserly 6% of the average award in arbitration cases and a
relatively generous 21% of the mean award in jury trials, indicating that defendants
offer less money, relative to their actual liability, in cases they are likely to lose, and
more money in cases they probably will win. Defendants underprice their offers in
73% of the arbitration cases and 38% of the jury cases, again reflecting the pattern
of miserliness toward plaintiffs in cases defendants are likely to lose and relative
profligacy toward plaintiffs in cases defendants are likely to win. Plaintiffs are
similarly aggressive and risk taking in cases they are likely to lose and more
conservative and risk averse in cases they are likely to win; plaintiffs underprice
their demands in 23% of the jury trials (47% win rate) and 39% of the arbitration
cases (74% win rate).
The higher win rates for plaintiffs in arbitration cases are consistent with other
studies documenting win rates ranging from 63% to 80%.47 This research suggests
47
See Maltby, Lewis. (1999, Fall). Employment arbitration: Is it really second class justice?
Dispute Resolution Magazine. Maltby, Lewis L. (1998). Private justice: Employment arbitration
and civil rights. Columbia Human Rights Law Review, 30, 29, 4648. Bingham, Lisa B. (1995). Is
there a bias in arbitration of nonunion employment disputes: An analysis of active cases and
outcomes. International Journal of Conflict Management, 6, 369, 378. Howard, William. (1995,
October-December). Arbitrating claims of employment discrimination. Dispute Resolution Journal,
4043. Ernst and Young. (2004, December 2004). Outcomes of arbitration: An empirical study of
consumer lending cases. National Arbitration Forum. (2000, January 7). Millennial issues regarding
arbitration fairness: An administrators view. Baxter, George. (199394). Arbitration in litigation for
employment civil rights? 2 Vol. of Individual Employee Rights 19. Delikat, Michael, and Kleiner,
Morris. (2003, Winter). Comparing litigation and arbitration of employment disputes: Do plaintiffs
better vindicate their rights in litigation? Conflict Management, 6(3). United States General
Accounting Office. (1992, May 11). Securities arbitration: How investors fare (Rep. No. GAO/
GGD-9274). American Arbitration Association. Analysis of the American Arbitration Associations consumer arbitration caseload: Based on consumer cases awarded between January and
65
that plaintiffs may benefit from reconsidering the conventional wisdom that jury
trials favor them (although many scholars argue that the probability of a plaintiff
award is vastly outweighed by the relatively small amount of arbitration awards).
The high win rate in bench trials (58%) vs. jury trials (47%) also augurs for a
reconsideration of the conventional plaintiff preference for jury trials. (In the
criminal law context, recent research also raises questions about the advantages
of jury trials for defendants. This research shows that judges in 2006 convicted
defendants in only 64% of the cases, compared to a jury conviction rate of 89%. As
legal affairs writer Jason Krause notes, The figures contradicted one of the oldest
pieces of conventional wisdom in the legal profession: that defendants get more
sympathy from a jury than a judge).48
3.8.2.4
Damages Claim
Damages are coded in the datasets as (a) Past damages, representing injuries and
damages already sustained; (b) Future damages, representing prospective, anticipated losses not yet paid or sustained, and (c) punitive or exemplary damages.
A plaintiff in a personal injury suit against an intoxicated driver, for example, may
seek compensation for medical expenses already incurred and pain and suffering
previously suffered (Past damages); the cost of future surgery anticipated by her
physician and prospective pain and suffering (Future damages); and punitive
damages based on the defendants reckless behavior while driving intoxicated.
The coding in the datasets is based on plaintiffs damages allegations, not the
type of damages ultimately recovered by plaintiffs. Awards generally are not
sufficiently allocated by VerdictSearch California and the adjudicator to consistently determine the type of damages ultimately awarded.
Distinctions Among Damages Claims. Behavioral economics theory posits that a
party is more likely to recover losses already incurred (Past damages) than
presently unrealized future profits or other relatively remote, prospective damages
(Future damages), even when a party is entitled to recover both types of
damages.49 In a breach of contract action against a contractor who abandons a
house construction project, for example, the plaintiff is more likely to recover its
advance payment to the contractor than the rental income that would have been
realized between the original contract completion date and the actual completion
date.50 Although a non-breaching party is entitled to the amount which will
August 2007. Consumer Arbitration Task Force - Searle Civil Justice Institute. (2009, March).
Consumer arbitration before the American Arbitration Association preliminary report.
48
Krause, Jason. (2007, June). Judge v. jury. ABA Journal, p. 46.
49
See Baron, Jonathan. (2000). Thinking and deciding (pp. 409431). Cambridge: Cambridge
University Press.
50
Facts based on Henderson v. Oakes-Waterman Builder, 44 Cal. App. 2d 615, 12 P. 2d 662
(1941), reversing trial courts determination of damages and holding owner was entitled to recover
advance payment, cost of demolition and reconstruction, and loss of rental value.
66
Table 3.10 Win rates and decision error rates by damages claim
Damages Claim
Defendant Decision
Rate (%)
Error Rate (%)
Error Rate (%)
Past Losses Only
46
64
21
Future Losses Only
35
65
26
Past/Future Losses
51
57
28
Past/Punitive
56
49
37
Past/Future/Punitive
75
32
49
No Decision
Error (%)
15
9
15
14
19
compensate the party aggrieved for all the detriment proximately caused thereby,
i.e., the equivalent of the benefits of contract performance,51 studies show that
jurors and judges are reluctant to award both damages actually incurred and
damages yet to be sustained.52 This bias purportedly manifests because previously
incurred damages are perceived as tangible and proximate, while future losses may
be perceived as speculative and remote.53
Effects of Damages Claims. The primary dataset presents mixed messages about
the existence of a cognitive distinction between Past damages awards and
Future damages awards. As indicated in Table 3.10, plaintiffs seeking only
Future damages fared poorly, recovering a net award in only 35% of the cases.
Plaintiffs alleging only Past damages, by contrast, prevailed in 46% of their cases.
Plaintiffs seeking both Past and Future damages, however, recovered a net reward
in 51% of the cases, a win rate slightly higher than the cases alleging only Past
damages.
Table 3.10 demonstrates the relation between the damages claim and the parties
decision errors. Cases alleging only Past damages are correlated with a low
defendant decision error rate (21%), but defendants error rate increases markedly
as the damages claim becomes more complex. Faced with a claim alleging Past,
Future, and punitive damages, defendants decision error rate more than doubles to
49%. Plaintiffs decision error rate, however, moves in the opposite direction, from
a high of 64% in cases alleging Past damages only to a low of 32% in cases
asserting Past, Future, and punitive damages. Litigants mean cost of error also is
skewed differently for defendants and plaintiffs. Defendants mean cost of error is
highest in cases alleging Past, Future, and punitive damages ($6,995,791) and
lowest in cases alleging only Past damages ($333,938). Plaintiffs mean cost of
51
California Civil Code Section 3300.

Cohen, David, & Knetsch, Jack L. (1992). Judicial choice and disparities between measures of
economic value. In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices, values, and
frames (pp. 436439). Cambridge: The Press Syndicate of the University of Cambridge.
53
An employers wage cuts, to cite another example, are more likely to be considered unacceptable
than the employers failure to increase wages. Cohen, David, & Knetsch, Jack L. (1991). Loss
aversion in riskless choice. In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices,
values, and frames (p. 157). Cambridge: The Press Syndicate of the University of Cambridge.
52
67
error, by comparison, is $78,404 in Past, Future, and punitive damages cases and
$30,021 in Past damages cases; plaintiffs highest mean cost of error is sustained in
cases alleging Past and Future damages ($121,700). But when mean cost of error is
replaced with median cost of error, both plaintiffs and defendants exhibit their
lowest median costs of error in Past damages only cases and their highest median
cost of error in Past, Future, and punitive damages cases.
Punitive Damages Claims. The presence of a punitive damages claim is correlated with high defendant decision error rates. Defendant decision error rose from
21% in Past damages only claims to 37% in Past and punitive damages claims, and
from 28% in Past and Future damages claims to 49% in Past, Future, and punitive
damages claims. By contrast, plaintiffs decision error was consistently lower in
cases alleging punitive damages. When a punitive damages claim was joined with a
Past damages claim, plaintiff decision error decreased from 64% (Past damages
only) to 49% (Past and punitive damages). In cases where a punitive damages claim
was joined with a Past and Future damages claim, plaintiff decision error decreased
from 57% (Past and Future damages only) to 32% (Past, Future and punitive
damages).
The substantially higher defendant decision error rates in punitive damage
claims may be attributable to the difficulty of predicting the amount of punitive
damage awards and defendants inadequate evaluative adjustments for non-paradigmatic claims. Experimental studies show that individual differences in punitive
damage awards produce severe unpredictability and highly erratic outcomes;
study participants show strong agreement in finding punitive intent, but there is
no consensus about how much in the way of dollars is necessary to produce
appropriate suffering in a defendant.54 The proposition that punitive damages
awards are unpredictable, however, is challenged by Theodore Eisenbergs empirical study published in 2006. His study found, inter alia, minimal, though observable, variation in the dispersion of the punitive and compensatory damage ratio over
the years [19922001] and between trial modes.55
Negative Problem-Solving Transfer in Punitive Damages Claims. Whether the
amount of punitive damages is predictable or unpredictable, the defendants in the
primary dataset displayed seriously diminished predictive capacity in punitive
damages claims. The defendants relatively poor outcomes suggest that they either
ignore the non-paradigmatic variable (punitive damages claim) or erroneously draw
problem-solving analogies between the unexceptional cases (no punitive damages
claim) and the exceptional cases (punitive damages claims). The risk of this type of
decision-making error (negative problem-solving transfer) is high when cases
54
Sunstein, Cass, et al. Assessing punitive damages (with notes on cognition and valuation in law).
In Sunstein, Cass (Ed.). Behavioral law & economics (pp. 232, 240). Cambridge: Cambridge
University Press.
55
Eisenberg, Theodore, et al. (2006). Juries, judges, and punitive damages: Empirical analysis
using the civil justice survey of state courts 1992, 1996, and 2001 data. Journal of Empirical Legal
Studies, 3(2), 276. Cf. Hersch, Joni, and Viscusi, W. Kip, (2004). Punitive damages: How judges
and juries perform. Journal of Legal Studies, 33(1), 136.
68
appear superficially similar: surface similarity in story line, causes, context, and
phrasing, explains Professor Miriam Bassok, frequently leads decision makers to
retrieve and apply a solution to a nonanalogous problem (negative transfer) and
thereby waste their cognitive resources or arrive at an erroneous solution.56
This inability to meet decision-making challenges by changing mental templates
is well documented and explained in the 2008 Harvard Business Review article,
The Experience Trap:
We conclude that managers find it difficult to move beyond the mental models that they
have developed from their experiences in relatively simple environments or that have been
passed on to them by others. When complications are introduced, they either ignore them or
try to apply simple rules of thumb that work only in noncomplex situations. What they
dont do is materially improve the quality of their mental models to take into account the
realities of complex projects.57
Like the recalcitrant managers described in The Experience Trap, many defendants seem to impose tried and true mental models on new and uncertain conditions,
often leading to disastrous results.
The cognitive template that is so successful in defendants assessment of simple
claims appears to be ill-suited for defendants evaluation of complex claims. As
Peter Drucker observed in his classic essay, The Effective Decision, one of the
most common decision-making errors is the mistake of treating a new event as if it
were just another example of the old problem to which, therefore, the old rules
should be applied.58 Although defendants may not lump all cases onto the routine pile, the danger is that they misclassify cases when sorting the routine from the
exceptional cases or treat cases in both categories with the same evaluative models.
When decision makers have seen it all before, their time-tested evaluative tools
may superimpose comparisons and analogies over incongruent facts and encourage
decision makers to minimize nuances later proven to be determinative.
Effect of Aggregated Claims on Win Rates and Negotiation Disparities. Apart
from its impact on decision error, a plaintiffs damages claim may affect win rates
and the parties negotiation strategies. As plaintiffs aggregate different types of
damages in their claims, their win rates increase. Cases alleging both Past and
Future damages, for example, have a higher win rate (51%) than cases alleging Past
damages alone (46%). When punitive damage claims are added to cases alleging
Past and/or Future damages, the win rate soars to 75%. Plaintiffs overprice their
demands in 79% of the cases alleging Past damages only, but plaintiffs incidence
of overpricing decreases to 51% in cases alleging Past, Future, and punitive
56
Bassok, M. (2003). Analogical transfer in problem solving. In Davidson, J.E. and Sternberg, R. J.
(Eds.) The psychology of problem solving (p. 343). Cambridge: Cambridge University Press.
57
Sengupta, Kishore, Abdel-Hamid, Tarek K. and Van Wassenhove, Luk N. (2008, February). The
experience trap. Harvard Business Review, p. 94.
58
Drucker, Peter. (1967). The effective decision. In Harvard Business Review on Decision Making
(p. 6). Boston, Massachusetts: Harvard Business School Press.
69
damages. Conversely, defendants underprice their offers in 36% of the cases

alleging Past damages only and 68% of the cases alleging Past, Future and punitive
damages.
In alleging multiple types of damages, plaintiffs may increase their win rates by
providing story and remedy alternatives to a jury and affording an opportunity for
the jury to compromise the parties competing narratives, motivations, and expectations. Cognitive psychology studies demonstrate that choices are affected significantly by the number of alternatives,59 different frames, reference points, contexts
and elicitation procedures,60 the addition of options, and the ability to compromise
between two extremes.61 People avoid making any choices when faced with two
unattractive or unpersuasive alternatives, but the addition of a third, less attractive
or less persuasive alternative sometimes increases the desirability of an option
about which one was previously ambivalent.62
Faced with a stark choice between awarding speculative, uncertain Future
damages to a plaintiff or rendering a defense verdict, the jury is more likely to
render a defense verdict. But given a choice between a defense verdict and a
plaintiffs aggregated claim for Future damages, Past damages, and punitive
damages, two cognitive changes appear to occur: (1) the bias against Future
damages ebbs when Future damages are combined with other types of damages
clams; and (2) Past damages claims are more appealing and hence successful when
combined with other damages claims. The bundling of damages claims may
functionally obscure the blemishes evident when a lone damages claim is asserted.
The opportunity to choose among different damages claims and to select among the
alternative narratives that underpin those claims also enables the jury to negotiate
mentally with the plaintiff and defendant and compromise their competing claims.
A plaintiff alleging both contract damages and punitive damages (e.g., the defendant breached the contract by failing to perform and defrauded my client because he
never intended to perform) permits the jury to choose a credible, middle ground
story (the defendant breached the contract but did not defraud the plaintiff) and
avoid the dissonance and unease generated by making stark, zero sum decisions.
Although arbitrators often are accused of avoiding tough decisions by splitting it
down the middle, jurors also may prefer to effect a compromise among competing
claims.
Asking for more damages instead of different types of damages also can result in
higher verdicts. In mock trials, jurors presented with the same evidence awarded
59
Thaler, Richard H. (1999). Mental accounting matters. In Kahneman, Daniel, & Tversky, Amos
(Eds.). (2000). Choices, values, and frames (p. 265). Cambridge: The Press Syndicate of the
University of Cambridge.
60
Shafir, Eldar, Simonson, Itmar, & Tversky, Amos. (1993). Reason-based choice. In Kahneman,
Daniel, & Tversky, Amos (Eds.). (2000). Choices, values, and frames (p. 618). Cambridge: The
Press Syndicate of the University of Cambridge.
61
Baron supra note 49 at 288.
62
Hastie, Reid, & Dawes, Robyn M. (2001). Rational choice in an uncertain world (pp. 237244).
Thousand Oaks, California: Sage Publications, Inc.
70
higher amounts to the plaintiff when the only variable was a higher amount
requested by the plaintiffs attorney.63 As law professor Chris Guthrie observes,
the lesson from the studies seems to be Ask and ye shall receive.64
3.8.2.5
Offer/Demand Ratio
Negotiation theorists contend that a negotiated resolution is less likely to occur

when the parties demands and offers are far apart. All things being equal, they
assert, parties whose negotiation positions are extremely disparate are less likely to
settle than parties whose negotiation positions are relatively close. This section does
not challenge this theory (its dataset would be useless in testing the theory because
it includes only non-settled cases) but rather examines the relationship between
decision error and the magnitude of the difference in the parties settlement positions. It specifically tests the conventional wisdom that, if the parties are far apart in
their settlement positions, the truth lies somewhere in between, i.e., plaintiffs
demand is too high relative to the probable outcome, and defendants offer is too
low. Applied to the concept of decision error, the conventional wisdom dictates that
neither party is likely to make a decision error when their settlement positions are
far apart. If, for example, plaintiff demands $1,000,000 and defendant offers
$100,000, the conventional wisdom holds that the likely verdict is somewhere in
between and neither party will commit a decision error by rejecting the other partys
extreme settlement proposal.
As shown in Fig. 3.1, all cases in the dataset can be broken down into categories
based on the range of quotients derived from dividing the amount of a defendants
offer by the amount of a plaintiffs demand. When defendants offer is $10 and
plaintiffs demand is $100, for example, the quotient is .10; when defendants offer
is $90 and plaintiffs demand is $100, the quotient is .90. If the conventional
wisdom is correct, a lower quotient will be correlated with lower overall decision
error, as the margin of error is broad, and a higher quotient will be correlated with
higher overall decision error, as the margin of error is narrowed for both parties.
The data, as shown in Fig. 3.1, do not support the conventional wisdom. The
truth in settlement negotiations does not lie somewhere between two extreme
positions but is nestled closer to defendants settlement positions when the parties
demands and offers are far apart. Plaintiffs are more likely to commit decision
errors when the offer/demand quotient is low, and their incidence of decision error
generally decreases as the parties settlement positions move closer to each other.
Defendants decision error rate, however, generally increases as the parties settlement positions converge. (Caveat to defendants: although the incidence of
63
Chapman, Gretchen B., & Bornstein, Brian H. (1996). The more you ask for the more you get:
Anchoring in personal injury verdicts. Applied Cognitive Psychology, 10, 519, 525.
64
Guthrie, Chris, Rachlinski , Jeffrey J. and Wistrich, Andrew J. (May 2001). Inside the judicial
mind. Cornell Law Review, 86(4), 789790.
71
80%
70%
60%
50%
Plaintiff
Defendant
40%
30%
20%
10%
9%
9%
%
7
80
9%
6
70
9%
5
60
9%
%
50
9%
40
9%
%
2
30
20
%
10
<
10
9%
0%
Offer/Demand
Fig. 3.1 Offer/demand ratio and decision error
defendant decision error is lowest when the parties settlement positions are far
apart, defendants mean cost of error is highest ($2,011,963) in this condition;
defendants errors are infrequent but colossal in extreme negotiations). In
extremely disparate settlement negotiations, where the defendants offer is less
than 10% of the plaintiffs demand, the dataset indicates that only 12% of the cases
will result in no error for both parties.
3.8.3
Two Secondary Context Variables
As discussed above, the major Context variables are the type of case, the existence
of a Section 998 offer of compromise, the forum in which the case is tried, the type
of damages claimed, and the extent of the offer/demand disparity. Two other
Context variables whether the alleged wrongful act was an act of omission or
commission and whether a defendant has insurance coverage merit consideration,
although they have less predictive capacity than the five major Context variables.
3.8.3.1
The Nature of the Alleged Wrongful Act
If the plaintiff alleges that defendants wrongful act was intentional instead of
negligent does this volitional difference appear to affect win rates, decision error
rates, or negotiation disparities? When the defendants alleged acts are characterized as either acts of commission or acts of omission, does the trier of fact manifest
72
Table 3.11 Win rates and decision error rates by nature of alleged act
Alleged Act
Plaintiff Win Plaintiff Decision Defendant Decision
Rate (%)
Error Rate (%)
Error Rate (%)
Commission
43
59
30
Omission
47
62
22
Omission/Commission 51
55
31
No Decision
Error (%)
11
16
14
what psychologists and behavioral economists call an omission/commission

bias?
Studies of the omission/commission bias demonstrate that acts of commission
are more likely to earn moral opprobrium than acts of omission, even when both acts
cause equal harm or are done with equal intentionality. Active deception for
example, was considered morally worse than withholding the truth, explain professors Ilana Ritov and Jonathan Baron, even when the actors intention to deceive
was judged to be the same in the two cases.65 For similar reasons, most states in the
United States permit passive euthanasia (not sustaining the lives of terminally ill
patients) but prohibit active euthanasia (injection of a lethal drug) even for persons
requesting death.66 Cognitive justifications for attaching less blame or weight to
omissions include (1) the belief that people should not be responsible for inattentive,
ignorant or inadvertent behavior; (2) the sense that omissions, unlike commissions,
rarely involve malevolent intentions; and (3) the perception, however inaccurate,
that omissions are not really causes.67
The primary dataset does not show a higher win rate for cases alleging an act of
commission and hence does not support the existence of a juror, judge, or arbitrator
bias treating alleged acts of commission more harshly than acts of omission. As
shown in Table 3.11, plaintiffs won 43% of the cases alleging an act of commission,
47% of the cases alleging acts of omission, and 51% of the cases alleging both an
omission and a commission. The triers of fact in this study, therefore, were slightly
more likely to impose financial penalties (awards favoring plaintiffs) on defendants
who allegedly committed an act of omission, evidencing a minor reversal of the
omission/commission bias. This type of reversal, though, was observed under some
circumstances in another study by Ritov when the decision maker is in a position
of responsibility.68 (The relatively high win rate for the cases alleging both
omissions and commissions also lends support to the behavioral economics theory
of enhanced loss aversion, positing losses that are compounded by outrage are
65
Ritov, Ilana, and Baron, Jonathan. (1990). Reluctance to vaccinate: Omission bias and ambiguity. In Sunstein, Cass, (Ed.). Behavioral law & economics (p. 170). Cambridge: Cambridge
University Press.
66
Baron supra note 49 at 401.
67
Ritov and Baron supra note 65 at 168171. See Kleindorfer, Paul, et al. (1993) Decision sciences
(p. 366). Cambridge: Cambridge University Press.
68
Ritov and Baron supra note 65 at 170.
73
much less acceptable than losses that are caused by misfortune or by legitimate
actions of others.69)
Although win rates did not reflect an omission/commission bias, the nature of the
alleged act may affect decision error rates. Defendant decision error was lowest in
cases alleging only an act of omission (22%) and highest in cases alleging acts of
both commission and omission (31%). Decision error among plaintiffs, however,
was lowest in cases alleging acts of both commission and omission (55%) and
highest in cases where the alleged wrong was only an act of omission (62%).
Defendants mean cost of error was greatest in cases alleging combined acts of
omission and commission ($3,240,824) and lowest in cases alleging only acts of
omission ($1,108,480). Plaintiffs mean cost of error also was lowest in cases
alleging only an act of omission ($56,253).
As observed in the damages section, the least frequently occurring variable
(punitive damages in the damages context and acts of commission in the omission/commission context) is associated with high defendant decision error. In
evaluating probable case outcomes and plaintiffs settlement demands, defendants
are masters of the mundane, exhibiting low decision error rates in simple, conventional cases and high decision error rates in complex, atypical cases. Complexity
generally enhances the economic utility of plaintiff decision making and undermines the efficacy of defendants decision making. This reflects defendants
reduced predictive capacity when a case does not fit into a conventional paradigm
and may be another example of negative transfer of expert evaluative skills from
a conventional paradigm into an exceptional paradigm.70
3.8.3.2
Insurance Coverage
The existence of insurance coverage is correlated with salient differences in

decision error rates, win rates, and negotiation disparities. Table 3.12 demonstrates
Table 3.12 Win rates and decision error rates by reported insurer
Insurance
Defendant Decision
Rate (%)
Error Rate (%)
Error Rate (%)
Insurer Reported
51
62
22
No Insurer Reported 46
58
30
69
No Decision
Error (%)
16
12
Kahneman, Daniel & Tversky, Amos. (1995). Conflict resolution: A cognitive perspective. In
Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices, values, and frames (p. 486).
Cambridge: The Press Syndicate of the University of Cambridge.
70
As explained in Chapter Two, Roselle Wissler and her colleagues found that defense lawyers
case assessments were less responsive to case details and more mechanical. Wissler, Roselle
L., Hart, Allen J., & Saks, Michael J. (1999). Decision making about general damages:
A comparison of jurors, judges, and lawyers. Michigan Law Review, 98, 751, 805.
74
the difference in decision error rates between defendants with insurance coverage
and defendants without insurance coverage. Decision error was eight percentage
points lower among insured defendants relative to uninsured defendants (22% and
30%, respectively). By contrast, plaintiffs decision error was higher in cases where
the defendants listed an insurance carrier or reported insurance coverage than in
cases where neither a carrier nor coverage was reported (62% v. 58%). The
incidence of no decision error increased from 12% in the no insurance cases
to 16% in the insurer reported cases. Defendants with insurance coverage manifested a mean cost of error of $1,076,082, an amount substantially lower than the
mean cost of error of $1,683,437 sustained by defendants without insurance coverage. When plaintiffs made a decision error in cases with an insured defendant,
plaintiffs mean cost of error was $83,665, considerably higher than plaintiffs
mean cost of error of $60,644 in cases without insurance coverage.
The win rate for plaintiffs suing insured defendants was higher than the win rate
for plaintiffs suing uninsured defendants (51% v. 46%). Prior to trial, however,
insured defendants made relatively strong efforts to settle. The average insured
defendants offer was 27% of the average award, contrasted with uninsured defendants mean offer of only 17% of the average award. Plaintiffs, for their part, took
more aggressive settlement positions with insured defendants, demanding 131% of
the mean award when negotiating with insured defendants and 115% of the mean
award in negotiations with uninsured defendants.
Consistent with insured defendants relatively generous offers is the fact that
they overpriced their offers in 45% of the cases, compared to an overpricing
incidence of 39% for uninsured defendants. Plaintiffs were more likely to make
an overpriced demand against an insured defendant than an uninsured defendant;
78% of plaintiff offers to insured defendants were overpriced, but only 70% of
plaintiffs offers to uninsured defendants were overpriced. The general relationship between insurance coverage and settlement negotiation positions is simple:
insured defendants offer more money and plaintiffs demand more money from
them.
The relatively low error rates for insured defendants may be attributed to
multiple procedural and psychological factors associated with sound judgment
calibration and decision making: experienced claims management, extensive data
regarding similar cases, comprehensive case evaluation at inception, regular reporting of case status and explanation of settlement positions, ongoing evaluation of
liability and reserve amounts, widening circles of communication and opinions as
estimated liability and reserve amounts increase, individual and group accountability for case assessments and systems for comparing those assessments with outcomes, and consistent risk policies. These resources and practices promote the
following habits and procedures identified with superior decision-making skills:
continuous updating and evaluation of claims data to enhance subject matter
expertise, avoidance of sunk cost biases, close attention to base rates derived
from other cases, preferences for explicit and transparent evaluative processes,
periodic re-calibration of liability and damages probabilities, graduated input
from multiple sources with different experience levels, timely feedback and
75
objective performance measures, and oversight to reduce excessive risk aversion by

subordinates.71
Additional factors favoring insurers, many of which were first identified by law
professor Marc Galanter, may include insurers more extensive experience representing defendants in jury trials (process pros with advance intelligence);
insurers strategic deployment of financial resources in pre-trial discovery (wealth
advantage); insurers proficiency in identifying and retaining reliable expert witnesses with a track record in similar cases (replicable evidence); and the confidence
that judges may place in career insurance defense counsel, who have established a
reputation in repeated court appearances, relative to single-appearance plaintiff
attorneys (insider or familiarity deference).72
Chris Guthrie and Jeffrey Rachlinskis study of insurance company adjusters,
managers, executives and lawyers provides an additional reason for the lower
decision error rates demonstrated by defendants with insurance coverage: insurance
company employees are less likely to be affected by decision-making heuristics and
biases that afflict the general population.73 These heuristics and biases, explained in
the next chapter, include framing (the propensity to avoid risks when facing gains
and take risks when facing losses), anchoring (the tendency to make estimates or
take positions based on irrelevant reference points) and self-serving biases (the
preference for egocentric judgments that enhance ones self-esteem or financial
position). After testing 189 insurance professionals attending three different industry conferences, Guthrie and Rachlinski found that the insurance professionals
demonstrated an impressive ability to resist the problems that heuristics can
cause.74 The results of six separate tests administered to these insurance professionals indicated that their expertise, their repeat-player status and their emotional
distance from the underlying dispute seem to render them less susceptible to the
biases proven to distort the judgments of both laypersons and attorneys.75 Guthrie
and Rachlinski conclude that insurance professionals decision- making behavior
is much more consistent with rational choice theory than the assessments of
laypersons. The ability to adopt a risk-neutral perspective and see litigation as a
cost of doing business is fundamental to the insurance industry, and the participants
in our study seem to have mastered it.76
71
For a discussion of the inefficiencies and costs of excessive risk aversion see Kahneman, Daniel,
& Lovallo, Dan. (1993). Timid choices and bold forecasts: A cognitive perspective on risk taking.
In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices, values, and frames (pp. 400
404). Cambridge: The Press Syndicate of the University of Cambridge. Practices correlated with
expert performance are presented in Part Four of this book.
72
Kritzer, Herbert M., and Silbey, Susan (Eds.). (2003). In litigation do the haves still come out
ahead? (pp. 1381). Stanford, California: Stanford University Press.
73
Guthrie, Chris and Rachlinski, Jeffrey J. Insurers, illusions of judgment & litigation. Vanderbilt
Law Review, Forthcoming; Vanderbilt Law and Economics Research Paper No. 0628. Available
at SSRN: http://ssrn.com/abstract952493
74
Id. at 2005.
75
Id. at 2019 fn. 9, 2047.
76
Id. at 2042.
76
Insurers, in Marc Galanters dichotomy of litigants, appear to be process pros.

Despite plaintiffs vilification of insurance companies and insurers reciprocal
berating of plaintiff contingency lawyers and their frivolous lawsuits, insurance
coverage is correlated with lower defendant decision error rates, lower defendant
mean costs of error, and higher settlement offers relative to the ultimate award. For
plaintiffs, the existence of insurance coverage is correlated with higher plaintiff
decision error rates, more aggressive demands, and more costly decision errors.
Plaintiffs incur losses more frequently and in greater amounts when they disregard
the systemic advantages accumulated and exercised by insurers.
3.8.4
The Major Actor Variables
Actor variables generally have less predictive value than Context variables. Nevertheless, four Actor variables merit analysis: the type of defendant, the gender of the
parties attorneys, the experience levels of the parties attorneys, and the academic
ranking of the law school from which the plaintiffs attorney graduated.
3.8.4.1
Defendant Types
The datasets indicate that insurance companies, corporations, and unincorporated

businesses, when placed in the role of defendants, are more likely to engage in
irrational, risk-taking behavior than individual and public entity defendants. This
contrasts with the risk-neutral or risk-averse conduct of corporations and unincorporated businesses when operating in the plaintiff role. It also contrasts sharply with
the low defendant decision error rates associated with insurance coverage where the
insurance company is representing an insured defendant but is not itself a defendant. In the defendant posture, corporations, unincorporated businesses, and insurance companies are high risk takers and more likely than individual defendants to
undervalue their risks at trial and reject plaintiff demands which turn out to be more
financially favorable than the trial award. The failure of corporate defendants to
make larger offers and avoid some of these losses, law professor Jeffrey
Rachlinski found in his earlier study of settlement decision making, can only be
described as risk-seeking.77
The relatively high decision error rates displayed by defendant corporations,
unincorporated businesses, and insurance companies are recorded in Table 3.13.
Defendant insurance companies show the highest decision error rate (37%), followed by corporations (33%), corporations sued jointly with unincorporated businesses and individuals (30%), and corporations and unincorporated businesses sued
jointly (29%). The lowest decision error rates are evidenced by public entities sued
jointly with individuals (18%). The highest mean cost of error is sustained in cases
77
Rachlinski supra note 11 at 113, 159.

Table 3.13 Win rates and decision error rates by defendant type
Type of Defendant
Plaintiff Win Plaintiff Decision Defendant Decision
Rate (%)
Error Rate (%)
Error Rate(%)
Business
43
64
23
Bus./Individual
47
60
27
Corporation
51
52
33
Corp./Individual
51
56
30
Corp./Bus.
54
50
29
Corp./Bus./Individual
51
56
30
Female Individual
60
56
23
Government
40
64
23
Govt./Individual
23
80
18
Insurer
56
46
37
Male Individual
47
63
21
Male/Female Individual 54
61
24
77
No Decision
Error (%)
13
13
15
14
21
14
21
13
2
17
16
15
where corporations, unincorporated businesses and individuals are sued jointly

($4,749,442), while the lowest mean cost of error is sustained by individual men
and women sued jointly ($314,286).
Although corporations presumably are more likely than individuals to be named
as defendants in large damage claims, their high mean cost of error reflects not only
the magnitude of claims asserted against them but also their aggressive negotiating
styles. The average offer made by corporations and unincorporated businesses sued
jointly is only 9% of the average award. This impecunious negotiating posture
contrasts sharply with that of public entities, whose average offer is 49% of the
mean award. Insurance companies, businesses, and corporations also are more
likely to submit underpriced offers (54%, 50%, and 48%, respectively) than public
entities, individual women and individual men (36%, 44%, and 37%, respectively).
The magnitude of corporate underpricing, moreover, leaves more than a little
negotiating room; the mean amount of corporations underpriced offers is
$2,194,815 less than the mean award.
The high decision error and underpricing rates of defendant corporations and
businesses contradict the conventional perception, among attorneys and judges
alike, that corporations and businesses are risk neutral, more often controlled by a
cost-benefit analysis and less affected by emotional factors that plague individual
decision making. The conventional viewpoint was expressed in Wrona v. Wrona,
the court chastising spouses in a family law case for their wasteful expenditures on
litigation costs:
If the attorneys involved in this case had represented a litigation-sophisticated business,
they would have been required to analyze the issues at the beginning of the dispute and
develop a cost-effective method to resolve those issues and end the dispute. The business
would have demanded an estimation of the fees and costs and asked for a method to
minimize those nonproductive expenses. Floridas families are entitled to legal advice that
is as sensible and cost-effective as that given to Floridas corporations.78
78
Wrona v. Wrona, 592 So. 2d 694, 697 (Fla. 2d DCA 1991).
78
The primary dataset, however, does not support a presumption of corporate sensibility and individual profligacy among defendants.
A different view was voiced by U.S. District Court Judge Jeremy Fogel, who
spent a few years earlier in his career assigned to family law court and thus could
compare the behavior of emotional family law litigants with sensible and costeffective corporations. When he assumed his new responsibilities for general civil
litigation cases, he initially anticipated that his assignment would be less driven by
emotion than family law disputes. But he quickly abandoned that assumption:
While I can say in hindsight that no judicial assignment quite equals that of a
family court judge for emotional intensity, many of the same psychological dynamics I observed in family court are alive and well in civil litigation. Judge Fogel
notes that the irrational motivations and conduct of corporations and businesses in
litigation can be insidious: Moreover, because their presence is rarely acknowledged or more than superficially explored by civil litigators, these dynamics can
have particularly profound effects in civil cases.79
3.8.4.2
Attorney Experience
The number of years an attorney has practiced is correlated with a counter-intuitive

pattern of decision error rates. Generally, parties representation by attorneys
practicing more than 30 years after bar admission is associated with an increase
in decision error rates. This trend begins after 30 years of experience and persists
for a 10-year period; thereafter, the relatively small fraction of attorneys who
continue representing parties after accumulating 40 years of experience display
ordinary decision error rates. These results generally are consistent with research
analyzing the relation between experience and the performance of clinical psychologists, auditors, surgeons, stockbrokers, parole officers, college admissions officials
and business managers.80
In cases where the plaintiffs attorney has practiced 3135 years or 3640 years,
the plaintiff decision error rate is 63% and 69%, contrasted with a decision error
rate of 57% for attorneys with 2130 years of experience. On the defense side of the
bar, this study finds a similar pattern of decision errors. Defense counsel in the 31
35 and 3640 years of experience categories are associated with decision error rates
of 29% and 41%, respectively, compared with decision error rates of 24% and 26%
for defense counsel with 2125 and 2630 years of experience, respectively.
Although plaintiffs and defendants have different overall decision error rates
(60% for plaintiffs and 25% for defendants), the effect of attorney experience on
decision error rates shows a uniform trend: a plateau in mid-career, a climb upward
in late-career, and a return to normalcy for the relatively few attorneys who try
cases after 40 years in the profession. The relationship between decision error and
79
Anderson, Craig. (2004, June 9). Making himself clear. San Francisco Daily Journal.
See Colvin, Geoff. (2008). Talent is overrated (pp. 34). New York: Penguin.
80
79
80%
70%
60%
50%
40%
30%
20%
10%
0%
ar
s
+
41
0
4
36
Ye
Ye
ar
s
ar
s
Ye
ar
s
5
Ye
3
31
ar
s
0
Ye
3
26
ar
s
5
Ye
2
Ye
5
2
16
21
ar
s
ar
s
Ye
1
11
10
6
Ye
ar
s
Plaintiff
Defendant
Experience Level
Fig. 3.2 Attorney experience and decision error rates
attorney experience, for both plaintiff attorneys and defendant attorneys, is shown
in Fig. 3.2. Although decision error rates decline for attorneys still practicing after
40 years, the 40 sample represents only 14% of all cases where an attorney with
more than 30 years of experience represented a party; only a small percentage of
attorneys continue practicing for 40 years or more.
The increased error rate for seasoned plaintiff and defense attorneys mirrors
attorney malpractice claims data. Most attorneys sued for legal malpractice have
been practicing for more than 10 years, and virtually all percentages for types of
error are lower for the younger lawyers.81 An American Bar Foundation study
showed that, although the youngest group of attorneys in the study comprised 13%
of the lawyers, that group of relatively inexperienced attorneys accounted for only
4% of the claims.82 (A study of the medical profession discovered a similar, inverse
relationship between the number of years that a physician has been in practice and
the quality of care that the physician provides, the researchers concluding that
this subgroup of physicians may need quality improvement interventions.)83
The co-author of the leading treatise on legal malpractice, Ronald Mallen,
concludes there is no empirical basis for the popular belief that older lawyers
should account for less claims than younger attorneys, who lack the skills and
81
Mallen, Ronald, & Smith, Jeffrey M. (2000). Legal malpractice (Vol. I, p. 38). St. Paul,
Minnesota: West Group.
82
Curran and Carson. (1994). The lawyer statistical report: The legal profession in the 1990s.
Chicago, Illinois: American Bar Foundation. Cited in Mallen, Ronald, & Smith, Jeffrey M. (2000).
Legal malpractice (Vol. I, p. 38). St. Paul, Minnesota: West Group.
83
Choudhry, Niteesh K., Fletcher, Robert H., Soumerai, Stephen B. (2005, February 15). Systematic review: The relationship between clinical experience and quality of health care. Annals of
Internal Medicine, 142(4), 260273.
80
knowledge that experience brings. He also proffers an explanation for the greater
frequency exposure of more experienced attorneys: One reason is that the older
lawyer may be too busy to pay adequate attention to the time limitations and details
that concern newer lawyers. Another consideration is that the newer lawyers are not
likely to be retained on the more complicated and difficult legal representations.84
Professor Herbert Kritzers extensive study of contingency fee practitioners
yields another explanation: attorneys who have practiced more than 20 years are
less discriminating in deciding whether to accept or decline cases.85 He found that
in some practices, attorneys with 21 or more years of experience accepted 56% of
the cases presented to them, compared with an acceptance rate of 47% for
attorneys with 1120 years of experience. Thus, some plaintiffs who otherwise
would have to abandon their claims obtain legal representation by more senior
counsel. During a personal conversation in 2007, Professor Kritzer opined that the
more experienced attorneys may be in a better financial position to take risks on
tough cases and are not financially constrained, as are younger attorneys, to turn
away the more difficult, financially problematic cases. If Professor Kritzers
hypothesis is correct, higher decision error rates for more experienced plaintiff
attorneys simply reflect a deliberate decision to take on problematic cases that
other attorneys have declined.
A competing explanation is that, at some point along the experience curve,
a sense of complacency and overconfidence invites risk and error. Karl Weick, a
professor of psychology at the University of Michigan Business School and author
of Managing the Unexpected, explains:
Consider wildland firefighters: did you know they are most likely to get killed or injured in
their tenth year on the job? Theyve adapted extremely well to past challenges but have
become less open to new information that would allow them to adapt to new challenges.
Thats why firefighters, like people in other organizations, should constantly be encouraged
to imagine different possibilities.86
Executives and professionals, Weick believes, frequently fall into a complacency

trap. They are under the illusion that they know more or less whats going to
happen next or how other people are likely to act. Thats both arrogant and
dangerous.87
84
Mallen & Smith supra note 81 at 3839.

Kritzer, Herbert M. (2004). Risks, reputations, and rewards (p. 93). Stanford, California:
Stanford University Press.
86
Coutu, Diane L. (2003, April). Sense and reliability. Harvard Business Review, p. 90.
87
Id. at 86. See Shanteau, James, et al. How can you tell if someone is an expert? Performancebased assessment of expertise. In Schneider, Sandra, and Shanteau, James. (2003). Emerging
perspectives on judgment and decision research (pp. 620639). Cambridge: Cambridge University
Press.
85
81
Table 3.14 Win rates and decision error rates by plaintiff attorney gender
Plaintiff Attorney Plaintiff Win Plaintiff Decision
Defendant Decision
Gender
Rate (%)
Error Rate (%)
Error Rate (%)
Female
43
65
19
Female/Male
59
46
39
Male
47
63
22
Male/Male
52
52
33
No Decision
Error (%)
16
15
15
15
Table 3.15 Win rates and decision error rates by defendant attorney gender
Defendant
Defendant Decision
Attorney Gender Rate (%)
Error Rate (%)
Error Rate (%)
Female
52
58
24
Female/Male
38
67
20
Male
50
60
26
Male/Male
45
58
29
No Decision
Error (%)
18
13
14
13
3.8.4.3
Attorney Gender
Turning from attorney experience to attorney gender, the datasets indicate that
differences in decision error rates, win rates, and settlement positions are correlated
with the gender of both plaintiff and defense counsel. In general, higher decision
error rates and lower win rates for plaintiffs are correlated with female solo attorneys, while higher decision error rates for defendants are correlated with male
attorneys practicing by themselves or with another male attorney. Low defendant
settlement offers, relative to the ultimate award, and serial underpricing of defendant
settlement offers also are correlated with male defense attorneys.
Table 3.14 shows that plaintiff win rates are lowest (43%) when plaintiffs are
represented by a solo female attorney, as contrasted with a win rate of 47% for solo
male attorneys. Plaintiff decision error is slightly higher (65%) when plaintiffs are
represented by solo female attorneys than when they are represented by solo male
attorneys (63%). Plaintiff trial teams consisting of a female attorney and a male
attorney, however, are correlated with superior win rates and lower decision error
rates than teams comprised of two male attorneys (59% and 52% win rates,
respectively, and 46% and 52% decision error rates, respectively).
For defendants, as shown in Table 3.15, the highest decision error rate (29%) is
correlated with a trial team consisting of two or more male attorneys, while the
lowest decision error rate (20%) is displayed by defense trial teams comprised of
both a female and a male attorney. Male solo defense attorneys also were correlated
with a slightly higher defendant decision error rate (26%) than that evidenced by
female solo defense attorneys (24%). Female/male defense teams prevailed in 62%
of their cases, while male/male defense teams won 55% of their cases. In settlement
negotiations, the average offer submitted by male/male teams was 18% of the
average award, compared to the average female/male team offer of 31% of the
average award. Male/male defense teams underpriced their offers in 42% of
82
the cases, compared to an underpricing incidence of 33% for female/male defense

teams; the mean amount of underpricing by male/male defense teams was
$4,250,520, compared to a mean amount of $1,691,249 for female/male defense
teams.
The slightly higher decision error rates and lower win rates correlated with solo
female attorneys representing plaintiffs and the relatively low decision error rates
correlated with female attorneys representing defendants roughly parallel some
results of another recent study. In an article entitled, Who Wins At Settlement?
law professor Russell Korobkin and statistician Joseph Doherty compared the
effect of gender in simulated negotiations between study participants assigned
the roles of plaintiffs lawyer and defendants lawyer. For plaintiffs lawyers,
Korobkin and Doherty concluded that there was a highly significant correlation
between the gender of the plaintiff subject and the amount of surplus [bargaining
advantage] captured by plaintiffs. Being female was negatively correlated with
surplus.88 They note that the current scholarly consensus, supported by a metaanalysis of bargaining experiments that study gender as a variable, is that, on
average across studies, men achieve slightly better outcomes than women in
distributive negotiations.89 For defendants lawyers, however, Korobkin and
Doherty found that plaintiffs surplus was not significantly correlated with the
gender of the opposing negotiator and thus their study did not support the
hypothesis that plaintiffs surplus would be larger when the defense lawyer is
female.
The higher decision error rates correlated with male defense attorneys mirrors
150 other studies showing that men are more risk seeking and more overconfident
than women.90 In a study entitled Boys Will Be Boys: Gender, Overconfidence,
and Common Stock Investments, for instance, the authors found that men trade in
their brokerage accounts 45% more often than women and underperform the market
by 54% more than women.91 The increased decision error rate of male defense
attorneys working with other male defense attorneys, and the attendant risk taking
88
Korobkin, Russell, and Doherty, Joseph. (2007, September 1). Who wins in settlement negotiations? (p. 30). Papers presented at the Second Annual Conference on Empirical Legal Studies,
November 910, 2007, New York University. Electronic copy available at http://papers.ssrn.com/
sol3/papers.cfm?abstract_id998095. Korobkin and Doherty at p. 21 cite Alice F. Stuhlmacher &
Amy E. Walters, (1999), Gender differences in negotiation outcome: A meta analysis. Personnel
Psychology, 52(3), 653.
89
Id. at p. 21.
90
Myers, David G. (2002). Intuition: Its powers and perils (pp. 159, 206). New Haven: Yale
University Press. Baron supra note 49 at 515. See Dorner, Dietrich. (1996). The logic of failure
(p. 6). Cambridge, Massachusetts: Basic Books.
91
Barber, B.M., & Odean, T. (2001). Boys will be boys: Gender, overconfidence, and common
stock investment. Quarterly Journal of Economics 116(1), 261262, cited in Myers , David G.
(2002). Intuition: Its powers and perils (pp. 159). New Haven: Yale University Press.
83
reflected in undervalued settlement offers, also are consistent with numerous

studies documenting a higher incidence of risk taking by males acting together
than acting alone.92
Settlement negotiations may be affected not only by the gender of a partys
attorney but also by the gender of the opposing counsel. When the defense counsel
is a female attorney, the plaintiffs mean demand is higher, relative to the mean
award, than the mean demand a plaintiff submits to a male defense attorney. The
defendants mean offer displays a similar bias, being lower, relative to the mean
award, when plaintiffs are represented by female attorneys and higher when a male
attorney represents a plaintiff.
Defendants, on average, are more likely to submit lowball offers when the
plaintiffs counsel is female; their offers to parties represented by female plaintiff
attorneys are roughly one-half of the amount they offer to parties represented by
male plaintiff attorneys. The average defense offer to a female solo attorney
representing a plaintiff is 14% of the average award, while the average amount
offered by defendants to a party represented by a male solo attorney is 24% of the
average award close to twice the amount offered to the female attorneys. When a
female plaintiff attorney teams with a male plaintiff attorney, the average offer they
receive is 11% of the mean award, as contrasted with an average offer of 23% of the
mean award made by defendants to male/male plaintiff attorney teams.
When the gender tables are turned, and plaintiffs submit demands to female
defense attorneys, this disparate negotiating pattern is repeated. Plaintiff demands
submitted to female defense attorneys are roughly twice the amount of the demands
submitted to male defense attorneys. When a single female attorney represents a
defendant, the plaintiffs mean demand is 209% of the mean award, compared with
a mean plaintiffs demand of 109% of the mean award when a single male defense
attorney represents a defendant. When a female/male team represents a defendant,
the average plaintiff demand is 207% of the mean award, compared with an average
plaintiff demand of 101% of the mean award when a male/male team represents a
defendant.
All of these results may represent a classic confounding problem a spurious
causal relationship between attorney gender and parties settlement positions.
When the data are categorized by case types, for instance, the gender distinctions
evident in the overall dataset are unstable. The negotiation disparities also appear to
be affected by the gender of the attorney submitting the demand or offer; in some
case types, female defense attorneys are less likely than male defense attorneys to
submit low settlement offers to female plaintiff attorneys. Considering the magnitude of the negotiation disparities displayed in the overall dataset, further research
on this subject should have a high priority.
92
See Plous, Scott. (1993). The psychology of judgment and decision making (pp. 205214). New
York: McGraw-Hill, Inc.
84
3.8.4.4
Academic Rank of Law School
In addition to showing that different decision error rates, win rates, and negotiation
strategies are correlated with an attorneys gender, the study data indicate that the
incidence of decision error is correlated with the academic ranking of the law
school from which the plaintiffs attorney graduated. Slightly higher decision
error rates and lower win rates are correlated with plaintiff attorneys who graduated
from one of the 20 highest academically ranked law schools, as listed by U.S. News
and World Report.93 These results are more pronounced when more than one
attorney represents the plaintiff.
Cases in which a plaintiffs attorney graduated from a Top 20 law school show
marginally higher decision error rates (65% vs. 63% decision error rate for Top
20 and non-Top 20 solo attorneys, respectively, and 51% v. 48% decision error
rates for Top 20 and non-Top 20 attorney teams, respectively), as shown in Table
3.16. Attorney teams consisting of two Top 20 graduates also are correlated with
lower win rates when compared with the performance of two non-Top 20 graduates
(46% vs. 57% win rates, respectively).
Plaintiffs mean and median cost of error also is higher in cases where a Top 20
graduate represents the plaintiff. Attorneys argue, however, that this result occurs
because high stakes, bet the company cases are more likely to be handled by a law
firm employing Top 20 graduates. High financial impact cases, the argument goes,
usually are handled by top tier law firms employing Top 20 law school graduates.
The mean award in cases where the plaintiff is represented by two Top 20 graduates,
though, is $1,266,656, compared with a higher mean award of $1,542,615 in cases
handled by two non-top 20 graduates, suggesting that the amount in issue alone
would not explain differential costs of error.
Comparatively aggressive negotiating styles also are correlated with Top 20 law
school graduates, especially when two Top 20 graduates work together as a trial
Table 3.16 Win rates and decision error rates by plaintiff attorney school rank
Plaintiff Attorney
Defendant Decision
School Rank
Rate (%)
Error Rate (%)
Error Rate (%)
A School
46
65
20
A/A School Team 46
51
29
A/B School Team 51
54
30
B School
47
63
22
B/B School Team 57
48
38
93
No Decision
Error (%)
15
20
16
15
14
U.S. News & World Reports academic ranking of schools is, of course, dynamic. A law school
ranked among the upper 20 in 2004 may not have been in that echelon when an attorney in the
study database graduated. Nevertheless, the ranking has been remarkably stable. Among the 25
law schools with the largest number of graduates admitted to the California State Bar, only one
school was listed in the Top 20 ranking in 1994 but omitted from that ranking in 2004. See
Schmalbeck, Richard. (1998, December). The durability of law school reputation. Journal of Legal
Education, 48(4).
3.9 Chapter Capsule
85
team. A plaintiff attorney team of Top 20 graduates overprices its demands in 71%
of the cases, compared with an overpricing rate of 62% for a non-Top 20 graduate
team. When the effect of teams is disregarded and all plaintiff attorneys who
graduated from a Top 20 school are placed in one set and compared with all plaintiff
attorneys who graduated from a non-Top 20 school, the negotiation disparities
remain. Graduates of Top 20 law schools, when representing plaintiffs, overprice
79% of their cases and non-Top 20 graduates overprice 74% of their cases.
3.8.4.5
Diversity Ranking of Law School
In addition to law firm academic rankings, the study examined the effect of law school
diversity, as ranked by U.S. News and World Report. The multivariate analysis
indicated that, for defendants, the law school diversity ranking had predictive capacity,
although it was one of the least important predictor variables. Generally, graduation
from a law school with a high diversity ranking was correlated with slightly reduced
decision error rates, both for solo defense attorneys and defense teams.
Unfortunately, this variable is not sufficiently reliable absent more extensive
studies and a solid history of diversity rankings by U.S. News and World Report.
The diversity ranking was not part of the U.S. News and World Report ranking until
2004, and, unlike academic rankings, the annual list of highly diverse law schools
has been unstable. Hence, researchers can determine whether an attorney graduated
from a law school ranked high in diversity but cannot ascertain readily whether a
law school had a highly diverse student population when the lawyer actually
attended the law school. The variable is discussed here because it is noteworthy
in the multivariate analysis, but any findings are highly tentative absent better data
and a longer history of diversity rankings.
3.9
Chapter Capsule
This study of 5,653 civil litigation cases shows that many parties would have
achieved better financial results by accepting their adversarys pre-trial settlement
offers than proceeding to trial. Comparing the actual trial results with the pre-trial
settlement offers the litigants previously rejected, the study finds that 60% of
plaintiffs and 25% of defendants failed to obtain a better financial outcome at trials
held between 2002 and 2007. Although plaintiffs experienced adverse trial outcomes more frequently than defendants, the financial costs incurred by defendants
when they lost their litigation wagers were significantly higher than plaintiffs
costs. The average cost of decision error was $73,400 for plaintiffs and
$1,403,654 for defendants during the 20022007 period.
The study also finds that the incidence of decision errors increased and the cost of
these errors soared between 1964 and 2004. Plaintiffs obtained trial results that were
the same as or worse than the pre-trial settlement offers made by their adversaries in
86
54% of the cases in 1964, and this decision error rate rose to 66% in 2004. During
that period, the incidence of defendants adverse outcomes ranged from a low of
19% in 1964 to a high of 26% in 1984, declining to 20% in 2004. The proportion of
cases in which neither party committed a decision error decreased from 27% in 1964
to 14% in 2004. Adjusted for inflation, the cost of plaintiffs decision errors increased
threefold, a relatively moderate amount compared to defendants 14-fold increase.
The incidence and magnitude of decision-making errors in the California dataset
are replicated in the smaller dataset for New York civil cases. Plaintiffs decision
error rate in the New York dataset is 56%, compared to 60% in the primary
California dataset; and the New York defendants decision error rate is 29%,
compared to 25% in the expanded California dataset. The percentage of cases in
which neither party makes a decision error is identical in both the New York and
California datasets (15%). The distribution of decision error costs again displays
significant disparities between plaintiffs and defendants, the New York plaintiffs
incurring an average loss of $52,183 when they commit a decision error and the
New York defendants sustaining an average loss of $920,874.
After analyzing 20 classes of case variables, including the type of case, forum,
insurance coverage, and the gender of the parties and their attorneys, this study
further finds that Context variables are more predictive of adverse trial outcomes
than Actor variables. The Context variables include systemic factors like the type
of case, damages, forum, and statutory settlement procedures, while the Actor
variables include personal factors like the experience level of the attorneys, the
size of firm in which the attorneys work, and the parties and attorneys gender.
The five variables with the strongest predictive capacity are the type of case,
whether a statutory offer to compromise was served, the forum in which the case
was adjudicated, the type of damages claimed, and the degree of disparity between
the parties negotiation positions. Variables of lesser impact are whether the alleged
wrong is an act of omission or commission, whether the defendant is insured, the
type of defendant, the gender and experience level of the parties attorneys, and the
law school from which the plaintiffs attorney graduated.
To assess whether an attorneys experience and training in conflict resolution
may affect decision error, the study examined trial outcomes for attorneys who
served as mediators on their local court panels. The study found that parties who are
represented by attorneys with mediation training experienced a lower incidence of
decision error and that the presence of these attorney-mediators decreased total
decision error for both parties. Plaintiffs represented by attorney-mediators showed
a 21% decrease in decision errors, and defendants represented by attorney-mediators exhibited a 16% reduction in decision errors. The attorney-mediators, however,
were not more likely to settle their cases than other attorneys who reported case
outcomes during the primary dataset period.94
94
Some sentences in this chapter are excerpted with permission from the authors article, Lets
not make a deal: An empirical study of decision making in unsuccessful settlement negotiations
(co-authored with Martin Asher and Blakeley McShane), Journal of Empirical Legal Studies, 5(3),
551591, published by Wiley Periodicals, Inc.
Part II
Causes
Chapter 4
Psychological Attributes of Decision Errors
The human understanding resembles not a dry light, but admits a tincture of the will and
passions, which generate their own system accordingly: for man always believes more
readily that which he prefers. . . . In short, his feelings imbue and corrupt his understanding
in innumerable and sometimes imperceptible ways.
Francis Bacon, Novum Organum (1620)
Decades of research by cognitive psychologists and behavioral economists demonstrate that decision makers acting under uncertainty, like attorneys and litigants in
settlement negotiations, are more intuitive than inductive, more reflexive than
reflective, and more insular than incorporative. They rely on impressions, impulses
and patterns, innate and inchoate, and employ decision-making shortcuts known
variously as heuristics, low-information rationality, fast and frugal reasoning, and
thin-slicing.1 These cognitive shortcuts coalesce facts, erase ambiguities, and
embolden decision makers. Whether described as going with my gut, flying by
the seat of my pants, or shooting from the hip, however, instinctive decision
making is poorly suited to complex disputes circumscribed by intricate rules and
multiple actors.
This chapter examines the psychological biases, heuristics and illusions that
corrupt sound decision making. Although it is impossible to precisely match every
poor quality decision with a specific cognitive misstep, decision makers generally
can improve their proficiency by identifying and mitigating a host of misperceptions and miscalculations correlated with decision-making errors. Until imaging
Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices, values, and frames. Cambridge:
The Press Syndicate of the University of Cambridge. Gigerenzer, Gerd, & Goldstein, Daniel G.
(1996). Reasoning the fast and frugal way: Models of bounded rationality. Psychological Review,
103(4), 650669. Gigerenzer, Gerd, & Todd, Peter M. Simple heuristics that make us smart.
(1999). New York: Oxford University Press, Inc. Popkin, Samuel. (1994). The reasoning voter:
Communication and persuasion in presidential campaigns. Chicago: University of Chicago Press.
Gladwell, Malcolm. (2005). Blink: The power of thinking without thinking. New York: Little,
Brown and Company.

89
90
4 Psychological Attributes of Decision Errors
technologies have demonstrated, to a reasonable degree of scientific certainty, how

human brains react to decision-making stimuli and how cognitive functions shift
among various areas of the brain when analytic competence deteriorates, attorneys
and clients efforts to improve decision-making quality will remain inefficient,
oftentimes misdirected, and of limited benefit. That is the social cost of making
great medical advances in cardiology, pulmonary medicine and radiation oncology
while allocating fewer resources to the behavioral and brain sciences. Pending
advances in scientific research that could identify exactly the cause of decisionmaking errors, attorneys and clients will need to mount a broad defense against their
own misconceptions. To make effective decisions they must anticipate, understand,
monitor, mitigate and outmaneuver biases and illusions that preserve self-esteem
and reduce cognitive effort in the short term but block insights and impair judgment
in the long term.
Cognitive psychologists and behavioral economists have identified and studied
more than 100 decision-making biases, heuristics and illusions. Some of these
psychological overrides like status quo bias, sunk costs, and cognitive dissonance are part of everyday conversation, indicating that they occupy a permanent
yet pliable position in the public domain and may never recover the meaning
originally ascribed to them by researchers. Other biases like the endowment
effect remain relatively obscure, shunned reactively as an unwelcome solicitation
from an alma maters development office or a salacious spammer. The biases
studied in this chapter, both popular and obscure, have been selected to answer
three critical questions in litigation decision making:
l
l
l
How do decision makers perceive conflicts and adversaries?

How do decision makers evaluate and respond to risk and uncertainty?
How do decision makers react to impending changes in their current conditions?
These three questions roughly cover the conflict resolution phases of (a) recognizing and defining a conflict; (b) ascribing motivations and intended outcomes to the
disputants; (c) determining the range of possible gains and losses; (d) reacting to
threatened or desired changes in status, reputation, and financial positions; (e)
choosing and discarding alternative resolutions; and (f) reconciling initial expectations with imminent outcomes.
To answer the first question regarding perceptions of problems and adversaries,
this chapter examines attribution error, selective perception and memory, selfserving biases, and reactive devaluation. The second question regarding evaluations
of and responses to risk and uncertainty necessitates a description of behavioral
economics concepts of framing and anchoring. The answer to the third question
about reactions to impending changes in current positions moves the analysis to the
status quo bias, the endowment effect, sunk cost bias, discounting of future costs,
overconfidence, and the availability, representativeness and hindsight biases. The
discussion of these biases below is intended to be informative, not exhaustive,
alerting decision makers to cognitive traps rather than convincing them they have
learned enough to overcome them. This chapter, accordingly, would respond
4.1 Perceptions of Adversaries and Conflicts
91
Nowhere to Thomas Huxleys inquiry, If a little knowledge is dangerous, where

is the man who has so much as to be out of danger?2
4.1
Perceptions of Adversaries and Conflicts
A host of cognitive biases afflicts clients in the early stages of a dispute. These
biases affect how clients perceive the character and motivations of their adversaries, the causes of the dispute, and the evidence that will affect settlement
negotiations and may eventually determine a judge or jurys adjudication of the
case. These perceptions, in turn, limit the formulation and evaluation of possible
solutions. If clients and attorneys can understand how their perceptions, definitions,
beliefs and attitudes are distorted by cognitive biases, it may be possible to improve
settlement decision making in general and expand settlement alternatives in particular. To the extent decision makers misunderstand their adversaries and the circumstances underpinning disputes, they misunderstand their own options.
Biases serve as cognitive shields against the affronts and indignities invariably
hurled in lawsuits. Whether named as a plaintiff or a defendant and whether sued as
an individual or corporation, any party is confronted by demeaning, unpleasant
images depicted by an adversary. Plaintiffs sense that they may be perceived as
greedy, nave, foolhardy, careless, stupid, or gullible regarding the events and
conditions that led to their claim as well as the filing of the lawsuit itself. Defendants recognize that they are depicted as uncaring, predatory, unethical, arrogant
and exploitative. To the extent the images are false, they are embarrassing and
insulting; to the extent the images are accurate, they are painful and infuriating. To
retain their individual self-esteem and corporate identity throughout this potentially
degrading process, parties inevitably rely on self-protective biases. Over time, these
self-protective biases form a self-sealing narrative, telling parties why they are in a
dispute, undermining the motives of adversaries, and sheltering parties from unfavorable and disconfirming information. These biases would be benign, perhaps
therapeutic, if they did not distort the information maligned parties critically need
to determine how their representatives, their adversaries, and their conduct will be
perceived by the judge, jury or arbitrator. In litigation, as in war, truth is the first
casualty, but its replacements are legion.3
What exactly are these self-protective biases that affect perceptions of adversaries and their contentions? The top candidates for most popular biases and most
likely to succeed biases are the same: fundamental attribution error, selective
perception, selective memory, self-serving biases, and reactive devaluation, each
of which is explained briefly below. The danger of identifying and discussing
2
Thomas Huxley. (1877). On elemental instruction in physiology.

The aphorism, In war truth is the first casualty, is attributed to the Greek dramatist Aeschylus
(525 BC - 456 BC). It is also attributed to U.S. Senator Hiram Johnson and Arthur Ponsonby.
92
specific biases is that decision makers look at that specific bias and conclude that it
does not apply to them, overlooking the fact that cognitive biases act in concert and
a slight vulnerability to each bias can build a perniciously large misconception.
Attorneys who are confident that they always maintain an open mind in evaluating
facts and a rigid objectivity in assessing outcomes may need to recall that one of the
foremost attorneys in the early 1900s was Newton Baker, who served as the City of
Clevelands solicitor for eight years and its mayor for five years. If his name sounds
familiar, it may be because he was a founding partner of Baker & Hostetler, to this
day one of the largest and most prestigious firms in the world. Mr. Baker took a
leave of absence from that firm when President Woodrow Wilson asked him to
serve as Secretary of War during World War I. His service as Secretary of War is
notable for, among other things, his response to an aviators then novel proposal
that airplanes be used to attack enemy ships: That idea is so damned nonsensical
and impossible that Im willing to stand on the bridge of a battleship while that
nitwit tries to hit it from the air.4
4.1.1
Fundamental Attribution Error
Fundamental attribution error is a first responder in litigation, manifesting almost

immediately to answer two bothersome questions, How did this happen and why
did they (plaintiff or defendant) do this? The attribution bias facilitates a rapid
response to these two questions by mushing them together and diverting attention
from the actual acts, events and conditions which preceded the litigation to the
perceived motives, dispositions and character flaws which are driving the litigation.
Attribution error enables clients to view their own conduct as a responsible reaction
to circumstances while attributing an adversarys behavior to ulterior motives,
character deficiencies, and unseemly money-grubbing. Clients, in short, have
reasons, while adversaries have motivations.
When the attribution bias is activated, determinative case facts are subsumed by
the imputed motivations underpinning the litigation. In explaining why a plaintiff
would file a lawsuit for breach of contract, for instance, a defendant may be more
likely to select greed, looking for a deep pocket, or trying to find someone to
blame for their own business problems than the possibility that the plaintiff was
responding to a legitimate business or legal condition, e.g., not being paid money
arguably due under the contract terms. A plaintiff, for her part, may be more likely
to believe that an insurance company has not settled a property damage claim
because insurers screw around with people than the fact that the insurer has
photographs and a witness statement showing no compensable damage to the
plaintiffs car. The attribution bias explains why, in litigation, former employees
4
Russo, J. Edward, and Schoemaker, Paul J.H. (2002). Winning decisions (p. 77). New York:
Doubleday.
93
are invariably disgruntled, corporate defendants are routinely irresponsible,

plaintiffs are consistently greedy, and insurance companies have no conscience.
It is as though these individuals and entities had no existence independent of the
dispositions attributed to them.
The tendency to attribute motives and character deficiencies to actors is so strong
that psychologists and sociologists employ the phrase motive mongering to
describe the indiscriminate attribution of motives to other people.5 Professors Austin
Sarat and William Felstiner have studied attorney-client interactions in actual law
office settings and observed the important role of motive mongering in shaping
stories about the past and establishing the objectives of the attorneys representation.
They explain that the construction of vocabularies of motives in lawyers offices
connects ideas, beliefs, experiences and interests. As lawyers and clients together
define how people behave and explain why they behave as they do, as they try to
make sense of life events, they give shape and content to such behavior and events.6
The imputation of motives, therefore, may be sequentially and logically inverted;
instead of deducing motivations from actual conduct and events, motivations first are
imputed and overlaid to describe, comprehend and link conduct and events. The
imputed motives form a comprehensive, internally consistent narrative to explain
otherwise disparate and ambiguous facts, but the resulting morality play may bear
little relation to reality. Most negotiators, business administration professors Deepak
Malhotra and Max Bazerman observe, wrongly assume they understand the other
sides motivations and, therefore, dont explore them further.7
In civil litigation cases, Felstiner and his colleagues find that the cause to which
an injury or loss is attributed often determines whether a lawsuit will be filed. A
claim shifts from being a grievance to a lawsuit when the claimant becomes
convinced that an injury or loss was caused by the fault of another individual
or organization. The claimant, in Felstiners terminology, follows a sequence of
naming, blaming, and claiming. Attribution theory, he believes, explains why
people are more likely to file a lawsuit if blame can be placed upon another,
particularly when the responsible agent can be seen as intentionally causing or
aggravating the problem.8 He observes that attorneys, sometimes unknowingly,
contribute to the clients attribution bias: A disputant discusses his problem with
a lawyer and consequently reappraises the behavior of the opposing party.
The disputant now believes that his opponent was not just mistaken but acted in
bad faith.9 Attorney-client interactions may change the clients perception of a
5
Mills, C. Wright. (1940, December). Situated actions and vocabularies of motive. American
Sociological Review, 5(6), 904913.
6
Sarat, Austin, and Felstiner, William L.F. (1988). Law and social relations: vocabularies of
motive in lawyer/client interaction. Law and Society Review, 22(4), 740.
7
Malhotra, Deepak, and Bazerman, Max. (2007, September). Investigative negotiation. Harvard
Business Review, p. 74.
8
Felstiner, William L.F., Abel, Richard L., and Sarat, Abel. (19801981). The emergence and
transformation of disputes: Naming, blaming, claiming. Law and Society Review, 15(34), 631, 641.
9
Id. at 637.
94
dispute from being an unintended mistake to a blameworthy display of bad faith

warranting recompense if not retribution although neither the lawyer nor the
opposing party necessarily knows about the shift.10
Ironically, the tendency to attribute human actions to dispositional factors rather
than situational factors is reversed when parties justify their own behavior.11
Professors Austin and Sarat explain this phenomenon in the context of family law
cases:
In interpreting their own actions clients shift from explanations based on personal dispositions and character traits to circumstances and situations. They emphasize their innocence,
vulnerability, and injury. They suggest that any undesirable conduct on their part was the
product of provocation or duress. The meanings they attach to their own behavior are
consistent with their attempt to blame their spouses and to present their own actions as
reasonable and justifiable responses to circumstances not of their making.12
Lawyers, add Austin and Sarat, do not generally challenge their clients attempts
at exculpation, nor do they validate them.13 Although they could exercise a
corrective role, many attorneys are concerned about threatening the attorney-client
relationship with a dissonant viewpoint and generally seek to avoid confrontation
with clients. In choosing not to counter the clients attributions of fault and blame,
however, attorneys jeopardize their own ability to secure a negotiated outcome.
Attorneys cannot persuasively encourage a client to consider or accept an adversarys settlement proposal when they have implicitly joined in the clients characterization of that adversary as reprehensible or implacable.14
The anomalous operation of the attribution bias litigants ascribe adversarys
behavior to disposition and their own behavior to situations and its practical effect
on negotiating outcomes are described by law professor Russell Korobkin in his
article, Psychological Impediments to Mediation Success: Theory and Practice.
He explains how imputed motivations alter perceptions, increase anger and sometimes fuel a desire for retaliation:
These attribution biases mean that when acts of others harm us, we are more likely to
conclude that they are bad people who have acted with malice or indifference. This
analysis, in turn, leaves us angrier than we would be if our assumptions were more accurate.
In contrast, when we are the harmdoer we are more likely to believe, on average, that our
actions are responses to unalterable situational constraints; that is, the harm we cause is due
to the situation rather than to our dispositional characteristics.15
10
Id. at 637.
See Ross, Lee. (1977). The intuitive psychologist and his shortcomings: Distortions in the
attribution process. Advances in Experimental Social Psychology, 10, 173.
12
Sarat and Felstiner supra note 6 at 747.
13
Id.
14
Sarat, Austin, and Felstiner, William L.F. (1988). Law and social relations: Vocabularies of
motive in lawyer/client interaction. Law and Society Review, 22(4), 765-766.
15
Korobkin, Russell. (2006). Psychological impediments to mediation success: Theory and practice. Ohio State Journal of Dispute Resolution, 21, 281, 302.
11
95
These conflicting beliefs may quickly raise emotional barriers to resolution. Victims of wrongful conduct become enraged when alleged wrongdoers attempt to
justify their conduct by reference to situations, because the victims know the
conduct was caused by dispositional characteristics; and alleged wrongdoers, for
their part, become irate when victims personalize conflicts and cast aspersions
upon their character, because the wrongdoers know their conduct was justified by
situational characteristics. Each imputation and each disavowal of bad motives
reinforce the recipient partys conviction that an adversary is unbalanced, unreasonable, and far too emotional to engage in good faith negotiations.
The attribution biases are fundamentally self-serving and reflect the desire to
look good and the need to protect self-esteem.16 College students, for instance, are
more likely to attribute their own choice of a major to situational factors and other
students choices to dispositional factors. In choosing a major, students believe they
rely on situational factors like good employment prospects while other students
rely on dispositional factors like wanting to make a lot of money.17 Attribution
errors also are demonstrated when people describe the cause of their successes and
failures. Their successes usually are attributed to personal factors (skill, intelligence, experience), while failures are attributed to external factors like market
conditions or an unfortunate situation in which they found themselves.18
Attorneys themselves are affected by attribution biases when they ascribe causes
to their case victories and defeats. Good outcomes frequently are attributed to skill
while bad outcomes are blamed on situational constraints. Yet to be found is an
attorney who regards her wins as largely fortuitous and her losses as self-inflicted.
Consider how two opposing attorneys describe the defense verdict in favor of
Mammoth Mountain Ski Area and against plaintiff Ray Willing, a 36-year old former
snowboarder rendered a paraplegic after an accident. In that case, Willing alleged that
Mammoth failed to maintain the ski area in a safe condition; the tip of his snowboard
hit a piece of metal, part of a soil erosion mesh, protruding out of the snow. The lead
defense lawyer, John Fagan, believes that his cross-examination of the plaintiffs
accident reconstruction expert witness, Olaf Jacobsen, was the turning point in the
case. A reporter for the San Francisco Daily Journal describes the critical moment:
Fagan questioned whether the damage to the top of the [snow] board could have been
caused only by impact with a narrow piece of metal or if it also could have been caused by
the sharp volcanic rocks native to Mammoth. As Jacobsen [plaintiffs expert witness]
measured the rocks on the stand with a protractor to determine their sharpness, the jury
could be heard to be laughing, Fagan said. Its unusual to feel like a trial is turning in your
favor during cross-examination of the plaintiffs best witness, he said, but I could sense
that the jury felt his testimony was not based in science.19
16
Plous, Scott. (1993). The psychology of judgment and decision making (p. 185). New York:
McGraw-Hill, Inc.
17
Id. at 182.
18
Bazerman, Max H. (2002). Judgment in managerial decision making (p. 67). New York: John
Wiley & Sons.
19
(2007, February 8). 2006 Top Defense Verdicts. San Francisco Daily Journal, p. 8.
96
An entirely different perspective is presented by plaintiffs counsel, Matthew

Clarke, of Cappello & Noel in Santa Barbara, California. Clarke believes the
courts proximity to Mammoth Mountain played a major role in the verdict.
The thing about trying a case in Mammoth Lakes is that 95% of the people
make their living off the mountain, he said. We got hometowned.20 Weighing
these conflicting assessments, one cannot objectively discern whether Mammoth
Mountain won because of personal skill factors its attorneys turning point
cross-examination of plaintiffs star expert witness or whether Ray Willing lost
because of external factors being hometowned by a biased jury. But one may
conclude that each attorneys perception of the cause provides more information
about attribution biases than it does about the reasons for the jurys verdict.
An unfortunate result of the attribution bias is that disputes about how problems
arose and how they should be solved merge into demeaning and distorted characterizations of the disputants themselves. Parties who perceive the world differently are seen as motivationally distorted by self-interest, mentally crippled by
stupidity, or both.21 For some people, the fact that others disagree with them does
not indicate that reasonable minds can differ but rather is itself evidence of bad
faith, as Professor Korbokin explains:
We believe that our understanding of the world is authentic; that is, we assume that we see
the world and the facts of the world as they truly are. It follows from this belief that if others
do not agree with our view of the world or our view of facts, then they must be misinformed,
biased, insensitive or self-interested. Once we explain the situational constraints that determined our actions, others can no longer claim to be misinformed. At that point, their claim to
perceive the world differently than we do constitutes evidence of their bad character.22
When Judge Richard Kramer of the Superior Court of California ruled that prohibitions against same-sex marriage were unconstitutional, for instance, his decision
was attacked as a crazy ruling by an arrogant San Francisco judge who apparently
hates marriage and hates the voters.23 In reality, Judge Kramer is Catholic,
Republican, and married, and he has gained a reputation for being compassionate,
respectful and unbiased.24 His decision, though decried as crazy, was later
upheld by the Supreme Court of California. Although one can disagree with his
decision, it does not follow that he has the personal characteristics attributed to him
by his detractors.
Attributing personal and dispositional characteristics to actions is a disruptive
and delusive impulse. Invariably, the only facts people know with any degree of
certainty are external facts an event occurred, a circumstance changed, a decision
20
Id.
Epley, Nicholas, and Caruso, Eugene M. (2004, June). Egocentric ethics. Social Justice
Research, 17(2).
22
Korobkin supra note 15 at 302303.
23
Finz, Stacy, and Van Derbeken, Jaxon. (2005, March 15). Judge is Catholic and Republican. San
Francisco Chronicle, p. A12.
24
Id.
21
97
was made, and behavior was altered. Presuming reasons and motivations for the
event, circumstance, decision or behavior invariably distracts parties from problem
solving; it encourages surmise, suspicion, and speculation without a gain commensurate with the risks it entails. The attribution of personal, dispositional characteristics to adversaries not only distorts an evaluation of their positions but also
eliminates consideration of creative or cooperative settlement alternatives that are
only practicable with people who have the integrity and trustworthiness conclusively presumed missing in the adversary. As Jeffrey Zaslow, a senior writer for The
Wall Street Journal, warns, we blame because we lack the skills to problemsolve. The instinct for self-protection encourages people to blame others, he
writes, but ultimately blame ruins everything, creating hostilities, scapegoats,
and an avoidance of hard decisions that could actually solve problems.25
4.1.2
Selective Perception and Memory
Once the attribution bias has guided parties in determining what type of people are
behind the litigation, the selective perception and memory biases foster a selfserving understanding of the facts that preceded the litigation. Selective perception
and memory serve two powerful purposes: they enable people to preserve a selfimage of competence and fairness, and they bridge interstices in their recollection.
The downside is that selective perception and memory prevent parties from understanding how a jury could favor an adversarys version of the facts and reject their
own contentions. Because the adversarial system is designed to reveal discrepancies
between an adversarys perceptions and facts and uncover differences between an
adversarys memories and the contemporaneous records, litigants need to be
acutely sensitive to the damage wreaked by selective perception and memory.
4.1.2.1
Selective Perception
Seeing is believing, the aphorism holds. But psychologists have learned that a
more accurate adage would be believing is seeing.26 Psychological experiments
consistently demonstrate that humans see what they have been pre-conditioned to
believe they will see, and they discard events inconsistent with their pre-conceptions. They see things as they have been or should be and not necessarily as they are.
Dartmouth College students, for instance, see twice as many infractions committed
by the Princeton University team when they watch a movie of a football game
25
Zaslow, Jeffrey. (2005, September 15). Its all your fault: Why Americans cant stop playing
the blame game. The Wall Street Journal, p. D1.
26
See Coutu, Diane L. (2003, April). Sense And Reliability: A Conversation With Celebrated
Psychologist Karl E. Weick. Harvard Business Review. pp. 8490.
98
between their teams; card players shown a black three of hearts are sure they saw a
normal three of hearts; voters watching the same media coverage of an election are
convinced that the media is biased against the particular candidate they support; and
pro-Arab and pro-Israeli college students viewing the same news broadcast segments reach completely divergent conclusions about whether the references to
Israel would cause neutral viewers to view Israel negatively.27 Students in different
classrooms, variously informed that the same visitor in each classroom was another
student, a demonstrator, a lecturer, a senior lecturer, and a professor, estimated his
height to be an additional inch with each incremental upgrade in his status.
Hence, the visiting professor was 2 inches taller than the same individual
introduced as a visiting student.28
Perception is not only biased but can be totally inaccurate. These visual lapses
result from that fact that far more information lands on your eyes than you can
possibly analyze and still end up with a reasonable sized brain, explains Jeremy
Wolfe of Harvard Medical School.29 Shown slides of a building, viewers do not
notice entire stories removed from sequential slides; and shown a cartoon of
dancing hens, they do not notice that one chicken had exploded.30 Subjects viewing
a one-minute videotape of a basketball game do not notice a woman carrying a large
white umbrella as she walks across the court, although she is filmed for four
seconds.31 Nor do 50% of subjects see a person in a gorilla suit when watching
six people play with three basketballs, although all of the subjects had previously
predicted that they would notice such an unusual event if it occurred.32 Peoples
intuition about vision and attention tells them that they would notice changes right
before their eyes, notes law professor Jeffrey Rachlinski, but studies show that
people discount how cognitively difficult it is to recognize many changes.33
The tendency to observe events as one expects them to be or as they should be is
not limited to visual perception. One may recall the tragedy in early 2006 of the 13
miners trapped in a West Virginia coal mine 260 feet below the surface. When the
rescuers finally reached the miners, they found one survivor and phoned the
command center. Their communication appears to have been hampered by fullface oxygen masks and radio communications in code, although 30 people in the
27
Plous supra note 16 at 1821.

Cialdini, Robert B. (1993). Influence: The psychology of persuasion (pp. 222223). New York:
William Morrow.
29
Angier, Natalie. (2008, April 1). Blind to change, even as it stares us in the face. The New York
Times, p. F2.
30
Id.
31
Goleman, Daniel. (1996). Vital lies, simple truths (pp. 8081). New York: Simon & Schuster.
See Bazerman, Max H., and Chugh, Dolly. (2006, January). Decisions without blinders. Harvard
Business Review, p. 90. (When we use this tape in the executive classroom, even fewer than 21%
of executives spot the woman.)
32
Rachlinski, Jeffrey J. (2003). Misunderstanding ability, misallocating responsibility. Brooklyn
Law Review, 68(4), 10711072.
33
Id. at 1072.
28
99
command center heard the transmission. In any event, word quickly spread that
there were twelve survivors. Upon learning the news, family members who had
gathered together at a church across from the mine hugged each other and shed
tears of joy. The church bells began ringing, and people were rushing out, yelling
Theres 12 alive!34 The states governor, Joe Manchin III, repeatedly confirmed
the earlier news of the miners survival with the command center, and they were
ecstatic too. The rescuers then made a second call to the command center. The
people in the command center had misunderstood the rescuers report. Apparently the rescuers meant to convey that they had found 12 individuals and were
trying to check their vitals signs, to determine if any were alive, said Bennett
Hatfield, the Chief Executive Officer of International Coal Group, the mines
owner.35 All twelve miners, in fact, were dead. There was clearly some misinterpretation, some miscommunication, Governor Manchin said after learning that the
report of a rescue was false.
4.1.2.2
Selective Memory
The handmaiden of selective perception is selective memory. Selective memory is

an undiscriminating bias and afflicts nearly all decision makers regardless of their
intelligence and educational levels. In one study, two psychologists surreptitiously
recorded a meeting of the prestigious Cambridge Psychological Society and, two
weeks after the meeting, asked their colleagues to summarize their recollection of
the meeting. Comparing their fellow psychologists recollections with the secret
recording, the psychologists found that more than 90% of the issues discussed at the
meeting were omitted from the recollections. To the extent issues were remembered, nearly half were incorrect. Overall, colleagues remembered comments
that were never made, they transformed casual remarks into lengthy orations, and
they converted implicit meanings into explicit comments.36 For the eminent
psychologists, this experiment was benign; for litigants, discrepancies of this
magnitude could seriously prejudice case evaluations for settlement purposes and
at trial could be sufficient evidence of a witness untruthfulness to support an
adverse judgment. The commonality of selective memory does not lessen its
deleterious impact on pre-trial settlement negotiations or its devastating effect on
juror perceptions of credibility; mistakes in recollection deemed innocuous in
ordinary life can assume a malignant quality and deliver a decisive blow in a trial.
To understand the bias of selective memory, consider the detailed testimony of
former presidential advisor John Dean, a graduate of Georgetown University Law
34
Daq, James, and ONeill, John. (2006, January 4). After reports to the contrary, only one miner
survives. The New York Times. CNN. (2006, January 5). Sound of moans led rescuers to surviving
miner. Available at http://www.cnn.com/2006/US/01/04/mine.explosion.wed/index.html
35
Id.
36
100
Center, and an attorney trained to analyze facts and to be aware of the criminal
consequences of misrepresenting them:
The President asked me to sit down. Both men appeared to be in very good spirits and my
reception was very warm and cordial. The President then told me that Bob referring to
Haldeman had kept him posted on my handling of the Watergate case. The President told
me I had done a good job and he appreciated how difficult a task it had been and the
President was pleased that the case had stopped with Liddy. I responded that I could not
take credit because others had done much more difficult things than I had done. . . I told him
that all I had been able to do was to contain the case and assist in keeping it out of the White
House. I also told him there was a long way to go before this matter would end and that I
certainly could make no assurances that the day would not come when the matter would
start to unravel.37
The richness of detail, the naturalness of the narrative, and the portrayal of
informality, appreciation, and modesty blend to convey Deans sincere, vivid
picture of this interaction.
Ulric Neisser, a psychologist and professor at Cornell, rattles this picture by
comparing Deans testimony with the actual transcript of those conversations:
Comparison with the transcript shows that hardly a word of Deans account is true. Nixon
did not say any of the things attributed to him here: he didnt ask Dean to sit down, he didnt
say Haldeman had kept him posted, he didnt say Dean had done a good job (at least not in
that part of the conversation); he didnt say anything about Liddy or the indictments. Nor
had Dean himself said the things he later describes himself as saying: that he couldnt take
credit, that the matter might unravel some day, etc. (Indeed, he said just the opposite later
on: Nothing is going to come crashing down.) His account is plausible but entirely
incorrect.38
Professor Neisser notes that Deans ambition reorganized his recollections and
that his testimony reflects not the meeting itself but his fantasy of it; the meeting as
it should have been. (Although some may regard Deans discrepancies as being
motivated by a desire to avoid liability for the Watergate scandal, the facts which he
reorganized were contextual, personal, or tertiary, not exculpatory.)
More recently, Secretary of State Hilary Clinton vividly and emphatically
recalled running across an airport tarmac after landing in Bosnia:
I certainly do remember that trip to Bosnia. I remember landing under sniper fire. There was
supposed to be some kind of a greeting ceremony at the airport, but instead we just ran with
our heads down to get into the vehicles to get to our base.39
The video of the visit, however, shows Secretary Clinton calmly walking from her
plane and meeting the U.S. Ambassador, John Menzies, the acting president of
37
Hearings Before the Select Committee on Presidential Campaign Activities of the United States
Senate, Ninety-third Congress, First Session, 1973, 957, quoted in Goleman, Daniel. (1985). Vital
lies, simple truths (pp. 9394). New York: Simon & Shuster.
38
Ulric Neisser. (1981). John deans memory: A case study. Cognition, 9(1). Quoted in Goleman,
Daniel. (1985). Vital lies, simple truths (p. 94). New York: Simon & Shuster.
39
Healy, Patrick, and Seelye, Katharine Q. (2008, March 25). Clinton says she misspoke about
dodging sniper fire. The New York Times.
101
Bosnia, Ejup Ganic, two American military officials, an 8-year old girl, and a
seventh grade class.40 The commander of the American forces in Bosnia, who
was at the airport, says, She never had her head down. There was no sniper threat
that I know of.
A similar misrecollection is displayed in former Federal Reserve Chairman Alan
Greenspans autobiography, The Age of Turbulence: Adventures in a New World. He
writes that he presciently urged his colleagues in early 1998 to raise interest rates as
a preemptive move against a stock market bubble. The transcripts of the Federal
Reserve meetings, however, do not support his version of events: They show Mr.
Greenspan argued for a rate increase principally because of inflation.41 In light of
the subsequent stock market implosion, it would have been prophetic for Greenspan
to have advocated the preemptive action that he now recalls, but the meeting
transcript suggests his outlook was more pedestrian than foresightful. Greenspan,
like Dean, apparently conveyed his fantasy of the meeting as it should have been.
Although the selective memory bias is more easily documented in the case of
public officials whose statements and appearances are recorded, filmed or transcribed, this bias affects nearly everyone. To test the accuracy of memory, psychologist Kathy Pezdek of Claremont Graduate University asked residents of New
York, California and Hawaii about their recollection of the World Trade Center
attack on September 11, 2001. She found that 73% of the participants incorrectly
reported that they saw a videotape of the first plane striking the first tower as it
happened. In reality, videotapes capturing that part of the days events did not
surface until much after the attacks had concluded.42 (Video of the attack was not
aired until the next day). Although many respondents expressed a high degree of
confidence in the accuracy of their memories, Professor Pezdek found no correlation between confidence and accuracy.
Professor Pezdeks findings regarding recollections of the World Trade Center
attack are substantiated by similar research at nine other universities. Psychologist
William Hirst of New School University, for instance, notes that people do not
accurately recall the airlines and number of planes. In terms of content, he says,
people are surprisingly inaccurate.43 Reviewing these studies, science writer
Sharon Begley concludes: They confirm that even for an event woven into our
synapses forever, memories are human constructs. They are amalgams of what
we experienced, read and pieced together afterward, and what we would like to be
true not documentary records.44
40
See also Allen, Joanne. (2008, March 25). U.S. News video contradicts Clinton on Bosnia visit.
Reuters. Available at http://www.reuters.com/article/politicsNews/idUSN2527872020080325
41
(2007, September 1516). Former fed chiefs book criticizes Bush and Republicans. The Wall
Street Journal, p. A2.
42
(Summer 2006). Focus: Memories of September 11. The Flame, p. 6. Claremont Graduate
University.
43
Begley, Sharon. (2002, September 13). Are all your memories of September 11 really true? The
Wall Street Journal, p. B1.
44
Id.
102
Sufficiently plastic to meld what actually occurred and what should have
occurred, the human brain forms memories that are more cognitively acceptable
than factually accurate. In its own fashion, the brain strives to be loyal to the values,
preconceptions, and prejudices of its host, maintaining a cognitive equilibrium
between self-perception and the world as it exists. As the Talmud states, We
dont see things as they are, we see things as we are.45 Consequently, the minds
capacity to tuck incongruous perceptions into congruent memories is extraordinary,
its task perpetual. Noting that the design of the mind facilitates self-deception,
Daniel Goleman, a psychologist and author of the bestseller Emotional Intelligence,
writes: the ease with which we deny and dissemble and deny and dissemble to
ourselves that we have denied or dissembled is remarkable.46
4.1.3
Self-Serving Bias
The biases of selective perception and selective memory, attended by fundamental

attribution error, support yet another cognitive bias that distorts perceptions of
adversaries cases and their motivations: the self-serving bias. This bias enables
people to overestimate their prospects and to achieve feats previously deemed to be
mathematically impossible. Surveys report that 90% of drivers rate themselves
above average; 94% of college professors think their work is above average;
attorneys place themselves in at least the top 80th percentile on such qualities as
ability to predict the outcome of a case, honesty, negotiation skills, and cooperativeness; nearly all newly married couples predict they will not be divorced; 90%
of judges think that at least half of their peers had higher reversal rates on appeal;
and a large majority of people claim to be above average in health and productivity.47 Eighty percent of surveyed hypertension patients state that it is impossible for
patients to tell when their blood pressure is high, but 88% of the surveyed patients
believe they can intuit their own blood pressure.48 When spouses quantify what
share of housekeeping responsibilities each performs, their respective contributions
to domestic tidiness invariably exceed 100%; when co-authors assess their percentage of effort in writing their book, the aggregate contributions are above 100%; and
when two conversationalists estimate how much time each spent talking, both
jabberers think they talked more than half the time.49 The self-serving bias thus
45
Myers, David G. (2002). Intuition: Its powers and perils (p. 73). New Haven, Connecticut: Yale
University Press.
46
Goleman supra note 31 at 95.
47
Birke, Richard. (2000). Settlement psychology: When decision-making processes fail. Alternatives to High Cost Litigation, 18, 203. Guthrie, Chris, Rachlinski, Jeffrey J., and Wistrich,
Andrew J. (2001). Inside the judicial mind. Cornell Law Review, 86(4), 811813.
48
Myers supra note 45 at 78.
49
Bazerman supra note 18 at 71. (2002). Guthrie, Rachlinski, and Wistrich supra note 47 at 812.
103
produces an extreme Lake Wobegon effect. Everyone is above average, and their
combined efforts always exceed 100%.
Aside from presenting mathematical impossibilities, the self-serving bias generates conceptual anomalies that consistently advance the proponents interests.
When asked whether, If someone sues you and you win the case, should he pay
your legal costs? 85% of respondents said Yes. But when asked, If you sue
someone and you lose the case, should you pay his costs? only 44% answered
Yes.50 Provided with identical research, both death penalty proponents and
opponents concluded that the research reinforced their prior beliefs.51 Likewise,
given the same evidence but divided into plaintiff attorney and defense attorney roles, law students interpreted the facts as being more favorable to the side
they were appointed to represent.52 In one experiment where all participants
received the same case information, law students assigned the plaintiff role predicted that the likely award at trial was $14,527 more than the amount predicted by
students assigned the defendant role; likewise, students in the plaintiff role thought
the fair settlement value of the case was $17,709 more than the valuation
determined by the students in the defense role.53 When participants in a different
experiment were informed they had performed better than non-participants, the
study participants thought their compensation should be based on results; when
informed that the non-participants performed better, the study participants thought
their compensation should be divided equally.54
These thoroughly inconsistent responses to surveys indicate that self-serving
biases shape disputants concepts of justice, equity, and fairness as subtly as chain
saw sculptors carve tree trunks in the rough-out phase. Perceptions of fairness are
not dictated by detached, impartial concepts of equity but rather reflect disputants
roles, status, power, resources, alliances and anticipated outcomes. As business
professor Max Bazerman explains, disputants first select a preferred outcome on the
basis of self-interest and then justify this preference on the basis of justice:
While people frequently have the goal of reaching a fair solution, their assessments of what
is fair are often biased by self-interest. For example, it is common for all parties in a conflict
to suggest viable, but self-serving, solutions, which they justify based on abstract fairness
criteria. Egocentrism allows people to believe that it is honestly fair for them to have more
50
Bazerman supra note 18 at 70.

Korobkin, Russell B., and Ulen, Thomas S. (2000). Law and behavioral science: Removing the
rationality assumption from law and economics. California Law Review, 88(4), 1093.
52
Id.
53
Guthrie, Rachlinski, and Wistrich supra note 47 at 813.
54
Birke, Richard, and Fox, Craig R. (1999). Psychological Principles in Negotiating Civil Settlements. Harvard Negotiation Law Review, 4, 35.
51
104
of a given resource than an independent advisor would judge. The problem lies not in a
desire to be unfair but in our failure to interpret information in an unbiased manner.55,56
If the effect of self-serving biases seems to be exaggerated by social scientists,

consider how often a person or organization advocates a fairness or performance
standard that would result in a singularly negative financial impact on the party
propounding the standard.
The practical effect of the self-serving bias on parties in litigation, according to
law professors Russell Korobkin and Thomas Ulen, is that plaintiffs (and defendants) will systematically anticipate their trial prospects as being better than
defendants (and plaintiffs) believe. The consequence of this is more trials than
would be predicted by the rational choice model, unless steps are taken to mitigate
the parties evaluative biases.57 This concern is echoed by law professor Chris
Guthrie and his colleagues in their article, Inside the Judicial Mind: Due to
egocentric biases, litigants and their lawyers might overestimate their own abilities,
the quality of their advocacy, and the relative merits of their cases. These views, in
turn, are likely to undermine settlement efforts.58
4.1.4
Reactive Devaluation
The biases that affect how parties view adversaries inevitably influence how
settlement proposals from adversaries are viewed. Research indicates that evaluations of proposals are affected as much by the source of the proposal as its content,
otherwise acceptable proposals being devalued when submitted by an adversary
and otherwise unacceptable proposals being seen more favorably when made by
aligned parties. The possibility of an adversary proposing a fair and appropriate
settlement triggers cognitive dissonance, and that dissonance is resolved by diminishing the attributes of the proposal. The process of discounting adversaries ideas is
called reactive devaluation. The upshot of reactive devaluation, Professor Korobkin
explains, is that a concession or compromise that is offered appears less desirable
55

When a traveler takes advantage of a computer glitch and purchases an airline ticket on-line for
$0, for example, she is not obtaining an unfair advantage but rather righting a previously inflicted
wrong. Asked whether she felt guilty about purchasing a fat finger fare for herself, her mother,
and two friends for airfare from Minneapolis to Acapulco, a traveler responded, Absolutely not.
Its fair to assume that American Airlines has taken advantage of me on more than one occasion.
What goes around comes around. (2007, September). National Geographic Traveler (p. 20).
57
Korobkin and Ulen supra note 51 at 1094.
58
Guthrie, Chris, Rachlinski, Jeffrey J., and Wistrich, Andrew J. (2001, May). Inside the judicial
mind. Cornell Law Review, 86(4), 812813.
56
105
than it appeared before it was offered. That is, grass growing on our side of the fence
looks less green than it did when it was growing on the other side of the fence.59
Reactive devaluation prevents people from taking an offer at face value and
explains why some litigants cannot take Yes for an answer. Instead of evaluating
the content of an offer on its own merits, recipients ask,
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Why is this particular compromise being offered?

Why is this particular exchange of concessions being proposed?
Why is the offer or proposal coming now?60
Convinced that adversaries would not be making good faith efforts to resolve a
dispute, parties often resolve these questions by concluding they must not value
what they are proposing to concede or they must know something about the
current situation that we dont.61 The overall effect of reactive devaluation is to
heighten distrust, change evaluations of alternatives previously deemed acceptable,
discourage parties from making further compromises or concessions, and generally
impede a negotiated resolution.
In a 1986 experiment, reactive devaluation was demonstrated by asking American
respondents to evaluate a broad nuclear disarmament proposal. For one group, the
proposal was attributed to President Ronald Reagan; the second group learned
that the proposal was advanced by a group of neutral strategy analysts; and for a
third group, the proponent was identified as Soviet leader Mikail Gorbachev. Not
surprisingly, the respondents reaction to the proposal varied significantly with
the proponent, although the content itself remained the same. Ninety percent of
respondents approved the proposal when it was attributed to President Reagan, 80%
backed the proposal when neutral analysts advanced it, and only 44% liked it when
they knew Gorbachev was the backer.62 Reactive devaluation apparently reflects
two presumptions: adversaries do not offer terms unless those terms advance their
own interests and harm the other partys interests; and adversaries do not offer
terms that would improve the other partys position or provide any relative advantage to the other party.
Reactive devaluation is not limited to adversaries proposals but extends to other
contexts in which proponents are perceived to act in their own self-interest. When
Stanford University was considering alternative plans for divesting its investments
in South Africa, for instance, students ratings of the degree of compromise shown
by Stanford depended on whether Stanford had proposed the plan. When students
were informed that Stanford proposed an immediate divestment, only 40% of the
students thought the immediate divestment plan was a greater concession than a
delayed divestment plan. But when the experimenters informed students that
59
Korobkin supra note 15 at 316.

Ross, Lee. Reactive devaluation in negotiation and conflict resolution. In Arrow, Kenneth, et al.,
Eds. (1995). Barriers to conflict resolution (p. 40). New York: W.W. Norton & Company, Inc.
61
Id.
62
Id. at 29.
60
106
Stanford proposed a delayed divestment plan, 85% of the students thought the
immediate divestment plan was a greater concession than the delayed plan. When
students were told that the university had not decided which divestment plan to
implement, 69% of the students thought the immediate divestment plan represented
a larger concession than the delayed plan. In variations of the experiments, students
continued to devalue a divestment plan whenever they were informed that the
University intended to implement it.63
Similar results appeared when students in an experiment were asked to imagine
that a professor was unfairly appropriating their research and, after being informed
of the students objections, offered to resolve the problem by either paying $750 to
the student or adding the students name as a co-author. When the professor offered
the $750 payment, most students preferred co-authorship; when offered co-authorship, most students wanted money. Even when the experiment was varied to depict
the professors reputation both positively and negatively based on prior dealings
with other research assistants, students preferred the alternative that was withheld.
Although a negative perception of the professor increased the magnitude of the
reactive devaluation, a negative perception was not essential in evoking reactive
devaluation.64 This finding suggests that antagonistic adversaries will experience a
higher level of reactive devaluation while cooperative adversaries will still find
their settlement overtures are affected by a milder but nevertheless serious degree
of reactive devaluation.
The chronic devaluation of proposals and concessions made by adversaries has
been documented in numerous other studies and appears to result, in part, from loss
aversion and an alteration of aspiration levels.65 Psychologist Lee Ross summarizes
the research results:
. . . any relevant object of judgment (including, presumably, a concession offer or a
negotiation proposal) will be evaluated more negatively as a consequence of its linkage
to a negative source (including, presumably, an enemy or adversary). In other words, no
reinterpretation, in fact no consideration of content at all, need take place for devaluation to
occur. One might simply reason that if they are offering a proposal it must be good for
them; and if it is good for them (especially if they are adversaries who wish us harm) it
must be bad for us.66
For clients and their attorneys, the practical effect of reactive devaluation is that
concessions intended to generate goodwill often are construed as strategic undermining and evidence of bad faith. Compromise proposals, Lee Ross explains,
frequently fail in their objectives because they are dismissed as trivial and
token, or received with coolness and expressions of distrust that serve to thwart
the goal of negotiated agreement and to weaken rather than strengthen the hand of
63
Id. at 33.
Id. at 3536.
65
Id. at 34. See Korobkin supra note 15 at 316321.
66
Ross supra note 60 at 34.
64
107
those who urge conciliation.67 For negotiators, reactive devaluation goes a long
way toward insuring that no good deed goes unpunished.
Given the strong effect of reactive devaluation, can concessions and compromises ever be evaluated on their merits, avoiding the skepticism and discounting
that seems to accompany even good faith settlement gestures? Lee Ross answers
this question affirmatively and suggests two practical strategies. First, before
making concessions or compromises, parties should explicitly ask adversaries to
state and rank their values, preferences, and objectives. This prevents adversaries
from viewing another partys settlement proposals as reflecting preferences of or
advantages to be obtained by the other party. Reactive devaluation is less likely to
occur when a proposal is perceived to be directly responsive to a request. Second,
parties can offer a menu of concessions in exchange for reciprocal concessions
and ask the other party to designate a preferred concession, as Ross explains: Tell
your adversaries that you are willing to take the first small step; stipulate or at least
outline some possibilities that clarify the magnitude of that step; and ask your
adversaries what they want. When you give them what they ask for, Ross
contends, the effects of reactive devaluation are muted.68
4.1.5
A Practical Example Of Overcoming Self-Protective Biases
A practical example of the expansive mindset conducive to sound decision making

and the clear reception of different viewpoints and alternatives is presented in the
JDS Uniphase class action case. In that case, a group of JDS shareholders alleged
that JDS withheld materially adverse financial information to inflate its stock value
while executives sold their holdings. Threatened with a claim that could have
bankrupted the company, the CEO and chief legal officer of JDS Uniphase continually evaluated the case, candidly assessed the range of outcomes, offered to settle
for $100 million (according to press reports), obtained reality checks by presenting the case to various focus groups, paid a former federal court judge for his
evaluation, and, after settlement negotiations failed, eventually proceeded to trial.
Following a four-week trial, the jury deliberated for one and one-half days and
returned a verdict in favor of JDS Uniphase, which the plaintiff did not appeal.69
Placed in the context of all securities fraud class action litigation during the
preceding 12 years, the JDS Uniphase decision was exceptional. Among 2,105
67
Id. at 38.
Id. at 3940.
69
(2008, February 6). JDS Uniphase wins at rare securities class action trial. San Francisco Daily
Journal, p. 4. Jones, Ashby. (2008, June 2). JDS wins investor lawsuit, bucking a trend. The Wall
Street Journal, p. B4.
68
108
shareholder securities fraud cases, it was one of only four cases tried to verdict and
only one of two defense verdicts.70
Looking back on the entire five-year period of litigation and intense decision
making, Kevin Kennedy, the CEO of JDS Uniphase, identifies the key decisionmaking guidelines for managing litigation:
Actively seek independent views; dont be a prisoner of your own mind.
Check your emotions and manage by facts; the facts will always matter.
Look beyond conventional wisdom; circumstances matter.
Establish a process to make decisions, and stick to the process.
There is rarely one path. Consider alternatives and back-up plans.71
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Underlying each of these guidelines is a lesson in avoiding attribution errors,

selective perceptions and memories, self-serving biases and reactive devaluation.
Following these guidelines requires a thorough, ongoing check for cognitive biases
and a conscientious effort to balance ones viewpoints with the case facts and
independent opinions. Properly employed, these guidelines mitigate biases and may
enable attorneys and clients to achieve the same level of calibration demonstrated
by JDS Uniphase and its legal team.
4.2
Evaluations of Risk and Reactions to Perceived Risk
Behavioral economists and cognitive psychologists studying decision making under

uncertainty have determined that perceptions of risk and propensities to decrease
or heighten risk are affected by framing and anchoring biases. Framing refers
to the perception or characterization of an impending event or decision as a loss or
a gain. Broadly stated, people are risk averse when contemplating a gain and risk
taking when facing a loss. Anchoring" describes the tendency to psychologically
latch onto a number, like the plaintiffs initial demand or the defendants first offer,
and evaluate subsequent conditions and alternatives relative to the anchor.
The concepts of anchoring and framing are part of the extensive research on
human judgment and decision making that began in the 1920s. Some of the early
researchers in the field were Ronald Coase, Herbert Simon, Paul Meehl, Amos
Tversky, Paul Slovic and Daniel Kahneman. The progression of their work, and its
later applications to decision making by attorneys and clients, is depicted in
Table 4.1. The Nobel Prize in Economics was awarded to Herbert Simon in 1978
for his pioneering research into the decision-making process within economic
organizations; to Ronald Coase, who taught at the University of Chicago Law
School, in 1991 "for his discovery and clarification of the significance of transaction
70
Jones supra note 69.

Id.
71
4.2 Evaluations of Risk and Reactions to Perceived Risk
109
Table 4.1 A conceptual history of judgment and decision making advances

Period Concepts
Game Theory
1920 Expected Utility Theory
1940 Pareto Efficient Strategy
Bayesian Equilibrium
1950s
1960s
Illustrative Contributions
Von Neumann and Morgenstern, Theory of Games and Economic
Behavior
Coase, The Nature of the Firm
Knight, Risk, Uncertainty and Profit
Ramsey, Truth and Probability
Shaw, A Comparison of Individuals and Small Groups in the Rational
Solution of Complex Problems
Maier, Reasoning in Humans: II. The Solution of a Problem and Its
Appearance in Consciousness
Bounded Rationality
Satisfycing
Nash Equilibria
Impossibility Theorem
Lens Model
Allais Paradox
Shapley Value
Meehl, Clinical Versus Statistical Prediction

Nash, The Bargaining Problem
Edward, The Theory of Decision Making
Hammond, Probabilistic Functionalism and the Clinical Method
Simon, A Behavioral Model of Rational Choice
Arrow, Social Choice and Individual Values
Luce and Raiffa, Games and Decisions
Ambiguity Aversion
Coase Theorem
Discounted Utility
Markowitz-Sharpe Theory
Decision Trees
Subjective Probability
Peterson and Beach, Man as an Intuitive Statistician

Raiffa, Decision Analysis
Sharpe, A Simplified Model for Portfolio Analysis
Ellsberg, Risk, Ambiguity and the Savage Axioms
Coase, The Problem of Social Cost
Cyert and March, A Behavioral Theory of the Firm
Pratt, et al., The Foundations of Decisions Under Uncertainty: An
Elementary Exposition
Prospect Theory
Groupthink
Framing
1970s
Kahneman, Slovic, Tversky, Judgment Under Uncertainty: Heuristics

and Biases
Janis and Mann, A Psychological Analysis of Conflict, Choice and
Commitment
Heuristics and Biases
Newell and Simon, Human Problem Solving
Anchoring
Kahneman and Tversky, Prospect Theory: An Analysis of Decision
Under Risk
Decision Support Systems
Slovic and Lichtenstein, Comparison of Bayesian and
Regression Approaches to the Study of Information
Processing in Judgment
Garbage Can Decision Process Cohen, et al., A Garbage Can Model of Organizational Choice
Elimination By Aspects
Business Intelligence
Win-Win Solutions
1980s
Boot-strapping
Subjective Utility
Asymmetric Information
Models
BATNAs
Nisbitt and Ross, Human Inference: Strategies and Shortcomings of

Social Judgements
von Winterfeldt and Edwards, Decision Analysis and Behavioral
Research
Hogarth, Judgment and Choice
Kahneman and Tversky, The Psychology of Preferences
Priest and Klein, The Selection of Disputes for Litigation
Fournier and Zuehlke, Litigation and Settlement: An Empirical
Approach
(continued)
110
Table 4.1 (continued)

Period Concepts
Conjunction Fallacy
1990s
Naturalistic Decision Making

Fast and Frugal Reasoning
Self-Serving Biases
Cognitive Illusions
Alternative Task Construals
Reactive Devaluation
Analytics
Foxes & Hedgehogs
2000 Thin-Slicing
2007
Lawyers as Debiasers
Deliberate Practice
Illustrative Contributions
Wittman, Is the Selection of Cases for Trial Biased?
Gigerenzer, et al., Simple Heuristics That Make Us Smart
Bazerman and Neale, Negotiating Rationally
Kleindorfer, et al. Decision Sciences
Klein, Sources of Power
Shanteau, Expert Judgment and Financial Decision Making
Kessler, et al., Explaining Deviations from the Fifty-Percent Rule: A
Multi-Modal Approach to the Selection of Cases for Litigation
Clermont and Eisenberg, Trial by Judge or Jury: Transcending
Empiricism
Korobkin and Guthrie, Psychology, Economics and Settlement: A
New Look at the Role of the Lawyer
Rachlinski, Gains, Losses and the Psychology of Litigation
Gross and Syverud, Getting to No: A Study of Settlement Negotiations
and the Selection of Cases for Trial
Birke and Fox, Psychological Principles in Negotiating Civil
Settlements
Tetlock, Expert Political Judgment
Armstrong, Principles of Forecasting
Davenport and Harris, Competing on Analytics
Ericsson, et al., The Cambridge Handbook of Expertise and Expert
Performance
Sieg, Estimating a Bargaining Model with Asymmetric Information:
Evidence from Medical Malpractice Disputes
Bibas, Plea Bargaining Outside the Shadow of Trial
Sunstein, Behavioral Law and Economics
Kritzer, Risks, Reputations and Rewards
Jolls and Sunstein, Debiasing Through Law
Korobkin and Ulen, Law and Behavioral Science: Removing the
Rationality Assumption from Law and Economics
Note: Concepts and works are representative, not exhaustive. Periods reflect dispersion, not
inception, of concepts. Italicized works are specifically related to the legal field.
costs and property rights for the institutional structure and functioning of the
economy; and to Daniel Kahneman (and Vernon Smith) in 2002 for having
integrated insights from psychological research into economic science, especially
concerning human judgment and decision-making under uncertainty.72 Their
intensive study of human judgment reasoning strategies, inductive inferences,
statistical prediction, subjective probability and causal attribution has revealed
how intuitive decision making often overrides deliberative processes and produces
results that may be counter-productive, inconsistent or suboptimal. Noting that
research exposes a persistent gap between a persons objective performance in
72
The Royal Swedish Academy of Sciences. (2002, October 9). The Bank of Sweden Prize in
Economic Sciences In Memory of Alfred Nobel 2002 [Press Release].
111
prediction and his self-assessment of prediction competence, Daniel Kahneman and

his colleagues found that peoples impressions of how they reason, and of how
well they reason, could not be taken at face value.73
Framing and anchoring illuminate some of the gaps between how people think
they reason and how they actually reason; they also show gaps between conventional economic theories and actual human behavior. The terms behavioral economics and behavioral finance are used to distinguish research regarding actual
human behavior in making economic choices from traditional economic theories
about purely rational evaluation and choice. Because the data described in this book
and the earlier studies by Gross and Syverud, Rachlinski, and Kiser, Asher and
McShane conform to behavioral economists models of decision making in the
gains mode and losses mode and do not conform to conventional economic
theories of rational actors seeking to maximize utility, a basic knowledge of
behavioral economics theory is required to understand and synthesize attorneylitigant decision making. Behavioral economics theory furnishes the framework for
comprehending how attorneys and litigants evaluate and react to risk and specifically how their perceptions of anticipated gains or losses affect their risk tolerances
and ultimately their decisions to settle or try cases. By becoming aware of the
enduring power and insidious effect of framing and anchoring, decision makers
may learn how to debias themselves and recalibrate their judgment to more
closely match actual conditions and probabilities.
4.2.1
Framing
Under normative or expected utility theories, parties are efficient decision makers
rationally seeking to optimize their economic interests. These rational actors, when
choosing among options, select the option with the highest expected utility, that is, the
optimal economic result. Behavioral economics theory (prospect theory and behavioral decision theory), however, posits that actual human decision making defies
expected utility theory and normative models of decision making. In behavioral
economics theory, explains psychology professor David Myers, economic intuition
sometimes defies economic logic, and in following our intuition we make decisions
mostly swiftly, often smartly, but sometimes stupidly.74 The most important finding
in the behavioral economics field, for purposes of this chapter, is that people are risk
averse when anticipating financial gains and risk taking when facing financial losses.
Professor Myers describes this behavioral model as being conservative when given a
chance to lock in a win, but daring when given a chance to avoid loss.75
73
Kahneman, Daniel, Slovic, Paul, & Tversky, Amos (Eds.). (1982). Judgment under uncertainty:
Heuristics and biases (p. xi). Cambridge: The Press Syndicate of the University of Cambridge.
74
75
112
Two early experiments conducted by Kahneman and his late colleague, Amos
Tversky, illustrate risk aversion in the gains frame and risk taking in the losses
frame. In the first experiment, subjects were asked to choose between two alternatives:
Alternative A: A sure gain of $240.
Alternative B: A 25% chance to gain $1000 and a 75% chance to gain nothing.
Kahneman and Tversky found that 84% of the subjects chose Alternative A, the
risk averse option, over Alternative B. In the second experiment, subjects had to
choose between these two alternatives:
Alternative C: A sure loss of $750.
Alternative D: A 75% chance to lose $1,000, and a 25% chance to lose nothing.
In this second experiment, 87% of the subjects chose Alternative D, the riskseeking alternative. Overall, 73% of the subjects chose Alternatives A and D (risk
averse when facing gains and risk taking when facing losses), and only 3% chose
alternatives B and C (risk taking when facing gains and risk averse when facing
losses) although Alternatives B and C are jointly superior in expected value to
Alternatives A and D whether you lose or gain.76
Kahneman and Tversky have shown that decision makers are consistently risk
averse in the domain of gains and risk seeking in the domain of losses.77 They
underweight a high probability of gain, preferring a sure thing, and underweight a
high probability of loss, preferring a gamble to a certain, smaller loss. The perceptual illusions fostered by framing outcomes, moreover, are as common among
sophisticated respondents as among nave ones.78
These patterns of risk aversion and risk taking are exhibited in many aspects of
human behavior. Investors, for instance, lock in their gains by selling their
winning stocks and avoid recognizing their losses by keeping their losing stocks.
In Peter Lynchs phrase, investors pull up the flowers and water the weeds.79
Another example of this behavioral economics model can be found at the racetrack
every afternoon. As their losses mount throughout the day, bettors are more likely
to overbet long shots and underbet favorites in a gamble to recover their losses.
This risk-taking gamble, when facing losses, occurs despite the obstinate fact that
longshot horses win only 1% of the time although 2% of the total money is bet on
them.80
76
Kahneman and Amos supra note 1 at 6.

78
79
80
Camerer, Colin F. (2000). Prospect theory in the wild: Evidence from the field. In Kahneman,
Daniel, & Tversky, Amos (Eds.). (2000). In Choices, values, and frames (pp. 295, 296). Cambridge: The Press Syndicate of the University of Cambridge.
77
113
The real-world consequence of risk-averse and risk-seeking behaviors is that

people making economic decisions often fail to maximize expected value. Since a
loss of a fixed value is regarded as more painful than a gain in the equivalent
amount, people make inferior choices that ultimately undermine their rational
economic objectives. When behavioral economics theories more accurately predict
human behavior than expected utility theories, impulse has eclipsed deliberation,
intuition has blocked analysis, and fear of loss has overridden objective probability
assessments. As John Locke observed centuries before the advent of behavioral
economics, All men are liable to error; and most men are, in many points, by
passion or interest, under temptation to it.81
Nearly 20 years after the advent of behavioral economics, Gross and Syverud
and Rachlinski applied the models of risk aversion in the gains frame and risk
taking in the losses frame to attorney-litigant decision making. In Gross and
Syveruds 1991 article, Getting to No: A Study of Settlement Negotiations and
the Selection of Cases for Trial, they noted that traditional economic models
depicting decision makers as intelligently pursuing independent self-interests
were unrealistic, and attorneys, clients, and insurers in actual negotiations and trials
were more like stragglers picking their way in the dark.82 They found that parties
did not attach equal values to trial outcomes and that the best example of
inequality is greater risk aversion on the part of plaintiffs. In this context, risk
aversion means that a loss will harm the affected party more than the monetary
value of an equivalent gain.83 Gross and Syveruds data also supported the
conclusion that defendants were risk seeking in the losses mode, and defendants
propensity to take risky settlement positions increased as their risk of loss
increased. In other words, defendants made lower offers when they were more
likely to lose a case, and they made higher offers in cases they were more likely to
win. The defendants offered nothing in 43%44% of the contract cases; zero offers
in the contract cases were made almost twice as often as in the personal injury
cases. But defendants lost 72%83% of the contract cases, compared with losses in
only 45% of the personal injury cases. Plaintiffs, for their part, were risk averse as
their prospects of a favorable trial verdict increased. In contract cases, which
plaintiffs were likely to win, the mean plaintiffs settlement demand was less than
the mean award; but in personal injury cases, which plaintiffs were likely to lose,
the mean plaintiffs demand was considerably greater than the mean award.84
Commercial transaction trials, Gross and Syverud summarized, fall into a
distinctive pattern of a high rate of plaintiff success, a stable trial rate, many measly
demands by the plaintiffs and many zero offers by the defendants.85
81
Locke, John. (1690). Essay concerning human understanding, bk. IV, ch. 20, sec. 17.
the selection of cases for trial. Michigan Law Review, 90, 319, 385.
83
Id. at 381.
84
Id. at 369.
85
Id. at 369.
82
114
In their second study, published in 1996, Gross and Syverud again found that
defendants were more likely to lose commercial trials, and plaintiffs were more
likely to lose personal injury cases. Nevertheless, most defendants in our commercial trials made puny settlement offers and then got hammered in court, and the
plaintiffs in these [commercial] cases played along with the defense and made puny
demands.86 For cases sampled in the 19901991 period, the mean defense offer in
commercial cases was $1,710,000 less than the mean verdict in commercial cases.
Reflecting their risk aversion in commercial cases, plaintiffs submitted demands
that, on average, were $710,000 less than the verdict. In personal injury cases, by
way of contrast, plaintiffs mean demand was $187,000 more than the mean verdict.
The degree of defendants risk taking also is illustrated by the fact that they made
zero offers in more than one-quarter of the cases, although, as Gross and Syverud
point out, a zero offer is never a reasonable assessment of the expected cost of a
case to a defendant. The trial itself is never free and usually expensive, and there is
always a chance, however low, that a jury will side with the plaintiff.87
Behavioral economics theories of risk aversion in the gains frame and risk taking
in the losses frame were squarely applied in Rachlinskis 1996 study, Gains,
Losses and the Psychology of Litigation. Noting that plaintiffs decisions generally presented a gains frame or a mixed loss/gain prospect and defendants
choices were made in a losses frame, Rachlinskis study showed that the cost of
making a decision error in settlement negotiations was significantly higher for
defendants than plaintiffs. When plaintiffs recovered a lower amount at trial than
they could have obtained by accepting defendants offer, the mean cost of the
plaintiffs error was $27,687 per case. For defendants, however the mean cost of a
defense decision error was $354,949 per case.
Rachlinski explains how the disproportionate costs of decision error by plaintiffs
and defendants fit into behavioral economics theories of risk aversion in the gains
frame and risk taking in the losses frame:
The defendants failure to make larger offers and avoid some of these losses can only be
described as risk seeking. Conversely, the plaintiffs behavior was, on balance, risk averse.
While over half of the plaintiffs in general litigation were worse off at trial than they would
have been had they settled (by an average of $27,687), the 23% who gained from going to
trial reaped huge rewards $354,949 per case (minus litigation expenses). On average,
these plaintiffs who litigated achieved a $66,106 (minus litigation expenses) reward for
having done so.88
Rachlinski concluded that the asymmetric costs of decision error were consistent
with framing theory. Plaintiffs were risk averse and, when settlement negotiations
failed, they generally benefited from litigation. Defendants were risk seeking and
86
Gross, Samuel, & Syverud, Kent. (1996). Dont try: Civil jury verdicts in a system geared to
settlement. UCLA Law Review, 44(1), 52.
87
Id. at 56.
88
Rachlinski, Jeffrey. (1996). Gains, losses and the psychology of litigation. Southern California
Law Review, 70, 114, 159.
115
overall paid heavily when they decided to try cases to a verdict instead of settling.
Although it is impossible to determine whether these patterns persist in settled
cases, Rachlinski suggests that could be the case: Assuming that a similar pattern
of offers occurs in cases that do settle, the data suggest that plaintiffs who accept
settlement offers forgo the potential for large rewards and pay a considerable price
for their risk aversion.89
The framing effects found in Rachlinskis studies are largely replicated in the
Kiser, Asher and McShane study. Plaintiffs decision error rate in the Kiser study is
61%, compared with a decision error rate of 56% in the Rachlinski study, and
defendants decision error rate in the Kiser and Rachlinski studies is 24% and 23%,
respectively. The mean cost of decision error for plaintiffs in the Kiser study is
$43,100, compared with defendants mean cost of decision error of $1,140,000.
This disparity in the cost of decision error is qualitatively similar to Rachlinskis
sample, where the plaintiffs mean cost of decision error was $27,687 and defendants mean cost of decision error was $354,949. Most of the time, one of the
parties has made some kind of miscalculation or mistake, Rachlinski stated in an
interview. The interesting thing about it is the errors the defendants make are much
more costly.90
The Kiser, Asher and McShane study also showed that the incidence and
magnitude of plaintiff and defendant decision error stayed relatively constant
during a 40-year period. Between 1964 and 2004, the incidence of plaintiff decision
error was consistently higher than the incidence of defendant decision error, and
defendants cost of decision error always exceeded plaintiffs cost of decision error.
As a percentage of defendants mean cost of error, plaintiffs mean cost of error
ranged from 2% to 20% during the entire 40-year period, reflecting an extreme
pattern of risk aversion on the plaintiffs part and risk taking by defendants when a
decision error occurred. Defendants risk-taking propensities, moreover, appear to
have increased during the 40-year period. Adjusted for inflation, the cost of decision
error for plaintiffs increased three-fold during the 40-year period, while the cost of
decision error for defendants increased 14-fold.
4.2.2
Anchoring
Anchoring refers to the impact of a number, methodically derived or arbitrarily

selected, on assessments and decision making. An anchor may be the listing price of
a home for sale, last years maximum temperature in July, a stocks 52-week high,
the current price of gasoline, or an adversarys initial settlement offer. An anchor
also may be as arbitrary as a number spun on a wheel of fortune or a number written
on a piece of paper in a bottle. Regardless of the source, anchors unconsciously
89
Id.
Glater, Jonathan. (2008, August 8). The cost of not settling a lawsuit. The New York Times, p. C1.
90
116
affect assessments and drive decisions. Although decision makers uniformly

believe they exercise independent judgment and deny that anchors influence
them, nearly every study proves otherwise.
Most anchors are derived from an objective source and then used to control
problem-solving outcomes. In determining the fair market rental value of office
space during a lease option period, for example, the parties often rely on lease rates
negotiated for similar spaces. When selling a car, both the buyer and seller may
consider Edmunds used car values or the Kelly Blue Book values. But anchors
determine assessments and outcomes even when they have no factual basis. Amos
Tversky and Daniel Kahneman conducted an experiment in which they randomly
divided study participants into two groups; one group was shown a spinning wheel
of fortune, depicting 100 numbers, which landed on the number 65, while the
second group saw a wheel which landed on 10. Both groups were asked the
question, What is the percentage of African countries in the United Nations?
The median estimate of participants shown the number 65 was 45%; the median
estimate of participants shown the number 10 was 25%.91
Anchors may be as subtle as the suggestion of a number or the sequencing of
numbers. In an experiment with accountants, one group was asked whether management fraud occurred in more than 10 companies out of each 1,000 audited,
while the other group was asked the same question with the modification in more
than 200 of every 1,000 companies.92 The accountants exposed to the 10 in
1,000 anchor estimated the instances of fraud to be just over 16, but those
presented with the 200 in 1,000 anchor estimated, on average, that fraud
occurred in more than 43 companies per 1,000. Similar results occur when
arbitrary anchors are selected and people are asked whether the price of a textbook
is higher or lower than $7,128.53, whether the average annual temperature in San
Francisco is more than 558 degrees, or whether the sales of certain Beatles records
were above or below 100,025 albums.93 In another experiment, people were
divided into two groups, one being asked to estimate the product of 1 2 3
4 5 6 7 8 and the other asked to estimate the product of the same numbers
reversed to show the higher numbers first (8 7 6 5 4 3 2 1). The first
group made a median judgment of 512; the median estimate of the second group
shown the high numbers first sequence was 2,250.94 Research shows that these
effects of anchors persist despite outrageously extreme anchors and monetary
incentives for accuracy and regardless of fields; anchoring has been documented
in estimates as diverse as the percentage of working mothers with children under
91

93
Hastie, Reid, and Dawes, Robyn M. (2001). Rational choice in an uncertain world (p. 102).
Thousand Oaks, California: Sage Publications. Plous, Scott. (1993). The psychology of judgment
and decision making (p. 146). New York: McGraw-Hill, Inc.
94
Hastie and Dawes supra note 93 at 102103.
92
117
age 5, the proportion of Iranians who are Islamic, the percentage of chemistry
professors who are women, and the share of soap operas carried by NBC.95
Anchors have a critical impact on settlement negotiations and trial outcomes,
determining not only the cost of a settlement or the amount of a verdict but the
likelihood of settlement as well. In their article entitled, Opening Offers and Outof-Court Settlements: A Little Moderation May Not Go A Long Way, law
professors Russell Korobkin and Chris Guthrie note that people evaluating hypothetical settlement offers were more likely to accept a $12,000 final settlement offer
when it followed a $2,000 opening offer than when it followed a $10,000 opening
offer. They theorize that those who received the $2,000 opening offer expected to
settle for a relatively small amount, so the $12,000 final offer seemed generous by
comparison, while those who received the $10,000 opening offer expected to settle
for relatively more, so the $12,000 final offer seemed relatively stingy.96 Professor
Guthrie and his colleagues note that at least five different studies demonstrate that
the initial amount demanded by a plaintiffs lawyer not only affects settlement
negotiations but strongly influences jurors deliberations as well. In one study,
mock jurors given the same factual information awarded $90,000 when the plaintiffs lawyer asked for $100,000, but they awarded $300,000 when the plaintiffs
lawyer demanded $500,000. As Guthrie notes, even silly and outrageous damages
requests can influence juror decision making, citing, for example, a substantial
uptick in mock jurors award when the plaintiffs attorney sought $1 billion instead
of a lower amount. The bottom line from these anchoring studies appears to be,
Ask and ye shall receive. In each study, when more money was requested for
damages by the plaintiffs attorney, the jurors awarded more.97
Reviewing the results of numerous anchoring studies, psychology professor
Scott Plous finds that anchoring effects are not diminished by financial incentives
for accuracy, the extremeness of the anchor, or the respondents familiarity with or
degree of concern about the subject matter. Overall, the research findings on
anchoring, he states, suggest that negotiators, advertisers, politicians and other
persuasion specialists will generally be most successful by staking out extreme
initial positions.98 Plous warns that when decision makers focus on best-case
and worst-case scenarios they may unintentionally form extreme anchors that
blind them to more realistic predictions; these scenarios can be especially harmful
because anchoring effects increase as the gap between the anchor and the preanchor estimates widen, greater disparities producing greater effects. He recommends that decision makers counter anchoring effects by considering a variety of
possible anchors before settling on any particular assessment. For attorneys, clients,
and mediators this could require the generation and consideration of multiple
outcomes instead of focusing on the chasm between plaintiffs demand and
95

97
98
96
118
defendants offer. Absent corrective measures, compromising a dispute by

splitting it down the middle may be little more than succumbing to extreme
anchoring effects.
Professor Chris Guthrie and Dan Orr, an attorney with Morgan, Lewis &
Bockius, completed a meta-analysis of 18 studies of anchoring effects; the total
number of subjects in these studies is 2,523, nearly all of whom participated in
simulated negotiations. The results of their meta-analysis showed that anchoring
has a powerful influence on negotiation outcomes.99 Specifically, they found a
correlation of 0.497 between the initial anchor and the ultimate negotiation result.
In lay terms, they explain, the 0.497 correlation means that every one dollar
increase in an opening offer is associated with an approximate fifty-cent increase in
the final sale price.100 Elaborating on their study results, they state that nearly
25% of the difference in outcomes among negotiations can be accounted for as a
function of an opening offer or other initial anchor, a result operatively consistent
with other research attributing 57.6% of negotiation outcome variance to opening
offers and initial counteroffers.101
Attorneys and clients who remain convinced that they are too experienced and
intelligent to be affected by anchoring bias may benefit from learning that anchoring effects are indiscriminate. Experienced negotiators are only slightly less likely
to be affected by anchors than novice negotiators. Insurance adjusters settlement
decisions are affected by policy limit anchors; civil law judges rulings and damage
awards are affected by settlement demand and jurisdictional amount anchors;
criminal law judges orders are affected by prosecutors bail amount recommendations and prison term demands; real estate agents opinions of appraised value,
selling price, and lowest acceptable offer are biased by listing prices; and MBA
students negotiating the purchase price of a vehicle are influenced by the amount
the seller can obtain from another purchaser.102 Not surprisingly, people who
exhibit susceptibility to anchoring effects frequently deny that anchoring had any
effect on their opinions. Most of the real estate agents in one study, for instance,
said that they would definitely notice any deviation in a listing price greater than
5% from the true value of a property; but manipulations of 12% went unnoticed
and had an impact on their appraisals.103
Anchors pose serious dangers to litigants and their attorneys. Law professor and
former Assistant United States Attorney Stephanos Bibas cites three major dangers:
(1) the selection of anchors frequently is biased and self-serving; (2) even
99
Orr, Dan, and Guthrie, Chris. (2006). Anchoring, information, expertise, and negotiation: New
insights from meta-analysis. Ohio State Journal of Dispute Resolution, 21(3), 621.
100
Id.
101
Id. at 622.
102
See Plous supra note 16 at 145152. Orr and Guthrie supra note 99 at 600601, 607611.
Hastie and Dawes supra note 93 at 106107. Guthrie, Chris, Rachlinski, Jeffrey, & Wistrich,
Andrew J. (2007). Blinking on the bench: How judges decide cases. Cornell Law Review, 93(1),
1921.
103
119
arbitrary, random or irrelevant numbers can serve as anchors and distort calculations; and (3) people do not make sufficient adjustments to anchors, overweighting
similarities to the anchor and underweighting differences, and thus may not realize
their initial choice of anchors has an inordinate effect on their final estimates.104
Psychologists Reid Hastie and Robyn Dawes also believe that people are prone to
underadjustments and that, due to primacy effects, information considered early
in the judgment process tends to be overweighted in the final judgment.105
Because people anchor on the initial information, they warn, the anchor not only
serves as a salient starting point for the judgment, but it biases the nature of the
additional information that is sought and retrieved downstream in the later
stages.106
One highly detrimental effect of anchors, suggested by the high incidence of
attorney-litigant decision error and the magnitude of those errors, is that litigants
may use settlement demands and offers to anchor the range of possible trial outcomes. A plaintiffs settlement demand may anchor a defendants assessment of the
worse possible trial outcome, and a defendants offer may anchor the plaintiffs
assessment of the lowest possible verdict. These anchors may be bolstered by
attribution biases and reactive devaluation when a plaintiff believes that a defendant
would not offer more than its minimum liability, and a defendant concludes that a
plaintiff would not demand less than its highest possible recovery. Litigants then
reject each others settlement proposals and proceed to trial anticipating that the
adjudicated outcome must fall somewhere between the parties settlement negotiation positions. In reality, the jurors will not see the anchors underpinning the
litigants decision to go to trial, and the trial outcome often has little or no relation
to the assessments represented by settlement positions. In commercial cases, where
the plaintiffs chronically underprice their claims relative to the ultimate awards,
defendants who anchor on the plaintiffs settlement demand and conclude it cant
get any worse than that could be shocked by an award two or three times the
amount of the plaintiffs demand. In Gross and Syveruds 1996 study, for example,
the average plaintiffs demand in commercial cases was $710,000 less than the
mean award. Conversely, in cases where defendants routinely overprice their offers
relative to the ultimate award, plaintiffs who anchor on a defendants last offer
could be severely distressed by an award substantially less than the defendants
offer. In a sample of products liability cases, for instance, 61% of defendants make
offers in excess of the ultimate award, and the average overpriced defense offer is
$92,001 more than the average award.107 Although plaintiffs may have perceived
104
Bibas, Stephanos. (2004, June). Plea bargaining outside the shadow of trial. Harvard Law
Review, 117(8), 2516.
105
106
107
Data regarding the products liability cases is from the California dataset for the 20022007
period, described in Chapter 3.
120
the defense offers in these products liability cases as a floor on their recovery, these
defense offers most often were the ceiling.
4.3
Reactions to Threatened Changes in Position and Status
This section responds to the third inquiry posed at the beginning of this chapter,
How do decision makers react to impending changes in their current conditions?
This question is critical because decisions to settle or try cases inevitably present a
desired or threatened change in wealth, reputation, employment, residence, health,
status, credibility or income. As explained below, at least nine biases affect decision
makers reactions to these potential changes. These biases are known as the
endowment effect, the status quo bias, optimistic overconfidence, the confirmation
bias, the representativeness and availability heuristics, hindsight bias, discounting,
and the sunk cost bias. The overall effect of these biases is to cause decision makers
to resist, ignore, minimize or discount changes, demand higher amounts to relinquish an existing right than they would have paid to obtain it, feel overly confident
about their capacity to control and predict change, and convince themselves that, to
the extent change occurs, they knew all along it would occur.
4.3.1
The Endowment Effect
The endowment effect, a term coined by University of Chicago economist Richard

Thaler in 1980, is a simple concept that defies conventional economic theory and
strongly affects conflict resolution. In its simplest form, the endowment effect
postulates that parties valuations of a right or an asset are not constant but are
context dependent in general and ownership dependent in particular. An individual,
accordingly, will demand more to relinquish a tangible asset or a right than the same
individual would pay to acquire that asset or right. In his autobiographical notes,
Daniel Kahneman describes the endowment effect: Our central observation was
that in many contexts the existing situation (e.g., price, rent, or wage) defines a
reference transaction, to which the transactor (consumer, tenant, and employee)
has an entitlement the violation of such entitlement is considered unfair and may
evoke retaliation. For example, cutting the wages of an employee merely because
he could be replaced by someone who would accept a lower wage is unfair,
although paying a lower wage to the replacement of an employee who quit is
entirely acceptable.108
108
Frangsmyr, Tore, Ed. (2003). Les Prix Nobel. The Nobel Prizes 2002. Stockholm: Nobel
Foundation.
4.3 Reactions to Threatened Changes in Position and Status
121
The endowment effect contradicts standard microeconomic theory holding that

goods have a constant value, whether being sold or purchased, and injects pricing
anomalies into settlement negotiations and outcomes. In litigation, the practical
effect of the endowment bias is that a party may demand more to abate a nuisance
than it would pay for the right to inflict the nuisance, a real property owner in an
eminent domain action may insist on compensation far greater than the fair market
value of the property, the amount of an injunction bond will be disputed because the
enjoined party places a higher value on the deprivation of a previously exercised
right than the enjoining party places on the power to restrain the exercise of that
right, and a retail tenant in a shopping center will demand more money to vacate the
premises early than it would pay to remain there. Although parties would agree, in
the abstract, that goods are fungible, their actions reflect a belief that another
persons goods are significantly more fungible than their own. As psychologists
Reid Hastie and Robyn Dawes state, Once people have possessed an object for
even a minute, they act as if losing it matters more than gaining it would have
mattered if they didnt have it.109
An experiment illustrates the endowment effect. In a classic coffee mugs and
candy study, students at the University of Victoria were divided into three groups.
One group was given a choice between a coffee mug and a 400-gram Swiss
chocolate bar. Their choices were about evenly divided, 56% selecting the mug
and 44% the candy bar. The second and third groups were not given choices;
subjects in the second group were simply given a mug, while those in the third
group received the candy bar. Students in the second and third groups then were
asked whether they wanted to exchange the items. Based on the roughly equal
preferences in the first group that was given a choice and the absence of any
transaction costs, one would predict that roughly half of the students in the second
group would exchange their mugs for a candy bar and half of the students in the
third group would trade their candy bars for a mug. In reality, however, only 11% of
the students initially given the mug were willing to trade for a candy bar, and only
10% of the students given candy were willing to exchange for a mug. The students
preferences, in short, were determined by their relation to the commodity rather
than any characteristic, quality, or valuation of the commodity itself.110
Since the owners valuation of an item is inconstant and context dependent, it
follows that in related experiments where the actual market price of a coffee mug is
between $4.25 and $4.75, students owning coffee mugs demand $5.25 to sell them
while non-owners refuse to pay more than $2.25 $2.75.111 When the experiment is
109

Knetsch, Jack L. (1989). The endowment effect and evidence of nonreversible indifference
curves. In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices, values, and frames
(pp. 172173). Cambridge: The Press Syndicate of the University of Cambridge.
111
Kahneman, Daniel, Knetsch, Jack L., and Thaler, Richard H. Anomalies: Endowment effect,
loss aversion and status quo bias. In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices,
values, and frames (p. 161). Cambridge: The Press Syndicate of the University of Cambridge. See
Kahneman, Daniel, Knetsch, Jack, and Thaler, Richard. Experimental tests of the endowment
110
122
repeated, sometimes with a different commodity, median selling prices are about
twice median buying prices and volume is less than half of that expected.112 The
pricing disparities induced by the endowment effect are even stronger when the
owner perceives that she has acquired the item as a result of personal attributes.
Students told that they had received a coffee mug as a result of outstanding
performance exhibit valuation differentials twice as high as students informed
the mugs were distributed randomly.113
The endowment effect is often illustrated by the economics professor who
purchased fine Bordeaux wines for less than $10 per bottle many years ago. The
wine has appreciated in value, the economist imbibes occasionally, and defying the
pricing invariability principle he teaches, refuses to sell it for the market price of
$200 per bottle or buy another bottle for $100. Reflecting on the irrational economist and the endowment effect, Kahneman recalls:
One key observation was the endowment effect, which Dick [Richard Thaler] illustrated
with the example of the owner of a bottle of old wine, who would refuse to sell it for $200
but would not pay as much as $100 to replace it if it broke. . . . Dick realized that the
endowment effect, which is a genuine puzzle in the context of standard economic theory, is
readily explained by two assumptions derived from prospect theory. First, the carriers of
utility are not states (owning or not owning the wine), but changes getting the wine or
giving it up. And giving up is weighted more than getting, by loss aversion.114
In Kahnemans view, the endowment effect is a manifestation of framing biases and

loss aversion. Since prospect theory posits that losses are weighted more heavily
than gains, owners inevitably demand more to sell (lose) than to buy (gain).
4.3.2
Status Quo Bias
The endowment effect often is considered a form of the status quo bias, both
conditions reflecting an aversion to losses resulting from a change in position.
The status quo bias presumes that, all other things being equal, people prefer the
status quo to alternative states. This bias presents a major impediment to conflict
resolution, as Kahneman and Tversky explain: A particularly important case of
loss aversion arises when the reference point is the status quo, and when the
retention of the status quo is an option. Because the disadvantages of any alternative
effect and the Coase theorem. In Sunstein, Cass, Ed. (2000). Behavioral law and economics
(pp. 211231). Cambridge: Cambridge University Press. See also Sunstein, Cass, and Jolls,
Christine. (2004, September). Debiasing Through Law (Discussion Paper No. 495, pp. 5053).
Harvard: John M. Olin Center For Law, Economics, And Business.
112
Kahneman, Knetsch, Jack L., and Thaler, Richard H. Anomalies: Endowment effect, loss
aversion and status quo bias. In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices,
values, and frames (p. 161). Cambridge: The Press Syndicate of the University of Cambridge.
113
Korobkin, Russell. (2003). The Endowment Effect and Legal Analysis. Northwestern University Law Review, 97, 1236.
114
Frangsmyr supra note 108.
123
to the status quo are weighted more heavily than its advantages, a strong bias in
favor of the status quo is observed.115 An individual inheriting property, for
example, is likely to maintain the assets in the form inherited, e.g., stocks and
bonds, although she would not purchase the same or equivalent stocks and bonds if
the inheritance consisted of cash. Similarly, new employees are more apt to choose
a new health care plan, while older employees maintain the same policy regardless
of its comparative disadvantages. To the extent people do change positions relative
to the status quo, they strongly prefer small changes to larger changes.116 The status
quo bias also explains why people are more likely to regret a loss resulting from a
deliberate change in the status quo than an equivalent loss incurred while maintaining the status quo.
The preference for the status quo does not reflect an objective assessment of
relative advantages of the status quo; the preference exists independent of the
quality or price of the status quo. In a survey of California electric power consumers, for instance, respondents were divided into two groups, one group consisting of consumers whose electric service was provided by a highly reliable company
and another group serviced by a relatively low reliability company. Both groups
then were asked to state a preference among six different plans of varying reliability
and price, including the two plans servicing the two groups. In the group of
consumers receiving highly reliable service, 60.2% preferred to maintain their
present plan and only 5.7% selected the low reliability service provided to the
other group, although its cost was 30% less; 58.3% of the consumers in the low
reliability plan also preferred their present company, only 5.8% preferring the
highly reliable service with a 30% cost increase.117
The perception of loss resulting from a change in the status quo, of course, is
from the viewpoint of the loss averse party seeking to maintain the status quo. In
law, however, one finds a status quo bias that extends far beyond individual loss
aversion and preserves the status quo even when the current state of affairs is
neither financially beneficial nor morally justifiable. The legal systems preference
for preserving the status quo is demonstrated by numerous procedural and evidentiary rules that legitimate the status quo and retard change. Examples of rules that
115
Kahneman, Daniel, and Tversky, Amos. Conflict resolution: A cognitive perspective. In

116
Tversky, Amos, and Kahneman, Daniel. (1991). Loss aversion in riskless choice: A referencedependent model. In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices, values, and
frames (pp. 146147). Cambridge: The Press Syndicate of the University of Cambridge. Kahneman,
Daniel, Knetsch, Jack L., and Thaler, Richard H. Anomalies: Endowment effect, loss aversion and
status quo bias. In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices, values, and
frames (p. 163). Cambridge: The Press Syndicate of the University of Cambridge. Camerer, Colin.
Prospect theory in the wild: Evidence from the field. In Kahneman, Daniel, & Tversky, Amos
(Eds.). (2000). Choices, values, and frames (p. 294). Cambridge: The Press Syndicate of the
University of Cambridge. See Korobkin supra note 113 at 12271293.
117
Thaler, Richard. (1992). The winners curse (p. 69). Princeton, New Jersey: Princeton University Press.
124
require more effort to change the status quo than to preserve it include evidentiary
rules establishing the burden of proof and effectively maintaining the status quo
unless the plaintiff, the party advocating change, meets its burden of proof; judicial
policies favoring injunctions for the purpose of preserving the status quo and
disfavoring injunctions that disrupt the status quo; majority and supermajority
voting requirements to amend or repeal statutes but none required to keep them
in the codes; rebuttable presumptions that sustain the status quo absent contrary,
preponderating evidence; and standards of review that require stronger evidence or
a higher level of proof to reverse rulings than to affirm them. In these instances, the
status quo bias is sufficiently durable to maintain an existing state even if that
results in the preservation of inequities. Absent a new and stronger force, inferences
are drawn and presumptions are made in favor of the status quo regardless of its
relative benefits or fairness.
In law the status quo bias exists independently of ethics, lawfulness or utility. A
thief is entitled to retain the fruits of his crime unless the prosecutor proves, beyond
a reasonable doubt, his guilt; a defrauded securities investor remains uncompensated unless she initiates a claim and proves, by a preponderance of the evidence, a
wrongful act; a corrupt official continues in office unless admissible evidence of
culpability is discovered; and discriminating employers persist unless employees
unable to afford independent counsel have convinced the Equal Employment
Opportunity Commission to file a complaint on their behalf. The default condition
in each of these instances is unlawful, but in its practical operation, the law both
embodies and enforces a status quo bias. In popular usage, this status quo bias is
reflected in the adage, Possession is nine-tenths of the law.
4.3.3
Overconfidence
Many psychologists and law professors regard overconfidence as the most significant contributor to decision-making failures.118 Successful decision makers are
inclined to attribute their own past successes to their own past actions and thereby
tend to exaggerate their own capabilities for avoiding risk and producing successful
outcomes in the future, explains Stanford University management professor James
March. Such optimism about ones ability to control future events, March continues, can lead to foolish adventures.119
118
See Korobkin supra note 15 at 290 (In my judgment, optimistic overconfidence is the most
significant psychological impediment to settlement in the mediation context). Yates, J. Frank,
et al. Probability judgment across cultures. In Gilovich, Thomas, Griffin, Dale, and Kahneman,
Daniel. (2002). Heuristics and biases (p. 271). New York: Cambridge University Press. (Overconfidence is the most common and frequently discussed finding in general-knowledge studies.)
See Birke and Fox supra note 54 at 15. Bibas supra note 104 at 2498.
119
March, James. (1994). A primer on decision making (p. 242). New York: The Free Press.
125
These foolish adventures are both cognitive and tangible. Cognitive misadventures related to optimistic overconfidence include the illusion of control, base rate
neglect, underadjustment, confirmation bias, and violations of probability theory.
Optimistic overconfidence drives an attorneys risk-taking conviction that, despite a
low likelihood of prevailing at trial, somehow his case will be more appealing and
meritorious than similar cases and he can present it more persuasively than another
attorney. Tangible examples of overconfidence include the plaintiffs general overpricing rate of 75% in the California dataset and 71% in the New York dataset, as
explained in Chapter Three. Acute overconfidence is evidenced in medical malpractice cases where, despite a win rate of only 21%, plaintiffs submit overpriced
demands in 83% of the cases, and the average overpriced demand is $547,732
above the average award. The defendants underpricing rate of 77% in the contract
cases, where plaintiffs win 78% of the cases, is another acute case of overconfidence. Physicist Richard Feynmans caution is apposite: The first principle is that
you must not fool yourself and you are the easiest person to fool.120
Overconfidence not only leads litigants into territory where they do not belong
but also maintains their cognitive equilibrium when it should be upset. Studies of
multiple professions psychologists, physicians, lawyers, and engineers show no
relationship between decision-making accuracy and degree of confidence.121 Psychologists, trainees and secretaries, for example, were asked to determine whether a
Bender-Gestalt test showed organic brain damage. Each group performed as well as
the other; the secretaries diagnoses were as accurate as clinicians with four to ten
years of experience. Most importantly, each group was as confident on cases they
misdiagnosed as on cases they diagnosed correctly.122
The less information decision makers have about a decision, the more confident
they feel about their decisions. Confidence assessments from a variety of people,
cognitive psychologists report, show considerable insensitivity to the extent of
their knowledge.123 Some studies actually replicate attorney-litigant decision
making and show high levels of decision-making confidence even when the study
participants know they have inadequate information. In one study conducted by
Kahneman and Tversky, for example, information was divided into three sets
(background data, plaintiffs argument, and defendants argument), and different
groups received different sets of information. Although the group that received all
the information achieved higher predictive capability in most cases, that is, were
more accurate in predicting the jury result, the group with the partial information set
120

Sternlight, Jean R., and Robbennolt, Jennifer. (2008). Good lawyers should be good psychologists: Insights for interviewing and counseling clients. Ohio State Journal on Dispute Resolution,
23, 437, 485, fn. 188 (Research has demonstrated a generally weak correlation between confidence and accuracy, although the relationship can be stronger under some circumstances.)
122
123
Fischhoff, Baruch, (1982). Debiasing. In Kahneman, Daniel, Slovic, Paul, & Tversky, Amos
(Eds.). (1982). Judgment under uncertainty: Heuristics and biases (p. 440). Cambridge: The Press
Syndicate of the University of Cambridge.
121
126
was more confident about its prediction even though it knew it had only one side of
the information.124
Overconfidence functions like a cognitive virus, infiltrating many dimensions of
litigant decision making. Litigants are overly optimistic in assessing their chances
in court; they assume that their opponent has less initiative and less imagination;
they overestimate the likelihood of imposing their preferences on an opponent; they
are overly confident in predicting whether, in a final arbitration procedure, the
arbitrator will select their final offer; and in mock trials they are often surprised
and dismayed by the strength of the position put forth by their mock opponent.125
The deleterious effects of overconfidence may be aggravated in attorney-client
relationships. As Kahneman and Tversky explain, optimistic overconfidence is
not a desirable trait for generals recommending a war or for attorneys urging a
lawsuit, even if their expressions of confidence and optimism are pleasantly reassuring to their followers or clients at the time.126
Attorneys and clients may take solace (or feel unease) in the knowledge that
judges, too, are susceptible to overconfidence and egocentric biases. In the judicial
mind, these biases manifest in different forms; 88% of judges, for example, believe
they are less likely to be overturned than the average judge, and most believe that
the lawyers who appear in front of them feel much more fairly treated than is
actually the case.127 The persistence of judicial decision-making biases also is
shown in a study where 67% of the judges believed that the parties should decline a
settlement offer which, from both the plaintiffs and defendants perspectives,
exceeded the expected value of trial. This elevated judicial decision error rate is
more consistent with that of risk-seeking parties and demonstrates that decisionmaking biases can afflict individuals with the highest level of objectivity and
detachment attempting to guide parties to settle a case on economically advantageous terms. Even for career jurists, whom society has selected for their superior
decision-making skills, overconfidence and egocentrism are difficult biases to
overcome.128
4.3.4
Confirmation Bias
The confirmation bias blocks the perception of new and disconfirming information
and reinforces ones belief that the facts and reasons initially leading to a decision
124
Kahneman, Daniel & Tversky, Amos (Eds.). (2000). Choices, values, and frames (p. 474).
125
Id. at 474475.
126
Id. at 476.
127
128
Guthrie, Rachlinski, and Wistrich supra note 47 at 821. See Guthrie, Rachlinski, & Wistrich
supra note 102.
127
were valid and have not changed. This bias smoothes information processing by
choosing evidence which confirms a belief closely held or a decision previously
made and dismissing contrary data as being unreliable, biased, inaccurate, or
incomplete. In ordinary life, the confirmation bias is helpful and reflects adaptive
behavior, as it reduces the cognitive workload required to evaluate and execute
complex decisions. It is one of the fast and frugal psychological mechanisms that
expedite the assembly of facts and the assimilation of new information to form a
coherent system of values, beliefs and actions.
When exercised in the assessment of litigation risks, however, the confirmation
bias produces an illusion of decision-making competence and fairness, distorts
crucial information, and fosters an out of mind, out of sight conviction that
information discarded by the decision maker is imperceptible to the adjudicator.
Like the children in developmental psychologist Jean Piagets experiments, decision makers affected by the confirmation bias seem to believe that by placing their
hands over their eyes, they can block others perceptions as well as their own. The
confirmation bias is particularly risky in an adversarial system where the opposing
partys lawyer is paid to discover and persuasively present evidence that contradicts
a decision makers narrative and was cognitively tossed by the decision maker in
his effort to justify actions previously taken and sustain an internally consistent
version of his case.
The tendency to underestimate or discard unfavorable facts and to overweight
favorable data is caused by the confirmation bias. When this bias is doing its job,
reasoning is chronically distorted by motivational biases, and people reason in
ways that support a preexisting decision rather than analyze it logically or rationally. People reason in ways consistent with what they want or expect to see.129 In
Karl Weicks notable phrase, believing is seeing. Eric Hoffer, the philosopher
awarded the Presidential Medal of Freedom, described this psychology in The True
Believer, noting that the strength of the true believer does not lie in moving
mountains but rather in not seeing mountains to move.130 Litigants likewise evaluate and assimilate information they receive in a way that is biased in favor of their
own position, state law professor Richard Birke and management professor Craig
Fox. Additional information does not diminish the confirmation bias any more than
a higher range of mountains would discourage Eric Hoffers true believer. Mixed
evidence tends to polarize rather than reconcile beliefs, and more information
actually causes parties to become more entrenched, disparities between valuations
to grow, and costs of disputing to rise.131
The confirmation bias is so strong that beliefs persist even after the information
that formed the beliefs has been discredited or withdrawn. The psychological
investment in establishing and maintaining beliefs is too high to abandon them
just because the underlying information is later proven to be false or inapposite. In a
129
Epley and Caruso supra note 21 at 179.

Hoffer, Eric. (1963). The true believer. New York: Harper Perennial Modern Classics.
131
Birke and Fox supra note 54 at 2728.
130
128
recent study, 860 people in Australia, Germany and the United States received a list
of events (some reported, others invented) and were then asked to state whether
they had heard of the events and to rate the likelihood of each event being true. As
to each event of which they had heard, they noted whether the report had been
retracted. For the Americans in the study, the simple act of remembering that they
had once heard something was enough to make them regard it as true, regardless of
a subsequent retraction. Even many of those who remembered a retraction still
rated the original claim as true. This result did not surprise Stephan Lewandowsky,
the psychology professor who led the study: By the time they receive a retraction,
the original misinformation has already become an integral part of that mental
model, or world view, and disregarding it would leave the world view a shambles.
Because people do whatever it takes to preserve their mental models, he concludes, people continue to rely on misinformation even if they demonstrably
remember and understand a subsequent retraction.132
As a result of the confirmation bias, many litigants evaluating information
obtained through pre-trial discovery procedures place disproportionate weight on
favorable evidence and either ignore or underweight disconfirming evidence. Noting that intuition seems to direct reasoning and that reactions to information are
largely automatic, psychology professors Nicholas Epley and Eugene Caruso
explain how adverse parties can look at the same information and reach entirely
different conclusions:
Given this causal sequence, it is now clear why ideological opponents find it so easy to
derive what they perceive to be compelling evidence in support of their particular position
from the exact same evidence. Automatic evaluations produce moral reasoners who are not
empiricists reasoning dispassionately about a particular issue, but motivated partisans
seeking justification for a preexisting intuition. The inherent ambiguity in almost any
partisan issue is likely to ensure that people seeking supporting evidence for one position
over another are likely to find some, producing opposing positions that partisans each
erroneously believe are a direct product of compelling rational arguments.133
As parties scan, filter, weight, and select information obtained through discovery
procedures, finding favorable evidence is as predictable as the United States
Supreme Courts summer recess. Unless biases are mitigated in this evidenceseeking phase, discovery becomes a predictable ritual in which the parties anticipate the evidence to be discovered, invariably find the sought-after evidence, and
then use that evidence to bolster assessments, opinions, and strategic decisions
already formed and implemented. Not surprisingly, given the confirmation bias,
some studies show a negative correlation between the extent of discovery and the
likelihood of settlement.134 More evidence, it appears, does not promote re-evaluation but rather solidifies an initial evaluation.
132
Begley, Sharon. (2005, February 4). People believe a fact that fits their views even if its
clearly false. The Wall Street Journal, p. B1.
133
Epley and Caruso supra note 21 at 181.
134
McKenna, Judith A., and Wiggins, Elizabeth. (19971998). Empirical research on civil discovery. Boston College Law Review, 39, 785, 796.
129
The confirmation bias is amplified when attorneys report to clients on a periodic

basis as is routine with defense counsel writing monthly or quarterly status reports
to large business and insurance companies instead of an episodic basis. Periodic
reports tend to shape events into a coherent, confirmatory theme of the case while
episodic reports are more likely to concurrently inform clients of disparate and
inconsistent facts elicited at a deposition or obtained through interrogatories or
document inspection demands. Discovery inevitably produces conflicting, disconfirmatory and ambiguous evidence, and decision makers case evaluations are aided
by seeing the evidence in the same form the jury or judge will see it. The synthesis
of raw evidence through an attorneys framework of legal theories and arguments
and prior advice and predictions may distort the actual impact of the evidence and
hinder the clients independent determination of its probative value. In many cases
the client would benefit from seeing the raw evidence and making its own evaluations assisted by the attorneys legal advice unencumbered by the attorneys
narratives and personal opinions of the witnesses credibility. Like physicians who
withhold reports believing that patients will overreact, attorneys often keep
depositions, motions and written discovery responses in their own files to protect
their clients from being alarmed before the attorney can explain the arguments
and evidence for the clients edification. In both circumstances, the professionals
underestimate the ability of their charges to comprehend information and make
their own evaluations and decisions. Because both attorneys and clients may be
affected by the confirmation bias, the risk of misperceptions is intensified by
filtering data through an attorney and sending to the client the attorneys summary
of the evidence instead of the evidence itself.
4.3.5
Representative and Availability Heuristics
Confirmation bias is augmented by the representativeness heuristic and the availability heuristic. These heuristics cause people to emphasize recent, spectacular and
visual information and ignore base rates and other non-affective, non-visual data.
Acting under the influence of these heuristics, people assess the likelihood of an
occurrence by its most recent manifestation, not its historical incidence, and
overweight easily visualized dangers while ignoring insensible yet major risks.
Homeowners buy flood insurance after a catastrophe, airline passengers purchase
flight insurance after a major aviation accident, and investors move assets into
stocks after a lengthy bull market. Although automobile accidents kill 3,500 people
every month and 42,000 people die from cancer each month, those unspectacular
facts dont seem to scare or interest us nearly as much as things like plane crashes,
mountain lion attacks, deadly roller coaster mishaps or avian flu.135 Death by
135
Daum, Meghan. (2007, August 18). Death by numbers. Los Angeles Times. Available at
http://www.meghandaum.com/latimes_column/2007/081807_death_numbers.htm
130
falling asteroid, writes Meghan Daum, a Los Angeles Times columnist and National
Public Radio contributor, seems infinitely more real than death by cholesterol.136
Evolutionary adaptation places a high premium on detecting and responding to
sensory stimuli in general and vividness in particular, frequently overriding the
analytical processes of the dorsal lateral prefrontal cortex. Until the Age of Reason
and The Enlightenment in the 18th century, nature strongly favored those who saw
stripes and scaled the nearest tree rather than those quickly devoured souls who
considered the odds of the stripes covering a zebras flanks instead of a tigers
empty stomach. Similarly, people who fled villages in the 1300s when they saw
blackened, necrotic limbs infected by the Bubonic plague are more likely to be your
ancestors than those thoughtful individuals who hung around contemplating the
statistical likelihood of dying from a rare bacterium. Acting first and deliberating
later has been the operative rule for survival and hence procreation; its adherents
dominate the genetic pool. The availability and representativeness heuristics reflect
the evolutionary advantages of assuming that recent events are more important and
more likely to recur than historical frequency data indicate and that visually
stimulating images have greater predictive value than arid statistics.
The vividness of the image or the ease with which it can be recalled distorts its
representativeness, explains law professor Richard Birke. This is why people
tend to believe, incorrectly, that there is more annual rainfall in Seattle than in
northern Georgia, that shark attacks lead to more deaths than falling airplane parts,
or that murder is more common than suicide.137 The availability and representativeness heuristics similarly lead most people to believe that homicides and car
accidents kill more Americans than diabetes and stomach cancer presumably
because of the greater media coverage provided to the former although the two
diseases kill far more people.138 A picture may be worth a thousand words, as the
saying goes, but more often a picture overcomes a thousand words.
Sophisticated, highly experienced decision makers are vulnerable to the cognitive distractions caused by the availability and representativeness heuristics.
Matthew Broderick, the director of the Homeland Security Operations Center
(HSOC) in New Orleans and a retired Marine brigadier general with 30 years of
experience, prided himself on fact-based decision making. During the Hurricane
Katrina disaster in New Orleans he was responsible for informing Homeland
Security Secretary Michael Chertoff and the White House of all ground intelligence.
As he saw it, one of his jobs was to not overreact, not get hysterical and get the
facts. Although breaches of the levees were reported as early as 7:30 a.m. on
August 29, 2005, and a half hour later the Transportation Security Administration
reported a breach of the Industrial Canal levee directly to HSOC, Mr. Broderick
stated throughout the day that the citys flood control structures were intact.139
136
Id.
Birke supra note 47 at 203.
138
139
Cooper, Christopher and Block, Robert. (2006, July 7). Behind the Katrina imbroglio. The Wall
Street Journal, p. B1.
137
131
When later asked by U.S. Senate investigators why he thought the levees had not
been breached despite numerous reports to the contrary, Mr. Broderick said he had
watched CNNs video segment showing carousers on Bourbon Street, a relatively
high point in New Orleans: The one data point that I really had, personally,
visually, was the celebration in the streets of New Orleans, of people drinking
beer and partying because and they used, they came up with the word we
dodged the bullet. So thats a pretty good indicator right there. After watching the
CNN video, Mr. Broderick issued a final report for that day stating preliminary
reports indicate the levees have not been breached, although the agency he
directed had received nearly a dozen definitive reports that the citys flood-control
system had been breached and eight other reports suggesting as much.140
Attorneys may not be fixated on CNN video segments, but they are attached to
strong images in the form of charismatic clients, visually searing narratives,
deposition sound bites, trial graphics and slides, riveting day in the life videotapes
of accident victims, and star quality expert witnesses. They relish a dramatic,
devastating cross-examination of an adversarys witness and may overlook the fact
that a dry, composed, and thorough direct examination of their own witness may be
more important to the jury. They also draw analogies between well-publicized cases
and their own cases, plaintiffs attorneys finding parallels between their cases and
record verdicts and defense attorneys seeing similarities between their cases and
major defense verdicts. Clients, in turn, may find the availability heuristic distorts
their expectations by over-emphasizing recent trials covered by the media or
outsized settlements or verdicts obtained by competitors, business colleagues,
neighbors, relatives and friends.
Paul Brest, president of the Hewlett Foundation and former dean of Stanford
Law School, is an expert on behavioral law and economics in general and decision
making in particular. In reviewing the contributions of Amos Tversky and Daniel
Kahneman to heuristics and biases research, he reiterates researchers findings that
judgments of probability are based on how readily salient examples come to
mind. He also explains the aggregate impact of the availability bias and confirmation bias: Because of the ways that people process information, having accurate
information does not necessarily improve decision making, and sometimes may
detract from it. Moreover, rather than accumulate the optimal amount of information, individuals often uncritically accept information that confirms their beliefs
while over-critically rejecting disconfirming data; they are overconfident in their
judgments; and are prone to base judgments on information that is vivid and
available to memory rather than more accurate but pallid and unmemorable.141
Although these biases may not unseat rational judgment and behavior, Mr. Brest
writes, they undermine the premise of homo economicus objectively accumulating
140
Id.
Brest, Paul. (2006, November). Amos Tverskys contributions to legal scholarship: Remarks at
the BDRM Session in honor of Amos Tversky, June 16, 2006. Judgment and Decision Making, 1
(2), 175.
141
132
and evaluating all data necessary to make rational, utility-maximizing decisions.

The more realistic view may be that of a decision maker consistently reacting to
recent and visually arresting stimuli and occasionally exercising the deliberative
powers of the prefrontal cortex to mitigate the availability and representativeness
heuristics. Human reasoning, in short, is invariably imagistic.142
4.3.6
Hindsight Bias
To the extent new information might challenge old beliefs, the hindsight bias
diminishes its impact. When a fact or event emerges outside the zone of expected
data, it briefly generates dissonance and causes cognitive distress. This sense of
dissonance and distress is ameliorated by rationalizations like, I knew this would
happen, This is exactly what I said would happen, or I knew it all along. This
mental attempt to quash dissonant information by reshaping it and recreating
recollections is known as the hindsight bias, and its existence has been documented in endeavors as diverse as medical diagnoses, elections, and pregnancy
tests.143 Under the influence of this bias, information about what actually occurred
apparently influences our judgments concerning what we thought would occur
before we knew the outcome. Events that have actually occurred seem, through
the lens of hindsight, to have been almost inevitable.144 The hindsight bias thus
squeezes new data into old cognitive portals, just as the confirmation bias shapes
new stories to conform to old memories and pressures new data to support old
results. When necessary to reduce dissonance between new information and old
beliefs, psychology professor Robyn Dawes explains, people change their recollection in ways that make sense of the present. Under severe stress to reconcile facts
and events, he states, people will quite literally make up stories about our lives, the
world, and reality in general.145
Three experiments demonstrate the operation of the hindsight bias. In the first
experiment, students were asked to review 15 possible outcomes for President
Richard Nixons anticipated trip to China in 1972 and to predict the most likely
outcome from among those possibilities. Two weeks after they submitted their
predictions, the students learned the actual outcome of the trip and were asked to
recall their original predictions; 67% of the students thought their original estimates were closer to the truth than they really were.146 In another experiment,
participants were asked to predict the outcome of the U.S. presidential election in
142
Dennett, Daniel C. (1995, August 25). [Review of the book] Damasio, Descartes error. Times
Literary Supplement, p. 34.
143
144
145
146
Russo & Schoemaker supra note 4 at 211.
133
2000. A few weeks after the election results were announced, the participants were
asked to recall their predictions. The participants reported that they had predicted
Gore leading Bush by 0.58% in the popular vote. Their recalled predictions were
remarkably close to the actual election results, as Gore led Bush by a 0.32%
difference. Their original prediction, however, was that Gore would win the popular
vote by a lead of 4.45%.147 In a third experiment, participants received a description
of the British Gurkha War. One group was not given any outcome information,
while the other four groups were told, alternatively, that the British had won, the
Gurkhas had won, a military stalemate occurred with a peace agreement, and a
military stalemate occurred without a peace agreement. The groups that received
outcome information were then asked how they would have assessed the probability
of each outcome if they had not received outcome information. The subjects
informed that the British had won assigned a mean probability of .57 to that
outcome, but the subjects not given any outcome information assessed the probability of a British victory as .34. Participants tended to believe that they would
have judged the outcome that they were told happened as being most likely, even if
they had not been told the outcome, reports Professor Bazerman. It becomes
clear, he notes, that knowledge of an outcome increases an individuals belief
about the degree to which he or she would have predicted that outcome without the
benefit of the knowledge.148
The danger of the hindsight bias, Professor Bazerman believes, is that it reduces
our ability to learn from the past and to evaluate decisions objectively.149 Stated
differently, we are insufficiently surprised by experience, and one result is that
we do not learn effectively from it.150 The hindsight bias prevents people from
recognizing gaps between their predictions and actual outcomes, delaying and often
halting the recalibration essential to expert judgment. It raises confidence in
predictive capacity when the actual evidence dictates caution, and it fosters an
illusion of decision-making competence when the facts compel cognitive corrections. In a world where everyone knew it all along, there is no incentive to learn
and very little left to learn.
4.3.7
Discounting Of Future Payments and Costs
Litigants often face choices between a lump sum payment and installment payments, between a lower, upfront payment and a higher, delayed payment, and
147
Schwarz, Norbert, and Vaughn, Leigh Ann. The availability heuristics revisited. In Gilovich,
Thomas, Griffin, Dale, and Kahneman, Daniel. (2002). Heuristics and biases (p. 113). New York:
Cambridge University Press.
148
Id. at 112. Bazerman supra note 18 at 36. Baron, Jonathan. (2000). Thinking and deciding
(p. 145). New York: Cambridge University Press.
149
150
134
between unconditional and contingent payments. Although most litigants are

familiar with the time value of money concept ($1 received today is worth more
than $1 received later) and the need to discount a future sum by a presumed rate of
return when determining its present value, most minds do not perform discounting
functions with mathematical precision or logical consistency. Consequently, litigants and their attorneys are not particularly adept at making what economist
Richard Thaler calls intertemporal choices, decisions in which costs and benefits
are spread out over time.151 Immediate payments are overweighted relative to
delayed payments, short term risks of non-payment are overweighted relative to
long term risks of non-payment or other material defaults, and mental discounting
rates are high relative to actual inflation costs or presumed investment returns. This
general inability to understand and calculate financial equivalencies is another
example of how decision makers routinely misunderstand the nature and cost of
change and consistently underreact or overreact to temporal manipulations of value.
People are an impatient lot, and negotiated outcomes often reflect their willingness to forgo greater long-term benefits in exchange for smaller, immediate benefits. The entire viatical settlement business is based on the assumption that an
insurance policy holder will take significantly less than the face amount of the
insurance policy to obtain an immediate payment, and payday loan businesses
typically realize an effective annual interest rate of 391% on a two-week loan
until payday.152 The general preference for immediate payment also is demonstrated by the fact that about 72% of all Social Security recipients choose to take a
reduced monthly benefit at 62 years of age instead of waiting for a larger monthly
amount payable at age 65. About 75% of women elect the early Social Security
payment, although their longer life expectancy statistically will result in lower
overall benefits.153 And at the heart of the American residential loan debacle,
which began to unfold in 2005, is a chronic inability to make rational intertemporal
choices. Given a choice between an initially lower monthly mortgage payment with
the risk of a higher interest rate and higher monthly payments in the future and an
initially higher monthly payment with a fixed interest rate loan and no risk of higher
monthly payments in the future, or a choice between a cash-out refinance loan with
a higher interest rate and a no-cash refinance loan with a lower interest rate, many
people were incapable of making a selection consistent with their long-term
financial capabilities and goals. Short-term financial gains eclipsed long-term
financial stability, and the prospect of immediate cash trumped equity preservation.
151
Thaler supra note 117 at 92.

Federal Deposit Insurance Corporation. (2007, Summer). When you need money fast: Sources
of affordable cash. FDIC Consumer News. Federal Trade Commission. (2008, March). Payday
loans very costly cash: Consumers urged to consider the alternatives. FTC Consumer Alert.
153
See Dalton, Thomas M. (2006, June). Retirement at 62: Is receiving social security early worth
it? The CPA Journal. Social Security Administration. (2005, May). OASI Monthly Statistics, April
2005 (Benefits in Current-Payment Status: Table 3. OASI Retired-Worker Beneficiaries, By Sex
and Election of Early Retirement, March 2004-March 2005). Social Security Administration.
152
135
In the process of making intertemporal choices, different parts of the brain are
activated, each part yielding a result dictated by its evolutionary function. When
asked, Would you rather have $15 in two weeks or $20 in four weeks? most
people correctly choose to wait an extra two weeks for the larger $20 payment. MRI
images of the brain, taken after that question is posed, show activation of the
prefrontal cortex, a region responsible for analytic thinking. When a different
question is posed, however, both the responses and MRI images are qualitatively
different. Asked, Would you rather have $15 now or $20 in two weeks?, about
half of the respondents want $15 now, although the time delay of two weeks for an
additional $5 is the same as the first question. The MRI image also shows that the
now signal in the second question shifts the brain activity from the prefrontal
cortex to the limbic system, triggering a relatively primitive deliberative process.
Harvard economic professor David Laibson explains the difference in the responses
to the two questions: The rat brain isnt capable of valuing the future. When
rewards have immediate consequences, our decisions are more likely to show
impatience.154
The irrationality of mental discounting is commonly seen in consumer purchases
of household items. Consumers will not purchase energy saving appliances unless
they obtain implicit discount rates of 17% to 300%.155 For example, they will not
pay $100 more for an energy efficient appliance that will save them $150 in the first
year of operation alone (a 50% discount rate for one year). But they will choose an
appliance that costs $50 less than the energy efficient appliance even if the lower
priced item will cost $50 more in electricity charges in the first year of ownership.
Discount rates, moreover, vary widely among consumers, and research indicates
that high discount rates are correlated with impulsiveness, low intelligence, brain
damage, and depressants like alcohol.156 These research findings suggest that
demographic segments with the highest objective need for lower costs or immediate
payments may also display the highest subjective vulnerability to discounting. This
compounded susceptibility to discounting is presumably evident to parties possessing superior economic resources and negotiating expertise.
Sophisticated defendants strategically exploit the cognitive weakness for shortterm gratification by offering an apparently reasonable amount to be paid over time
or at a future date or, at the plaintiffs election, a relatively modest amount payable
154
Heimer, Matthew. (2005, January). Outsmarting your brain. Smart Money, pp. 77, 79. See
(2005, January 13). Economics focus/mind games. The Economist, p. 71. McClure, Samuel M.
(2004, October 15). Separate neural systems value immediate and delayed monetary rewards.
Science, 306(5695), 503.
155
Hausman, Jerry A. (1979, Spring). Individual discount rates and the purchase and utilization of
energy-using durables. The Bell Journal of Economics, 10(1), 3354. Houston, Douglas A. (1983,
September). Implicit discount rates and the purchase of untried, energy-saving durable goods. The
Journal of Consumer Research, 10(2), 236246. Thaler supra note 117 at 94. Lowenstein, George,
and Prelec, Drazen. (1992). Anomalies in intertemporal choice. In Kahneman, Daniel & Tversky,
Amos (Eds.). (2000). Choices, values, and frames (p. 592593). Cambridge: The Press Syndicate
of the University of Cambridge.
156
Bibas supra note 104 at 2506.
136
right away. In another iteration, defendants may offer an uncertain, potentially large
amount depending on the outcome of a future event or, at the plaintiffs election, a
de minimis payment now. These savvy litigants display an ostensible reasonableness about the amount of a future payment and create the impression that the
plaintiff, not the defendant, is choosing to forgo payment of a reasonable sum in
exchange for immediate compensation. In these negotiations, where intertemporal
valuations are manipulated to enhance short-term gratification and minimize longterm benefits, the logic of present value calculations is no match for the lure of
immediate payment.
4.3.8
Sunk Cost Bias
Dont throw good money after bad. Everybody knows better than that, and nearly
everyone is convinced they would not make such a mistake. So why study the sunk
cost bias? The simple answer is that money does not come with labels good
money and bad money, ill-advised incremental expenditures initially are seen
as prudent investments or steps necessary to protect investments, and nearly
everyone evidences a sunk cost bias to bolster prior decisions and protect an illusion
of competence. Very few decision makers can determine when more seed money
will land on the compost pile or giving someone just another chance will generate
additional losses.157
Sunk cost effects have been demonstrated in numerous experimental and real
world studies. In a study conducted by Hal Arkes and Catherine Blumer, 85% of
the subjects decided to invest additional research funds in a project that was 90%
completed and had already consumed $10 million of the companys cash although
they were informed a competitor was already selling a product that was superior in
all respects to the product under development in the research project. But when
information regarding the previous $10 million expenditure on the research project
was deleted and all other information remained the same, only 17% of the subjects
elected to continue the project. Similarly, people who have paid full price for tickets
are significantly more likely to attend an event than people who receive discounted
tickets, and loan officers who previously approved loans are more likely to approve
additional loans after the borrowers default.158
Unfortunately, the psychological investment in previous decisions and the need
to reduce dissonance resulting from bad decisions may render people more likely to
spend money on projects with poor track records than good track records. The need
to prevent or forestall the recognition of failure appears to motivate additional
expenditures on projects already exhibiting detrimental outcomes. When informed
157
See Royer, Isabelle. (2003, February). Why bad projects are so hard to kill. Harvard Business
Review, pp. 4856.
158
Baron supra note 148 at 298. Plous supra note 16 at 244.
137
that a decision they had made was unsuccessful, study participants are more likely
to allocate additional money to the project affected by their unsuccessful decision
than a different, successful project. When study participants are informed that
someone else in the organization made the unsuccessful decision, they are significantly less likely to approve additional funding for the failing project than persons
who made the initial, unsuccessful decision about the failing project.159
The sunk cost effect also motivates people to orchestrate data and evaluate
performances to justify prior decisions. A study by organizational behavior experts
Barry Staw and Ha Hoang, for instance, concluded that basketball players playing
time and probability of being traded were significantly affected by their teams prior
draft choices and the sunk costs incurred to sign players independent of the players
actual performance.160 Likewise, managers who favored hiring an employee write
positively biased performance appraisals of that employee, while those opposed to
the hiring decision negatively slant their performance appraisals.161
An extreme version of the sunk cost bias is played out every time Professor
Max Bazerman conducts his negotiating class for executives at Harvards John
F. Kennedy School of Government. Seasoned executives, making six and seven
figure incomes and handling decisions that affect large organizations, are invited to
participate in an auction for a $100 bill. They are told that the auction is slightly
different from most auctions in that the second highest bidder must pay the amount
of his bid but will, of course, not win the $100 bill. The bidding starts and within
seconds the bids are near $100. Fearing that he will lose his entire bid, the second
highest bidder inevitably escalates his psychological commitment and bid, responding to Bazermans baiting, Come on, Brian! Dont you want at least $100 for
all your work? The result is excruciatingly predictable: Ive played this game
perhaps 600 times, Bazerman says, and Ive never seen the bidding stop below
$100.162
Lawyers and clients who routinely negotiate and litigate disputes may believe
they are too experienced to fall for Professor Bazermans games. But how does one
explain real life cases where clients spend $420,000 on attorneys fees in an
unsuccessful attempt to recover less than $25,000, or $1,000,000 in attorneys fees
to recover $121,000, or $1,400,000 in attorneys fees to obtain an amount less than
the settlement offer made before the case was filed? Each of those cases seems to
reflect an extreme sunk cost bias similar to that shown by the Fortune 500 executives in Bazermans auction. Consistent with the self-deception that often attends
decision-making biases like the sunk cost bias, attorneys and clients do not take
responsibility for adverse outcomes but rather blame the other side for being
unreasonable in settlement negotiations and forcing the case to trial. As professors
159

Staw, B. M., & Hoang, H. (1995). Sunk costs in the NBA: Why draft order affects playing time
and survival in professional basketball. Administrative Science Quarterly, 40, 474493.
161
162
Heimer supra note 154 at 77.
160
138
Gross and Syverud concluded from their interviews with attorneys, 81% of plaintiffs and 72% of defendants blamed the other side or an extrinsic factor when asked,
Why did this case go to trial rather than settle. Each side says the other did it,
Gross and Syverud report, and almost nobody says, We gambled and lost.163
As a result of the enormous costs incurred prior to serious settlement negotiations or trials, clients and attorneys are highly vulnerable to sunk cost biases. These
biases are reflected in comments like, Weve come too far to walk away from this
now, We might as well take our best shot with the jury, or If you had offered
that at the beginning of the case, we might have accepted it. Like the bidders in
Professor Bazermans game, litigants start off intending to make financially
rewarding decisions but eventually become concerned with winning the competition, saving face, minimizing losses, and punishing their opponent for getting them
into such a mess.164 When both parties have reached the point of diminishing
returns, they nevertheless continue a mutually destructive pattern, believing they
are being forced by the other bidder to continue and claiming the other bidder is
crazy to continue.165
The sunk cost effect in litigation often is heightened by the fact that the key
decision makers in the settlement negotiations also were the key players in the
actions and decisions that preceded the filing of the case, making it all the more
imperative for those prior actions and decisions to be justified and vindicated.166 To
overcome the strong pressures applied by the sunk cost bias when they attempt to
assess probable outcomes and evaluate settlement alternatives, both attorneys and
clients must detach themselves from their prior financial and cognitive investments. Effective decisions can only be forward-looking, as past expenditures
neither mitigate the effects of a bad decision nor diminish the benefits of a sound
decision. Expending additional money on a counter-productive cycle of self-justification never enhances an otherwise imprudent course of action but rather inflicts
further harm and embarrassment. When litigants find themselves knee deep in the
big muddy, they need to recognize and resist the inclination to wade farther in the
expectation of finding firmer sediment.
The decision to abandon a strategy that has reached the point of diminishing
marginal returns is one of the most imperative yet most difficult challenges presented to clients. Because effective decision making requires a stern willingness to
abandon prior positions and shift resources to more productive ventures, litigants
163
Gross & Syverud supra note 86 at 49.

165
Id.
166
See Staw, B. (1976). Knee-deep in the Big Muddy: A study of escalating commitment to a
chosen course of action. Organizational Behavior and Human Performance, 16, 2744. Staw,
B.M. and J. Ross. (1987). Knowing when to pull the plug. Harvard Business Review, 65(2), 6874.
Statman, Meir, and Caldwell, David. (1987, Winter). Applying behavioral finance to capital
budgeting: Project terminations. Financial Management, 16(4), 715. Staw, Barry M., and Ross,
Jerry. (1989, October 13). Understanding behavior in escalation situations. Science, 246(4927),
216220.
164
4.4 Chapter Capsule
139
must continually ask themselves, If we did not do this already, would we, knowing
what we now know, go into it?167 If the answer is no, clients, aided by counsel,
must extricate themselves before the fallout consumes core resources. Although he
was not referring to the sunk cost bias specifically, Peter Druckers advice about
abandoning projects is apposite:
The first policy and the foundation for all the others is to abandon yesterday. The first
need is to free resources from being committed to maintaining what no longer contributes to
performance, and no longer produces results. In fact, it is not possible to create tomorrow
unless one first sloughs off yesterday. To maintain yesterday is always difficult and
extremely time-consuming. To maintain yesterday therefore always commits the institutions scarcest and most valuable resources and above all, its ablest people to nonresults.
. . . And if these people are committed to maintaining yesterday, they are simply not
available to create tomorrow.168
To facilitate the acknowledgment and abandonment of a strategy producing a

negative marginal return, attorneys and litigants need to shift their focus from the
immutable past to the pliant future. Studies indicate that emphasizing changed
external circumstances rather than personal decision-making shortcomings can
diminish sunk cost biases. The focus on changed circumstances and future consequences diminishes the egocentric drive to escalate prior commitments, shifts the
decision makers attention away from prior positions and commitments, directs
analysis to the current conditions and furnishes a self-protective reason for making
new and better decisions.169
4.4
Chapter Capsule
Psychological biases, heuristics and illusions corrupt sound attorney-litigant decision making. To make effective decisions, attorneys and clients must understand
how psychological factors affect their perception of conflicts and adversaries, their
evaluation of and response to risk and uncertainty, and their reactions to impending
changes in the status quo.
Perceptions of adversaries actions, character and motivations are distorted by
attribution errors, selective perception and memory, self-serving biases and reactive
devaluation. These distorted perceptions, in turn, unduly restrict the alternatives
considered in pre-trial settlement negotiations and foster erroneous, self-sealing
views of how judges and juries will decide cases. In assessing risk and uncertainty,
attorneys and clients are affected by anchoring and framing biases. Anchoring
biases cause litigants to place undue weight on amounts derived from appraisals,
Drucker, Peter. (1999). Management challenges for the 21stcentury (p. 74). New York: Harper
Collins Publishers.
168
Id.
169
Baron supra note 148 at 299. Bazerman supra note 18 at 78.
167
140
estimates, sales, offers, demands and other sources that may be biased, self-serving,
irrelevant, unreliable, arbitrary or inaccurate. Framing biases cause litigants to be
risk seeking when facing losses and risk averse when anticipating gains, resulting in
suboptimal results for both plaintiffs and defendants. In responding to threatened or
impending changes resulting from settlements or verdicts, attorneys and clients are
influenced by the endowment effect, the status quo bias, optimistic overconfidence,
the confirmation bias, representativeness and availability heuristics, hindsight bias,
discounting, and the sunk cost bias. These biases cause decision makers to resist,
ignore, minimize or discount changes, demand unreasonably high amounts to
relinquish perceived entitlements, feel overly confident about their capacity to
control and predict changes, and believe that whatever occurred in hindsight was
merely a reflection of their foresight.
Chapter 5
Institutional Impediments to Effective Legal

Decision Making
My mind seems to have become a kind of machine for grinding general laws out of large
collections of facts, but why this should have caused the atrophy of that part of the brain
alone, on which the higher tastes depend, I cannot conceive. . . . The loss of these tastes is a
loss of happiness, and may possibly be injurious to the intellect, and more probably to the
moral character, by enfeebling the emotional part of our nature
Charles Darwin, The Autobiography of Charles Darwin (1881)
When conflicts escalate above their dispute resolution capabilities, individuals and
organizations retain attorneys to recover their losses, protect their assets and
preserve their reputations. Clients expect an attorney to objectively evaluate facts,
advise them of the applicable law, persuasively represent their interests through
adept advocacy and negotiating skills, accurately assess the likelihood of prevailing
in the event of a trial, and discern the utility of a pre-trial settlement. These
expectations, however, often exceed the scope of an attorneys education and
training. Although attorneys know the law, can make persuasive distinctions
between conflicting legal authorities and often are trained in advocacy and negotiating skills, they are not educated or prepared to be prognosticators.1 Probabilistic
reasoning skills are not part of the traditional law school curriculum, and attorneys
consequently substitute knowledge of statutes and case law for formal decisionmaking models. When an attorney is regarded as an expert in a particular field, it
signifies that he is thoroughly conversant with every statute, case and regulation
that could apply but may not accurately foresee how and whether they will be
applied. Attorneys hold strong and confident opinions about what should happen in
a case and what they expect to happen, but their subject matter expertise, standing
alone, is not equivalent to forecasting expertise.
Similarly, in the health care field physicians may possess excellent diagnostic skills but usually
are not regarded as experts on life expectancy. See Strauss, David, and Shavelle, Robert. (1998,
Summer). Doctors are not experts on life expectancy. Expert Witness, 3(2).

141
142
5 Institutional Impediments to Effective Legal Decision Making
Accurate forecasting of trial outcomes is the touchstone of financially beneficial

negotiations. Because the goal of negotiation is to produce something better than
the results you can obtain without negotiating, as declared in the negotiation skills
bestseller Getting To Yes, one first must know what the results would be without
negotiating.2 The threshold requirement for evaluating an adverse partys settlement proposal and negotiating any pre-trial resolution of a case thus is an accurate
picture of what the trial outcome would be. The 11,000 attorney-litigant decisions
analyzed in Chapter Three of this book, combined with the prior empirical decisionmaking research summarized in Chapter Two, demonstrate, however, that many
litigants and their attorneys do not know and cannot predict accurately what the
probable trial result will be. They embark on settlement negotiations without an
intended destination or a GPS, showing up at mediation sessions or settlement
conferences before investigating results in similar cases and assessing the settlement value and likely trial result in the clients case.3 Lacking sound data and
models, their negotiating style is instinctive. As business professors Russo and
Schoemaker explain in Winning Decisions, professionals honed intuitive skills
are crucial for framing questions, collecting evidence, and identifying the pertinent
factors in a decision; but they lack formal decision rules and systematic models for
decision making. Consequently, they shoot from the hip when many data points
are involved.4
Attorneys and litigants seem to know how to negotiate but not the basis from
which to negotiate. Absent information about what occurs in similar cases or what
is likely to occur in their own case, they may negotiate reactively but not effectively. Although proficient negotiators do not have to be good trial lawyers, they do
need to know what would happen to a case in the hands of a good trial lawyer. As
professors Austin Sarat and William Felstiner explain, despite its relative rarity,
formal adjudication is quite significant. It is the prospect and anticipation of what
judges or juries would do were cases tried that provide the impetus for settlement
activity both before and after cases have been formally filed in court.5 Given the
paucity of actual trial experience among litigation attorneys, the difficulty of
obtaining reliable data regarding adjudicated outcomes, and the lack of decisionmaking training and models, however, it is not clear that attorneys and litigants are
Fisher, Roger, Ury, William, & Patton, Bruce. (1991). Getting to yes (p. 100). New York: Penguin
Books.
3
John Flaherty, a former California Superior Court Judge and presently a neutral with Judicial
Arbitration and Mediation Services (JAMS), states, Its disappointing the lawyers havent given
enough thought to where the mediation should be going. It doesnt appear to leave any room to
negotiate. Anderson, Craig. (2008, June 20). Settling well into retirement keeps jurist busy. San
Francisco Daily Journal, p. 2.
4
Russo, J. Edward & Schoemaker, Paul, J.H. (2002). Winning decisions (p. 158). New York:
Doubleday.
5
Sarat, Austin, and Felstiner, William L.F. (1995). Divorce lawyers and their clients: Power and
meaning in the legal process (p. 109). New York: Oxford University Press.
5.1 Law School Education
143
knowingly and effectively guiding themselves through the settlement versus trial
analysis.
To understand why attorneys and litigants decision-making behavior may be
suboptimal and can undermine their own economic objectives, this chapter examines three institutions that may contribute to decision-making errors and low quality
problem-solving skills: law schools, law firms, and courts. Five possible causes of
ineffective decision making are discussed: (1) law schools lack of emphasis on
problem-solving skills and probabilistic and methodological reasoning; (2) law
firms disproportionate attention to billable hour production and legal processes;
(3) law firms competition for clients and attorneys attendant deference to clients
expectations and affect; (4) the reportedly high rate of depression, obsessive
compulsive disorder and substance abuse among law students and lawyers and its
effect on creative, comprehensive problem solving; and (5) the sharply decreasing
number of civil trials and the consequent decline in attorney trial experience and
knowledge of trial outcomes.
5.1
Law School Education
Most law schools do not teach aspiring lawyers how to serve their future clients as
effective, efficient problem solvers. That is not their objective, and they should not
be held accountable for neglecting skills they neither agreed to teach nor sought to
inculcate. The fundamental direction of law school education was set in the late
1800s when law schools started to adopt the case method of teaching advanced by
Harvard Law School professor Christopher Columbus Langdell. The case method
emphasized the reading and analysis of court cases and presumed that law, like
geometry, could be reduced to a system of axioms and corollaries.6 It differed
from pedagogical methods employed by other law schools until 1890 in that it
de-emphasized the experience of practitioners and posited that academics could
deduce a rational, consistent set of legal principles from the scientific study of court
decisions. In the opinion of former Yale Law School dean Anthony Kronman, the
Langdellian approach ultimately changed the definition of professional excellence:
The early-nineteenth-century ideal of the lawyer-statesman made prudence a
central value, as did the common-law tradition on which that ideal drew. The
late-nineteenth-century ideal of scientific law reform demoted the virtue of practical wisdom to a position of marginal importance and put a more abstract form of
theoretical understanding in its place instead.7
The case method, also referred to as the Harvard method or case dialog
method and later melded with the Socratic method, formalized the type of
6
Kronman, Anthony. (1993). The lost lawyer: Failing ideals of the legal profession (p. 184).
Cambridge, Massachusetts: Harvard University Press.
7
Id. at 2223.
144
courses taught in the first year of law school. The prior emphasis on practitionerdirected, apprenticeship-like training was displaced by an academic curriculum
initially requiring the study of Real Property, Torts, Contracts, Civil Procedure, and
Criminal Law.8 These courses still form the core curriculum of the first year of law
school, and the tenets of some courses remain largely intact. As the renowned
medieval historian Norman Cantor notes, A barrister of 1350 deep frozen and
thawed out today would need only a six-month refresher course at a first-rate
American law school to practice property or real estate law.9
5.1.1
Separation of Legal Education from Legal Practice
Although Langdell intended to teach law as a science and raise the academic
stature of law schools, the case method effectively separated law students from the
practice of law. In Langdells view, the worldly wisdom of practicing lawyers
plays no role, and there is nothing left for a practitioner to teach.10 Unlike
medical students who quickly shift from classroom instruction to clinical practice,
law students typically spend the entire three-year course of instruction in a classroom, unperturbed by the sight of a client. Law schools counterpart to the see one,
do one, teach one axiom of medical schools would be read about one, read about
one, read about one.11 Law students classroom instruction may be punctuated by
moot court competition or participation in law school clinics, but these practical
experiences are neither required nor treated as intellectually equivalent to classroom teaching. Law school faculty members, reports the Carnegie Foundation for
the Advancement of Teaching, voice deep skepticism about the intellectual value
of practice-oriented courses, and one law professor characterized the schools
clinical program as a side show in which the central faculty and students are not
interested.12
Law professors are fond of saying that they teach students to think like
lawyers, but it would be more accurate to say they are taught to think like the
highly intelligent people whose analyses and opinions they study for three years:
appellate court judges and law professors. It would be strange indeed if law students
8
See Sullivan, William M., et al. (2007). Educating lawyers: Preparation for the profession of law
(pp. 57). San Francisco, California: Jossey-Bass.
9
Cantor. Norman. (2001). In the wake of the plague: The black death and the world it made.
New York: Perennial. Quoted in Acocella, Joan. (2005, March 21). The end of the world. The New
Yorker, p. 84.
10
Kronman supra note 6 at 188.
11
See Coughlin, Christine Nero, McElroy, Lisa, and Patrick, Sandy. (2009, April 14). See one, do
one, teach one: Dissecting the use of medical educations signature pedagogy in the law school
curriculum. Georgia State University Law Review, Forthcoming; Wake Forest Univ. Legal Studies
Paper No. 1380079. Available at SSRN: http://ssrn.com/abstract=1380079.
12
Sullivan supra note 8 at 100101.
145
thought like lawyers since students have little or no direct, experiential exposure to
lawyers until after graduation. As one student commented in the Carnegie Foundations 2007 report, law schools create people who are smart without a purpose.13
A similar pedagogical approach to medical school education would result in an
outstanding class of anatomists and researchers but none capable of palpating a
patient.
The benefit of the case law teaching method is that students learn legal principles
in the context of a judicial opinion, which typically summarizes the cases factual
background, identifies the issues to be decided, explains the applicable law and
judicial precedents, and applies overarching principles and policies to specific facts.
This method is primarily syllogistic and analogical and presumes that a framework
for practical law practice may be imparted through issue identification, general
legal concepts, parallelism and differentiation. The disadvantage of the case
method is that students do not learn problem solving skills in general and probabilistic reasoning skills in particular. They lack the ability to promptly resolve actual
legal problems and moral dilemmas and may not make timely, economical and
sound decisions when presented with a muddied factual record.
5.1.2
Testing Law Students Reasoning Skills

and Moral Judgment
Although the efficacy of law school education has not been studied extensively,
some research projects indicate that law students are not developing strong problem-solving and moral reasoning skills during their three-year enrollment. Testing
shows that the methodological reasoning skills of first-year medical, chemistry,
psychology, and law students are initially similar, but after two years of graduate
education the psychology students show a 70% increase in test scores and medical
students show a 25% increase. The law and chemistry students, however, show no
improvement at all.14 The investigators in these studies explain why the law and
chemistry students fail to develop problem solving skills: It appears that the
probabilistic sciences of psychology and medicine teach their students to apply
statistical and methodological rules to both scientific and everyday-life problems,
whereas the nonprobabilistic science of chemistry and the nonscientific discipline
of the law do not affect their students in these respects.15 Law school education,
13
Id. at 142.
Gilovich, Thomas. (1991). How we know what isnt so (pp. 191192). New York: The Free
Press.
15
Lehman, D.R., Lempert, R.O. & Nisbett, R.E. (1988). The effects of graduate training on
reasoning: Formal discipline and thinking about everyday life events. American Psychologist,
43, 43142, quoted in Gilovich supra note 14 at 192. (The Lehman study, however, did report that
psychology, medical, and law training produced effects on ability to reason about problems in the
logic of the conditional). See Woll, Stanley. (2001). Everyday thinking: Memory, reasoning, and
14
146
they observe, affords students the luxury of not being confronted with messy
problems that contain substantial uncertainty and a tangled web of causes.16
Despite the purported benefits of the Socratic method, which forces students to
describe, analyze, criticize, and distinguish cases through a vigorous verbal
exchange with their law professors, law students apparently do not develop strong
verbal reasoning skills in law school. Although practicing lawyers careers depend
on the exercise of sound reasoning and communication skills with clients, adversaries and judges, law schools, according to one study, did not produce any reliable
differences in improvement on the verbal reasoning sub-test of the GRE (gains
ranged from 4% to 17%).17 The lack of a statistically significant improvement in
verbal reasoning suggests that law students problem-solving skills are not being
honed to meet the challenges of client service after graduation. Law students may
not be learning methodological and statistical reasoning skills because neither the
case method nor the Socratic method has proven to be a superior method of
promoting scientific, practical, or discursive analysis.
Describing a recent study of law students legal reasoning skills, law professor
Stefan Krieger makes some general observations and compares the performance of
third year law students to second year law students and medical school students:
l
But unlike medical students, there was little change between their [third year
law students] recall of relevant facts and that of second-year students. In other
words, in contrast to final-year medical students, third-year law students apparently had not yet refined the skill of distinguishing adequately between relevant
and irrelevant facts.18
judgment in the real world (p. 465). Mahwah, New Jersey: Lawrence Erlbaum. (The apparent
explanation for these findings is that psychology graduate students have a good deal of training in
both statistics and experimental design, whereas law and chemistry students do not. Medical
students, it turns out, at least at Michigan [where the original study was performed] are trained on
the topic of judgment under uncertainty, as well as having experience with statistical concepts,
both of which may account for their performance on the statistical problems.)
16
reasoning: Formal discipline and thinking about everyday life events, American Psychologist,
43, 441, quoted in Gilovich supra note 14 at 192.
17
reasoning: Formal discipline and thinking about everyday life events. American Psychologist,
43, 43142, quoted in Gilovich supra note 14 at 192. (This result occurred in testing of the
graduate students in medicine, psychology and chemistry as well).
18
Krieger, Stefan. (2006). The development of legal reasoning skills in law students: An empirical
study. Journal of Legal Education, 56(3), 352. Professor Krieger notes that the sample size was
small; the subjects were from a single law school; and no attempt was made to control for the
differences in background or academic achievement of the different subject groups. As limited as
this study may be, however, it demonstrates that empirical methods can help assess law student
learning.

l
147
Third year law students seem prone to generate indiscriminately a large number
of rules, many of which are irrelevant. . . . Here, third-year students appear to be
processing too much garbage.19
The failure of most upper-level students many of whom had completed
Evidence to consider evidentiary and burden allocation issues seems
puzzling.20
The large number of third-year subjects who identified the lack of a statute as a
problem suggests that we may be teaching students to look for the quick fix of an
applicable statute or regulation.21
The studys findings regarding third-year law students recall of relevant propositions, Professor Krieger writes, appear to raise some questions about the effectiveness of the final year-and-a-half of law school on students ability to focus on the
relevant facts in a legal problem.22
Shortcomings in law students methodological and probabilistic reasoning
skills are not limited to strictly legal issues but extend to moral dilemmas as well.
As explained in the Carnegie Foundations most recent report on law schools,
a number of studies have shown that students moral reasoning does not appear
to develop to any significant degree during law school.23 Nor do law students
exhibit improved ethical decision-making skills once they graduate and have an
opportunity to apply whatever ethical skill set they acquired in law school to a
practical setting. Reviewing the pertinent research, the Carnegie Foundation finds:
This picture of a lack of growth in moral thinking during law school is borne out by
studies of practicing lawyers, which reveal scores for attorneys that are comparable
to those of entering law students.24 The reported absence of growth in moral
judgment and ethical decision making is a critical defect in law school education,
as the sound evaluation of moral and ethical issues is a core skill for practicing
attorneys; the American Bar Associations MacCrate Report identifies recognizing
and resolving ethical dilemmas as one of the ten core professional skills and ranks
the promotion of justice, fairness, and morality in ones own daily practice as one
of the four central professional values.25
Researchers focus on the law school curriculum in trying to understand why
law students do not develop practical and ethical problem solving skills, sometimes overlooking the crucial role played by the law school admissions process.
19
Id. at 349.
Id. at 350.
21
Id. at 353.
22
Id. at 345.
23
24
Id.
25
American Bar Association, Section of Legal Education and Admissions to the Bar. (1992, July).
Legal education and professional development an educational continuum. Report of the task force
on law schools and the profession: Narrowing the gap. Chicago: American Bar Association.
20
148
This admissions process relies heavily on the results of the Law School Admission
Test (LSAT), which attempts to measure three cognitive skills (reading, analysis,
and logic). Although performance on the LSAT is predictive of law school performance, it is not predictive of performance as an attorney. Specifically, the LSAT
does not test for practical judgment and 25 other factors identified by lawyers and
judges as important to attorney effectiveness, such as the ability to see the world
through the eyes of others, problem solving, creativity/innovation, and strategic
planning.26 Marjorie Schultz, a co-principal investigator of a long-term project to
re-design the LSAT, explains the shortcomings of the current law school admissions process:
Most make no organized effort to assess likely professional competence; their admission
decisions are dominated by narrow criteria intended mainly to predict academic performance. This lack of congruity between function and means arguably undermines professional quality and certainly raises questions about justification. Although other professions
also rely on academic predictors, they pay attention to assessing professional potential as
well. Medical schools explicitly consider whether an applicant will make a good doctor,
placing substantial weight on noncognitive abilities such as motivation and human interaction skills. Business schools seek students with work experience in business, evaluating
multiple essays to determine clarity of career goals and placement potential. But law
schools, particularly elite law schools, assess applicants mainly on the basis of who will
make a good law student rather than who will make a good lawyer. 27
Admitted to law school by a process that deemphasizes situational judgment and

practical problem solving, and educated by a method largely divorced from actual
legal practice, law students cannot be expected to learn and develop strong client
representation and ethical reasoning skills during three years of legal education.
5.1.3
An Example of Law Student Decision Making
Weak methodological reasoning and decision-making skills may lead law students
and attorneys to focus on satisfying their clients subjective expectations and
financial goals formed prior to the attorneys retention, rather than detachedly
shaping those expectations and goals to reflect the applicable law, probable outcomes and the risks posed by disputed evidence. This tension between meeting
clients goals and providing objective advice arises from an attorneys dual roles of
advocate and counselor and can become acute when the clients expectations
conflict with the direction dictated by sound, thorough methodological reasoning.
Absent a firm grounding in ethical decision making, law students and attorneys may
resolve this tension by promoting the clients short-term objectives and neglecting
their own duty to provide independent, professional counseling.
26
Hall, Linley Erin. (2005, Summer). What makes for good lawyering? The Transcript, pp. 22, 24.
Schultz, Marjorie. (2005, Summer). Expanding the definition of merit. The Transcript, p. 25.
27
149
The attorneys dual roles zealous advocate and mature counselor are episodically irreconcilable for many law students and practitioners, as illustrated by the
litigation strategies selected by Cornell Law School students in an experiment
based on an actual case.28 The students were advised that they were representing
a pharmaceuticals manufacturer sued by the parents of a child who suffered severe
side effects from a drug manufactured by the client. The parents recently had
offered to settle for $3 million. The client, however, had failed to produce several
incriminating documents. The law students were specifically informed that the
parents would eventually receive the documents; the case could be reopened after
disclosure of the documents; litigation after re-opening the case probably would be
more expensive; the court might impose financial penalties on the client and the
attorney for non-disclosure of the documents; and the parents probably would
demand $5 million after the document disclosure.
One group of students was informed that the client thought the case had been
going badly and had originally planned to pay $1 million. In this group, faced
with making a risky and somewhat deceitful choice, 45% of the students made the
expedient decision to accept the $3 million offer before disclosing the documents.
To meet the clients expectations, this group chose to undertake significant financial
and ethical risks not only for the client but for the attorney as well. Superficially
perceiving the decision-making alternatives as losses and gains relative to the
clients expectations, the law students demonstrated poor judgment and high
susceptibility to framing biases and their attendant risk-taking strategies.
The second group of students in the experiment, however, was informed that the
client thought the case was going well and had initially expected to settle for
$5 million. Those two facts were the only information changed in the five-page
description presented to the law students. Based merely on a difference in the
clients attitude and its prior financial expectations, only 12% of the students in
the second group chose to settle before document disclosure. Thus, simply switching the attorneys client relationship from a losses mode to a gains mode altered
the law students legal and ethical decisions. Law students in both groups functioned as opportunists, molding their decisions to comport with the clients expectations, and overlooked their responsibilities to provide independent advice
consistent with fiduciary and ethical standards.
The students difficulty in making high-quality, ethical decisions that comprehend the complexity of the clients dilemma and promote the clients long-term
interests as shown in the students preference for expedient solutions and disregard of impending ethical and financial consequences reflects fundamental
problems in legal decision making. Educational deficiencies in the development
of decision-making skills may be particularly troublesome when one considers the
28
Rachlinski, Jeffrey. (1996). Gains, losses and the psychology of litigation. Southern California
Law Review, 70, 113, 140144.
150
dominant personal characteristics of students applying for law school admission.

Law schools, and hence the legal profession itself, have recruited individuals whose
modal Myers Briggs Type indicator preference is either I(E)STJ or I(E)NTJ
decision makers and problem solvers who do not see the wider ramifications of
current, expedient decisions, quibble over abstract issues and terms that have
little meaning or relevance to others, and rush into premature judgments and
actions without considering new information.29 Although they are serial decision
makers, they may take in only that information that fits their insights, overlook
details or facts that do not fit into their Intuitive patterns, and decide too quickly
before taking in enough information or considering alternatives or exploring
possibilities.30 Considering the specific decision-making weaknesses of the dominant law student personality types, the case for teaching decision-making skills in
law schools is compelling.
5.1.4
Deficiencies in the Case Method of Teaching
Law schools uneven development of the problem-solving skills necessary to

handle client cases and ethical quandaries suggests that their reliance on casebook teaching reading, discussing and questioning students about cases in which
the judges have already simplified, synthesized and occasionally omitted facts to
support their conclusions may not promote evaluative reasoning skills in real-life
conflicts rich with factual ambiguities.31 The case method appears to have four
principal shortcomings in teaching effective problem solving and decision making:
(1) the judicial distillation of facts in an opinion does not promote factual analysis
in a practice setting; (2) the presentation of facts in a judicial opinion may be biased
to support the stated result and often excludes the personal and practical predicaments encountered by litigants and their attorneys; (3) the case method does not
teach probabilistic decision making and displays a bias against statistical evidence;
and (4) the study of appellate court opinions necessarily excludes models of sound
decision making and focuses almost exclusively on exemplars of decision-making
failure. These four shortcomings are discussed below.
29
Byers, Mark. (1996). Anatomy of lawyer personality and long term satisfaction. In Full
disclosure: Do you really want to be a lawyer? Princeton, NY: Petersons Guides. Myers, Isabel
Briggs. (1997). Introduction to type (5th Ed). Palo Alto, California: Consulting Psychologists
Press, Inc. See Richard, Larry. (1993, July). How your personality affects your practice: The
lawyer types. ABA Journal, p. 74.
30
Myers supra note 29.
31
See Rubin, Edward. (2007, March). Whats wrong with Langdells method, and what to do about
it? Vanderbilt Law Review, 60(2), p. 609.
5.1.4.1
151
The Distillation of Facts in Judicial Opinions
To the extent case facts are presented in judicial opinions, they are reduced,
highly selective, ready-made, and, at times, erroneous.32 The skeletonizing
of cases, legal scholar Lon Fuller wrote in 1933, is a delicate business, and
necessarily anticipates the analysis which will be applied to the simplified situation.33 Consequently, as a case is skeletonized, facts and legal arguments
incongruent with the courts decision may be overlooked, omitted, phrased in a
manner to invite derision, or rejected as irrelevant, disingenuous, inapposite or
novel.34 The appellate courts purpose in describing the cases factual background is to demonstrate the basis for its decision, not to highlight all of the
evidentiary contradictions that may have required a trial in the first place. Absent
a de novo review, an appellate court opinion rarely serves as a model of factual
analysis because the lower courts factual findings are either adopted by the
appellate court or cursorily examined to meet the relatively light standard of any
substantial evidence to support the verdict. Like movie viewers, law students see
only the final version of a story and are spared hundreds of excised vignettes that
could otherwise affect their opinion of the characters motivations, values and
actions.
When finally condensed into an appellate court opinion, facts are presented as
supporting evidence, not the cauldron of disputed perceptions, conflicting documentation and distorted memories presented by clients to law students immediately
after graduation. Not surprisingly, some law students participating in their first
mediation clinic inform their clinical instructor that a case cannot be resolved
because the parties disagree on what happened or one of the parties is lying.
Lacking experience in handling factual ambiguities and contradictions, the students
stop problem solving once the dispute requires skills more expansive than opining
about the appropriate outcome when legislative rules and legal principles are
applied to a predetermined, coherent set of facts.
Reviewing judicial opinions from which factual ambiguities and legal uncertainties have been stripped does little to prepare law students for their responsibilities to clients upon graduation. United States District Court Judge Thomas
Griesa explains the difference between the broad evaluation skills required by
effective trial attorneys and the narrow analysis undertaken by the appellate courts:
A trial attorney in a large case starts with an amorphous mass of information that may or
may not turn out to be useful evidence. As to the law, a lawyer may find little or no
definition of what is to be used for legal argument out of the great body of potentially
applicable constitutional provisions, statutes, regulations and judicial decisions. A trial
32
Noonan, John T. (2002). Persons and masks of the law (p. 141). Berkeley: University of
California Press.
33
Id.
34
Consistent with the doctrine of stare decisis and the underlying predilection to regulate the future
by imposing the past, a courts characterization of an argument as novel invariably precedes a
spirited thrashing.
152
attorney, through a process of rigorous analysis that a lay person may find hard to
understand, must bring order out of chaos to be able to go before a court with the clients
case. . . .
But by the time a case gets to an appellate court, there is a definite, finite record of
evidence (having been presented to the trial court), not the unrefined mess that the trial
attorney often starts with. The issues on appeal are not waiting to be developed but are
precisely specified. The relevant legal rules and judicial precedents have been culled from
the great body of potential authorities.35
Although Judge Griesa notes that appellate judges have unique and taxing intellectual demands, he believes that the trial lawyers accomplishment of making
the case comprehensible requires a distinct blend of tenacity and inventiveness. I
have frequently thought, he states, how truly creative, yet still how disciplined, a
lawyer before me needs to be.36
Judge Griesas description brings to mind a sieve onto which a host of facts and
legal sources are poured; and through a creative, discerning and incredibly difficult
process the successful attorney eventually produces a factually compelling and
legally cognizable case. If the appellate courts end up looking at the distillate and
not the raw constituents, as Judge Griesas comments suggest, reading their opinions alone would not assist law students in understanding how a partys attorney
compared and assembled the messy facts and obscure legal principles dumped on
her desk years before an appellate court opinion was rendered. That, however, is the
task that will confront law students shortly after graduation.
5.1.4.2
Factual Biases and De-Personalization in Judicial Opinions
The judicial opinions in casebooks, according to United States Ninth Circuit Court
of Appeals Judge John Noonan, have been composed to shed light on the life of a
rule, not upon the parts of the participants in the process.37 In his incisive book,
Persons and Masks of the Law, Judge Noonan removes the masks, formed by rules
and concealing the persons, and reveals the facts and motivations behind leading
judicial opinions.38 Investigating the famous tort case, Palsgraf v. Long Island
Railroad Company, for instance, Judge Noonan discovers that Judge Benjamin
Cardozos written opinion is factually misleading and incomplete. Although first
year law students study Palsgraf to learn the tort principle that the risk reasonably
to be perceived defines the duty to be obeyed, they cannot know from Judge
Cardozos eloquent opinion that the subject railroad accident, as he described
it in the opinion, could not possibly have happened.39 The Palsgraf case,
35
Griesa, Thomas P. (2005, October 25). A good trial lawyer could sit on any court. The Wall
Street Journal, p. A21.
36
Id.
37
Noonan supra note 32 at 6.
38
39
153
the landmark decision in defining the extent of legal duty in tort law, is itself a
legal fiction.
In addition to misstating the events which preceded Mrs. Palsgrafs accident,
Judge Cardozos opinion omits four facts critical to law students learning how to
make intelligent decisions to protect clients: (1) Mrs. Palsgraf, the plaintiff injured
by the defendant railroads alleged negligence, was a very poor 43-year old
janitress earning $416 a year, all alone with three children, and suffering from
a neurological disorder; (2) she was awarded $6,000 by the jury in the trial court; (3)
her attorney made a serious misjudgment in not compromising after the jury
verdict; and (4) after waiting four years for the trial and appeal to be resolved,
she owed her doctors $195 and, contrary to the court rules, was ordered by Judge
Cardozo to pay $350 in court costs to the defendant railroad company, nearly her
entire annual income. The Palsgraf case thus is a decision-making failure of tragic
proportion, masked by the courts scholarly opinion. As Judge Noonan concludes, Only a judge who did not see who was before him could have decreed
such a result.40 And only law students studying the Palsgraf opinion could see it as
an iconic tort law decision instead of a lesson in the perils of impractical legal
representation.
As shown by the judicious selection and omission of facts in the Palsgraf
opinion, it may be a misnomer to characterize the law school curriculum as a
casebook method of education. In fact, the case method of teaching in law school
is the study of judicial opinions, not the cases themselves. Because the entire trial
record is not included in case books and no one is privy to the records and
communications of the attorneys and their clients, very little information about
the case itself is available for study. This contrasts sharply with the case method
in graduate business schools, where writing about and studying a case a comprehensive presentation of all aspects of a difficult business problem fraught with
conflicting requirements from the marketing, accounting, human resources,
manufacturing and compliance departments and compounded by incomplete and
disparate data from sources of varying degrees of reliability is a major undertaking. The case presented to the graduate business student is a knotty problem; the
opinion read by the law student is a resolved dispute. Comparing the performance
of law school students and business school students in simulated negotiations, law
professor Carrie Menkel-Meadow observes, the business students were far more
creative in solutions to problems, including creating joint ventures, buy-outs,
contingency planning, and shared financial risk solutions to complex problems.
Business students seem better prepared to deal with dynamic, constantly changing
situations, perhaps because their case method is so much more contextual than that
of law schools.41
40

Menkel-Meadow, Carrie J. (2000). When winning isnt everything: The lawyer as problem
solver. Hofstra Law Review, 28, 905, 915.
41
154
5.1.4.3
Probabilistic Decision Making and Statistical Analysis
The casebook method introduces students to legal philosophy, opinion writing and
some substantive law principles, but it neglects the methodological reasoning,
probabilistic decision making, and quantitative evaluation skills essential to
accurate assessment of clients positions and likely case outcomes. Because judicial
opinions reflect judges general preference for the narrative rather than the calculative, the case method also transfers to another legal generation a preference
for analogical argument over statistical evidence.42 This result is particularly
harmful because the majority of students admitted to law school lack quantitative
skills as undergraduates, and that deficiency is neither identified nor corrected in
law school.
Although probability judgments in actual client cases require at least a rudimentary understanding of math and statistics, wherever possible, law avoids mathematical tasks, states University of Chicago law professor Saul Levmore. Professor
Levmore denotes a math-law divide and discerns a general disinclination on the
part of lawyers, law professors, and judges to engage in probabilistic assessment of
legal requirements such as causation and negligence. He depicts law as a field
functioning in the pre-science, pre-modern era: legal practice seems at odds with
scientific logic, or at least with probabilistic reasoning.43 In a similar vein,
Cameron Stracher, publisher of the New York Law School Law Review, comments:
By giving students the false idea that being a lawyer is all about intellectual
debate, we also drive the wrong students to law school in the first place. The hordes
of English majors who fill our classes might think twice if they knew that economics and mathematics with their emphasis on problem-solving are the best
preparation for a career in law.44
Despite this need for students and lawyers with demonstrated abilities in systematic problem solving and quantitative analysis, law school admissions offices
open a sluice gate for liberal arts students unfamiliar with scientific or other formal
methods of inquiry, hypothesis generation, argument, testing and proof. Fifty-eight
percent of all law students majored in political science, social science, education,
arts and letters, or history, while only 7.1% of law students majored in science,
mathematics or engineering.45 The question posed by David Cheifetz, a Canadian
42
See Fienberg, Stephen E. (Ed.). (1989). The evolving role of statistical assessments as evidence
in the courts. New York: Springer-Verlag. (Report of the National Research Council Panel on
Statistical Assessments as Evidence in the Courts). Gatowski, Sophia, Sophia, et al. (2001).
Asking the gatekeepers: Results of a national survey of judges on judging expert evidence in a
post-daubert world. Law & Human Behavior, 25, 433. Cited in Vidmar, Neil, and Hans, Valerie P.
(2007). American juries (pp. 187188). Amherst, New York: Prometheus Books.
43
Levmore, Saul. (2000). Conjunction and aggregation (Olin Working Paper No. 110). University
of Chicago, Law & Economics.
44
Stracher, Cameron. (2007, January 27). Meet the clients. The Wall Street Journal, p. W11.
45
Craft, Kim R., and Baker, Joe G. (2003, Summer). Do economists make better lawyers?
Undergraduate degree field and lawyer earnings. Journal of Economic Education, 34(3), 263, 271.
155
barrister and solicitor and the author of Apportionment of Fault in Tort, remains a
challenge to the law school admissions process and the legal profession: what does
it tell us about law as a discipline that so many people who claim theyre no good at
math, sciences, philosophy, logic etc. (and whose transcripts show it), manage to
get into law school and then do reasonably well?46
5.1.4.4
Teaching and Modeling Decision-Making Failures
Casebook teaching not only overlooks salient facts but also focuses on decisionmaking failures. Casebook teaching is, by its very nature, the study of problemsolving failures. Nearly every civil tort, property, or contract case resolved by an
appellate court opinion is a statistical aberration resulting from an attorney or
clients weak predictive capacity, risk-taking propensity, poor negotiating skills,
or irrational belief persistence. For the case to have been adjudicated in a trial court
in the first instance, law professor Samuel Gross explains, it usually means a whole
lot of efforts by a whole lot of people have failed. 47 Since an estimated 97% of
civil cases are resolved before trial, only 12% 15% of trial verdicts are appealed,
and 43% of those appeals are dismissed or withdrawn before a decision on the
merits,48 one may question why law students spend three years concentrating on
appellate court cases that epitomize conflict resolution failures and will comprise a
tiny fraction of their future litigation workload. How can law students learn and
employ best practices in the legal profession after studying many of the worst
practices for three years? If a business school limited its MBA curriculum to
Chapter 11 bankruptcy cases, would CEOs not question its pedagogy and steer
clear of its graduates?
The study of failure certainly can be beneficial if accompanied by insights into
the causes of failure and recommendations for avoiding similar problems. A
judicial opinion, however, does not provide remedial instruction regarding the
underlying negotiation failure but rather transforms the failure into a platform for
confirming precedents, enunciating new legal principles or reconciling conflicting
authorities.49 Appellate courts grasp an unsightly cognitive scoreboard, flip it over,
46
Cheifetz, David. (2007, March 14). Comment posted on slaw.ca. Available at http://www.slaw.
ca/2007/03/13/carnegie-foundation-report/.
47
Liptak, Adam. (2003, December 14). U.S. suits multiply but fewer ever get to trial, study says.
The New York Times, Section 1, p. 1.
48
See Eisenberg, Theodore and Heise, Michael. (2007, September). Plaintiphobia in state courts?
An empirical study of state court trials on appeal. Cornell Legal Studies Research Paper No.
07006. Available at SSRN: http://ssrn.com/abstract=988199. See also Cohen, Thomas. (2006).
Appeals from general civil trials in 46 large counties, 20012005 (NCJ-212979). Available at
http://www.ojp.usdoj.gov/bjs/abstract/agctlc05.htm.
49
The ongoing, incremental cycle of precedent-making, which is based on enthymemes and
analogous reasoning, as opposed to scientific or empirical research, was described by Tacitus in
the first century: What is today supported by precedents will hereafter become a precedent
Annals, bk. XI, 24.
156
and start writing fresh narratives and erudite holdings on the apparently unblemished side of the same card. In reading the courts opinion, the fundamental
question law students should ask is not what holding does the case state, but rather
what are the parties doing there in the first place? The penchant of our casebook
warriors to litigate requires some explanation,50 writes Columbia Law School
professor Samuel Issacharoff, and that explanation cannot be found in the shortsightedness of the disputants.51
To the extent judicial opinions elucidate legal reasoning and principles, that
epistemic benefit is not confined to settlement failures but can be acquired more
effectively in the context of successful conflict resolutions, just as a business
student learns management practices and finance principles from studying solvent
companies. The overwhelming majority of civil disputes are resolved without a
written judicial opinion, and the parties and attorneys in those cases presumably
divined the applicable law and resolved legal uncertainties without the delay and
costs attendant to obtaining appellate court review.52 Examining ordinary cases in
which the parties have voluntarily resolved their differences may teach more about
legal problem solving than reading an appellate court case in which at least one
partys problem solving skills are exceptionally maladroit. As management theorist
Peter Drucker asserts, effective executives and organizations concentrate on
strengths and successes, for one cannot build on weaknesses.53 Yet 150,000
law students are building their careers today on weaknesses as they study cases
where, as Professor Issacharoff states, the parties have proven themselves to be
losers from the moment they enter the process of adjudication.54
5.1.5
Attempts to Change Law School Curriculum
The Carnegie Foundation, American Bar Association (ABA), practitioners, judges,

and educators have long acknowledged a disconnect between law school education
and client needs. As Professor Stracher states, There appears to be a growing
consensus that although law schools may teach students how to think like a
lawyer, they dont really teach them how to be a lawyer. As a result of reading
about the law for three years but not engaging in it, Professor Stracher elaborates,
young lawyers rarely know how to interview clients, advocate for their positions,
negotiate a settlement or perform any number of other tasks that lawyers do every
50
Issacharoff, Samuel. (2002). The content of our casebooks: Why do cases get litigated (Working
Paper No. 196, pp. 23). New York, NY: Columbia Law School, The Center for Law and
Economics Studies.
51
Id. at 3.
52
See Eisenberg, Theodore, and Lanvers, Charlotte. (2009, March). What is the settlement rate and
why should we care? Journal of Empirical Legal Studies, 6(1).
53
Drucker, Peter. (1996). The effective executive (p. 71). New York: Harper & Row Publishers, Inc.
54
Issacharoff supra note 50 at p 4.
157
day. In short, they are woefully unprepared to be lawyers, despite the outrageous
hourly fees charged for their services.55
The central criticism of law schools is that they do not prepare law students for
the practice of law. In other fields like medicine and structural engineering, the
potential lapses between training and practice are bridged decisively and promptly
(albeit imperfectly) because the consequences are visible, costly, measurable and
socially unacceptable. In legal matters, however, the indicia of malfeasance are
rarely as visible as wrong site surgeries or collapsed buildings, and society consequently has not developed reliable metrics for monitoring and evaluating attorney
performance.
Despite the lack of consensus on what constitutes effective, responsible lawyering and what law schools should do to meet those professional objectives, law
schools have been subjected to persistent, intense criticism. This criticism has been
largely ignored, but in recent years advocates of reform have been expressing
guarded optimism. Law professor Roy Stuckey states, For the first time in 130
years, there seems to be some momentum building toward significantly changing
legal education.56 An overview of this criticism and proposed reforms, including
reports and comments by The Carnegie Foundation, the American Bar Association,
The International Institute for Conflict Prevention & Resolution, judges, law
professors and practitioners, is presented below.
5.1.5.1
The Carnegie Foundation
The Carnegie Foundation For The Advancement Of Teaching has evaluated law
school education for nearly a century, beginning with the Redlich Report in 1914.
That report, based on site visits to ten law schools, questioned the effectiveness of
the case method of teaching (described variously as the Socratic method, the
case dialog method, or the Langdellian case method). Seven years later, the
Carnegie Foundation released the Reed Report I in 1922, followed by the Reed
Report II in 1928. These reports, reflecting observations of more than 130 law
schools, again questioned the near-exclusive emphasis on the case method of
teaching. The Foundations ongoing concern about the pedagogical limitations
and weaknesses of the case method was voiced a fourth time in the Packer &
Erhlich Report, published in 1972. Although the Packer & Erhlich Report cautioned
against undue emphasis on clinical education, it strongly advocated for more
diverse curricula that would provide a more sensitive and penetrating interrelation
between theory and practice.57 All four of these Carnegie Foundation reports were
55
Stracher supra note 44 at W11.

Stuckey, Roy. (2007). Momentum is building for legal education reform. The Complete
Lawyer, 2(5).
57
56
158
resoundingly ineffective in promoting substantive changes in law school curricula.

The Redlich and Reed reports, observes Carnegie Foundation president Lee Shulman, were ignored with enthusiasm, and the Packer & Erhlich Report was even
more ignored.58
The Foundations most recent report, Educating Lawyers: Preparation for the
Profession of Law, published in 2007, compares the practical, problem-based
training provided by medical, business and engineering schools with the theoretical
education imparted by law schools. It finds that the case method has at least two
unintended consequences. First, legal education typically pays little attention to
direct training in professional practice and consequently conveys the impression
that lawyers are more like competitive scholars than attorneys engaged with the
problems of clients. Second, law schools fail to complement the focus on skill in
legal analysis with effective support for developing the ethical and social dimensions of the profession, and as a result, law students have no way of learning when
and how their moral concerns may be relevant to their work as lawyers. According
to this report, both of these unintended consequences lack of attention to practice
and the weakness of concern with professional responsibility result directly from
law schools reliance on a predominantly formal, academic and theoretical teaching
method and a reluctance to engage students in the experience of practice.59 To
remedy these deficiencies, the Carnegie Foundation proposes an integrative
strategy for teaching law linking the cognitive, practical and ethical aspects of
lawyer training and ending the domination of the Socratic classroom.60
5.1.5.2
American Bar Associations MacCrate Report
Fifteen years before the publication of The Carnegie Foundations most recent
report, Educating Lawyers, the American Bar Association Task Force on Law
Schools and the Profession issued a report broadly criticizing the theoretical
emphasis of law schools and recommending a practice-centered curriculum including mandatory clinical programs. The report, usually referred to as the MacCrate
Report, called for legal educators and practicing lawyers to stop viewing themselves as separated by a gap and recognize that they are engaged in a common
enterprise the education and professional development of the members of a great
profession.61 The MacCrate Report initially noted that no consensus existed
58
Henderson, Bill. (2007, December 7). Why I worry about the Carnegie report (2007): Four data
points. Empirical Legal Studies Blog. Available at http://www.elsblog.org/the_empirical_legal_studi/2007/12/why-i-worry-abo.html.
59
Sullivan supra note 8 at 12, 187, 188.
60
61
American Bar Association supra note 25.
159
between the practicing bar and the legal education community about the skills
necessary to be an effective lawyer: Surprisingly, throughout the course of extensive decades-long debates about what law schools should do to educate students for
the practice of law, there has been no in-depth study of the full range of skills and
values that are necessary in order for a lawyer to assume the professional responsibility of handling a legal matter. The identification of these skills and values, the
MacCrate Report stated, was a necessary predicate for determining which skills
can effectively be taught in law school.
To compile an inventory of professional skills, the Task Force solicited ideas
from judges, law professors, practitioners, bar examiners, and bar association
representatives. This effort culminated in the identification of Fundamental Lawyering Skills, including problem solving, legal analysis, legal research, factual
investigation, communication, counseling, negotiation, advising a client about the
option of litigation and alternative dispute resolution, administrative skills and the
ability to recognize and resolve ethical dilemmas. The Task Force also identified
four fundamental professional values that accompany these skills: competent representation; striving to promote justice, fairness, and morality; striving to improve
the profession; and professional self-development. Although a systematic way of
assessing these values has yet to emerge, law schools, after publication of the
MacCrate Report, have expanded the range of courses offered in the second and
third years, and the law school accreditation process has placed increased emphasis on instruction in practice skills.62
Paul Brest, a dean emeritus of the Stanford University Law School, notes that the
MacCrate Report places the skill of problem solving at the very top of the list
even before legal analysis. He is concerned about the disparity between the broad
problem-solving skills sought by clients and the narrow band of skills ordinarily
taught in law school. Arguing that clients do not present purely legal problems but
rather seek a comprehensive problem-solving approach that integrates multiple
disciplines, he emphasizes the primacy of problem-solving skills above technical
legal knowledge:
Most real world problems do not conform to the neat boundaries that define and divide
different disciplines, however, and a good lawyer will be able to go beyond the confines of
mere technical legal expertise. Indeed, most clients do not want lawyers to confine
themselves to the law, but rather expect them to integrate legal considerations with the
other components of the matter. . . . The solutions may be constrained, facilitated, or even
driven by the law, but they often call for judgment, common sense, and even expertise not
of a particularly legal nature.63
Because lawyers are societys general problem solvers, he observes, they help
their clients approach and solve problems flexibly and economically, not restricting
62

Brest, Paul, and Krieger, Linda. (1994, July). On teaching professional judgment. Washington
Law Review Symposium: The 21st century lawyer: Is there a gap to be narrowed?
63
160
themselves to the cramped decision frames that legal thinking tends to impose on
a clients predicament.64
After the release of the MacCrate Report in 1992, the ABA continued to express
misgivings about law school curriculum and the neglect of practical lawyering
skills and professional ethics. In 1996, the Professionalism Committee of the
ABAs Section of Legal Education and Admission to the Bar concluded that
lawyer professionalism has declined in recent years and increasing the level of
professionalism will require significant changes in the way professionalism ideals
are taught.65 Two years later, in 1998, the ABA established The Task Force on
Business Lawyers as Problem Solvers because of the continued concern that law
students and lawyers skills in legal analysis, negotiation and drafting do not meet
clients need for problem solving. James Freund, one of the creators of the task
force and a retired partner at Skadden, Arps, Slate Meagher & Flom, explains that
theres very little pure law involved in much of what we do. Rather, whats at
issue are such matters as deciding between alternative courses of action (each of
which is legal but carries differing risks and rewards), or negotiating matters of
agreement (where, in effect, the parties are creating their own law), or delving into
financial strategies or techniques all far removed from a legal text. Lets face
it, Freund says, problem solving is the name of the game.66 Donald Langevoort,
one of the professors involved with Freund in forming the task force, emphasizes
the importance of developing creativity and problem-solving skills. He notes that
the most innovative law schools are coming to see the need to reform a portion of
their curriculum to more closely resemble that found in MBA programs, with an
emphasis on rich detailed case studies, strategic decision-making and teamwork
solutions.67
5.1.5.3
CPR Institute Advisory Council
In 1999 the International Institute for Conflict Prevention & Resolution (CPR
Institute), working with the Soros Foundation, formed the Advisory Council
on Problem Solving and Legal Education. The CPR Institute is a non-profit
64
Brest, Paul, & Krieger, Linda. (1999, Winter). Lawyers as problem solvers. Temple Law Review,
72(4), 811832.
65
American Bar Association, Section of Legal Education and Admissions to the Bar. (1996).
Teaching and learning professionalism: Report of the Professionalism Committee. Chicago:
American Bar Association.
66
Freund, James C. (1999, July/August). A lawyers perspective: New business lawyers need to
know how to find the deal. Business Law Today. American Bar Association Section of Business
Law.
67
Langevoort, Donald C. (1999, July/August). An academics perspective: New business lawyers
need to know how to find the deal. Business Law Today. American Bar Association Section of
Business Law.
161
educational corporation whose 500 members include corporations, law firms, and
law professors, and the Advisory Council consisted of law professors and law
school deans.68 Finding that contemporary law school does not adequately teach
problem solving skill and that a lawyers effectiveness is built on the strength of
his or her problem solving acumen and sophistication, the Advisory Council
submitted numerous recommendations to expand the scope and breath of problem-solving education, including:
l
Afford every student the opportunity to take a course where the lawyers core
roles of problem solver, counselor, negotiator, consensus builder, process and
transactional architect are examined.
Prepare an inventory of problem-solving skills to be taught in law school
courses, including the assessment of legal risks, ability to make judgments,
application of creativity and resiliency, reframing problems and negotiation
skills.
Increase the number of faculty members who will pursue problem solving
research in related disciplines, such as economics, psychology, and sociology,
and who may possess advanced degrees in these disciplines.
Create educational materials in the problem-solving field that draw on law,
economics, statistics, decision analysis, cognitive and social psychology, organizational behavior and other needs.
Create a Web-based problem-solving clearinghouse for information and
communication dissemination, as well as faculty networking regarding scholarship and curriculum design.
Promote cross-teaching and joint research in problem solving studies between
law schools and the disciplines of business, economics, psychology, social work,
education, and anthropology.
Assist law school faculty to create problem solving case studies by convening
working groups between practitioners and law faculty.69
CPR also initiated an annual Problem Solving in the Law School Curriculum
Award to recognize superior, innovative methods of teaching problem solving in
law schools. Past recipients of these awards have structured classes to integrate
legal theory with exercises in practical counseling, negotiating, and drafting, often
requiring law students to work collaboratively and to resolve both legal and ethical
problems.
68
CPR Institute Advisory Council on Problem Solving and Legal Education. (2001). Problem
solving and the law school curriculum statement and recommendations for further integration.
New York: CPR Institute for Dispute Resolution.
69
Id.
162
5.1.5.4
Judge Harry T. Edwards and the Gap Between

Legal Education and Law Practice
In his seminal and controversial article, The Growing Disjunction Between Legal
Education and the Legal Profession, Judge Harry T. Edwards, Judge of the United
States Court of Appeals, District of Columbia Circuit, decried the law school/law
practice dichotomy, asserting that laws schools are moving toward pure theory
while the law firms are moving toward pure commerce. The middle ground of
ethical practice, he declared, has been deserted by both.70 The functional divorce
between legal education and law practice, he states, is not entirely accidental, as it
serves mutual interests:
. . . what we are now seeing is a sham of professionalism. Some law schools grant J.D.s
but allow professors to ignore or disparage legal doctrine, on the assumption that bar review
courses will prepare students to pass the bar and that students will then learn whatever they
need to know from their employers. Many law firms and other employers of young legal
talent accept or even encourage this ruse, because the unformed novices can be shaped to
the employers needs. New associates will learn to misconstrue cases and statutes, to
write obfuscatory briefs, to overpaper a case, and this education will be all the smoother if
they studied only pure theory in law school.71
Contending that law schools have abandoned their principal mission of professional
scholarship and training, he finds that contemporary legal scholarship is impractical
and falls into two categories of uselessness: The first kind is not directly prescriptive: it does not address a problem that some practitioner or governmental decision
maker must resolve. The second kind of impractical scholarship is directly
prescriptive, but wholly theoretical: it prescribes a decision, but ignores the applicable sources of law.72 In a similar vein and with equivalent bluntness, Chief
Judge Dennis Jacobs of the federal appeals court in New York derides contemporary legal scholarship: I havent opened up a law review in years. No one speaks of
them. No one relies on them.73
Judge Edwards assessments of law schools shortcomings is buttressed by his
survey of law clerks. These law clerks, he notes, were among the most successful
70
Edwards, Harry T. (1992). The growing disjunction between legal education and the legal
profession. Michigan Law Review, 91, p, 34.
71
Id. at 39.
72
Id. at 46.
73
Liptak, Adam. (2007, March 19). When rendering decisions, judges are finding law reviews
irrelevant. The New York Times. See Nance, Jason P. and Steinberg, Dylan J. The law review
article selection process: Results from a national study. (July 18, 2007). Available at SSRN: http://
ssrn.com/abstract=988847. (We found, for example, that Articles Editors seek to publish articles
from well-known and widely-respected authors. It appears, however, that editors do not assume
that prestigious authors produce the best scholarship, but instead they pursue the work of wellknown authors because it can increase their journals prestige within the legal academic community). Separately, Ian Ayres analyzed law journal citations and found that articles that included
an equation or an appendix were cited a lot less. Ayres, Ian. (2007). Super crunchers (p. 153).
New York: Bantam Books.
163
students in law schools, and if they perceive deficiencies in their legal education,
ordinary students would have suffered an even greater loss of practical, doctrinal
training. Reflecting on their law school experiences, Judge Edwards law clerks
reported:
l
most faculty members (and certainly most of the youngest and most ambitious)
were generally disdainful of the practice of law;74
Many of the professors appeared to work at setting themselves apart from the
world by their attempt to convey an air of superiority, both intellectual and
moral. . . . What was actually conveyed was the fact that so many of the
professors were out of touch with the effects of the legal system on the majority
of the people.75
The greatest problem is that most of the academic literature does not address
the problems that arise in my practice. I am not sure that most law professors
have much of a sense of (or care) what those legal issues are.76
law school focused much more on the intellectual . . . to the exclusion, indeed
the disdain, of the practical. . . . The teaching was that if a problem admitted of
an answer, it was almost not worth thinking about!77
It sometimes seems that the issues most fiercely debated in the academic
community are the ones least relevant and accessible to the rest of the legal
community.78
Despite his law clerks disparaging evaluation of their legal education, Judge
Edwards insists that law firms share responsibility with law schools for this evident
disjunction between practice and education and the resultant decline in ethical
behavior. Although practitioners may criticize law schools for their lack of
practical training and scholarship, many law firms fail to balance a bill or
be banned attitude with a broad sense of professional ethics and public service.
Law firms, Judge Edwards declares, must ensure that young graduates do not
become materialistic, unprofessional practitioners. Law firms have no right to
complain that law graduates are unskilled, where those skills are simply used to
maximize profit.79
On this legal seesaw, where law schools remain woefully theoretical and law
firms remain slavishly profitable, the clients are forced to serve as the fulcrum,
bearing the entire weight of impracticality and cupidity. Clients, not law firms,
ultimately pay the cost of training law school graduates to be functional attorneys,
and clients bear the risk of deficient moral reasoning, whether attributable to law
schools or law firms. These burdens are transferred to clients because attorneys,
74
Edwards supra note at 70 at 35.

Id. at 52, fn. 54.
76
Id. at 54.
77
Id. at 61.
78
Id. at 75.
79
Id. at 73.
75
164
unlike other professionals, do not undergo extensive practical training between

school enrollment and law firm employment, and associates at elite law firms do not
experience a compensation interregnum where entry-level salaries are commensurate with entry-level skills. The disjunction between law school and law practice
would not be a problem if graduates were subsequently trained in the legal
counterpart of a medical residency program; the problem arises because no clinical
experience bridges the theoretical nature of law schools and the materialistic nature
of law firms. Whether law schools should be less theoretical or law firms should be
less materialistic ultimately is a question about what the legal profession owes to
clients, not what law schools owe to law firms.
5.2
Law Firms
Shifting the focus from law school curricula to law firm practices, one senses that an
institutional bias against efficient and effective problem solving is carried forward,
like a professional orthodoxy, after law students graduate and enter the practice.
The sources and underlying incentives for this bias are different for law schools and
law firms, but the gap between convention and function remains. Law firms and
their lawyers adhere to procedures and measure quality and success in ways that
may vary significantly from the clients goals. Writing in American Lawyer,
attorney Paul Lippe describes the disparity between law firms concept of quality
and clients objectives:
Most large law firms see quality as the ability to deal with rare and complex situations, such
as big transactions or large-scale litigation. They still measure quality in their own terms
the absence of typos, proper Shepardizing, conformance to filing deadlines, the raising of
esoteric issues. Most clients regard these as only marginally important.80
Based on his more than 20 years of practice, including employment as general

counsel of Synopsys, Inc. for seven years, Lippe believes that billing in six minute
increments cant help but lead to six-minute thinking. Improving quality requires
more of a strategic and systems orientation.81
While clients seek predictability, efficiency, strategic thinking, lower costs,
problem-solving abilities, and quantitative information, law firms promote complexity, resist efforts to manage costs, and perform legal work that often provides
only an incremental, inestimable benefit. When I talk to law firms, says William
B. Solomon, Jr., general counsel of General Motors Acceptance Corporation,
I have one hand on my wallet. With the pressure on firms to increase revenues,
they dont care very much about cost effectiveness.82 The perverse incentives of
law practice are conceded by Evan Chesler, the presiding partner of Cravath,
80
Lippe, Paul. (2005, October). The quality quandary. American Lawyer.

Id.
82
Swanton, Mary. (2007, July). Making the grade. Inside Counsel.
81
5.2 Law Firms
165
Swaine and Moore: If you are successful and win a case early on you put yourself
out of work. If you get bogged down in a land war in Asia, you make more money.
That is frankly nuts.83
Law professor Donald Langevoort uses the term dysfunctional lawyering to
describe attorney behavior at odds with client objectives lawyers insistence on
belaboring the unimportant, or taking hard-line positions out of habit, fear of being
second-guessed or a desired posture for their clients, even though there is little
economic sense to what they are pushing.84 Some objectives of a law firm
maximizing gross revenue and minimizing malpractice exposure by researching
both likely and conceivable issues may pose direct financial and ethical conflicts
with a clients goal of obtaining prompt and economical guidance for likely, not
improbable, eventualities. Other objectives attracting new clients and cases and
retaining existing clients present less direct but nevertheless serious impediments
to realistic problem solving, as the professional distance between attorney and
client becomes blurred and clients may be led to misapprehend the probable outcomes of their cases.
Emblematic of the conflicting objectives and perceptions between law firms and
clients is the 18th Annual Survey of General Counsel, published in July 2007 by
Inside Counsel.85 That survey shows that the vast majority of attorneys believe they
are providing excellent legal services, but relatively few of their clients are satisfied
with the quality and cost of legal services. Sixty-two percent of law firms give
themselves an A rating for overall performance, but only 19% of their clients
think they deserve an A. Consistent with these ratings, 60% of law firms expect
their clients to bring more general corporate work to them, but only 24% of the
corporations inside counsel intend to do so. Evaluating their long-term quality
improvement measures, more than two-thirds of law firms believe their level of
service has improved over the last five years, but only 29% of the clients see an
improvement. Fifty-six percent of law firms believe they are actively seeking out
ways to reduce the costs of legal services, but only 11% of their clients agree with
them. On a fundamental issue of legal ethics and business integrity bill padding
only 10% of law firms agree with the statement, Most law firms pad their bills.
But 39% of in-house counsel, who review the bills, are convinced that most law
firms are cheating.
The conflicting objectives of attorneys and clients and the attendant tensions,
frustrations and distrust in attorney-client relationships are rooted in four systemic
impediments to effective problem solving: (1) the billable hour system and minimum billable hour requirements deter efficient client representation; (2) attorneys
narrow professional focus frequently prevents them from foreseeing how judges
and juries will perceive and decide their clients cases; (3) attorneys define client
service in terms of due process, i.e., undertaking and completing procedural
83
Chesler, Evan. (2009, January 12). Kill the billable hour. Forbes.
Langevoort supra note 67.
85
Swanton supra note 82.
84
166
protocols, while clients evaluate service in terms of outcomes; and (4) the competition for clients often results in unrealistic client expectations, inappropriate deference to client directions, and undue personal involvement with the client.
5.2.1
Conflicts Between Efficient Problem Solving

and Billable Hour Requirements
Attorney productivity and compensation are determined primarily by billable

hours, and the utility or quality of those hours is a secondary concern. While
attorneys are urged to produce a high-quality work product and advance the clients
objectives, those values are adjunctive and not acceptable substitutes for meeting
billable hour requirements. In the modern law firm, law professor Mary Ann
Glendon states, the rules are simple: Keep your head down, dont ask questions,
and bill as much as you can.86
The fundamental problem with hourly billing and billable hour requirements,
however, is that they reward inefficiency, intellectual tizzies, staffing redundancies,
and rounding up billable time while penalizing precision, focus, skill, and
practicality.87 Expressing serious concerns about the insidious effect of timebased billing, the report of the American Bar Associations Commission on Billable
Hours states: With no gauge for intangibles such as productivity, creativity,
knowledge or technological advancements, the billable-hours model is a counterintuitive measure of value. Alternatives that encourage efficiency and improve
processes not only increase profits and provide early resolution of legal matters,
but are less likely to garner ethical concerns.88 Attorney Jay Shepherd, whose
law firm has completely abandoned the billable hour system, believes hourly
billing fundamentally conflicts with clients objectives: Hourly billing is wrong
and its anti-client. Theres a disincentive to be efficient since you get paid more
86
Segal, David. (1998, March 22). In the business of billing? Lawyers say a rush for money is
shaking professions standards. Washington Post, p. H1, cited in Galanter, Marc, and Henderson
William D. (2008). The elastic tournament: The second transformation of the big law firm.
Stanford Law Review, 60, 1867.
87
Billable hour systems also appear to be counter-productive in the criminal law context. In Radha
Iyengars comparison of salaried public defenders and court-appointed private attorneys, she
found that the salaried public defenders performed significantly better than the court-appointed
private attorneys paid on an hourly basis. Criminal defendants represented by the court-appointed
attorneys were more likely to be found guilty and received longer average sentences (eight months
longer). Iyengar, Radha. (2007). An analysis of the performance of federal indigent defense
counsel (Working Paper 13187). National Bureau of Economic Research. Court-appointed attorneys also were slightly more likely to take cases to trial and slightly more likely to lose. They
also took longer to resolve cases through plea bargains. Liptak, Adam. (2007, July 17). Not all
defenders are alike. San Francisco Daily Journal, p. 2.
88
Carter, Terry. (2005, August). Thrifty litigation. ABA Journal, p. 39.
5.2 Law Firms
167
if you take longer to finish a matter even though the client wants it finished as fast
and efficient as possible.89
Scott Turow, the noted author of best-seller novels like Presumed Innocent and a
practicing attorney at the Chicago office of Sonnenschein Nath & Rosenthal,
recently weighed in on the inherent conflict between an attorneys profit motive
under the billable hour system and the clients need for competent yet expeditious
representation. If attorneys treated this inherent conflict like any other concurrent
conflict of interest under the rules of professional conduct, Turow believes, the
requisite disclosure would include: I want you to understand that Im going to bill
you on a basis in which the frank economic incentives favor prolonging rather than
shortening the litigation for which youve hired me; and my billing system
rewards me at your expense for slow problem-solving, duplication of effort,
featherbedding the workforce and compulsiveness not to mention fuzzy math.
After 30 years of practice, Turow writes, I have been unable to figure out how our
accepted concepts of conflict of interest can possibly accommodate a system in
which the lawyers economic interests and the clients are so diametrically
opposed.90
These concerns about the disincentive to practice efficiently and the incentive
to bill expansively, inherent in the billable hours system, are well-founded.91
Billable hour requirements, according to John McGuckin, general counsel for
Union Bank, undercut the professionalism in the attorney-client relationship
and impose a measurement that can only be met to our detriment by associates
billing hours they shouldnt. 92 In law professor William Rosss recent survey of
billing practices, two-thirds of the attorneys reported that they had specific knowledge of bill padding, a practice which Professor Ross describes as invoicing a
client for work never performed or exaggerating the amount of time spent on a
matter. When asked whether they personally had performed unnecessary tasks to
bump up their billable output, 54.6% of the surveyed attorneys responded affirmatively. Eleven years earlier, in a similar study conducted by Professor Ross in 1995,
40.3% of the lawyers admitted to performing unnecessary work.93 In a different
survey of attorneys conducted by law professor Susan Fortney in 19992000, 64%
89
Pfeiffer, Sacha. (2007, October 10). Law firm backs away from the billable hour in favor of upfront fees. San Francisco Daily Journal, p. 5.
90
Turow, Scott. (2007 August). The billable hour must die. ABA Journal, p. 35.
91
See Fortney, Susan Saab. (2005). The billable hours derby: Empirical data on the problems and
pressure points. Fordham Urban Law Journal, 33, 171. Fortney, Susan Saab. (2000). Soul for sale:
An empirical study of associate satisfaction, law firm culture, and the effects of billable hour
requirements. University of Missouri Kansas City Las Review, 69, 241. Rhode, Deborah. (2005).
Profits and professionalism. Fordham Urban Law Journal, 33, 49.
92
Iafolla, Robert. (2006, September 7). ABA asks how to making billing better for all. San
93
Lattman, Peter. (2007, May 2). Bloated billings. The Wall Street Journal, p. B2. See Ross,
William. (2006). The honest hour: The ethics of time-based billing by attorneys. Durham, North
Carolina: Carolina Academic Press.
168
of respondents agreed that attorneys tend to rationalize and justify questionable

billing practices, and 46% agreed billing pressure causes ethical and competent
attorneys to leave law practice.94 Lamenting that the billable hour system
encourages lying, one attorney respondent wrote, If you dont lie you are
perceived to be a slacker, even though, in reality you may work far more than
others.95
Lawyers preoccupation with the gross volume of billable hours interferes
with constructive, creative client problem solving. It rewards the sheer expenditure
of time and discourages the evaluation, measurement and recognition of work
product quality and client service. Although long hours may be perceived as
emblems of professional commitment, studies uniformly report that long hours
are correlated with major performance errors and inefficient problem solving.96 The
performance of professionals working extreme hours is worse than their performance while intoxicated, indicating that fulfilling a firms notion of dedication may
be harmful to the clients interests.97 In the mythology of law firms, long hours
foster an illusion of client dedication and obscure the fact that the firm, not the
client, is the primary beneficiary of the attorneys exhaustion. Psychologists who
study fatigued professionals would join former Yale Law School Dean Anthony
Kronman in questioning the values, priorities, and character of the new professional ideal: the lawyer who cares about nothing but work and is prepared to
sacrifice all of his or her personal energies to it, regardless of how narrow and
dull the work becomes.98
94
Fortney, Susan Saab. (2003). I dont have time to be ethical: Addressing the effects of billable
hour pressure. Idaho Law Review, 39, 305, 310, 315.
95
Id. Writing about the Billable Hour Derby, an attorney and syndicated columnist states:
Whoever said, Its quality, not quantity, that counts, never worked at a law firm. . . . Taking
the lead in your firms Billable Hour Derby definitely has its rewards. If you achieve this status,
you will notice partners treating you differently. Several partners, including one who had never
previously acknowledged my existence, congratulated me and told me to keep up the good work.
None of them had any idea what I was doing. If I had spent all month committing malpractice, it
seemed the important thing was to spend a lot of billable time doing it. The Rodent. (2002,
February 12). Success means winning billable hour derby. San Francisco Daily Journal.
96
See Pirtle, Jennifer. (2006, September). Stressing yourself sick. ABA Journal, p. 35. Hallowell,
Edward M. (2005, January). Why smart people underperform. Harvard Business Review,
pp. 5562. See also Entine, Oliver A., and Small, Dylan S. The role of rest in the NBA homecourt advantage. (2008). Journal of Quantitative Analysis in Sports, 4(2), Article 6.
97
Czeisler, Charles A. (2006, October). Sleep deficit: The performance killer. Harvard Business
Review, pp. 53, 54, 56. See Hewlett, Sylvia Ann, and Luce, Carolyn Buck. (2006, December).
Extreme jobs: The dangerous allure of the 70-hour workweek. Harvard Business Review, p. 49.
98
Kronman supra note 6 at 307.
5.2 Law Firms
5.2.2
169
The Consequences of Avoiding The Big Picture
In the classification of entrepreneurial strategies devised by management theorist

Peter Drucker, the practice of law would be categorized as a specialty skill niche.
One of the major limitations of a specialty skill niche, Drucker writes, is that it
inflicts tunnel-vision on its occupants.99 In order to maintain themselves in their
controlling position, the occupants of a specialty skill niche have to learn to look
neither right nor left, but directly ahead at their narrow area, their specialized
field.100
Consistent with the tunnel vision demanded by practitioners of a specialty skill
niche, lawyers bring a narrow perspective to problem solving and learn to avoid
the big picture. Benjamin Sells, a Chicago psychologist who specializes in
counseling attorneys, explains how the practice of law deters lawyers from thinking
about issues beyond their narrow client assignment:
The Law simply doesnt know what to do with Big Ideas that escape analytic definition. It
knows that justice, truth, and fairness are supposed to be the end results of the legal process
but because such terms cant be defined in a way the Law is comfortable with, it begins to
shy away from direct contact with them.101
Although lawyers may enter law school with a strong sense of justice and idealism,
they find that law school and the business of law discourage consideration of largescale social and policy issues. Lawyers who initially were committed to social
justice issues find that there is no real ethic that encourages lawyers to undertake
such work, and many then decide to forgo their broad-minded ambitions and just
go make money and obtain job security.102 As a result of high billable hour
requirements and institutional pressures to behave in a materialistic fashion,
notes Judge Harry T. Edwards, lawyers who remain interested in social responsibilities find it difficult or impossible to realize their ethical ideals in private
practice.103
The narrowing of attorneys perspective promotes high profitability in law firms
and poor decision making in client cases. Lawyers simply do not see cases the way
judges and jurors will see them. Although lawyers may shun the Big Ideas, judges
and jurors approach their tasks with a wide vision and broad moral objectives. As
trial judge Michael Anello observed shortly after appointment to the bench, a
judges emphasis on fairness and doing the right thing presents a sharply different
perspective from his prior role as a civil defense lawyer representing insureds:
99
Drucker, Peter. (1985). Innovation and entrepreneurship (pp. 239240). New York: Harper &
Row, Publishers.
100
Id. at 240.
101
Sells, Benjamin. (1994). The soul of the law: Understanding lawyers and the law (p. 37).
Rockport, Massachusetts: Element Books, Inc.
102
Edwards supra note 70 at 68, 70.
103
Id. at 71.
170
I enjoy the new perspective now that my primary objective is to do the right thing,
to be balanced and be fair, rather than being an advocate for one side or the
other.104 Judge Cynthia Ming-Mei Lee echoes this broad view of the judges
role: As a judge your perspective is not that narrow. It forces you to look at all
things and constantly try to find the balance of doing the right thing and taking into
account everything that everyone has said.105
Jurors, too, focus on the big picture, as Reid Hasties extensive studies of juror
behavior demonstrate. The central cognitive process in juror decision making,
Hastie finds, is story construction the creation of a narrative summary of the
events under dispute.106 Gary Klein, a decision scientist familiar with Reid
Hasties research, studied the Mike Tyson rape trial and asked an attorney whether
law schools teach attorneys about story building. The attorney replied, there is
virtually no such training. Law school concentrates on legal arguments, precedents,
rules of evidence, and other matters, not on training on what makes people accept or
reject stories.107
Attorneys reductive approach to the practice of law and their ambivalence about
Big Ideas overlook the cognitive motivations and processes of their audience
judges and jurors. Attorneys deliver discrete arguments but their audience listens
for credible themes and narratives. Noting that in real life you get no extra points
for listing every possible legal theory, Jim McElhaney, a law professor who
teaches trial practice, criticizes attorneys typical legal argument as being meticulously over-thorough, boring, tediously repetitive, argumentative and totally unpersuasive.108 Attorneys often overlook the fact that meticulously dismantling an
opponents case is not a substitute for persuasively building their own case. Taught
to be detailed and thorough, attorneys may not relate to the grand themes that
intersect at every trial right versus right, wrong versus wrong, and good old right
versus wrong and the strategic interplay of character and candor, power and
weakness, deception and vulnerability.109 Because jurors focus on broad themes
while lawyers delve into arguments, they inevitably develop discrepant views of a
case. Attorneys ability to accurately forecast case outcomes will continue to be
impaired if they disregard the necessity of a compelling, grand scale narrative and
instead focus narrowly on each discrepancy in a witness testimony, judicial precedents tenuously linked with the case being tried, and ponderous, redundant proof
of each element of a cause of action.
104
Daily Journal Corporation. Southern California Judicial Profiles, San Diego County Superior
Court, 20022.
105
(2006, March 27). Studying Red scare stirred interest in law. San Francisco Daily Journal, p. 2.
106
Hastie, Reid & Dawes, Robyn M. (2001). Rational choice in an uncertain world (p. 136.
107
Klein, Gary. (1999). Sources of power (p. 185). Cambridge: The MIT Press.
108
McElhaney, Jim. (2008, March). Stuck in the rut. ABA Journal, p. 24.
109
Id. at 25.
5.2 Law Firms
171
The omission of themes and narratives necessarily follows from an education

that confuses argument with persuasion. Professor McElhaney finds that law
schools usually are not interested in teaching their students to communicate with
laypeople, so they leave the job half-done.110 One of the consequences, he states,
is that litigators dont have any idea how to put a coherent story together.111 In his
column for the American Bar Associations Litigation magazine, his fictional Judge
Standwell wonders whether law schools teach young lawyers to contest everything but omit any instruction in developing and relating cogent themes and
narratives: Ive seen a number of young lawyers who seem to think that if you
just put everything in a bag, shake it up and then pour it out in front of the judge and
jury, theyll put it together for you.112 Modern litigators, Professor McElhaney
writes, dont tell the story of the case any more.113
Although Professor McElhaney complains that attorneys have not learned how
to tell a story, the fundamental problem may be that they do not see a story to be
told. A story necessarily embraces the broad themes and values that guide trial
judges and jurors decisions, yet attorneys learn early in their careers that their
primary objective is to advance the clients interests, not promote any esoteric
concept of justice. The first phase of legal education, the famous legal scholar Karl
Llewellyn noted, is to drive fairness, ethics, and common sense out of law students
thoughts:
The hardest job of the first year is to lop off your common sense, to knock your ethics into
temporary anesthesia. Your review of social policy, your sense of justice to knock these
out of you along with woozy thinking, along with ideas all fuzzed along their edges. You
are to acquire [the] ability to think precisely, to analyze coldly, to work within a body of
materials that is given, to see, and see only, and manipulate the machinery of the law.114
This process, Llewellyn continues, lays the foundation for law practice and invariably sacrifices some judgment, insight and humanity. When this education is
successful, attorneys enter practice untethered by ethics and a sense of justice,
ostensibly trained to think like lawyers but unable to see like jurors. Educated to
avoid issues of social policy and justice and rewarded with entry level annual
compensation approaching $200,000 in 2008, newly admitted attorneys are
unlikely to notice or correct their professional astigmatism. The business pressures
on private practitioners, and the competition for business, a young attorney
explains, are so great that there is little concern for anything public service,
social justice, training associates that does not directly enhance the lawyers
marketplace advantage or financial bottom line.115
110
Id.
McElhaney, Jim. (2008, April). Rejiggering jury selection. ABA Journal, p. 30.
112
Id.
113
Id. at 31.
114
Llewellyn, Karl. (1996). The bramble bush (p. 116). New York: Oceana Publications. Sullivan
supra note 8 at 78.
115
Edwards supra note 70 at 68, fn. 93.
111
172
5.2.3
Due Process and the Elevation of Process

Above Results
Consistent with attorneys narrow focus, new lawyers quickly learn to emphasize
procedures over outcomes. Because it is easier to follow protocols than be accountable for results, law firms assure clients they will do everything possible but may
not discern what, among all possible processes, is necessary or efficacious. The
messiness of client problems and the perceived vagaries of the legal system are
obviated by emphasizing procedural compliance and exhaustion of remedies rather
than substantive outcomes. Clients learn that they can rely on attorneys to do it
right but cannot expect them to get it right.
Benjamin Sells notes that lawyers inevitably fall back on due process, assuring
themselves that clients untidy problems are at least amenable to order if not
susceptible to control: one of the most striking things to the non-lawyer who
becomes involved in a lawsuit is the degree to which lawyers emphasize means
more than ends, procedure more than outcome.116 Attorneys unwavering faith in
due process, Sells states, presumes that order can be established in even the most
chaotic situations if only enough procedural safeguards can be ensured, and that if
surprise and uncertainty can be minimized then over time things will balance
themselves out in predictable ways.117 Due process, however, is not a probabilistic
or methodological reasoning skill used for practical, substantive problem solving. It
is, instead, a legal framework of rights and procedures imposed over unruly people
grappling with intractable problems. Due process does not resolve problems but is
merely a protocol for handling them. By creating a fictitious division between the
means to be employed and the results to be achieved, attorneys insure that they are
accountable only for undertaking the means over which they have direct control.
They agree to guide clients through a labyrinth of legal procedures but will not
identify precisely the destination.
Lawyers elevation of process over outcome is antithetical to sound decision
making and efficient conflict resolution. Accountability for results and continuous
feedback about results is essential to developing expertise in decision making and
problem solving, yet attorneys make it abundantly clear from the inception of the
attorney-client relationship that they are not accountable for results. In this system,
few incentives exist to become an efficient, strategic problem solver, evaluating
which activities are truly effective and limiting legal services to those most likely to
further the clients objectives. Absent a direct connection between the clients goals
and the attorneys engagement, Scott Darling, general counsel of Danger, Inc.
states, lawyers do nothing more than spend their time arguing about silly legal
points, simply because that is what they are taught to do and that is academically
116
Sells supra note 101 at 37.

Sells supra note 101 at 3839.
117
5.2 Law Firms
173
what good lawyering is.118 This disconnect between process and results has
contributed, in large measure, to the dominant view that lawyers magnify the
inherent divisiveness of dispute resolution and rarely cooperate to resolve disputes efficiently, write law professors Ronald J. Gilson and Robert Mnookin.119
Shielded by a professional ideology that is said to require zealous advocacy, they
state, lawyers endlessly and wastefully fight in ways that enrich the lawyers but
rarely advance the clients.120 Although attorneys are fulfilling the dictates of
zealous advocacy, clients conception of effective legal representation has little
to do with zealous advocacy and the methodical exhaustion of all avenues of legal
redress but rather envisions a fast and safe route to resolution or advising the client
that the journey should not be undertaken in the first place.
In the commercial world, where products, services, and financial results are
tangible, litigation seems to be the only enterprise without deliverables. If the
nature of litigation itself prevents attorneys from producing tangible results, or at
least accurate estimates of case outcomes and likely costs, then that implicit
premise should be made explicit to clients. Clients then can determine whether,
in a legal system that purportedly is risky, uncontrollable and unpredictable, their
attorney has any comparative advantage or instead is a fungible vehicle puttering
through an expensive, lengthy, quarrelsome and possibly optional process. Pressed
to justify how their legal representation can be beneficial in a legal system they
portray as being riddled with uncertainties, hazards and surprises, attorneys may
need to upgrade their client counseling skills by undertaking some training in
formal decision making and economic modeling and forecasting.121 Vague evaluations like strong case, good case, and defensible position, which leave plenty
of room to maneuver whatever the case result, will need to yield to statistics and
probabilities. As law professor Gary Munneke states in his article, Legal Skills for
a Transforming Profession, building efficiencies into the delivery of legal services
requires well-honed problem-solving skills and an understanding of decision tree
analysis. Effective client representation, he contends, also may require training in
economics and statistics: Arguably, economic modeling and forecasting represent
a professional skill that lawyers should possess in order to serve their clients
interests competently.122
118
Chanen, Jill Schachner. (2005, July). The strategic lawyer. ABA Journal, p. 44.
Gilson, Ronald & Mnookin, Robert. Cooperation and competition in litigation: Can lawyers
dampen conflict? In Arrow, Kenneth, Mnookin, Robert H. & Ross, Lee (Eds.). (1995). Barriers to
conflict resolution (p. 185). New York: W.W. Norton & Company, Inc.
120
Id. at 185186.
121
See Sarat, Austin, and Felstiner, William L.F. (1986). Law and strategy in the divorce lawyers
office. Law & Society Review, 20(1), 93, 127. See also Kleinmuntz, Benjamin. Why we still use
our heads instead of formulas: toward an integrative approach. In Connolly, Terry, et al. (Eds.).
(2002). Judgment and decision making (p. 687). Cambridge: Cambridge University Press.
122
Munneke, Gary A. (2001). Legal skills for a transforming profession. Pace Law Review, 22,
105, 132137, 147, 149.
119
174
5.2.4
Competitive Market Pressures, Undue Deference to Client

Expectations and Inappropriate Client Involvement
The path from initial case intake to trial is marked by classic agent-principal
conflicts. These conflicts assume two detrimental forms: (1) different objectives,
risk preferences and incentives for the client and the attorney; and (2) asymmetric
information conditions under which it is difficult and expensive for the client
to determine whether the attorneys conduct is serving the clients interests.123
These conflicts often lead to attorneys overselling their capabilities, presenting
unrealistic evaluations of the clients prospects at trial, spending excessive
amounts of time on activities with diminishing marginal returns, and attempting
to enhance or protect professional reputations by exhibiting extreme risk aversion
or risk taking in pre-trial settlement negotiations. In some cases, attorneys and
litigants survive and frequently thrive in a litigation vortex for years before reality
is administered, the cost of decision-making error is liquidated, and agent-principal conflicts become evident.124 The underlying reason for this denouement,
according to Whitney North Seymour, the former United States Attorney for the
Southern District of New York and president of the New York Bar Association, is
attorneys conflicting economic interests: Cases arent settled sooner because
lawyers, who benefit most from litigation, are in controlnot the clients who
pay the bill.125
Although agent-principal conflicts exist at all phases of litigation, the pre-trial
phase is critical because it anchors the range of anticipated losses and gains,
delineates the parameters of case resolution as gains or losses, and provides
abundant opportunities for subsequent misunderstandings and conflicts in the
attorney-client relationship. As explained below, decision-making competency is
undermined in this early stage by three strong forces: (1) attorneys economic
competition for clients; (2) attorneys concomitant deference to clients perceptions, expectations, and objectives; and (3) attorneys humanitarian desire to alleviate client anxiety, a legal tradition sometimes called sympathetic detachment.
123
See Eisenhardt, M.K. (1989). Agency theory: An assessment and review. Academy of Management Review, 14(1), 5774. McKee, Michael, Santore, Rudy, and Shelton, Joel. (2007, June).
Contingent fees, moral hazard, and attorney rents: A laboratory experiment. Journal of Legal
Studies, 36, 253273.
124
See Polinsky, A. Mitchell & Rubinfeld, Daniel L. (2003). Aligning the interests of lawyers and
clients. American Law and Economics Review, 5(1), 165, 188 (noting the potential conflict of
interest between attorney and client and proposing a different form of contingent fee agreement).
125
Gilson & Mnookin supra note 119 at 184. Attorneys, however, see themselves as faithful and
fervent fiduciaries, implementing litigation strategies chosen by their clients.
5.2 Law Firms
5.2.4.1
175
Competition for Clients and Deference to Client

Perceptions, Expectations and Objectives
In the legal beauty contest, attorneys inevitably vie for clients respect, retention
and recompense. Although most attorneys are reluctant to provide a substantive
evaluation early in a case engagement, they are aware that clients have multiple
choices in the marketplace for legal representation and, in selecting counsel, will
search for distinguishing attributes among attorney candidates. Attorneys adamantly deny that they foster unrealistic client expectations, but studies consistently
show that clients have a dissenting opinion: lawyers who say they just provide
technical input and lay out the options while leaving the decisions and methods of
implementing them up to their clients are kidding themselves.126
At both an explicit and implicit level, attorneys convey evaluations that are
firmly etched in the clients memory and later anchor and often prejudice the
clients case outcome assessment. Even where they think of themselves as merely
providing information for clients to integrate into their own decisions, asserts
Professor William Simon, lawyers influence clients by myriad judgments, conscious or not, about what information to present, how to order it, what to emphasize,
and what style and phrasing to adopt.127 In attempting to demonstrate personal
competence and establish credibility, for instance, an attorney may unintentionally
convey confidence in the clients position when she simply intends to instill
confidence in her ability to discharge the representation competently and strategically. Due to confirmation bias, the client may imbue the attorneys opinions with a
degree of certitude neither expressed not intended. Clients hear not only what they
want to hear but also what is not directly contradicted; the potential for self-serving
misunderstandings is vast because attorney-client communications often are ambiguous, indirect, non-confrontational and circular, and attorneys do not directly tell
their clients that they are being unreasonable.128 In the etiquette of attorney-client
communications, the foremost rule may be, If you cant say something nice, dont
say anything at all.
In a study of clients interviewed and counseled by attorneys, law professors
Felsteiner and Sarat describe a sequence of attorney-client interactions (law talk)
designed to convey the attorneys competence while simultaneously lowering the
clients expectations and putting some distance between themselves and
responsibility for any eventual disappointment.129 The clients perception is that
lawyers start with formalism and an explanation of the procedures mandated by
126
Gordon, Robert. (1988). The independence of lawyers. Boston University Law Review, 68, 1, 30.
Simon, William. (1991). Lawyer advice and client autonomy: Mrs. Joness case. Maryland Law
Review, 50, 213, 214216.
128
Felstiner, William, and Sarat, Austin. (1992). Enactments of power: Negotiating reality and
responsibility in lawyer-client interactions. Cornell Law Review, 77, 1447, 1464. Sarat and
Felstiner supra note 5 at 144.
129
127
176
statutes law talk full of explicit references to rules.130 Later in the representation, attorneys emphasize people over rules and the judges immense discretionary power.131 They characterize legal rules as unnecessarily technical and stress
the limits of law in guiding or determining behavior outside of the courtroom.132
Later still in the representation, they emphasize differences in judges as determinative of outcomes: Judges are portrayed in ways that suggest that they are capable of
making decisions on grounds that have nothing to do with facts or rules.133 At the
end-stage counseling, attorneys criticize the skill, motives, dedication and abilities
of both judges and opposing counsel and highlight the importance of the attorneys
local knowledge, insider access, connections and reputation.134 Ultimately
describing the legal system as idiosyncratic and personalistic, they attempt to
shift responsibility for bad results from lawyers to powerful and unapproachable
legal authorities. The critique of judges thus works to empower lawyers at the
expense of their clients.135 For clients, Felsteiner and Sarat find, this is a difficult
and disappointing message. Clients start with a belief in the efficacy of rights in
the legal system, only to encounter a process that not only is inconsistent, but
cannot be counted on to protect fundamental rights or deal in a principled way with
the important matters that come before it.136
This scenario of attorney-client counseling gives the attorney wide latitude
to retreat from earlier case assessments without being technically contradictory.
The law remains as initially explained, the attorney counsels, but the vagaries of
the legal system and the costs of litigation may prevent the client from realizing the
result due from a strictly legal standpoint and initially contemplated by the attorney.
It is the system that has disappointed the client, not the attorney. The extensive
use of mediation and non-binding arbitration facilitates this slippery client management, as explained by Deborah Hensler, a Stanford Law School professor and
RAND Institute Senior Fellow:
Lawyers increasingly compete for clients, and one way to land a client is to encourage her
to believe she has a strong case, or at least, that the lawyer can overcome obstacles to an
attractive outcome. The lawyer who over-promises faces the unpleasant task of informing
the client that her options are not as attractive as she thought. Mediation offers an
opportunity for the lawyer to enlist a third party in this task. By bringing a third-party
into the negotiation process, non-binding arbitration also offers the lawyer a scapegoat for a
less-than-fully-satisfactory outcome.137
130
Sarat, Austin, and Felstiner, William L.F. (1989). Lawyers and legal consciousness: Law talk in
the divorce lawyers office. Yale Law Journal, 98, 1663, 1671.
131
Id. at 1674.
132
Id. at 1674.
133
Id. at 1676.
134
Id. at 1676, 1685.
135
Id. at 1679.
136
137
Hensler, Deborah. (2000). A research agenda: What we need to know about court-connected
ADR (RP-871, p. 17). Santa Monica: RAND Institute for Civil Justice.
5.2 Law Firms
177
Deborah Rhode, another Stanford Law School professor and author of In the
Interests of Justice: Reforming the Legal Profession, voices a similar concern about
the not-so-subtle consequences of lawyers competition for clients: Price consciousness among corporate clients, together with the relaxation of bar restrictions
on competition within and across professions, also have intensified economic
pressures in private practice and have led to increased instability in lawyer-client
relationships. In this highly competitive market for clients, she states, attorneys
face intense pressure to serve clients short-term interests.138 This obeisance to
clients short-term interests represents a profound change in the legal profession,
transforming attorneys from the conscience of Wall Street in the 1960s to the
ushers of Wall Street at the turn of the century.139
A recent study of law firms reinforces the concern, if not the conviction, that
economic pressures have changed the nature of the attorney-client relationship from
an advisory role to a supportive capacity. Relying on their own research and other
studies completed by Kimberley Kirkland, Robert Nelson, Robert Gordon, Mark
Suchman, Mary Ann Glendon, and Laura Beth Nielsen, law professors Marc
Galanter and William Henderson write:
l
Partners have strong incentives not to act as autonomous counselors who serve
as a check on their clients desires, but as agents for their clients.
Corporate legal departments now favor entrepreneurial lawyers who privilege
the companys commercial interests above strict standards of professionalism.
In-house counsel, in some instances, hire outside lawyers to reinforce the
position staked out by the general counsel, and if he or she wants to be hired
again, it behooves him [or her] not to offer a contrary opinion.
Corporate counsel may not seek an independent legal opinion but instead hire
outside counsel to obtain a specific, cost-effective result; their objective is to
increase short-term profits with the minimal amount of legal drag on company
transactions.
CEOs increasingly want their general counsel to have the same exclusive
loyalty to the company that they expect from employees who do not have
professional responsibilities.140
Although law firms historically provided expert and autonomous advice, Galanter
and Henderson write, the dispensation of independent advice is no longer the
business model sought or compensated by most corporate clients.
The competitive pressure on lawyers and the consequent focus on short-term
interests directly harm attorneys as well as clients. Ronald Mallen, a national expert
138
Rhode, Deborah. (2002). Expanding the role of ethics in legal education and the legal
profession. Santa Clara, California: Markkula Center for Applied Ethics. Available at http://
www.scu.edu/ethics/publications/submitted/rhode/legaled.html.
139
See Larissa MacFarquhar. (2008, February 25). Life and letters, East Side Story. The New
Yorker, p. 54 (describing Louis Auchincloss view of attorneys roles in the 1960s).
140
Galanter, Marc and Henderson, William. (2008). The elastic tournament: The second transformation of the big law firm. Stanford Law Review, 60, 102, 147148.
178
on attorney malpractice and partner of Hinshaw & Culbertson, points to competition as a major cause of poor judgment in client origination and representation:
These economic pressures result in efforts to originate business. One consequence
is that even large, sophisticated law firms have represented some clients who should
not have been represented on these matters. The ultimate issue, Mallen notes, is
how the pressure to originate business will affect the judgment of individual
lawyers and collectively the firms judgment. Poor judgment and inadequate
internal controls, Mallen believes, are responsible for significant malpractice
claim losses and caused many of the multi-million dollar losses during the last
20 years.141
5.2.4.2
Undue Emotional Involvement with Clients
A sense of uncertainty pervades civil litigation. The perceived inability to control

costs, outcomes, procedures and timing deprives people and organizations of their
ordinary sense of authority, direction and stability. People who otherwise carefully
plan their actions sense that an uncomfortably large portion of their future now rests
in the hands of four people to whom they might not have extended a lunch
invitation, let alone an incursion into their personal affairs and businesses: their
own attorney, their adversary, their adversarys attorney, and the trier of fact (judge,
jury or arbitrator). Keenly aware of the clients sense of uncertainty and loss of
control, attorneys naturally seek to restore the clients equilibrium, spawning a host
of unintended consequences.
In the competitive marketplace for clients, the attorneys intention is to solidify
the attorney-client relationship and reduce the clients sense of uncertainty, yet any
balanced view of a clients position is as likely to heighten uncertainty as it is to
reduce it. In attempting to reduce uncertainty and instill confidence, an attorney
embarks on a path often leading to unrealistic case assessments and inaccurate
perceptions of the opposing partys motives, options, resources and objectives. In
the extreme case, writes attorney William Domnarski in an article entitled The
Curse of Compassion For Clients When Advocacy Sacrifices Objectivity, the
lawyers become their client, their cause. It is that identification that is so terrifying,
because it involves the loss of self; not just professional self, but self generally.142
In befriending the client and internalizing the clients cause, the attorney forfeits the
objectivity central to professional representation. The client is convinced that
he has a strong ally but does not comprehend that a candid counselor may better
serve him.143
141
Mallen, Ronald & Smith, Jeffrey M. (2000). Legal malpractice (Vol. I, p. 54). St. Paul,
Minnesota: West Group.
142
Domnarski, William. (2007, October 15). The curse of compassion for clients when advocacy
sacrifices objectivity. San Francisco Daily Journal, p. 6.
143
See Chemerinsky, Erwin. (2009, May 8). Help wanted. San Francisco Daily Journal, p. 6 (My
sense, after over 30 years as a lawyer, is that a very large percentage of serious ethical violations
come when lawyers go too far in their effort to please the client or get the results the client wants.)
5.2 Law Firms
179
To varying degrees, attorneys attend to clients subjective needs by authenticating, translating, confirming, and reiterating clients beliefs. In communications
ranging from implicit endorsement to outright support, attorneys reify clients
belief that their conduct is justified, their cause worthwhile.144 At a practical,
business development level, attorneys recognize and financially benefit from the
fact that many clients are not seeking candid advice about whether they should have
taken the actions and made the decisions that precipitated the litigation in the first
place but rather are expecting counsel to re-cast those actions and decisions in a
flattering legal light. The point at which an attorneys conduct shifts from legitimate
advocacy to client pandering is difficult to discern, especially when financial
incentives, ethical obligations and a sincere desire to help a client are intermingled.
Deferring to the clients subjective preferences, attorneys often prolong a litigation
denouement with powerful, inspired and exceptionally remunerative advocacy
instead of urging a prompt resolution that would require the client to consciously
accept some degree of responsibility for fostering or mishandling a legal dispute.
Janet Malcolm, an author and once herself a party to protracted litigation,
describes the insidious yet wonderfully gratifying effect of the rhetoric of
advocacy:
[W]hat the lawyer says and writes on his clients behalf is gratifying beyond the latters
wildest expectation. The rhetoric of advocacy law is the rhetoric of the late-night vengeful
brooding which in life barely survives the skeptical light of morning but in a lawsuit
becomes inscribed, as if in stone, in the bellicose documents that accrue while the lawsuit
takes its course, and proclaims with every sentence, I am right. I am right. I am right.145
The law cure, she writes, is unfailingly satisfying: Of pleasurable reading experiences, there may be none greater than that afforded by a legal document written on
ones behalf.146 The immediately pleasing law cure, however, may not be therapeutic in the long term, as it tends to reinforce clients perceptions when candid
legal advice might present alternative viewpoints and to strengthen clients resolve
when sound judgment may dictate compromise. A clients self-satisfaction neither
portends nor facilitates a satisfactory outcome.
Imbued with the conviction that zealous advocacy is not only a virtue but also
an ethical requirement, some attorneys are receptive to enacting the clients objectives and strategies, regardless of the attorneys independent belief that those
objectives may be unrealistic and the strategies counterproductive. If the client is
willing to pay the bill and the task is not manifestly unethical, the attorney reaps a
superior financial return by deferring to the clients demands. Scorched earth
litigation strategies, attorney Fred Silberberg believes, usually happen for one
144
See Slocum, Robin Wellford. (2009). The dilemma of the vengeful client: A prescriptive
framework for cooling the flames of anger. Marquette Law Review, 93(3). Available at SSRN:
http://ssrn.com/abstract=1088855.
145
Domnarski supra note 142 at 6.
146
Clendinnen, Inga. (2004, November 17). Making stories, telling tales: Life, literature, law. 18th
Lionel Murphy Memorial Lecture.
180
reason: The lawyer allows the client to drive the case. This is akin to allowing
someone who is intoxicated to be at the wheel.147 He adds: Some lawyers believe
that their job is to do what the client wants, regardless of the potential outcome.
Some like to feed on the emotional duress of the client and let the client take
control.148 The clients duress, when combined with a law firms stress on billable
hour production, is a heady concoction; when billable hours are the main factor in
partnership decisions, Judge Edwards observes, attorneys may find it difficult to
keep an ethical distance from their clients.149
The attorneys internalization of the clients hopes and desires is simultaneously
empowering and misleading. The attorneys focus on short-term affect rather than
long-term effect presages cardinal decision-making errors. As James Reason, the
eminent psychology professor and author of Human Error, explains, Accuracy of
reasoning performance is critically dependent upon whether the problem solvers
attention is directed to the logically important rather than the psychologically
salient aspects of the problem configuration.150 When the attorneys financial
and reputational interests become intertwined with the clients subjective demands
and expectations, both attorney and client lose the capacity to abstract, analyze and
decide effectively. They cognitively tag team each other, transferring and reinforcing each others beliefs and biases, and in extreme cases like the Rite Aid
accounting scandal, the corporate clients CEO and general counsel emerge from
a close personal warp and are sentenced to a federal prison term.151
Although attorneys will argue that the psychologically salient needs must be
addressed, most practitioners are neither trained nor competent to provide affective
relief.152 Nor is the legal system, essentially a distributive justice system, designed
or committed to deliver affective equilibrium. Despite the legal systems limitations
and some attorneys chronic inability to distinguish between an appropriate level of
emotional intelligence in client representation and undue personal involvement in
a clients legal affairs, the overall trend in law practice is shifting from neutral
advice to supportive counseling. The competition for clients encourages attorneys
to function simultaneously as rainmakers, advocates, fiduciaries and friends, displaying not only legal proficiency but client allegiance as well.
Fostering emotional engagement with clients and supporting their subjective
expectations has a deep tradition in law. The legal tradition of emotional
147
Silberberg, Fred. (2008, February 19). Divorce lawyers must bring their clients back to reality.
San Francisco Daily Journal, p. 6.
148
Id.
149
Edwards supra note 70 at 77.
150
Reason, James. (1990). Human error (pp. 8788). Cambridge: Cambridge University Press.
151
Collins, Jeffrey G., and Toomey, Erin L. (2007, December). Lawyers dont look good in stripes.
Michigan Bar Journal, p. 34.
152
See Sarat, Austin, and Felstiner, William L.F. (1988). Law and social relations: Vocabularies of
motive in lawyer/client interaction. Law and Society Review, 22(4), 765 (Lawyers can have little
insight into the dispositions or character of people with whom they have had little contact; legal
training provides no readily recognizable psychological expertise).
5.2 Law Firms
181
involvement is sometimes described as sympathetic detachment. In an address to

the American Association of Law Schools, law professor Jack Sammons states that
traditionalists use the awkward combination of opposites, sympathetic detachment, to describe a relationship with clients essential to its exercise because they
know of no simpler way of saying that the rationality of our particular practical
wisdom as lawyers depends on an underlying emotional involvement.153 Consistent with the model of an attorney as advisor, confidant and cheerleader, ethical
guidelines drafted by the Litigation Section of the American Bar Association refer
to a lawyers desire to convince the client of the lawyers support for the clients
position and cite Model Rule 2.1, Comment 1 (a lawyer endeavors to sustain the
clients morale and may put advice in as acceptable a form as honesty permits).154
Attorneys attention to the clients emotional state also is encouraged in a national
trial practice treatise: While it is important to be realistic with the client, at the
same time counsel must never hesitate expressing optimism if the facts justify it.
Sincere expressions of optimism are very helpful in establishing a healthy attorneyclient relationship.155
The requisite underlying emotional involvement is again emphasized in law
professor Thane Rosenbaums book, The Myth of Moral Justice: Why Our Legal
System Fails To Do Whats Right. He calls for lawyers to practice the art of
empathy, see themselves as members of a healing profession, treat the emotional injuries that accompany the legal ones, and perceive the client with a
grievance as not that much different from a patient in pain.156 In 2006, a year after
publication of Professor Rosenbaums book, a consonant sentiment was voiced by
law professor and former law school dean David Hall in The Spiritual Revitalization of the Legal Profession. Professor Hall also sees the law as a healing profession, leading individuals out of darkness and loneliness and into the sunlight of
peace and justice. Practicing the sacred craft of the legal profession, lawyers
guide clients with our compassion and tears . . . and with unconditional love for
those who have been rejected and despised.157
The philosophy urged by professors Rosenbaum and Hall, however, might be
difficult to balance with the detached objectivity required for prudent client
counseling. In studies of complex decision making under uncertainty, the existence
of strong personal and emotional relationships between the decision makers has
153
Sammons, Jack L. (2002). Traditionalists, technicians, and legal education, Gonzaga Law
Review, 38, 237, 240. See Sammons, Jack L. (1995). Rank strangers to me: Shaffer and Cochrans
friendship model of moral counseling in the law office. University of Arkansas at Little Rock Law
Review, 18, 1.
154
Section of Litigation, American Bar Association. (2002, August). Ethical guidelines for settlement negotiations (p. 8). Chicago, Illinois: American Bar Association.
155
Lane, Fred, and Lane, Scott. (2004). Lanes Goldstein trial technique (3rd, Chapter 7A, p. 6).
Eagan, Minnesota: Thomson West.
156
Rosenbaum, Thane. (2004). The myth of moral justice: Why our legal system fails to do whats
right (pp. 38, 48, 57, 309). New York: Harper Collins.
157
Keeva, Steven. (2006, March). Take off the straightjacket. ABA Journal, p. 76.
182
proven to be conducive to ineffective decisions.158 Maintaining a clients emotional

equilibrium, in fact, may be more closely associated with promoting optimistic
overconfidence, selective perception, and confirmation bias than a healthy
attorney-client relationship. Although the concepts of sympathetic detachment
and sincere emotional support are well intentioned, the candid attorney will recognize that his helping hand may be extended far beyond the attorneys abilities. As
the court observed in Cincinnati Bar Association v. Alsfelder, an attorney, unless a
qualified therapist, may no more engage in that profession than a therapist may
practice law without a license.159 Untrained and unlicensed to practice the healing
arts, attorneys should consider seriously the ethics and efficacy of insinuating
themselves into a clients sense of emotional well-being.160
5.3
Mental Impairment
Mental impairment impedes and at times completely obstructs creative problem

solving and intelligent decision making. Although mental impairment usually is
categorized as a psychological condition, it is treated in this chapter as an institutional contributor to poor judgment. Why is mental impairment placed in an
institutional context? The reason is that lawyers and law students appear to be
psychologically normal before entering law school, but shortly after entering law
school and continuing throughout their legal careers they manifest high levels of
mental impairment.161 Roy Stuckey, law professor and principal author of Best
Practices of Legal Education, states, It is well known that lawyers suffer higher
158
See Janis, Irving. (1989). Crucial decisions (p. 217). New York: The Free Press. Bruner, Robert F.
(2005). Deals from hell. Hoboken, New Jersey: John Wiley & Sons. See also Miller, S.D., Hubble,
M.A. and Duncan, B.L. (1996). The handbook of solution-focused brief therapy: Foundations,
applications and research. San Francisco California: Jossey-Bass (therapists with superior treatment outcomes have lower initial patient alliance scores than therapists with inferior treatment
outcomes).
159
103 Ohio St. 3d 375, 2004 Ohio 5216, 816 N. E. 2d 218 (2004).
160
See Gantt, Larry O. (2005). More than lawyers: The legal and ethical implications of counseling
clients on nonlegal considerations. Georgetown Journal of Legal Ethics, 18, 365.
161
Benjamin, Andrew H., et al. (1986). The Role of Legal Education in Producing Psychological
Distress Among Law Students. American Bar Foundation Research Journal, 11, 225, 247. Cited
in Daicoff, Susan. (1997). Lawyer Know Thyself: A Review of Empirical Research on Attorney
Attributes Bearing on Professionalism. American University Law Review, 46, 1337, 1378, 1379.
Litowitz, Douglas. (2005). The destruction of young lawyers: Beyond one l (p. 19). Akron, Ohio:
The University of Akron Press. Daicoff, Susan. (1998) Asking lawyers to change their spots:
Should lawyers change? A critique of solutions to problems with professionalism by reference to
empirically-derived attorney personality attributes. Georgetown Journal of Legal Ethics, 11, 547.
See Schiltz, Patrick J. (1999). On being a happy, healthy, and ethical member of an unhappy,
unhealthy, and unethical profession. Vanderbilt Law Review, 52, 871, 875.
5.3 Mental Impairment
183
rates of depression, anxiety and other mental illness, suicide, divorce, alcoholism
and drug abuse, and poor physical health than the general population or other
occupations. Less well known, he informs, are the facts that these problems
begin in law school. Although law students enter law school healthier and happier
than other students, they leave law school in much worse shape.162
Perhaps law schools, courts, and law firms have no effect at all on attorneys
mental impairment, and perhaps attorneys are just late bloomers in the loam of
emotional distress, but the absence of pre-existing behavioral or psychological
deviations from the general population suggests that legal institutions play some
role in the professions high incidence of mental impairment.163 As psychologist
Amiram Elwork, an expert in the psychological problems of attorneys, explains,
The fact that lawyers experience higher rates of depression than the average
suggests that there is something about their work that contributes to the problem.164 Absent predictors or evidence of mental impairment in pre-law students,
lawyers mental impairment may not exist as a disease independent from the
institutions that inculcate the legal culture.165
The chairman of the American Bar Associations Law Student Division, Daniel
Suvor, calls depression and anxiety the elephant in the classroom its something
that no one talks about.166 Although Suvor believes that an institutional denial
problem is alive and well, the existence among law students and attorneys of high
162
Stuckey, Roy, et al. (2007). Best practices for legal education (p. 22). New York: Clinical Legal
Education Association.
163
See Iijima, Ann L. (1998). Lessons learned: Legal education and law student dysfunction.
Journal of Legal Education, (48), pp. 524, 526 (It is clear that law students become candidates for
emotional dysfunction immediately upon entry into law school and face continued risks throughout law school and subsequent practice).
164
Keeva, Steven. (2006, January). Depression takes a toll. ABA Journal, p. 38.
165
If law students were emotionally abnormal prior to admission to law school and the bar and
were in fact pre-disposed to mental distress and illness after admission, something would be
curiously wrong with the law school admissions process and the law firms recruiting programs,
for they would have inadvertently but successfully recruited a disproportionately large and highly
labile group of students with a latent mental impairment. The problem with denying any institutional responsibility for fostering law students and lawyers mental impairment is that it suggests
that an exceptionally large lot of damaged goods was selected initially rather than bruised in
transit.
166
Weiss, Debra Cassens. (2008, March 13). Emphasis on money can be source of depression in
law school. ABA Journal Law News Now. Available at http://abajournal.com/news/emphasis_on_money_can_be_source_of_depression_in_law_school. Jones, Leigh. (2008, March 12). ABA law
student group tackles depression. National Law Journal Online. Available at http://www.law.com/
jsp/article.jsp?id=1205322359313. See Allan, Rick B. (1997). Alcoholism, drug abuse and lawyers: Are we ready to address the denial? Creighton Law Review, 31, 265. Curtis, Diane. (2008,
May). Depression takes a heavy toll on lawyers. California Bar Journal, p. 1.
184
levels of depression, anxiety, obsessive-compulsive disorder, suicide, divorce and

alcoholism appears to be well documented. Representative research findings are:
l
167
About 19% of attorneys are depressed, compared with 6.7% of the general
population, and attorneys are more likely to experience clinical depression
than individuals in any other profession.167
Although only 10% of pre-law students suffer from depression, psychiatric
distress increases significantly during law school, with 17%40% of students
reporting significantly elevated levels of depression and 20%40% reporting
other significantly elevated symptoms, including obsessive-compulsive, interpersonal sensitivity, anxiety, hostility, paranoid ideation, and (psychoticism)
social alienation and isolation.168
About 20% of attorneys abuse alcohol, compared with 10%12% of the general
population.169
Practicing lawyers exhibit clinical anxiety, hostility and depression at rates that
range from eight to 15 times the general population.170
11% of attorneys reported suicidal ideation at least once a month, and white male
lawyers may be twice as likely to commit suicide as other white males.171
21% of male lawyers and 15% of female lawyers meet clinical criteria
for obsessive-compulsive disorder, compared to 1.4% 2% of the general
population.172
Shellenbarger, Sue. (2007, December 13). Even lawyers get the blues: Opening up about
depression. The Wall Street Journal, p. D1. See Bernard, Kristy N. and Gibson, Matthew L.
(2004). Professional misconduct by mentally impaired attorneys: Is there a better way to treat an
old problem? Georgetown Journal of Legal Ethics, 17, 619, 630 (It is well established that
attorneys as a group, suffer from mental illness and substance abuse at a rate higher than the
general population, citing Fleury, Jeffrey J., Kicking the habit: Diversion in Michigan the
sensible approach, University of Detroit Mercy Law Review, 73, 11). Schiltz, Patrick, (1999,
Autumn). Those unhappy, unhealthy lawyers. Notre Dame Magazine. Eaton, William, et al.
(1990). Occupations and the prevalence of major depressive disorder. Journal of Occupational
Medicine, 32, 1079.
168
Daicoff, Susan. (1997). Lawyer know thyself: A review of empirical research on attorney
attributes bearing on professionalism. American University Law Review, 46, 1337, 1378, 1379.
Perlin, Michael L. (2008). Baby, look inside your mirror: The legal professions willful and sanist
blindness to lawyers with mental disabilities (NYLS Legal Studies Research Paper No. 07/08).
University of Pittsburgh Law Review. Forthcoming; available at SSRN: http://ssrn.com/
abstract=1111596.
169
Weiss, Debra Cassens. (2007, December 13). Lawyer depression comes out of the closet. ABA
Journal, Law News Now. Available at http://abajournal.com/news/lawyer_depression_comes_
out_of_the_closet. See Sells supra note 100 at 17: (One third of all lawyers suffer from either
depression, alcohol or drug abuse.)
170
Jones, supra note 166.
171
Keeva, Steven. (2006, January). Depression takes a toll. ABA Journal, p. 38.
172
Schiltz, Patrick J. (1999) On being a happy, healthy, and ethical member of an unhappy,
unhealthy, and unethical profession. Vanderbilt Law Review, 52, 871, 876.

l
l
185
12% of graduating law students exhibit signs of chemical dependency.173

30% of male lawyers and 20% of female lawyers score above the clinical
cutoff on the measure of anxiety disorder, although only 4% of the general
population meets clinical criteria for generalized anxiety disorder.174
The magnitude of these psychological disorders is amplified by the fact that lawyers
resist seeking outside help and tend to isolate themselves when placed under
stress.175
These problems, many attorneys believe, are a direct consequence of law
students inadequate information about the legal profession and lawyers reactions
to contemporary law firm practice.176 Law school is a default choice for many
undergraduates uncertain about their career objectives; up to 50% of law students
report uncertain career goals as one of their reasons for attending law school,
rendering law school a residual graduate school.177 The pressure of billable hours
and personally meaningless work compound this ambivalence about career goals
after law school graduation. As one attorney comments:
True, some students choose law school for the wrong reasons. Also true, law schools
generally do not provide sufficient courses that are representative of law practice day to
day law practice. A huge factor in lawyer depression, in my opinion, is the pressure to bill
for every minute you breathe, view every human being you meet or encounter on the street
as a potential client, reject those with legal problems if they cannot afford $365 per hour no
matter the seriousness and merit of their legal problem, and do not worry too much about
ethics.178
One attorney describes his professional life as morsels of bitter irony and farce,
while another laments, I think a lot of the problems stem from the fact that so many
of us envisioned something so different for our work lives than what really
173
McCann, Greg K., et al. The sound of no students clapping: What zen can offer legal education.
University of San Francisco Law Review, 29, 313, 314 n. 6. Cited in Freshman, Clark, et al.,
(2002). The lawyer-negotiator as mood scientist: What we know and dont know about how mood
relates to successful negotiation. Journal of Dispute Resolution, 2002(1), 46, fn. 214.
174
Beck, Connie, et al. (1996). Lawyer distress: Alcohol-related problems and other psychological
concerns among a sample of practicing lawyers. Journal of Law & Health, 10, 1, 50. Quoted in
Schiltz, Patrick J. (1999) On being a happy, healthy, and ethical member of an unhappy, unhealthy,
and unethical profession. Vanderbilt Law Review, 52(4), 871, 876.
175
Heins, Marilyn, et al. (1983). Law students and medical students: A comparison of perceived
stress. Journal of Legal Education, 33, 511, 520521. Cited in Daicoff, Susan. (1977). Lawyer
know thyself: A review of empirical research on attorney attributes bearing on professionalism.
American University Law Review, 46, 1337, 1381.
176
Cf. Monahan, John, and Swanson, Jeffrey. (2008). Lawyers at mid-career: A 20-year longitudinal study of job and life satisfaction (Working Paper 104, p. 3). University of Virginia Law
School Public Law and Legal Theory Working Paper Series. (There are two literatures on lawyer
satisfaction, and their findings differ so starkly that one may wonder whether they are studying the
same phenomenon.)
177
Daicoff supra note 168 at 1357.
178
Weiss supra note 169.
186
occurs.179 She adds: In the first 57 years of practice, most of us are little more
than highly-skilled technicians with a lot of responsibilities but no authority who act
at the direction of controlling clients and bosses.180
Two-thirds of associate attorneys report they are forced to sacrifice fulfillment
outside of work in order to advance their careers, nearly half feel stressed and
fatigued most of the time, and 84% would be willing to make less money in
exchange for lower billable hour requirements.181 Attorneys efforts to limit their
billable hours and gain control over their lives often are discouraged, thwarted, or, if
granted, can result in the attorney being thrown off the partnership track. It should
go without saying, write two managing directors of a major legal placement firm,
that, with the rarest of exceptions, you should never complain to a partner about
your hours.182 An attorney who requested a reduction in her billable hours writes:
I was simply dropped from all my work, with no questions or discussion. The partners
avoided meeting my eyes in the elevator and the halls. It was as if I had fallen off the
planet.183
Another attorneys request to reduce her hours was granted reluctantly, and she
encountered resentment among her colleagues who felt forced to pick up her hours
to maintain the firms profit-per-partner goals all of the galley slaves, she was
told, need to row at the same pace.184 For some attorneys, even sleep does not
allow a respite from the anxieties and pressures of law practice; attorney Anthony
Laporte says he dreams of witnesses who turn into snakes or juries made up of
Attila the Hun clones. Although he recognizes the dreams have never been
helpful, he worries that if these anxiety dreams stopped it would mean he had
stopped caring about work.185
From a more detached position, psychologist Martin Seligman attributes attorney unhappiness to three factors: pessimism, low decision latitude, and being part
of a giant win-loss enterprise. The legal profession, according to his research on
individuals and organizations including undergraduates, competitive swimmers,
179
Neil, Martha. (2008, January 22). Which lawyers love their jobs (comment 9). ABA Journal
Law News Now. Lattman, Peter. (2007, December 13). Why are so many lawyers so depressed?
The Wall Street Journal Law Blog. Available at http://blogs.wsj.com/law/2007/12/13/why-are-somany-lawyers-so-depressed/.
180
Lattman supra note 179.
181
Fivel, Michelle L., and Kamper, Krista, E. (2008, February 29). About to burn out? Try these
tips to survive life as an associate. San Francisco Daily Journal, p. 6. Curtis, Diane. (2008,
January). Move to a better work/life balance. California Bar Journal, p. 1.
182
Kamper, Krista E., and Fivel, Michelle L. (2008, February 28). For associates facing long
workdays, preparation is key. San Francisco Daily Journal, p. 6.
183
Uelmen, Amelia J. (2005). The evils of elasticity: Reflection on the rhetoric of professionalism and the part-time paradox in large firm practice. Fordham Urban Law Journal, 33, 81, 83.
Quoted in Galanter and Henderson supra note 140 at 156.
184
Curtis, Diane. (2008, January). Move to a better work/life balance. California Bar Journal, p. 1.
185
Sandberg, Jared. (2008, January 15). Dreaming about work can be a nightmare, but it beats
insomnia. The Wall Street Journal, p. B1.
187
insurance agents, and NBA teams, is the only enterprise in which pessimism is
rewarded because seeing trouble as pervasive and permanent is a component of
what the law profession deems prudence.186 Unfortunately, he elaborates, this
pessimistic trait makes an attorney valuable in her professional life and depressed in
her personal life. The second factor low decision latitude in high-stress situations
and low choice matched with high pressure, especially for junior attorneys is not
only correlated with depression but coronary artery disease as well.187 But the most
important psychological factor is the win-loss game of litigation, shifting law
practice from providing good counsel about justice and fairness to being a big
business in which billable hours, take-no prisoners victories, and the bottom line are
now the principal ends.188 Since win-lose contests provoke the highest degree of
aggression and emotional detachment, Seligman concludes, attorneys will be
depressed, anxious, and angry a lot of the time.189
It is axiomatic that depression, anxiety, obsessive-compulsive disorder, suicidal
ideation and alcohol abuse will impair if not destroy an attorneys judgment and
problem-solving capabilities.190 These psychological impairments prevent an attorney from adequately understanding and comprehensively defining client problems
and foreclose cooperative, creative, and constructive methods to resolve those
problems. Stress alone has a highly detrimental effect on cognition, as John
Medina, a biologist specializing in mental health issues, explains:
Stress hormones seem to have a particular liking for cells in the hippocampus, and thats a
problem because the hippocampus is deeply involved in many aspects of human learning.
The result? Stressed people dont do math very well. They dont process language very
efficiently, and they have poorer memories, both short- and long-term. These, of course, are
the skills needed for individuals to excel in business.191
If some form of mental distress or substance abuse afflicts 20% 30% of the
attorney population, the most salient and immediate improvement in attorneys
decision-making capabilities would result simply from psychiatric counseling,
stress reduction programs and participation in confidential lawyer assistance programs.
In the longer term, the emotional distress correlated with law school teaching
and law firm practice merits careful research and analysis. At the Law and the
186
Seligman, Martin. (2004). Authentic happiness: Using the new positive psychology to realize
your potential for lasting fulfillment (p. 178). New York: Free Press
187
Id. at 179-180.
188
Id. at 180.
189
Id. at 181.
190
For a wonderfully broad exposition of the effects of emotional states on negotiating strategies
and outcomes, see Freshman, Clark, et al. (2002). The lawyer-negotiator as mood scientist: What
we know and dont know about how mood relates to successful negotiation. Journal of Dispute
Resolution, 2002(1). See also Levit, Nancy, and Linder, Douglas. (2008). Happy law students,
happy lawyers. Syracuse Law Review, 58. Available at SSRN: http://ssrn.com/abstract=1095271
191
Coutu, Diane. (2008, May). The science of thinking smarter: A conversation with brain expert
John J. Medina. Harvard Business Review, pp. 51, 52.
188
Emotions conference conducted in January 2007 at the University of California,

Berkeley, the founding dean of the CUNY Law School, Charles Halpern, said that a
major emotional issue legal educators need to consider is the emotional damage law
school inflicts on its students. His comment was practically ignored, as panel
members directed their attention to other law and psychology issues not directly
impinging upon the academe. Charles Halperns question is piercing, pivotal, and
primary; it warrants a thoughtful response from legal educators whose teaching
methods may unwittingly damage students. Professors and lawyers would delve
into any other institution that appears to engender systemic depression and anxiety
in intelligent and psychologically normal men and women after immersion in the
institutions culture and pedagogy.
5.4
The Disappearing Civil Trial
Despite popular perceptions of a litigation explosion, the number of civil trials

has decreased sharply during the last 40 years. The portion of civil cases resolved
by trials (as opposed to settlement, prejudgment motions, and other pre-trial
procedures) is less than one-sixth of what it was in 1962.192 Between 1992 and
2002, the number of jury trials in tort, contract, and real property cases declined by
44%.193 In the seventy-five most populous counties in the United States, tort trials
decreased by 31.8% and contract trials decreased by 61% between 1992 and 2001.
During the same period, federal court trials in tort actions decreased by 37.6%, and
contract trials decreased by 47.7%.194 In 2004, the total number of federal civil
trials was 5,500, a sharp decline from 14,300 in 1984.195
Starting in the 90s, states Stephen Dillard, the head of litigation at Fulbright
& Jaworski LLP, the concern became that we had a dress rehearsal for a play that
never runs.196 These perpetual rehearsals put the legal profession on a collision
course with actuality more actors, agents, scripts, and stages, a meager and
dwindling number of performances before a live audience, and more reviewers
than ticket holders. Although everyone has an opinion about the legal actors and
their playbooks, few learn how a real audience would have received them. Trial
attorneys have been replaced by litigators, reflecting the shift from jury trial
experience to pretrial discovery and law and motion practice, and even the King of
Torts, Dickie Scruggs, can recall only one tort case he ever tried to verdict as lead
192
Galanter, M. (2004). The vanishing trial: An examination of trials and related matters in federal
and state courts. Journal of Empirical Legal Studies, 1(3), p. 461.
193
Id. at 508.
194
Id. at 510.
195
Koppel, Nathan (2005, December 1). Trial-less lawyers. The Wall Street Journal, p. B1.
196
Id.
5.4 The Disappearing Civil Trial
189
counsel. (He lost).197 Because litigators invariably settle cases instead of trying
them, it is not surprising that they do not know and cannot accurately predict how
judges and juries will act. Like the King of Torts (now deposed), they excel at
recruiting good clients, obtaining favorable settlements, earning large fees, and
staying away from juries. When the occasional case blows up at trial, it is an
isolated event in an attorneys career and can be quickly obscured by years of
appellate court proceedings.
5.4.1
Settling Without Benchmarks
Accompanying this steep decline in civil trials is a steadily growing population of

attorneys, a proliferation of new statutes, regulations, agencies, and rules, an
increase in the number of case filings, and a rapid expansion of law journals.198
The juxtaposition of more law and fewer trials challenges attorneys forecasting
capabilities and has changed the basis of settlement negotiations. These negotiations now are based on settlements, not verdicts, in purportedly similar cases,
effectively substituting the untested opinions of equally confused litigants for actual
outcomes in trials. If litigation attorneys and their clients were meteorologists, they
would be studying other meteorologists predictions, not the actual weather.
The paucity of civil trials and attorneys resultant inability to periodically
recalibrate trial outcome estimates produces chaos in the settlement markets.
Because few attorneys know what cases are worth if tried to verdict, the initial
volley of settlement demands and offers at a mediation session or a settlement
conference may convince clients that they, like Alice at the Mad Tea Party, have
fallen down the rabbit hole:
Take some more tea, the March Hare said to Alice, very earnestly.
Ive had nothing yet, Alice replied in an offended tone: so I cant take more.
You mean you cant take less, said the Hatter: its very easy to take more than nothing.
Nobody asked your opinion, said Alice.
Whos making personal remarks now? the Hatter asked triumphantly.199
Settlement negotiations often begin by poking holes in plaintiffs alleged damages,

a relatively easy task, and then disintegrate over liability evaluations, a tough job
requiring strong risk assessment skills. As U.S. Court of Appeals Judge Randall
Rader explained in his keynote address to the 1999 Summit Conference on
197
Carter, Terry, (2008, April). Long live the king of torts? ABA Journal, p. 46. See Boyer, Peter J.
(2008, May 19). The bribe. The New Yorker, pp. 45, 46 (I can assure you he hasnt tried ten cases
to verdict in his life, Bill Reed, a Jackson attorney who is one of Scruggs closest friends, says.)
(Richard Scruggs pleaded guilty to conspiring to bribe a judge in March 2008 and was sentenced
later that year).
198
See Galanter supra note 192 at 529.
199
Carroll, Lewis. Alice in wonderland. Chapter VII. (Emphasis in original).
190
Intellectual Property, the parties usually know how much is at stake or they
calculate it within a close margin, but the variable that prevents settlement is the
uncertainty in the outcome. The parties reach wildly different estimations of
who is going to win the suit the plaintiff figures he is going to win big, and the
defendant thinks, Im not going to lose a penny here.200
Conducted without the benefit of reliable verdict data, litigation settlement
negotiations often assume a never-never-land character. In a world where nearly
all cases settle, the merits of the case are relegated to secondary importance,
displaced by bald assertions of liability and equally baseless rejoinders. It may
not even be possible to base settlement on the merits, states law professor Janet
Cooper Alexander, because lawyers may not be able to make reliable estimates of
expected trial outcomes. There is nothing to cast a shadow in which the parties can
bargain.201 Settlement negotiations thus run around a syllogistic circuit: settlement
is beneficial because a party cannot predict the probable result at trial; a party
cannot predict the probable result at trial because nearly all cases are settled; each
case, therefore, should be settled. In these closed loop settlement negotiations,
conducted without dependable precedents, the parties bargaining tactics may
trump legal merits, the caliber of legal arguments is rarely tested, and modesty is
anything but a virtue.
In interviews with journalist Tyler Cunningham of the San Francisco Daily
Journal, several lawyers said that fewer jury trials leaves less information about
how juries will treat certain situations information that might prove useful in
negotiating settlements. Lawyers acknowledge that they are less certain about
what amount a modern jury would return for any injury.202 Julia Molander, the
past president of the Association of Defense Counsel of Northern California,
describes the drop in trials as a tragedy. She believes that the settlement process
requires as a fundamental that the mediator base settlement values on trial
verdicts. Absent information regarding verdicts in similar cases, she finds that
the mediators end up shooting in the dark.203
The declining number of civil trials means that judges, too, must function
without empirical parameters and rely on attorneys for case evaluation. Professor
Mark Galanter observes, judges preside over routine settlements that reflect not
legal standards but the strategic positions of the repeat players.204 In this legal hall
of mirrors, judges and attorneys circumvolve a spiral of attribution in which
200
Rader, Randall. (2000). The pace and expense of litigation in United States courts (p. 5). In
Proceedings of the 1999 Summit Conference on Intellectual Property, CASRIP Symposium
Publication Series No. 5. Seattle: University of Washington.
201
Alexander, Janet Cooper. (1991). Do the merits matter? A study of settlements in securities
class actions. Stanford Law Review, 43, 497, 567. Cf. Baker, Tom and Griffith, Sean J. (2009).
How the merits matter: D&O insurance and securities settlements. University of Pennsylvania Law
Review, 157, 755.
202
Cuningham, Tyler. (2004, June 1). Disappearing act. The Daily Journal, p. 6.
203
Ben-Yehuda, Eron. (2004, December 6). In dispute. Daily Journal Extra, p. 9.
204
191
supposedly autonomous decision-makers take cues from other actors who purport
to be mooring the decisions of the former.205 In securities fraud class action suits,
for example,
settlement judges, like lawyers, have little relevant experience to draw on other than their
knowledge of settlements in similar cases . . . their role becomes not to increase the
accuracy of settlements, but to provide an impetus to reach some settlement. In the absence
of information about how similar cases fared at trial, settlement judges could be an
important force in maintaining a going rate approach to settlements.206
The absence of verdict data is particularly acute in these types of cases because
more than 2,000 securities class actions have been filed during the last ten years but
only seven of those cases proceeded to trial.207 The lack of reliable data about
actual trial outcomes makes it nearly impossible for defendant corporations and
their counsel to make intelligent risk assessments by comparing probable trial
outcomes with the plaintiffs settlement demands. Evaluating the merits and formulating settlement positions well outside the shadow of law and precedent,
corporations and their attorneys can do little more than guesstimate probable
trial results and reasonable settlement amounts.
Attorneys apparently have become inured to negotiating without empirical
reference points. Even when historical data is available for jury verdicts in similar
cases, attorneys rarely research verdict databases before asserting positions at
settlement conferences or mediations. In one bar association survey, for instance,
fewer than 25% of the respondent attorneys said they had consulted jury verdict
reports to value their most recently resolved case.208 Lynne Bassis, a mediator for
14 years, observes, I dont think Ive ever had anybody pull out a jury verdict and
say, Heres why. It seems to be more of a visceral valuation.209 Regarding each
case as unique and nuanced, attorneys ignore and devalue case outcome data
available in jury verdict reports and from judicial data centers, an oversight
psychologists call base rate neglect. Listening to parties at mediation sessions,
one would conclude that the likelihood of a successful trial outcome for both
plaintiffs and defendants is always above average and the results reported in other
cases are unrepresentative of the clients charisma and the attorneys skills in
the instant case.210 Each case, it appears, is not only sui generis but permaximum
as well.
205
Id. at 528.
Alexander supra note 201 at 566.
207
Friedman, Gabe. (2008, February 6). JDS Uniphase wins at rare securities class-action trial. San
Francisco Daily Journal, p. 4. Weinberg, Neil. (2008, February 11). Theyre back. Forbes.
208
Galanter, Marc. The regulatory function of the civil jury, p. 75, fn. 42. In Litan, Robert E.
(1993). Verdict: Assessing the civil jury system. Washington, D.C.: Brookings Institution Press.
(Seventy percent of the respondents reported that they relied heavily on consultations with other
attorneys in their own firms.)
209
Ben-Yehuda supra note 203 at 9.
210
In his article, Inferring beliefs from selected samples: Evidence from civil litigation, Seth
Seabury of RAND reports that litigants and attorneys who use jury verdict reports systematically
206
192
5.4.2
Causes and Motivations for Pre-Trial Settlements
The increasing number of pre-trial settlements, the decline in the number of trials
and attorneys resultant lack of trial experience raise a perplexing causation question: do parties settle because they obtain better results through settlement than
could be achieved at trial, or do parties settle cases because they cannot evaluate the
likely result at trial? Although attorneys and proponents of alternative dispute
resolution (ADR) are convinced that negotiated resolutions provide superior
results, there is no objective way of testing whether a settlement has yielded a
better result than could have been obtained at trial. Hence, the mere fact of
settlement and the avoidance of trial do not establish intelligent decision making
and effective problem solving. Reflecting on the decline in trials and the rise in
negotiated resolutions, Judge Patrick Higginbotham, who sits on the U.S. Court of
Appeals for the Fifth Circuit, notes, it is not clear how much the shift toward ADR
reflects the merits of the process itself in other words, a competitive success in the
legal marketplace over trials.211
When parties themselves are surveyed, the findings are mixed with regard to
whether mediation and neutral evaluation outperform or simply do as well as
traditional litigation. 212 In studies of general civil jurisdiction cases,
a majority of studies find no differences between mediation cases and non-mediation cases
in participants assessments, transaction costs, the amount of discovery and the number of
motions filed. The findings are mixed with regard to whether mediation does or does not
increase the rate of settlement or reduce the trial rate, reduce the time to disposition, and
enhance compliance compared to the traditional litigation process. The few studies of
neutral evaluation in general civil cases suggest it does not reduce the time to disposition
or transaction costs, but might reduce the number of motions and trials.213
In some other earlier studies, parties expressed a higher level of satisfaction with
arbitrations and trials than court settlements, raising more questions about the
efficacy of settlements and parties and attorneys predictive capacity in urging
settlement.214
underestimate the true variability of those awards and civil litigants consistently use misinformation to set their expectations and guide their settlement behavior. See Seabury, Seth. (2007,
July 5). Inferring beliefs from selected samples: Evidence from civil litigation. Papers presented at
the Second Annual Conference on Empirical Legal Studies, November 9-10, 2007, New York
University. Available at SSRN: http://ssrn.com/abstract=998687.
211
Higginbotham, Patrick E. (2004, Summer). The disappearing trial and why we should care.
RAND Review.
212
Wissler, Roselle L. (2004, Fall-Winter). The effectiveness of court-connected dispute resolution in civil cases. Conflict Resolution Quarterly, 22(1-2), 55, 80. See Shestowsky, Donna, and
Brett, Jeanne. (2008, November). Disputants perceptions of dispute resolution procedures: An
ante and ex post longitudinal empirical study. Connecticut Law Review, 41(1), 63.
213
Wissler supra note 212 at 81.
214
Lind, E. Allan, et al. (1990). In the eye of the beholder: Tort litigants evaluations of their
experiences in the civil justice system. Law and Society Review, 24, 953. Lind, E. Allan, et al.
193
It remains unclear whether the number of civil trials is decreasing because

litigants intelligently assess probable trial outcomes and then negotiate economically sound pre-trial settlements or whether litigants simply feel pressured to settle
to avoid the standard parade of horribles inestimable and rising attorneys fees,
unpredictable verdicts and endless post-trial motions and appeals. The existence of
a general preference for settlement, note professors Marc Galanter and Mia Cahill,
does not mean that the pursuit of settlement in any particular instance is an
informed and uncoerced expression of such a preference.215 No data exist to
reliably and conclusively determine whether parties impetus to settle is coercive
or prudential, whether ADR procedures have evolved primarily for attorneys
convenience or clients welfare, and whether the major goal is to reduce court
docket congestion or increase party satisfaction.216 Like cesarean deliveries,
mediated settlements have increased markedly within the last decade without
published clinical data demonstrating whether these alternative procedures are
performed for the subjects safety rather than the practitioners benefit or whether,
as found in the medical context, many participants expressing a preference for the
procedure were generally poorly informed of the risks of this procedure and/or
overestimated the safety of the procedure.217
Efforts to assess the quantitative and qualitative differences between mediation
outcomes and adjudicated outcomes have been boldly challenged by a steadily
refined pro-mediation publicity machine, marked by superb rhetoric and inspiration,
(1989). The perception of justice: Tort litigants views of trial, court-annexed arbitration, and
judicial settlement conference. Santa Monica, California: RAND Corp. Lind, E. Allan. (1990).
Arbitrating high stakes cases: An evaluation of court-annexed arbitration in a United States district
court. Santa Monica, California: RAND Corp. Hensler, Deborah. (1992). Court-ordered arbitration: An alternative view. Santa Monica, California: RAND Corp. See Testimony of Professor
E. Allan Lind on the Alternative Dispute Resolution and Settlement Encouragement Act, (H.R.
2063, 105th Congress, 1st Session, Subcommittee on Crime, Committee on the Judiciary, U.S.
House of Representatives Oversight Hearing on The Need For Additional Federal District Court
Judges, October 9, 1997.)
215
Galanter, Marc, and Cahill, Mia. (1994). Most cases settle: Judicial promotion and regulation of
settlements. Stanford Law Review, 46, 1339, 1352.
216
Patnoe, Lisa, (2002). The implications of recent procedural justice research on the evaluativefacilitative debate. Rutgers Conflict Resolution Law. Journal, 1, 1, fn. 41. Hensler, Deborah.
(2000). A research agenda: What we need to know about court-connected ADR. Santa Monica,
California: RAND Corp. See Hensler, Deborah R. (2001). ADR research at the cross roads, p. 75.
Santa Monica, California: RAND Corp. (Lawyers whose cases were referred to mediation or
ENE [early neural evaluation] were highly satisfied with the procedures and felt they accorded fair
treatment to their clients, but they were not significantly more satisfied than lawyers whose cases
were not referred to ADR). See Morris, Cecelia G. (2006, Winter). Judging the handbook for
judges. Dispute Resolution Magazine, p. 28, 29 (the first goal of ADR in bankruptcy mediation is
to save time and money, with party satisfaction included only as a secondary objective.)
217
Gamble, J.A. and Creedy, D.K. (2001, June). Womens preference for a cesarean section:
Incidence and associated factors. Birth, 28(2), 10110. See also Aron, D.C., et al. (2000, January).
Variations in risk-adjusted cesarean delivery rates according to race and health insurance. Medical
Care, 38(1), 3544.
194
but a paucity of empirical evidence that continues to this day.218 Professor Hensler
notes that ADR administrators and practitioners have turned away from empirical
investigation and critical analysis of ADR consequences, and researchers have
encountered indifference or hostility to empirical research on ADR.219 To the
extent research demonstrates participants subjective satisfaction with ADR processes, it is unclear whether that subjective satisfaction is attributable to high
standards of procedural justice achieved through ADR or the participants unusually
low or uninformed expectations of fair and respectful treatment in any dispute
resolution forum.220
In the absence of empirical evidence establishing the superior utility of settlement, the legal profession has been dogged for decades by the suggestion that
inexperience and poor forecasting skills, not calculated strategy, motivate some
attorneys to settle cases. This suspicion certainly increases as the number of trials
decreases, but questions about attorneys settlement motivations were voiced years
before the vanishing civil trial. Alexander Woollcott expressed these doubts in
1939, writing for the New Yorker Magazine:
The practice of settling out of court has so gained ground of late that many a noted lawyer
can hardly remember when last he underwent the disconcerting experience of trying a case
before a jury. Furthermore, it may be guessed that among the many excellent reasons which
dictate a settlement in any case is the unconfessed one that, for personal reasons, the
counsel involved would a little rather not submit to ordeal by combat. Once down in that
dusty and unpredictable arena, the most disturbing things might happen to them.221
As the number of trials diminishes and pre-trial settlements increase, doubts about
the motivations of attorneys and the efficacy of settlement will persist. These doubts
may be quelled when attorneys avail themselves of data regarding verdicts and
settlements and acquire the skills to analyze that data and present it to clients in a
methodical and instructive manner.
Clients concerns that they are settling for too little or paying too much are best
addressed with data, not attorneys and mediators folkloric anecdotes about other
parties who persisted in similar courses of action, pursued understandable but
unrealistic objectives and suffered disastrous results.222 When patients consult
with their physicians about an affliction, they decide on a course of treatment by
discussing actual outcomes in carefully documented clinical studies; they do not
base decisions on the physicians most successful or most easily recalled patient. In
218
Coben, James, and Harley, Penelope. (2004, Spring). Intentional conversations about restorative justice, mediation and the practice of law. Hamline Journal of Public Law & Policy, 25(2),
253.
219
Hensler, Deborah R. (2001). ADR research at the cross roads (pp. 74, 76). Santa Monica,
California: RAND Corp.
220
See Patnoe, Lisa, (2002). The Implications of Recent Procedural Justice Research on the
Evaluative-Facilitative Debate. Rutgers Conflict Resolution Law Journal, 1.
221
Stryker, Lloyd Paul. (1954). The art of advocacy (p. 291). New York: Simon & Shuster. Quoted
in Bradford, Glenn. (2002, July-August). Losing. Journal of the Missouri Bar, 58(4).
222
Felstiner and Sarat supra note 128 at 1464.
5.5 Chapter Capsule
195
modern medical practices, this emphasis on data is referred to as evidence-based

medicine. As keen evaluators of evidence, lawyers are uniquely qualified and
indeed ethically charged to undertake a similarly broad search for evidence-based,
statistically valid data about verdicts and settlements to protect their clients.
5.5
Chapter Capsule
The goal of negotiation is to produce something better than the results you can
obtain without negotiating, as declared in the negotiation skills bestseller Getting
To Yes. Attorneys and clients thus must know what the likely result at trial would be
if settlement negotiations are unsuccessful. Although attorneys are knowledgeable
about the law and well trained in legal argument, they are not necessarily experts in
predicting trial outcomes and solving problems. Shortcomings in forecasting and
problem-solving skills can lead to suboptimal negotiations.
Five institutional factors may contribute to difficulties in accurately forecasting
case outcomes and efficiently resolving client problems: (1) law schools lack of
emphasis on practical problem-solving skills and probabilistic and methodological
reasoning; (2) law firms disproportionate attention to billable hour production and
legal processes; (3) law firms competition for clients and the attendant deference to
clients subjective expectations and needs; (4) the reportedly high rate of depression, obsessive compulsive disorder and substance abuse among law students and
lawyers and its effect on creative, comprehensive problem solving; and (5) the
sharply decreasing number of civil trials and the consequent decline in attorney trial
experience and knowledge of trial outcomes.
Part III
Consequences
Chapter 6
Legal Malpractice Liability For Settlement

Counseling and Decision Errors
Prophecy is the most gratuitous form of error.

George Eliot, Middlemarch, Ch. 10, 18711872
Second-guessing, Monday morning quarterbacking, living through the rear-view

mirror, 20/20 hindsight these colloquial terms convey skepticism about retrospective criticisms of decisions necessarily made before essential information became
available to a decision maker. But does this skepticism about hindsight judgments
extend to attorneys settlement advice later shown to be improvident? Or are
attorneys culpable when trial outcomes turn out to be worse than pre-trial settlement offers declined based on the advice of counsel? If cases are gambles, who is
supposed to know when to fold them and when to hold them the attorney or the
client?
Attorneys today often face the Hobsons choice of either (1) advising a client to
accept a settlement offer, risking malpractice liability if the client later claims it
could have obtained a superior financial result at trial; or (2) advising a client to
reject a settlement offer, risking liability if the result at trial is worse than the
rejected settlement offer. This dilemma intensified during the last two decades as
judicial decisions continued to shift away from the relatively lenient judgmental
immunity rule to the more exacting standard of care test.1 To an ever-increasing
extent, the practitioner negotiating a settlement proceeds at her peril.
Because the courts themselves have not consistently delineated the scope of
attorneys liability for case assessments, recommendations and settlements, this
chapter cannot offer traffic light clarity for directing attorneys legal advice and
clients settlement decisions. Instead, this chapter presents a range of judicial
opinions in an attempt to alert practitioners to potential liabilities, indicate how
some courts allocate the respective responsibilities of attorneys and clients, illuminate some trends in imposing liability for settlement decisions and explain common
See Copeland Lumber Yards v. Kincaid, 69 Or. App. 35, 38, 684 P.2d 13, review denied 298
Or. 37 (1984).

199
200
6 Legal Malpractice Liability For Settlement Counseling and Decision Errors
defenses to malpractice claims. This chapter is not a treatise; malpractice treatises

tend to be read by attorneys who think they may have committed malpractice and
are looking for a way out, while this chapter is intended for attorneys and clients
who are trying to avoid a claim in the first place.
To accomplish these objectives, this chapter preliminarily assesses whether
malpractice claims regarding settlements constitute a significant portion of all
malpractice claims and how often clients prevail in those claims. It then summarizes the fundamental policy issues courts confront when deciding whether to
absolve attorneys of malpractice liability for advice and related actions taken in
connection with settlement negotiations or impose liability for inaccurate advice or
incomplete research, investigation and counseling regarding a settlement. This
chapter next analyzes how courts have resolved these policy issues in attorney
malpractice cases presenting two basic fact situations: (1) where dissatisfied clients
resolved the underlying cases by entering into settlement agreements and later
claimed the settlements were inadequate, coerced, unauthorized or otherwise egregious; and (2) where hapless clients proceeded to trial and later contended the case
should have been settled. Both the settled for too little and tried for too much
cases highlight gaps between clients expectations and attorneys performances that
culminate in malpractice claims. The analysis of those two basic categories of
claims is followed by an overview of the legal defenses asserted by attorneys in
malpractice actions. The related issues of attorneys ethical duties in settlement
negotiations and the circumstances in which a breach of those duties could result in
disciplinary proceedings are treated in the next chapter.
6.1
Malpractice Claims Data
Malpractice claims data show a significant and persistent conflict between client
expectations and attorney performances in case evaluation, risk assessment and
settlement negotiations. According to the American Bar Associations Profile of
Legal Malpractice Claims, the specific activity Settlement/Negotiation constituted 7.67% of all malpractice claims in the 20042007 period, and 8.2% of all
malpractice claims in the earlier 20002003 period (when claims are classified by
type of activity). The errors failure to follow clients instructions, failure to
know or properly apply the law, failure to obtain clients consent or to inform
client [of various alternatives or the risks involved], inadequate discovery of
facts or inadequate investigation, and planning or strategy error constituted
37.58% of all malpractice claims in the 20042007 period and 41.54% of all
malpractice claims in the 20002003 period (when claims are classified by type
of alleged error).2 Thus, nearly one-half of all malpractice claims allege errors
2
American Bar Association Standing Committee on Lawyers Professional Liability. (2008).

Profile of Legal Malpractice Claims 20042007. Chicago, IL: American Bar Association.
6.1 Malpractice Claims Data
201
relating to professional skills required in pre-trial evaluations, negotiations and

settlements.
The most comprehensive data regarding attorney malpractice claims is maintained by an Ontario, Canada insurer, The Lawyers Professional Indemnity Company (LAWPRO). Its data is the most complete because, unlike their American
counterparts, all attorneys in Ontario are required to carry malpractice insurance,
and LAWPRO is the only carrier. The American Bar Association has compared its
malpractice data with LAWPROs and concluded that the results show relatively
similar claims experiences between the two countries.3 LAWPROs data indicate
that the major cause of malpractice claims has shifted during the last thirty years
from calendaring mistakes (usually failing to file an action before it was barred by
the statute of limitations) to attorney/client communication and relationship
issues. According to law professors Kara MacKillop and Neil Vidmar, communication and relationship problems were responsible for 46% of all claims and 51% of
claims costs. The errors, they note, fall into four categories: failure to follow client
instructions (13.7% of claims, 13.6% of costs), inadequate discovery or investigation (12.9%, 15%), failure to inform or obtain consent (11.6%, 13.4%), and poor
communication (8%, 9%).4 Calendaring issues constituted only 14% of the total
number of claims and 11% of claim costs, although they were the primary type of
malpractice claim thirty years ago. Because contemporary attorneys are more likely
to face a malpractice claim regarding their relationship skills than their calendaring
systems, attorneys with a bad courtside manner are a swelling financial risk for law
firms and malpractice insurers.
How do attorneys fare at trial when they are sued for legal malpractice? An
analysis of all attorney malpractice cases reported by VerdictSearch during the
20-year period between 1987 and 2007 reveals a high incidence of claims regarding
settlement and a low incidence of defense verdicts. Nearly one-third of the reported
cases involved some aspect of settlement, and the national win rate for the plaintiff
clients ranged from 70% to 74%.5 The plaintiff win rates in legal malpractice
actions are roughly double the national win rates of medical malpractice plaintiffs
(33%) and are significantly higher than the win rates of plaintiffs in non-motor
vehicle negligence cases (43%) reported during the same 20-year period. If law
professors MacKillop and Vidmar are correct in claiming it is fairly common for a
customer of the legal profession to have an unpleasant experience in their work with
American Bar Association Standing Committee on Lawyers Professional Liability. (2005). Profile
of Legal Malpractice Claims 20002003. Chicago:, IL: American Bar Association.
3
MacKillop, K. & Vidmar, N. (2006). Legal Malpractice: A Preliminary Inquiry. Available at
SSRN: http://ssrn.com/abstract=912963.
4
Ibid., 19.
5
The win rates varied slightly based on whether the case type search was coded as Legal
Profession: Malpractice or Professional Negligence: Attorney. Win rates, of course, pertain
only to cases that proceed to trial or arbitration. Data compiled by the American Bar Association
indicate that only 34% of all legal malpractice claims result in a payment by a malpractice
insurance company.
202
an attorney, the VerdictSearch data suggests it is fairly common for their attorney
to have an unpleasant experience in trying to defend it.
The concept of being sued for malpractice arising from a negotiated settlement
strikes many attorneys as oxymoronic. A negotiated settlement represents a mutually acceptable resolution of a case, they argue, and clients do not assent to
settlements unless they are sincerely satisfied with the result. The empirical evidence, however, does not support this argument. In the only longitudinal study of
disputants satisfaction with settlements, litigants who settled their cases did not
appear to be any more satisfied with the result than litigants who proceeded to trial.
The authors of that study, law professor Donna Shestowsky and management
professor Jeanne Brett, report: There were no differences in global satisfaction
between those who experienced adjudicative procedures and those who experienced nonadjudicative procedures, or between those who experienced adjudicative
procedures and those whose cases were dropped or dismissed.6
Earlier studies also fail to substantiate the belief that disputants are uniformly
satisfied with negotiated resolutions. In a study of personal injury cases, 54% of all
claimants who settled their case thought the settlement was inadequate, and
claimants with the most serious injuries were the least satisfied with the settlement,
66% stating that the settlement was inadequate. In a study of family law disputants,
37% of the respondents were extremely dissatisfied with their settlements, and
only 28% reported satisfaction with the outcome. In another study of out of court
settlements, only 53% of the settling defendants considered the settlement to be
fair. Comparing mediated outcomes with adjudicated outcomes, yet another study
found that 67% of the parties who participated in mediation thought their settlements were fair, compared with 59% of the parties who proceeded to an adjudicated
outcome at trial.7 Relying on a clients presumed satisfaction with settlements,
therefore, appears to be a thin shield against a legal malpractice claim.
6.2
Competing Policy Considerations
The arguments supporting attorney liability for improvident settlement decisions

are as persuasive as the arguments limiting attorney liability to extreme situations
where the attorneys settlement recommendations are tainted with fraud or unsupported by any research or investigation. The competing policy considerations and
the courts disparate conclusions are illustrated by two cases, Muhammad v.
Strassburger8 and Ziegelheim v. Apollo,9 decided by two state supreme courts
6
Shestowsky, D., & Brett, J. (2008). Disputants Perceptions of Dispute Resolution Procedures: An
Ex Ante and Ex Post Longitudinal Empirical Study. Connecticut Law Review, 41(1), 39, 9091.
7
These studies are discussed in Galanter, M., and Cahill, M. (1994). Most Cases Settle: Judicial
Promotion and Regulation of Settlements. Stanford Law Review, 46, 13531356.
8
587 A.2d 1346, 1349 (Pa. 1991).
9
607 A.2d 1298, 1304 (N.J. 1992).
6.2 Competing Policy Considerations
203
(Pennsylvania and New Jersey) a year apart. Refusing to allow a dissatisfied client
to sue her attorneys for legal malpractice following her execution of a settlement
agreement, the Supreme Court of Pennsylvania in Muhammad v. Strassburger
stated:
The primary reason we decide today to disallow negligence or breach of contract suits
against lawyers after a settlement has been negotiated by the attorneys and accepted by the
clients is that to allow them will create chaos in our civil litigation system. Lawyers would
be reluctant to settle a case for fear some enterprising attorney representing a disgruntled
client will find a way to sue them for something that could have been done, but was not.
We refuse to endorse a rule that will discourage settlements and increase substantially the
number of legal malpractice cases. A long-standing principle of our courts has been to
encourage settlements; we will not now act so as to discourage them.10
The court held that a client dissatisfied with a settlement to which he agreed cannot
sue his former attorneys unless that plaintiff can show he was fraudulently induced
to settle the original action.11
A year later the Supreme Court of New Jersey in Ziegelheim v. Apollo reached
the opposite result. It held that a clients agreement to a negotiated settlement does
not bar a legal malpractice action against her former attorney. Expressly refusing to
adopt the rule declared in Muhammad v. Strassburger, the Court stated:
Although we encourage settlements, we recognize that litigants rely heavily on the professional advice of counsel when they decide whether to accept or reject offers of settlement,
and we insist that the lawyers of our state advise clients with respect to settlements with the
same skill, knowledge, and diligence with which they pursue all other legal tasks. Attorneys
are supposed to know the likelihood of success for the types of cases they handle and they
are supposed to know the range of possible awards in those cases.12
In allowing the clients suit to proceed absent a showing of fraud, the court noted
that the negotiation of settlements is one of the most basic and most frequently
undertaken tasks that lawyers perform; and a lawyer is required to carefully
investigate the facts of the matter, formulate a legal strategy, keep the client
informed of the status and advise the client on the various legal and strategic
issues that arise.13 The fact that the client understood and accepted the settlement
and that the settlement was fair and equitable, the Ziegelheim court stated, does not
mean necessarily that the partys attorney was competent or that the party would not
have a received a more favorable settlement had the partys incompetent attorney
been competent.14
The tension between the competing policies expressed in Muhammad and
Ziegelheim promotion of settlements and discouragement of speculative claims
by disgruntled clients versus an attorneys duty to meet the standard of care in
10
607 A.2d at 1349.

Id. at 1348.
12
Id. at 1304.
13
Id. at 1303.
14
Id. at 1305.
11
204
competently representing and advising clients in settlement negotiations pervades

hundreds of appellate court cases raising attorney malpractice issues. This tension
remains unresolved, and many of the cardinal concepts that underpin these decisions escape consistent definition and application. The point at which a bad decision
becomes actionable malpractice is both opaque and shifting. As Ronald Mallen, a
co-author of the leading treatise Legal Malpractice, states, despite centuries of
applying the error of judgment rule in attorney malpractice actions, the courts have
not analyzed or defined the judgmental process being protected.15
The courts difficulty in forging sound legal malpractice principles from competing policies and interests closely mirrors the dilemmas posed by medical malpractice cases, as described by professors Samuel Gorovitz and Alasdair MacIntyre
in their essay, Toward a Theory of Medical Fallibility.16 They note that medical
error not only occurs but seems unavoidable; that some medical error seems
innocent even when severely damaging, whereas other medical error seems culpable; that the harm that results from medical error seems sometimes but not always to
warrant compensation; that the error that causes harm seems sometimes but not
always to warrant sanctions; and, finally, that the relationships among culpability,
harm, compensation, and sanctions are obscure. Like medical malpractice actions,
legal malpractice actions confound principles of accountability, fairness, compensation and societally acceptable ranges of professional error. Conscientious attorneys overlooking critical legal issues, irresponsible attorneys mishandling cases
that could not be won by the most diligent attorney, clients with unrealistic
expectations who nevertheless should have obtained a better outcome, gross legal
errors causing negligible damages and minor legal errors causing catastrophic
damages all complicate and challenge malpractice liability principles.
6.3
Malpractice Claims Arising from Settled Cases
The settled for too little malpractice claims, filed after clients sign settlement
agreements and, in some cases, affirm them in open court, typically present eleven
imbricated fact patterns: (1) the client was inadequately advised regarding the
settlement and trial prospects; (2) the attorney coerced the client into settling the
case; (3) the attorneys mistakes prevented the plaintiff from obtaining a better
settlement or prosecuting the case to trial; (4) the attorneys delays caused the client
to forego more favorable settlement terms; (5) the attorney failed to disclose a
conflict of interest, colluded with an adverse party or otherwise defrauded the
client; (6) the attorney did not transmit settlement proposals; (7) the attorney failed
15
Mallen, R., & Smith, J. (2007). Legal Malpractice }18:12, p. 1137 St. Paul, Minnesota:
Thompson West.
16
Gorovitz, S. & MacIntyre, A. (1976). Toward A Theory of Medical Fallibility. Journal of
Medicine and Philosophy 1, 51.
6.3 Malpractice Claims Arising from Settled Cases
205
to conduct adequate legal research, discovery or investigation before the settlement;

(8) the attorney was not authorized to consent to the settlement agreement; (9) the
settlement agreement was defectively drafted; (10) the client did not understand the
settlement agreement; and (11) the attorney did not anticipate changes in the law or
errors by the court. These eleven fact patterns, commonly asserted defenses to
them, and the courts dispositions in illustrative cases are discussed below.
Although the clients claims were dismissed in many of these cases, those cases
should not be interpreted as barring similar claims; many of those cases portend
emerging areas of liability and client-friendly opinions at a later time. The facts or
proof deemed missing in the dismissed cases may be readily adduced in a
subsequent case, or a later case may present a more compelling reason for imposing
liability than appeared in the dismissed case. Attorneys should anticipate both an
increased number of claims and an expanded scope of liability.17
Numerous published opinions attempt to delineate the boundaries of attorney
liability for settlement advice and decisions. Due to the vast number of cases, this
summary of malpractice liability is necessarily truncated, highlighting only about
200 opinions that declare general liability rules and apply those rules to nuanced
claims. The purpose of this review is to heighten practitioners sensitivity to a wide
range of legal duties and client expectations, not to catalog every opinion or discuss
each case disapproving an opinion cited here. In considering the cases described
below, prudent practitioners will recognize that the fact the claim was made at all
may be more important than whether it survived a summary judgment motion; any
claim is expensive and may jeopardize or increase the cost of continued malpractice
insurance coverage, regardless of the claim outcome. Anticipating sources of client
conflict, moreover, may lead to preventative counseling practices that are far less
expensive and more effective in the long term than prevailing against dissatisfied
clients who once contributed to a law firms income and prestige.
For clients, this review of settlement malpractice law serves the additional
purpose of preventing undue reliance on attorneys assessments and advice, illustrating how attorneys advice can be misinterpreted, reiterating the inherent risks in
any decision to settle or litigate and pointing out the limits of attorneys responsibilities for adverse outcomes. Seemingly catastrophic case outcomes do not necessarily translate into attorney liability even when a client indisputably could have
17
For law review articles regarding attorneys malpractice liability, see: Cooney, M. (2006).
Benching the Monday-Morning Quarterback: The Attorney Judgment Defense to Legal Malpractice Claims. Wayne Law Review, 52(3), 1051; (1994). Lawyers Responsibilities and Lawyers
Responses. Harvard Law Review, 107, 1547; Thomas, M. (1998). When Is an Attorneys Breach
of Fiduciary Duty in Missouri Not Legal Malpractice? Missouri Law Review, 63, 600601;
Leubsdorf, J. (1995). Legal Malpractice and Professional Responsibility. Rutgers Law Review,
48. 148150; Lord, P. (1986). Loss of Chance in Legal Malpractice. Washington Law Review, 61,
14801485; Spiegel, M. (1979). Lawyering and Client Decisionmaking: Informed Consent and the
Legal Profession. University of Pennsylvania Law Review, 128(1), 41140; Munneke, G., &
Davis, A. (1998). The Standard of Care in Legal Malpractice: Do The Model Rules of Professional
Conduct Define It? Journal of the Legal Profession, 22, 33.
206
obtained more money through better settlement negotiations or by proceeding to

trial. Thus, understanding clients responsibilities for settlement decisions is at least
as important as comprehending attorneys duties and may guide clients into a more
constructive collaboration with their attorneys.
6.3.1
Inadequate Advice Regarding Settlement

and Trial Prospects
An attorney is obligated to give the client reasonable advice. This obligation

arises from the fact that clients rely heavily on the professional advice of counsel
when they decide whether to accept or reject offers of settlement.18 Since the vast
majority of cases are resolved without trials, settlement is the most common end
and is often the principal objective of litigation. There can be little doubt that clients
routinely anticipate that their cases will be settled and that they rely heavily on their
lawyers recommendation regarding settlement, expecting that the lawyer has a
sufficient understanding of the relevant facts, law, and prospects to make an
intelligent recommendation.19 At a minimum, an attorney advising a client regarding settlement must know the relevant facts, the strengths and weaknesses of the
case, the monetary and psychological costs of continued litigation, and what the
outcome is likely to be if the case proceeds further, based not only on the relevant
law but also on what triers of fact in the community are doing in similar kinds of
cases.20
An attorneys duty to competently advise clients regarding settlements encompasses both advice proffered and advice withheld. An attorney has an affirmative
duty to advise a client and may be liable for a failure to advise as well as erroneous
advice.21 An attorney should furnish advice when requested and should also
volunteer opinions when necessary to further the clients objectives.22 Even when
an attorney has expressly limited the engagement, the attorney may still have a
duty to alert the client to legal problems which are reasonably apparent, even
though they fall outside the scope of the retention. The rationale is that, as between
the lay client and the attorney, the latter is more qualified to recognize and analyze
the clients legal needs.23
18
Ziegelheim v. Apollo, 607 A.2d 1298, 1303, 1304 (N.J. 1992).

Thomas v. Bethea, 718 A.2d 1187, 1195 (Md. 1998).
20
Prande v. Bell, 660 A.2d 1055, 1065 (Md. Ct. Spec. App. 1995).
21
Ishmael v. Millington, 50 Cal. Rptr. 592. 598 (Cal. Ct. App. 1966).
22
Nichols v. Keller, 19 Cal. Rptr. 2d 601, 608 (Cal. Ct. App. 1993).
23
Nichols v. Keller, supra, at 608. See Janik v. Rudy, Exelrod & Zieff, 14 Cal. Rptr. 3d 751 (Cal. Ct.
App. 2004) (class counsels representation extends beyond claims described in class certification
order).
19
207
The duty to advise extends beyond strictly legal considerations. An attorney is

obligated to consider and appraise the hazards of legal actions, including matters
beyond whether liability exists as a matter of law.24 Consequently, an attorney
must not only convey realistically the strengths and weaknesses of the case but also
any other relevant information necessary for the client to make an informed
settlement decision.25 Noting the wide scope of litigation attorneys obligations,
Robert Hesselbacher of Wright, Constable & Skeen, LLP opines: If the plaintiff
can present any evidence that his attorney failed to consider some factor in
evaluating the value of his case, or even if he simply can find an expert to testify
that the settlement amount was unreasonable, he is likely to have a viable claim of
legal malpractice.26
The courts broad definition of attorneys duties is accompanied by a similarly
broad deference to attorneys judgments.27 Although the law requires attorneys to
exercise adequate skill and care, it does not demand that they be perfect or
infallible, and it does not demand that they always secure optimum outcomes for
their clients.28 An attorneys considered exercise of her informed judgment even
if subsequently proven to be erroneous is not negligence. . . . There is no presumption that an attorney has been guilty of a want of care, arising merely from a bad
result.29 Because an attorney does not act as an insurer of the outcome of a case,
good faith tactical decisions made on a fairly debatable point of law are generally
not actionable under the rule of judgmental immunity.30 An attorney, in short, is
not required to exercise perfect judgment in every instance.31
A perennial joke among attorneys, law professor Mark Cooney writes, is that the
only thing that two trial attorneys can agree on is what a third trial attorney is doing
wrong.32 This joke reflects the reality that attorneys hold strong opinions and have
good faith differences regarding the merits, settlement values and likely outcomes
of cases. Because responsible attorneys may reach different conclusions about the
same case, a recommendation to settle or not to settle on particular terms is not
24
Meagher v. Kavli, 97 N.W.2d 370, 374 (Minn. 1959).

G. Heileman Brewing Co, Inc. v. Joseph Oat Corp., 848 F.2d 1415, 1422 (7th Cir. 1988).
26
Hesselbacher, R. Attorney Liability for Negligent Settlement Advice. St. Paul, Minnesota: The
Harmonie Group.
27
See Mason v. State, 712 S.W.2d 275 (Ark. 1986) (court must avoid hindsight bias and judge
attorneys performance based on facts and circumstances existing at the time).
28
Grayson v. Wofsey, Rosen, Kewskin & Kuriansky, 646 A.2d 195, 201 (Conn. 1994), quoting
Ziegelheim v. Apollo, supra n. 18, at 1298.
29
Gans v. Mundy, 762 F.2d 338, 340 (3d Cir.), cert. denied, 474 U.S. 1010, 106 S. Ct. 537, 88 L.
Ed. 2d 467 (1985), quoting Mazer v. Sec. Ins. Group, 368 F. Supp. 418, 422 (E.D. Pa.1973), affd
mem., 507 F.2d 1338 (3d Cir. 1975).
30
Crosby v. Jones, 705 So. 2d 1356, 1358 (Fla. 1998).
31
Ramp v. St. Paul Fire & Marine Ins. Co., 269 So. 2d 239, 244 (La. 1972).
32
Cooney, M. (2006). Benching the Monday-Morning Quarterback: The Attorney Judgment
Defense to Legal Malpractice Claims. Wayne Law Review, 52(3), 1051.
25
208
malpractice simply because another lawyer, or even many other lawyers, would not
have made the same recommendation under the alleged circumstances.33 Courts,
consequently, will not indulge in hindsight and second guess an attorneys settlement advice if it was within the range of possible verdicts as established by expert
testimony.34 This judicial deference to attorneys informed, good faith judgment is
expressed in a multitude of jurisdictions.35
The defense of judgmental immunity (also referred to as the error of judgment,
attorney judgment, independent business judgment and professional judgment rules) does not exculpate attorneys from all judgment calls but rather is
limited to reasonable, informed decisions made in good faith. The defense ordinarily applies to professional judgments about strategies and tactics but does not
shield neglect or incompetence. As the court brusquely declared in Pineda v.
Craben: There is nothing strategic or tactical about ignorance.36 Judgmental
immunity thus does not apply where an attorney limited his research to a single
case, which he interpreted incorrectly, and overlooked an essential issue (federal
33
Prande v. Bell, supra n.20, at 1065.

Royal Ins. Co. of Am. v. Miles & Stockbridge, P.C., 138 F. Supp. 2d695, 704 (D. Md. 2001),
amended in part on other grounds, 142 F. Supp.2d 676 (D. Md. 2001).
35
Ziegelheim v. Apollo, supra n. 18, at 1306 (attorneys who pursue reasonable strategies in
handling their cases and who render reasonable advice to their clients cannot be held liable for
the failure of their strategies or for any unprofitable outcomes that result because their clients took
their advice); Cook v. Connolly, 366 N.W.2d 287, 299-291 (Minn. 1985) (a proposed settlement
represents the best judgment of counsel on what is attainable for his or her client based on a wide
variety of considerations, each of which some other attorney might weigh differently; and
counsels good faith judgment, even if in error, is not deemed to be malpractice); Meir v. Kirk,
Pinkerton, McClelland, Savary & Carr, P.A., 561 So. 2d 399, 402 (Fla. Dist. Ct. App. 1990)
(good faith exercise of professional judgment is protected and no claim of negligence may be
premised thereon); Crosby v. Jones, supra n. 30, at 1358 (no liability for good faith tactical
decisions); Oakes & Kanatz v. Schmidt, 391 N.W.2d 51, 5354 (Minn. Ct. App. 1986) (distinguishing non-actionable client dissatisfaction with purportedly inequitable settlement from
actionable negligence of attorney during pre-settlement representation); Woodruff v. Tomlin, 616
F.2d 924, 930 (6th Cir. 1980) (attorney not liable for litigation strategy decisions based on honest
exercise of professional judgment); Kirsch v. Duryea, 578 P.2d 935, 939 (Cal. 1978) (we have
recently recognized a latitude granted the attorney engaged in litigation in choosing between
alternative tactical strategies); Glenna v. Sullivan, 245 N.W.2d 869, 872873 (Minn. 1976)
(attorney not liable for error or mistake in judgment provided he acts with honest belief his advice
is well-founded and in clients best interests); Rorrer v. Cooke, 329 S.E.2d 355, 367 (N.C. 1985)
(law is not an exact science and attorneys differences in opinion about appropriate action are
consistent with the exercise of due care); Hudson v. Windholz, 416 S.E.2d 120, 124 (Ga. Ct. App.
1992) (no liability where attorney assessed the relative strengths and weaknesses of the plaintiffs
claims . . . and exercised his best, informed judgment prior to recommending that plaintiffs execute
the release); Bernstein v. Oppenheim & Co. 554 N.Y.S.2d 487, 489 (N.Y. App. Div. 1990)
(attorney may select one among several reasonable courses of action and is not liable for an
honest mistake of judgment); McKnight v. Dean, 270 F.3d 513 (7th Cir. 2001) (not the office of
malpractice litigation to second guess unless unreasonable).
36
424 F.2d 369, 372 (9th Cir. 1970).
34
209
preemption).37 Nor does the judgmental immunity doctrine protect an attorney who
allegedly failed to perform the minimal research that an ordinarily prudent attorney would do before rendering legal advice38 or an attorney who recommended
that plaintiffs settle a medical malpractice case for an amount below a damages cap
ruled unconstitutional at the time of the settlement.39 The critical distinction for
malpractice liability, therefore, is whether the attorneys recommendation of
settlement is one that no reasonable attorney, having undertaken a reasonable
investigation into the facts and law as would be appropriate under the circumstances, with knowledge of the same facts, would have recommended.40
6.3.2
Client Coerced into Settlement by Attorney
Malpractice claims alleging that a client was forced into settling a case are
infrequent, but they reveal serious deficiencies in how attorneys communicate
with clients. Whether successful at trial or dismissed on summary judgment, the
forced to settle cases inform attorneys that more responsive, considered and
individualized advice is essential not only to guide the client but also to protect
the attorney from malpractice liability.
Consider the excerpt below from Luisa Prandes testimony in Prande v. Bell,
supra. Does her testimony indicate that the source of the perceived coercion was her
attorney or the exigencies of the case?
Q.
A.
Q.
A.
Q.
A.
Are you saying that you were forced into that settlement?
Yes.
Tell me how you were forced into it.
I was going by the advice of counsel that my case was not going all that well because
of the testimony of the doctors.
What specifically did your attorneys tell you that you say forced you into the settlement?
My attorneys told me that I did not have any choice, that I will have to take that money
in order for us to go on with the second case.41
Ms. Prande further testified that she was told she had no choice but to settle her
claim, was pressured to settle because the doctors would not testify that her
injuries resulted from the accident and felt pressured into the Spillman settlement
that she felt was unfair. The Prande court reversed a summary judgment in favor
of the defendant attorney and remanded the case, holding that Ms. Prande had
37
Aloy v. Mash, 38 Cal. 3d 413, 419 (1985).

Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686, 693 (Minn. 1980).
39
Hipwell v. Sharp, 858 P.2d 987 (Utah 1993). See Glenna v. Sullivan, supra n. 35, 245 N.W.2d at
873 (Justice Todd concurring specially) (defendant did little or nothing to accumulate all of the
pertinent facts necessary to make an evaluation of plaintiffs claim); Goebel v. Lauderdale, 263
Cal. Rptr. 275 (Cal. Ct. App. 1989) (total failure to perform even the most perfunctory research).
40
Prande v. Bell, supra n.20, at 1065.
41
Id. at 1067.
38
210
presented a triable issue of fact as to whether any reasonable attorney would have
recommended the settlement.42
Claims of coercion, similar to those asserted in Prande v. Bell, assume many
forms: the attorney refused to try the case, threatened to convert the billing from a
contingency basis to an hourly fee basis, and intimidated and coerced her into
signing the settlement agreement;43 the attorney negligently negotiated the settlement terms and pressured the client into accepting the amount of the settlement;44
the attorneys threat to raise his fee compelled the client to accept the settlement;45
and the attorneys recklessly handled their case and forced them into accepting
the settlement offer.46 Many of these cases implicate the attorneys compensation
in general and a contingency fee in particular, indicating that attorneys must
vigilantly avoid the perception of coercion when they have a direct financial interest
in effectuating a prompt settlement.
One of the most colorful claims of coercion was made in McGann v. Wilson,47
where the client alleged the attorney committed legal malpractice by coercing the
Maryland resident [client] to accept a settlement of his claim prior to the return of
the verdict by the jury that heard the case. In this barrister version of curiosity
killed the cat, the attorneys settled the case for $200,000 just minutes before the
jury completed its deliberations. As part of the settlement, the attorneys stipulated
that, despite the binding nature of the settlement, the jury would disclose its verdict.
After the jury foreman announced that the amount of its verdict would have been
$750,000, the clients sued the attorney and prevailed in a malpractice action
alleging negligence, including using undue pressure exhorting the [clients] to
settle their case. Noting that the defendant attorneys became impaled on their
own petards, the court summarized the case background succinctly: Counsel
settled the case for $200,000; the jury verdict would have been $750,000. Once
those disparate figures hit the proverbial fan, the battle began in earnest.48
Some coercion claims are defeated by the absence of legally cognizable
damages, the courts taking a somewhat jaundiced attitude toward clients who allege
misconduct but cannot prove that a better result would have been obtained absent
the misconduct. The courts opinion in McKnight v. Dean49 is representative:
We do not condone Deans action in "forcing" McKnight to settle. If McKnight was
pigheaded and wanted to tilt at windmills, that was his right. Dean didnt have to continue
representing him in those circumstances, but he could not, whether to safeguard his fee or
42
Id. at 1065.
Lowman v. Karp, 476 N.W.2d 428, 429 (Mich. Ct. App. 1991).
44
Norton v. Superior Court, 30 Cal. Rptr. 2d 217 (Cal. Ct. App. 1994).
45
Manatee Cablevision Corp. v. Pierson, 433 F. Supp. 571, 572 (D.D.C. 1977).
46
Broad v. Conway, 675 F. Supp. 768, 770 (N.D.N.Y. 1987).
47
701 A.2d 873, 877 (Md. Ct. Spec. App. 1997).
48
Id. at 874.
49
270 F.3d 513, 519 (7th Cir. 2001)
43
211
for any other reason, use deception to induce his client to settle against the clients will. The
decision to settle is the clients alone. [Citations]. But misconduct of this sort, though a
form of malpractice (more precisely, a breach of the lawyers ethical duty to his client), will
often be harmless.
Citing the absence of evidence that client McKnight would have done better by
rejecting the settlement and going to trial, the court concluded, Dean did
McKnight a favor in coercing a $765,000 settlement, if that is what really
happened.50 If there is no injury, the court added, there is no tort.51
Coercion claims serve to remind practitioners that, although the standard of care
is measured objectively by the practices of reasonably prudent attorneys, clients
perceptions of attorney pressure, urgency and intimidation are inherently subjective. Unless an attorney contours her communications for a clients individual,
subjective needs, the attorneys adherence to an objective standard of care will not
prevent malpractice claims alleging coercion, duress or undue influence in this
fiduciary relationship. A clients understanding and acceptance of a settlement
agreement is dependent on the particular background and experience of the client,
as attorney Jeffrey Geiger, a member of the Defense Research Institutes Professional Liability Committee, explains: An attorney should take into account the
intelligence, education, experience, background and age of the client. While a court
is less likely to give credence to postsettlement claims of a lack of understanding
as to the terms of the settlement when the client is a sophisticated purchaser of legal
services, an impaired client will require greater handholding by the attorney in
order for a settlement to be seen as the product of informed consent.52
6.3.3
Attorneys Mistakes Prevented Client from Obtaining

a Better Settlement or Prosecuting Case to Trial
Factually related to the coercion claims are the malpractice actions in which the
client alleges that he settled a case to mitigate damages caused by the attorneys
negligence or because the attorney had so hopelessly botched the case that the
proper settlement or judgment was unattainable. This category of malpractice claim
is described in Thomas v. Bethea:53
50
Id. at 517.
Id. at 517. See King v. Bishop, 879 S.W.2d 222, 224 (Tex. App. 1994).
52
Geiger, J. (2005). Settlement and the Client: Considerations When You Are The Target of a
Professional Malpractice Claim. Retrieved June 18, 2005 from http://www.sandsanderson.com/
PressRelease/settlement.htm. See Geiger, J. (2000). Clients Unhappy Hindsights: When a Settlement Leads to a Malpractice Claim. For the Defense 60.
53
718 A.2d 1187, 1191 (Md. 1998).
51
212
One category involves situations in which the client claims that he or she was given little
choice but to settle on disadvantageous terms because the lawyer failed in some other
respect to prepare or prosecute the case properly, thereby diminishing the prospect of
success if the litigation continued. The gravamen of the action in those situations is not so
much that the lawyer negligently recommended a settlement that was unreasonably low, but
that what otherwise would be an unreasonably low settlement was essentially forced on the
client because of other deficiencies by the lawyer. If the client was aware of those
deficiencies prior to settling, the settlement itself, given the circumstances then faced by
the client, may not have been unreasonable at all, and, indeed, may have been entirely
prudent.
A related question, the court explained, is whether, by agreeing to the settlement,

the client should be barred from litigating its fairness in a suit against the lawyer,
and the answer appears to be no.54
The outcomes of the had to settle cases largely depend on whether the clients
damages appear to be speculative or demonstrable. Although relatively few of these
types of cases proceed to trial, the courts are inclined to afford plaintiffs an
opportunity to prove damages resulting from the attorneys alleged malfeasance.
In Wassall v. DeCaro55 the court reversed a summary judgment in favor of the
defendant attorney where the clients claimed that they agreed to dismiss the
underlying case because they did not wish to suffer with defendants any longer
and [wanted] to put a merciful end to two and a half years of malpractice. The
court declared that an attorney who has neglected his role as steward, hopelessly
delaying, and perhaps prohibiting, the system from properly resolving his clients
case, should not be able to seek safe haven in a dismissal that resulted because the
client could not risk allowing the attorney further to neglect his role.
A similar result occurred in Kermati v. Schackow,56 where the court declined to
permit the attorney to benefit from his own alleged mistakes. In Kermati, the client
had no choice but to accept a grossly unfair settlement because the attorneys
allowed the statute of limitations to run. Noting that other courts permit malpractice
suits where the paucity of the settlement was caused by a breach of duty on the part
of the attorney, the Kermati court stated that the $200,000 settlement may indeed
have been fair and the best obtainable, due to the malpractice of the attorneys
involved. In such a case it may well be the clients duty to accept the lesser amount,
in order to mitigate their damages.57
54
Id. at 1192.
91 F.3d 443, 445 (3d Cir. 1996).
56
553 So. 2d 741, 744 (Fla. Dist. Ct. App. 1989)
57
Id. at 745, 746. See California State Auto. Assn. Inter-Ins. Bureau v. Parichan, Renberg,
Crossman & Harvey, 101 Cal. Rptr. 2d 72, 80 (Cal. Ct. App. 2000) (client reasonably mitigated
damages by $850,000 settlement payment where attorneys negligence caused clients exposure to
potential bad faith action); Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A., 834 A.2d 170, 181
(Md. Ct. Spec. App. 2003) (malpractice liability may be imposed when a lawyers general
deficiencies have compromised the opportunity to receive more at trial (or a favorable outcome
for that matter), such that the client is essentially forced to settle); Titsworth v. Mondo, 407 N.Y.
S.2d 793, 796 (N.Y. Sup. Ct. 1978) (prior settlement does not bar malpractice action where clients
55
213
The clients failure to dismiss the attorney or challenge his actions before the
case had been materially damaged by the attorneys negligence is rarely a defense.
In Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A., supra, for instance, the
defendant law firm raised the statute of limitations defense and asserted that the
client should have known about the firms alleged negligence before the date when
the clients claimed they knew they had been harmed. In other words, the court
stated, Bogie, Nagle argued that their representation was so careless that an
objective person would have been put on notice about their negligent actions at a
much earlier time.58 Citing the fiduciary relationship between attorney and client,
the attorneys superior knowledge, and the clients reasonable reliance on his
attorney, the court reversed the summary judgment granted on the statute of
limitations ground.
In support of its decision, the Supik court cited Frederick Road Ltd. Partnership
v. Brown & Sturm.59 In that case, the court emphasized the attorneys fiduciary
duties and stated, A client is entitled to believe a lawyer who says, I am your
lawyer, why not trust me, I am a lawyer, I would not do anything that is wrong.
The clients ongoing reliance on her attorneys advice is founded upon public
policy, because the confidential and fiduciary relationship enables an attorney to
exercise a very strong influence over his client and often affords him opportunities
to obtain undue advantage by availing himself of the clients necessities, credulity,
and liberality.60 Consequently, malpractice defense lawyers arguments that an
attorneys negligence was so manifest that it should have been detected earlier are
often unavailing.
assent to the settlement was compelled because prior misfeasance or nonfeasance by the attorneys
left no other resource); Prospect Rehabilitation Servs., Inc. v. Squitieri, 920 A.2d 135 (N.J. Super.
Ct. App. Div. 2007) (issue of fact as to whether client took reasonable steps to mitigate effect of
attorneys negligence by settling underlying action); Huntington v. Fishman, 441 S.E.2d 444, 446
(Ga. Ct. App. 1994) (client allegedly agreed to inadequate settlement because attorney failed to
timely serve defendant); Schaefer v. Manfredi, 549 N.Y.S. 2d 59, 60 (N.Y. App. Div. 1989) (a
cause of action for malpractice is viable despite the plaintiffs settlement of the underlying action
where such settlement was compelled because of the mistakes of the defendant); White v.
Kreithen, 644 A.2d 1262, 1265 (Pa. Super. Ct. 1994), alloc. denied, 652 A.2d 1324 (Pa. 1994)
(client forced to accept judges proposed settlement figure because she could not retain substitute
counsel after discharging attorney who allegedly failed to conduct proper investigation and trial
preparation); Lowman v. Karp. 476 N.W.2d 428, 431 (Mich. Ct. App. 1991) (settlement remains
the prudent option for both attorney and client where the chances of recovery at trial have been
diminished because of the negligence of the attorney); Edmonson v. Dressman, 469 So. 2d 571,
574 (Ala. 1985) (malpractice adequately pled where plaintiff claimed attorneys negligent investigation and advice caused her to accept substantially less than the amount to which she was
entitled).
58
Supik v. Bodie, Nagle, Dolina, Smith & Hobbs, P.A., supra n.57, 834 A.2d at 177.
59
756 A.2d 963, 977 (Md. 2000).
60
Id.
214
6.3.4
Attorneys Delays Caused Client to Forego More

Favorable Settlement Terms
Related to the had to settle cases are the cases specifically alleging that the
attorneys delay in prosecuting the case caused the client to lose the opportunity
to settle or forced a settlement on unfavorable terms. In the Wassall case, discussed
above, the court found the attorneys representation to be shoddy at best, noting
that DeCaro [attorney] did not negotiate and complete a settlement, frustrated
efforts to have the case amicably resolved, wasted the resources of the courts by his
footdragging, and seriously impaired plaintiffs case, necessitating the agreement
to have the case dismissed. Reflecting on a record of neglect and delay, the court
stated, With every minute the case continued with DeCaro, plaintiffs negotiation
position arguably waned and it became less likely that the defamation defendants
would be willing to settle the claims and counter-claims on favorable terms, if at
all. Concluding that the plaintiff clients had little other choice than to dismiss
their case, the court reversed the summary judgment for defendants.61
Contrasting sharply with the courts decision favoring the client in Wassal is the
courts rejection of the clients claim in Schlomer v. Perina.62 In Schlomer, the
client alleged that three years of neglect caused the client to accept a low settlement
and lose the use of money that would have been obtained from an earlier settlement.
Finding no evidence that the insurance carrier would have settled the clients claim
earlier and noting the speculative nature of the clients damages claim, the court
affirmed the reversal of the jurys verdict against the attorney: we conclude that
recovery must be denied under public policy grounds because the injury in this case
is simply too remote from the negligence, and, furthermore, the injury is too
wholly out of proportion to the culpability of the negligent tortfeasor.63
61
91 F.3d at 447, 450.

485 N.W.2d 399, 402 (Wis. 1992).
63
Id. at 402. See Thompson v. Halvonik, 43 Cal. Rptr. 2d 142, 144 (Cal. Ct. App. 1995) (affirming
summary judgment on ground appellants evidence that he would have obtained a better
settlement had respondents [attorneys] proceeded more diligently was too speculative to support
his claim for damages); DiPalma v. Seldman, 27 Cal. App. 4th 1499, 15061507 (1994) (trial
court erred in granting nonsuit but client must prove that careful management of a claim would
have resulted in a favorable judgment and collection); Campbell v. Magana 184 Cal. App. 2d 751,
758 (1960) (action not brought to trial within mandatory five-year period but plaintiff had no good
cause of action and case had no settlement value because highest offer was $350 and plaintiff
refused to settle for less than $100,000); Becker v. Julien, Blitz & Schlesinger, P.C., 406 N.Y.S.2d
412, 414-415 (N.Y. Sup. Ct. 1977) (no malpractice liability where value of clients claim did not
exceed settlement amount even if client could show attorney was lax or dilatory).
62
6.3.5
215
Conflict of Interest, Fraud and Collusion with

an Adverse Party
Conflict of interest claims present a unique confluence of ethical principles, causation issues and evidence law. They differ from other settlement malpractice claims
in at least one critical respect: expert testimony is not always necessary to prove the
standard of care and the defendants breach of duty. In conflict of interest cases,
those elements of a malpractice action may be established by a courts judicial
notice of the ethical standards allegedly breached by the attorney.
National and state ethics rules require attorneys to disclose potential conflicts
and prohibit attorneys from simultaneously representing clients with actually
conflicting interests in adversary proceedings.64 The purpose of these rules is
described in Anderson v. Eaton:
By virtue of this rule an attorney is precluded from assuming any relation which would
prevent him from devoting his entire energies to his clients interests. Nor does it matter
that the intention and motives of the attorney are honest. The rule is designed not alone to
prevent the dishonest practitioner from fraudulent conduct, but as well to preclude the
honest practitioner from putting himself in a position where he may be required to choose
between conflicting duties, or be led to an attempt to reconcile conflicting interests, rather
than to enforce to their full extent the rights of the interest which he should alone
represent.65
Under the ABAs Model Rules of Professional Conduct, a conflict of interest exists
and impairs the duty of loyalty owed by an attorney to his client if there is a serious
risk that a lawyers ability to consider, recommend or carry out an appropriate
course of action for the client will be materially limited as a result of the lawyers
other responsibilities or interests.66
Because a negligent failure to act may constitute legal malpractice and an
attorney is required to protect his client in every possible way, an attorney may
be liable for a failure to disclose a conflict of interest.67 An attorney is negligent,
therefore, when he assumes a position adverse or antagonistic to his client without
the latters free and intelligent consent given after full knowledge of all the facts
and circumstances.68 The facts and circumstances in the attorneys disclosure
should include all potential risks of dual representation, the possibility of representation by independent counsel and the limitations of the attorneys representation.69
If the attorney fails to fully disclose all pertinent facts and circumstances and obtain
the clients informed consent, he is civilly liable to the client who suffers loss
64
See A.B.A. Model Rules Profl Conduct R. 1.7, and Cal. Rules of Profl Conduct R. 3-310.
293 P. 788, 790 (Cal. 1931).
66
A.B.A. Model Rules of Profl Conduct R. 1.7 Comment 8.
67
Day v. Rosenthal, 217 Cal. Rptr. 89, 99 (Cal. Ct. App. 1985).
68
Id. at 100.
69
See Allstate Ins. Co. v. Keller, 149 N.E.2d 482, 486 (Ill. App. Ct. 1958).
65
216
caused by lack of disclosure.70 The attorneys failure to disclose need not be the
sole cause of the clients loss; liability may be imposed on the attorney if another
partys wrongful action was a realizable likelihood which made the attorneys
inaction negligent, thus forming a concurrent (and not superseding) cause of
harm.71
An attorneys initial determination that an actual conflict of interest does not
exist must be continually evaluated throughout the representation of multiple
clients, especially during settlement negotiations. The ABAs Ethical Guidelines
for Settlement Negotiations describe this ongoing duty: Even when the lawyers
initial conclusion that multiple clients can be represented was well-founded, however, consideration later of possible settlement options can generate circumstances
where interests emerge as potentially divergent, if not actually conflicting. Conflicts
can arise from differences among clients in the strength of their positions or the
level of their interests in settlement, or from proposals to treat clients in different
ways or to treat differently positioned clients in the same way.72 An aggregate
settlement of multiple claims, for instance, in which the attorney fails to advise
each client of the total amount of the settlement and the amount and nature of each
clients participation in the settlement, may constitute a breach of fiduciary duty.73
Because the attorneys duty of loyalty is so closely enmeshed with and circumscribed by professional ethics, settlement malpractice claims alleging a conflict of
interest necessarily meld ethical rules and professional negligence standards.
Although ethical rules generally are not admissible as presumptive evidence of
professional negligence, some courts have carved out an exception to that general
rule for conflict of interest claims.74 In those cases, the ethical rules establish the
70
Lysick v. Walcom, 65 Cal. Rptr. 406, 414 (Cal. Ct. App. 1968).
Ishmael v. Millington, 50 Cal. Rptr. 592, 598 (Cal. Ct. App. 1966). Cf. Blecher v. Collins, P.C. v.
Northwestern Airlines, Inc. 858 F. Supp. 1442, 1457 (C.D. Cal. 1994) (if actual conflict exists,
attorney must refund fees received after the conflict arose but is not liable for other damages unless
client can prove the failure to disclose the conflict of interest caused it to lose the trial and/or obtain
a disappointing settlement).
72
Section of Litigation, American Bar Association. (2002). Ethical Guidelines for Settlement
Negotiations. Chicago, IL: American Bar Association.
73
See Karpman, D. (2007, August). Multiple Clients May Present Multiple Conflicts. California
Bar Journal 16, citing ABA Formal Opinion 06-438. See also Arce v. Burrow, 958 S.W. 2d 239
(Tex. App. 1997), rehg overruled, (Jan. 15, 1998) and writ granted (Aug. 25, 1998), and judgment
affd in part, revd in part on other grounds, 997 S.W.2d 229 (Tex. 1999).
74
See Ishmael v. Millington, 50 Cal. Rptr. 592 (Cal. Ct. App. 1966) (summary judgment in favor of
attorney reversed, the court citing Rules 6 and 7 of California Rules of Professional Conduct);
Lysick v. Walcom, 65 Cal Rptr. 406 (Cal. Ct. App. 1968), (judgment for attorney reversed and case
remanded, negligence established as matter of law by the general standards of professional
care); Lieberman v. Employers Ins. of Wausau, 419 A.2d 417, 425 (N.J. 1980) (defendant
breached a duty inherent in their attorney-client relationship); Mirabito v. Liccardo, 5 Cal.
Rptr. 2d 571 (Cal. Ct. App. 1992) (ethics standards may be admitted as evidence of breach of
fiduciary duty but standards do not create independent ground for malpractice action); Baxt v.
Lilioa, 714 A.2d 271 (N.J. 1998) (violation of ethical rules does not give rise to a cause of action
for legal malpractice); Wright v. Williams, 121 Cal. Rptr 194, 200 (Cal. Ct. App. 1975) (in some
71
217
standard of care, rendering expert testimony unnecessary. In Day v. Rosenthal,75

the court affirmed a $26,396,511 malpractice award against an attorney, adopting
the trial courts finding that the case from beginning to end oozes with attorneyclient conflicts of interest, clouding and shading every transaction and depriving
Doris Day and Martin Melcher of the independent legal advice to which they were
entitled.76 With respect to the standard of care, the court invoked the Rules of
Professional Conduct and dismissed the need for expert testimony:
It required no expert to tell the trial court that Rosenthals perverted sense of duty to his
clients, the Melchers, is attorney negligence. . . . The standards governing an attorneys
ethical duties are conclusively established by the Rules of Professional Conduct. They
cannot be changed by expert testimony. If an expert testifies contrary to the Rules of
Professional Conduct, the standards established by the rules govern and the expert testimony is disregarded. . ..77
The defendant attorneys numerous blatant, and egregious violations of attorney

responsibility, the Court further stated, were not breaches of legal technicalities
for which expert testimony is required. They were violations of professional
standards; standards which the trial court was compelled to notice.78
In their article Playing by the Rules: Violations of Ethics Rules as Evidence of
Legal Malpractice, attorneys Gena Sluga and Douglas Christian note that [o]nly a
few courts have found that the violation of an ethics standard is conclusive evidence
that a lawyer breached the standard of care to her client.79 They find, however, that
the overwhelming majority of courts admit evidence of an ethics violation as
some, but not presumptive, evidence of the standard of care. The courts heavy
reliance on rules of professional conduct in the Day case, therefore, was exceptional, as law professor Gary Munneke wrote in 1998: Only one jurisdiction has
gone as far as to say that violation of an ethical rule is negligence per se. Day v.
Rosenthal argues that the applicable ethics code actually establishes a civil right
giving rise to an automatic remedy.80
Day and its progeny81 may well presage the substitution of ethical rules for
expert testimony in cases other than conflict of interest claims. Although the
prohibition against conflict of interest is deeply rooted in the rules of professional
circumstances the failure of attorney performance may be so clear that a trier of fact may find
professional negligence unaided by the testimony of experts).
75
217 Cal. Rptr. 89 (Cal. Ct. App. 1985), cert. denied, 475 U.S. 1048 (1986).
76
Id. at 94.
77
Id. at 102.
78
Id.
79
Sluga, G. & Christian, D. (2001, Summer). Playing by the Rules: Violations of Ethics Rules as
Evidence of Legal Malpractice. FICC Quarterly.
80
Munneke, G., & Davis, A. (1998). The Standard of Care in Legal Malpractice: Do The Model
Rules of Professional Conduct Define It? Journal of the Legal Profession, 22, 59.
81
See Stanley v. Richmond, 41 Cal. Rptr. 2d 768 (Cal. Ct. App. 1995), Mirabito v. Liccardo, 5 Cal.
Rptr. 2d 571, (Cal. Ct. App. 1992). See also Hatcher v. Roberts, 478 So. 2d 1083, 1087 (Fla. Dist.
Ct. App. 1985), review denied, 488 So. 2d 68 (Fla. 1986).
218
conduct, other types of malpractice claims are similarly grounded in those rules.
The duty of competent representation, for instance, is expressly stated in Rule 1.1 of
the Model Rules of Professional Conduct; likewise, the duty to provide competent
and comprehensive advice is embodied in Rule 1.4. While neither of these model
rules (or their state counterparts) appears to have been substituted for expert
testimony or regarded as conclusive evidence in settlement malpractice cases, the
policy considerations favoring their admission and presumptive effect are as persuasive as the considerations for invoking the conflict of interest standards in the
Day case.
For practitioners, the practical lesson here is that the line between the standard of
care and professional ethics is blurred, and the consequences of unethical practice
can extend not only to disciplinary proceedings but to malpractice claims as well. If
ethical standards are presumptive evidence of a breach of duty, it is foreseeable that
a directed verdict could be entered against an attorney defending a malpractice
action, eliminating any waffle room afforded by expert testimony. As attorneys
Sluga and Christian warn, Lawyers who still believe that the violation of an ethics
rule may only be used against them in a disciplinary proceeding are sadly mistaken.82
6.3.6
Attorney Did Not Transmit Settlement Proposals to Client
Occasionally a client belatedly learns that his attorney did not transmit his settlement proposals to an adversary or did not inform him of the adversarys settlement
offer. In Moores v. Greenberg,83 for example, the court affirmed a judgment against
an attorney who failed to inform the client of a $90,000 settlement offer before the
client lost at trial instead of a fat settlement, the court observed, he received
nothing but a rebuff from the jury. Although the failure to inform a client of a
settlement proposal violates the attorneys ethical responsibilities and may deprive
the client of a settlement opportunity, the attorney often escapes civil liability
because the client cannot prove that the case outcome would have been better absent
this omission. In Magnacoustics, Inc. v. Ostrolenk, Faber, Gerb & Soffen,84 the
attorney did not transmit an adversarys settlement offer, but the court dismissed the
clients malpractice action because they could not prove that, absent the attorneys
alleged negligence, they would have accepted the offer. Similarly, the clients claim
82
Sluga, G. & Christian, D. (2001, Summer). Playing by the Rules: Violations of Ethics Rules as
Evidence of Legal Malpractice. FICC Quarterly.
83
834 F.2d 1105, 1107 (1st Cir. 1987),
84
755 N.Y.S. 2d 726 (N.Y. App. Div. 2003), leave to appeal denied, 798 N.E.2d 349 (N.Y. 2003).
219
was dismissed in Rubenstein & Rubenstein v. Papadakos85 because the client

unequivocally conceded that the offer would have been rejected.86
6.3.7
Failure to Conduct Adequate Legal Research, Discovery

and Investigation Before Settlement
One of the most common malpractice claims is that an attorney failed to adequately
investigate and conduct discovery and the client was damaged by entering into a
settlement without essential information. As the court noted in Fishman v.
Brooks,87 The typical case of malpractice liability for an inadequate settlement
involves an attorney who, having failed to prepare his case properly or lacking the
ability to handle the case through trial (or both), causes his client to accept a
settlement not reasonable in the circumstances. This type of claim, the court
elaborated in Wartnick v. Moss & Barnett,88 is based on the general principle that
attorneys must use reasonable care to obtain the information needed to exercise his
or her professional judgment, and failure to use such reasonable care would be
negligence, even if done in good faith.
A common complaint in this category, the court stated in Thomas v. Bethea,89
is that the lawyers settlement recommendation was flawed because, as the result
85
295 N.Y.S.2d 876, 877 (N.Y. App. Div. 1968).

See Miller v. Byrne, 916 P.2d 566, 574 (Colo. Ct. App. 1995) (attorney required to advise clients
of settlement negotiations and their ramifications regardless of whether they were bona fide);
Builders Square v. Saraco (868 F. Supp. 748, 749 (E.D. Pa. 1994) (attorney has duty to explore
and timely communicate to his client settlement offers); Rizzo v. Haines, 555 A.2d 58, 64 (Pa.
1989) (attorney has duty to explore and elicit settlement offers, investigate settlement inquiries and
offers and ascertain how much more defendant was willing to pay after defendants counsel
commented I can get you more than $550,000); Keller v. Barry, 443 N.Y.S.2d 436, 437 (N.Y.
App. Div. 1981) (summary judgment precluded by triable issues of fact regarding the reasonableness and the adequacy of the advice given regarding a settlement offer); Dorf v. Relles, 355
F.2d 488 (7th Cir. 1966) (directed verdict proper where attorney allegedly failed to disclose and
discuss adversarys settlement offer with client but client failed to present expert testimony to
establish standard of care); Joos v. Auto-Owners Ins. Co., 288 N.W.2d 443 (Mich. Ct. App. 1979)
(because attorney, as a matter of law, is required to disclose and discuss settlement offers, expert
testimony not required to prove breach of duty where attorney failed to inform client of pre-trial
settlement offers within policy limits); Mc Conwell v. FMG of Kansas City, Inc., 861 P.2d 830, 839
(Kan. Ct. App. 1993), rev. denied, 254 Kan. 1077 (1994) (absent evidence regarding desire or
ability to settle no liability for alleged failure to transmit settlement offers and pursue settlement);
Cannistra v. OConnor, Mc Guinness, Conte, Doyle, Oleson & Collins, 286 A.D.2d 314 (N.Y.
App. Div. 2001) (clients must prove they would have accepted settlement offer if attorney had
transmitted it); Dykema v. Godfrey, 467 So. 2d 824, 825 (Fla. Dist. Ct. App. 1985) (fact that client
had no defense to foreclosure action did not relieve attorney of duty to inform client of status of
settlement negotiations).
87
487 N.E.2d 1377, 1380 (Mass. 1986).
88
490 N.W. 2d 108, 113 (Minn. 1992).
89
Thomas v. Bethea, supra n. 19, at 1192.
86
220
of a deficient investigation, the lawyer significantly undervalued the clients case

and thus made a settlement recommendation that bore no reasonable relationship to
what likely would have resulted had the litigation been pursued. In that setting, it is
not that the client was knowingly forced to settle for less than the case was worth, as
much as the client having been misinformed as to what the case was, in fact, worth.
The Thomas court observed that these cases frequently present a secondary issue
whether the attorney who failed to adequately prepare the case for trial is actually
recommending a settlement to cover up some other act of malpractice that
prejudiced the case and that might have been revealed if the litigation proceeded.90
The standard of care, with respect to the duty to investigate and conduct
discovery, is broadly defined and imprecisely applied. The specific duty to obtain
adequate information is often subsumed, and to some extent lost, under judicial
declarations of attorneys general duties to competently advise clients. The courts
opinion in Prande v. Bell91 broadly defines attorneys duties regarding settlement
recommendations while acknowledging that the legal principles defy uniform
application: Simply put, this kind of legal malpractice involves a judgment call;
there exists no bright line by which to assess malpractice. Before recommending
that a client settle, or not settle, a claim, either before or after suit is filed, the
lawyers must have, at a minimum, an adequate appreciation of (1) the relevant
facts, (2) the potential strengths and weaknesses of the clients case as it then stands
and as it might possibly be developed, (3) the likely costs, both monetary and
psychological, of proceeding further with litigation, and (4) what the outcome is
likely to be if the case proceeds further, based not only on the relevant law but also
on what triers of fact in the community are doing in similar kinds of cases. These
elements, the court acknowledged, are mostly subjective in nature, not easy to
quantify.92
Despite the somewhat subjective nature of adjudicating malpractice claims, the
courts have not hesitated to impose upon attorneys a duty to undertake essential
discovery and complete an adequate factual investigation.93 In Baldridge v. Lacks,94
90
Id. at 1192.
660 A.2d 1055, 1065 (Md. Ct. Spec. App. 1995).
92
Id. at 1065.
93
Collins v. Perrine, 778 P.2d 912, 915 (N.M. Ct. App. 1989) (defendant attorney did not have
sufficient information about the facts and law involved when he recommended settlement and
settled the case without performing even the minimum level of discovery necessary in such a
complex case); Ziegelheim v. Apollo, supra n.18, 607 A.2d at 1305 (attorneys failure to conduct
discovery allegedly led to improvident acceptance of the settlement); Grayson v. Wofsey, Rosen,
Kewskin and Kuriansky, supra, n. 28, 646 A.2d at 202 (information obtained by attorneys
insufficient to permit them to responsibly recommend settlement to the plaintiff); Brizak v.
Needle 571 A.2d 975, 983 (N.J. Super. Ct. App. Div. 1990) (attorney is required to conduct diligent
investigation regarding material claims in clients case). Cf. Sukoff v. Lemkin, 202 Cal. App. 3d
740, 745 (Cal. Ct. App. 1988) (malpractice award against attorney for failure to investigate
reversed, the court stating that plaintiff client had the burden to establish that additional discovery
would have resulted in a higher award to her.)
94
883 S.W.2d 947 (Mo. Ct. App. 1994)
91
221
the court reversed a judgment in favor of the defendant attorney and remanded the
case for a new trial where the attorney admitted he did not conduct discovery but
claimed the plaintiff client insisted on settling as quickly as possibly anyway
against the attorneys advice.95 The attorney claimed that he specifically informed
the client that they were not ready to settle the case because discovery and
investigation had not been completed.96 Nevertheless, the courts decision was
based, in part, on evidence that the attorney failed to engage in discovery, failed
to trace assets, was not equipped with the necessary information to advise his
client as to the advantages and disadvantages of a proposed settlement and advised
the client without first having fully and adequately assessed the nature and extent
of the assets. Holding that an attorney should be, and is, liable for any negligent
advice which results in damage to the client, the Baldridge court stated that the
damages may be measured by the difference between what the client actually
received and what she would have received had the underlying action been
tried.97 Like the court in Prande v. Bell, the Baldridge court also declined to
adopt a bright line rule regarding malpractice liability.
A similar result occurred in Collins v. Perrine,98 where the court affirmed a
jurys $2,958,789 verdict against a defendant attorney. The attorney, like his
defendant counterpart in Baldridge, admitted he took no depositions, filed no
requests for production or for admission, and submitted no interrogatories to
defendants.99 He proffered a simple justification that many attorneys find perfectly
normal and acceptable: the client had no resources to pursue discovery or retain
an expert witness. The defendant attorney also asserted that the decision to settle
without conducting discovery was in fact strategic; it was necessary to settle this
case, the attorney claimed, to obtain seed money for a stronger case against
another defendant.100 Holding that the evidence of malpractice was sufficient, the
court noted that the jury could have readily found that Perrine settled the case
without performing even the minimum level of discovery and did not have
sufficient information about the facts and law involved in this case when he decided
to recommend settlement.101 With respect to damages, the court dismissed the
defendant attorneys argument that the client had to adduce evidence, from opposing counsel in the underlying case, that a higher settlement was possible. Instead,
the court held, the proper measure of damages is the amount of the judgment that
could have been recovered, but for his negligence, in the underlying case.102
95
Id. at 956.
Id. at 956.
97
Id. at 954.
98
778 P.2d 912 (N.M. Ct. App. 1989).
99
Id. at 915.
100
Id. at 914.
101
Id. at 912.
102
Id. at 917.
96
222
The failure to conduct discovery regarding assets is a recurrent and sufficient

ground for imposing malpractice liability in marital dissolution cases. In Ziegelheim v. Apollo, supra, for example, the defendant lawyer allegedly failed to
discover multiple assets held by the plaintiffs husband. The New Jersey Supreme
Court reversed the lower courts order granting summary judgment for the defendant lawyer, stating that an attorneys duties include a careful investigation of the
facts of the matter.103 Because the attorneys failure to conduct a thorough
investigation led to the improvident acceptance of the settlement, the plaintiff
wife was entitled to litigate the issue of whether she would not have accepted the
settlement had she been competently advised.104 Similar liability principles were
followed in Grayson v. Wofsey, Rosen, Kweskin and Kuriansk.105 In Grayson, the
plaintiff alleged her counsel was negligent in failing to conduct adequate discovery
about her husbands assets. As a result of her attorneys negligence, she claimed,
she settled for less property and alimony than she should have received. The
Connecticut Supreme Court upheld a jury award of $1,500,000 in favor of the
plaintiff wife, representing $1,000,000 lost in connection with the property settlement and additional amounts she otherwise would have received as alimony payments.106
When an attorney has failed to undertake a reasonable investigation before
advising a client, the defense of judgmental immunity is unavailing. Judgmental
immunity contemplates a broad range of permissible tactical and strategic decisions
but does not condone passivity or inactivity. The attorney may be inexpert but not
inert. Hence, an attorney may make debatable tactical decisions about which
investigative techniques and discovery procedures to employ and may execute
those decisions imperfectly, but judgmental immunity will not excuse wholesale
neglect, delay or inaction. Like judicial discretion and corporate directors business
judgment, an attorneys judgment is not unfettered but must be exercised without
personal bias, in good faith and on an informed basis.107 Nor are the practical
defenses regarding the clients inability to pay for discovery and investigation
likely to be persuasive. In Collins, for instance, the clients inability to pay for
discovery was cited as an additional element of the attorneys negligence because
103
Ziegelheim v. Apollo, supra n. 18, at 1303.

Id. at 1301, 1305.
105
646 A.2d 195 (Conn. 1994).
106
See Callahan v. Clark, 901 S.W.2d 842 (Ark. 1995) ($248,000 award affirmed where defendant
attorney negligently advised client to sign property settlement agreement); Stanley v. Richmond,
41 Cal. Rptr. 2d 768 (Cal. Ct. App. 1995) (testimony of a family law expert was not necessary to
establish whether respondent was negligent by failing to perform a simple research task, and by
responding to a clients request for advice about the pluses and minuses of a decision without the
benefit of valuable, and readily available, information).
107
See Findley v. Garrett, 240 P.2d 421, 427 (Cal. Ct. App. 1952) (business judgment rule);
Gossman v. Gossman, 126 P.2d 178 (Cal. Ct. App. 1942) (judicial discretion)
104
223
the case should not have been handled without sufficient resources to conduct
discovery.108
Does the duty to investigate include an obligation to determine the existence and
limits of insurance coverage? Courts that have addressed this issue answer the
question affirmatively, absent a provision in the fee agreement expressly disclaiming responsibility for ascertaining the availability of insurance.109 In Fishman v.
Brooks,110 for instance, the court affirmed a judgment against the defendant attorney who told his client that only $250,000 was available when, in fact $1,000,000
was available. At the time the attorney made a settlement demand and received
settlement offers from the opposing party in the underlying action, the attorney did
not know what the available insurance coverage was.111 Recognizing that his
attorney was not prepared to try the case, the client settled for $160,000 and
then sued the attorney for the difference between the settlement obtained and the
fair settlement value of his case. Despite the attorneys objections, the court held
that evidence of the fair settlement value was admissible to prove not only the
attorneys negligence but also the clients damages.112
6.3.8
Attorney Not Authorized to Consent to Settlement

Agreement
Claims regarding an attorneys authority to settle a case range from an inadvertent

misunderstanding between an attorney and a client to an attorneys fraudulent
execution of the clients name on a settlement agreement. Although attorneys
uniformly acknowledge the principle that only the client can consent to a settlement, this principle is strained in actual practice. As the cases cited below demonstrate, clients unintentionally authorize attorneys to approve settlement terms that
the clients neither understand nor want, attorneys assume they are authorized to
approve settlements when the client steadfastly believes no such authority was
granted and courts enforce settlement agreements despite a clients disapproval of
the terms.
108
Collins, n. 98 supra, 778 P.2d at 915.

See Hirsch v. Weisman, 592 N.Y.S.2d 337 (N.Y. App. Div. 1993) (settlement based on
allegedly mistaken belief that defendants had coverage in the amount of $100,000 instead of
$500,000) and Shaya B. Pacific, LLC v. Wilson, Elser, Moskowitz, Edelman & Dicker, LLP, 38 A.
D. 34 (N.Y. App. Div. 2006) (defense counsel may have duty to ascertain existence of excess
coverage). Cf. Blackwell v. Eckman, 410 N.W.2d 390 (Minn. Ct. App. 1987) (summary judgment
in action based on failure to discover defendants insurance coverage properly dismissed where
evidence of coverage was hearsay).
110
487 N.E.2d 1377, 1379 (Mass. 1986).
111
Id. at 1379.
112
Id. at 1380.
109
224
It is axiomatic that an attorney may not compromise, settle, or consent to a final

disposition of his clients case without express authority.113 Absent a specific
authorization to compromise and settle a claim, an attorney has no implied or
ostensible authority to bind his client to a compromise settlement of pending
litigation.114 The clients exclusive right to accept or reject a settlement proposal
is embodied in Rule 1.2 of the Model Rules of Professional Conduct and reiterated
in numerous opinions.115 An attorney who settles a case without the clients
authorization may incur malpractice liability, but the recoverable damages for a
plaintiff are limited by the amount that would have been recovered from the
defendant absent the unauthorized settlement.116 For a defendant whose attorney
improperly stipulated to a settlement, the recoverable damages are limited to the
difference between the stipulated amount and the amount actually owed by the
client.117
The possibility that an attorney and his client, both acting in good faith, can
harbor conflicting beliefs about their respective authority to approve a settlement is
illustrated in Pohl v. United Airlines Inc.118 In Pohl, the client added a handwritten
note to the attorney fee agreement with my authorization to qualify the
attorneys power of attorney to sign settlement agreements. His attorney eventually
negotiated a settlement agreement with the adverse party, but the client, believing
that he had the ultimate right to approve the settlement agreement, refused to sign it.
In a hearing regarding enforcement of the agreement, the court found that the
attorney had actual authority to settle the case. This finding was based on the
attorneys multiple telephone calls to the client, explaining the negotiations over
a three-month period, and the clients verbal approval of the settlement terms
throughout that period. The court specifically ruled that the attorneys authority
did not have to be in writing and the clients oral authorization of the settlement
terms was sufficient, despite the clients handwritten note on the fee agreement.
A client, the court emphasized, may be bound by a settlement if he implied an
113
Turner v. Burlington N. R.R. Co., 771 F.2d 341, 345 (8th Cir. 1985), quoting Thomas v.
Colorado Trust Deed Funds, Inc., 366 F.2d 136, 139 (10th Cir. 1966).
114
Blanton v. Womancare, Inc., 696 P.2d 645, 650 (Cal. 1985), quoting Whittier Union High
School Dist. v. Superior Court, 136 Cal. Rptr. 86 (Cal. Ct. App. 1977).
115
See Linsk v. Linsk, 70 Cal. 2d 272 (1969) (attorney not authorized to impair the clients
substantial rights or the cause of action itself); Cook v. Sur. Life Ins. Co., 903 P.2d 708, 714 (Haw.
Ct. App. 1995) (attorney not authorized to settle without special authority in writing); Levy v
Superior Court, 10 Cal. 4th 578, 583 (1995) (to be enforceable, settlement agreement requires
clients knowledge and express consent); Clark v. Burden, 917 S.W.2d 574, 576 (Ky. 1996)
(settlement agreement not binding unless attorney has express or actual authority); Luethke v.
Suhr, 650 N.W. 2d 220 (Neb. 2002) (lawyers execution of a settlement agreement without a
clients knowledge or consent constitutes a breach of duty to the client; and it may constitute a
fraud upon the court).
116
Lewis v. Uselton, 480 S.E.2d 856, 860 (Ga. Ct. App. 1997).
117
Coon v. Ginsberg, 509 P.2d 1293, 1296 (Colo. Ct. App. 1973).
118
213 F.3d 336, 338 (7th Cir. 2000).
225
intention to settle the claim to his attorney, regardless of whether he actually

intended to settle the claim.119
Similar misunderstandings occur when clients are defended by their insurance
company. Insured clients often do not realize that their insurance polices contain
provisions expressly authorizing the insurer to settle third-party claims without
their consent. These provisions are valid and enforceable, as the court stated in
Robertson v. Chen:120
The insured normally cannot either bind the insurer by the insureds own consent nor
prevent settlement by withholding consent. [L]iability policies usually specifically prohibit the insured from settling or negotiating for a settlement or interfering in any manner
with the defense except upon the request of the insurer unless the insurer is in breach of the
contract. [Citation.] By accepting a liability insurance policy, the insured is bound by these
terms. [Citation.] For this reason, it is common practice for insurance counsel and an
adjuster to handle the negotiation of insurance-funded settlements without the superfluous
involvement of a fully protected insured.
Thus, when the insurance company provides a defense without reservation, the
clients authorization to settle is neither solicited nor required; the insurer is
entitled to take control of the settlement negotiations and the insured is precluded
from interfering therewith.121
6.3.9
Settlement Agreement Defectively Drafted
In another class of settlement malpractice claims, the clients acknowledge their

understanding of and consent to the settlement agreement but claim that the
settlement agreement itself does not reflect the intended terms. The clients malpractice action in Arnav Retirement Trust v. Brown122 is representative, the client
alleging that the attorneys error in drafting the settlement stipulation caused
damages of $4,000,000. In that case, the client signed a revised version of the
settlement agreement but did not read the agreement in its entirety, relying on his
attorneys statement that the revisions affected only one typographical error and the
rest of the agreement was identical to the prior version. In fact, the revised
agreement included not only the revision mentioned by the attorney but another
change erroneously lowering the amount of the stipulated judgment upon default
119
Id. at 339.
52 Cal. Rptr. 2d 264, 267 (Cal. Ct. App. 1996). Emphasis in original.
121
Commercial Union Ass. Cos. v. Safeway Stores, Inc., 26 Cal. 3d 912, 919 (1980). Accord New
Plumbing Contractors v. Edwards, Sooy & Byron, 121 Cal. Rptr. 472 (Cal. Ct. App. 2002) (insured
has no cause of action for business reputation damage and payment of deductible where policy
grants insurer discretion to settle). Cf. Ivy v Pac. Auto. Ins. Co., 156 Cal. App. 2d 652, 660 (1958)
(insurer, through its attorney, clearly violated its duties by stipulating to a judgment in excess of
the policy limits without insureds knowledge or consent).
122
727 N.Y.S.2d 688 (N.Y. Ct. App. 2001)
120
226
from $6,023,702.95 to $2,080,000. The client did not read the entire revised version
of the agreement. On appeal, the defendant attorneys argued that the client was
bound by the settlement agreement despite his failure to read it. Addressing that
argument and ultimately holding that the client had adequately alleged the law
firms failure to exercise reasonable skill and diligence, the court stated: the
binding nature of that agreement between plaintiffs and a third party is not a
complete defense to the professional malpractice of the law firm that generated
the agreement to its clients detriment.123 In other cases, however, a clients claim
that a settlement agreement was defectively drafted has elicited mixed results.124
6.3.10 Client Misunderstood the Settlement Agreement

After agreeing to a settlement, clients may discover that they did not understand all
the terms or the specific ramifications of the agreement. Although the agreement
usually is binding on the contracting parties, clients attempt to recover losses
resulting from their misunderstanding by asserting that their attorneys were deficient in advising them. This type of malpractice claim, however, is often defeated
by the clients inability to prove damages.
In Brooks v. Brennan,125 the client alleged that her attorney negligently represented her in a settlement that required her to resign from employment. Denying
that she had agreed to resign and disputing her attorneys contention that she knew
resignation was one of the settlement terms, she hired a new attorney to negotiate a
different settlement. The new attorney negotiated and recommended a nominally
better settlement, increasing the settlement consideration by $1,000. The court
dismissed the clients malpractice claim on summary judgment, holding that she
had failed to prove that she would have recovered a larger sum if the case had
proceeded to trial or that she could have obtained a better settlement absent the
attorneys alleged negligence.
123
Id. at 691.
See, e.g., Schneider, Smeltz, Ranney & LaFond, P.L.L. v. Kedia, 796 N.E.2d 553, 556 (Ohio Ct.
App. 2003) (no malpractice liability where client signed settlement agreement with integration
clause and later claimed settlement terms were less advantageous than settlement terms client
had authorized); Hunzinger Constr. Corp. v. Quarles & Brady, 735 So. 2d 589, 597 (Fla. Dist. Ct.
App. 1999) (damages recoverable where negligent drafting error resulted in judgment against
client); Orrick Herrington & Sutcliffe v. Superior Court (Malcolm), 132 Cal. Rptr. 2d 658 (Cal. Ct.
App. 2003) (attorneys fees spent on unsuccessful motion to set aside settlement not recoverable
despite allegation that lawyers prepared horribly defective agreement); Ziegelheim v. Apollo,
supra n. 18, at 1306 (summary judgment improper where client alleged attorney negligently
delayed in finalizing the settlement and the written settlement agreement ultimately prepared
differed from the settlement terms recited in court).
125
625 N.E.2d 1188 (Ill. App. Ct. 1994).
124
227
The court reached a similar conclusion in Hoover v. Larkin.126 In that case, the
client acknowledged her consent to the settlement in open court but later claimed
that she did not hear all of the settlement terms. Her malpractice claim was
dismissed on summary judgment because she could not prove that the attorneys
alleged inadequate advice and misrepresentations regarding the settlement terms
caused her to lose a viable cause of action. The court stated, When the plaintiffs
allegation is that some failure on the attorneys part caused an adverse result in prior
litigation, the plaintiff must produce evidence from which a jury may reasonably
infer that the attorneys conduct caused the damages alleged. Proving damages
may be especially difficult when the client is sophisticated, highly educated and
clearly capable of understanding the plain terms of the settlement agreement.127
A slightly different claim is presented when the client understands the language
of the agreement but misunderstands its ramifications. In Viccinelli v. Causey,128
the client approved a community property settlement but was unaware that a
judgment lien encumbered the residence she received as part of the settlement.
Her attorney was aware of the judgment and claimed he told the client about the
judgment, but he did not testify he affirmatively informed her that the recordation of
the judgment operated as a judicial mortgage on the residence. The client denied
knowledge of the judgment and alleged that she would not have entered into the
settlement if she had been advised that the judgment was an enforceable lien against
her property. Although the client did not present expert testimony regarding the
standard of care, the court found that the attorneys representation fell below any
reasonable standard of care, diligence and skill and affirmed a judgment awarding
damages in the amount the client paid to satisfy the lien.129
6.3.11 Failure to Advise of Uncertainty of Law and Anticipate

Judicial Error
This review of settlement malpractice liability would be remiss if it did not signal
two additional grounds of liability. The first type of claim asserts that the attorney,
although knowledgeable about the applicable law, failed to advise the client that the
law is uncertain or unsettled. The second type of claim alleges that the attorney,
although competently performing her own duties, failed to anticipate the courts
error.
126
196 S.W.3d 227 (Tex. App. 2006, pet. denied).

See Berman v. Rubin, 227 S.E.2d 802 (Ga. Ct. App. 1976) (attorney not liable for negligent
misrepresentation regarding meaning of settlement terms where agreement is clear, client is welleducated and client read and signed the agreement). Cf. Paul v. Smith, Gambrell & Russell, 642 S.
E.2d 217 (Ga. Ct. App. 2007).
128
401 So. 2d 1243, 1245 (La. Ct. App. 1981).
129
Id. at 1245.
127
228
The judgmental immunity rule generally protects attorneys strategic decisions

regarding uncertain areas of law and, in many jurisdictions, does not mandate
disclosure of the uncertain nature of the law. To properly advise clients regarding
an unsettled area of the law, attorneys must undertake reasonable research in an
effort to ascertain relevant legal principles and to make an informed decision as to a
course of conduct based upon an intelligent assessment of the problem.130 An
attorney, though, is not liable for an honest error in judgment concerning a
doubtful or debatable point of law, and at least in California is not obligated to
disclose the uncertain nature of the law: As a matter of policy, an attorney should
not be required to compromise or attenuate an otherwise sound exercise of informed
judgment with added advice concerning the unsettled nature of relevant legal
principles. Under the venerable error-in-judgment rule, if an attorney acting in
good faith exercises an honest and informed discretion in providing professional
advice, the failure to anticipate correctly the resolution of an unsettled legal
principle does not constitute culpable conduct.131
Although an attorneys exercise of professional judgment regarding an unsettled
area of law may be protected from liability, it is unclear whether a non-California
attorney must disclose to the client that she is making a judgment call regarding an
uncertain area of law. This distinction is explained in law professor Mark Spiegels
article, Lawyers and Client Decisionmaking: Informed Consent and the Legal
Profession:
This lack of attention to the issue of disclosure raises particularly significant problems with
regard to cases involving the lawyers exercise of judgment. In these, courts generally do
not impose an obligation on the attorney to tell a client of the uncertainty of results of a
particular course of action. Rather, as long as the attorney has researched the issue and has
found the law uncertain, he has the discretion to weigh the costs and benefits of alternative
courses of action.132
Where the law is unsettled, Professor Spiegel further notes, cases have held the
client has no malpractice action for incorrect advice even when no evidence
indicates that the lawyer explained the risks of uncertainty to the client.133
After the publication of Spiegels article, at least one court has held that an
attorney is obligated to disclose that an area of law is unsettled. In Wood v. McGrath,
130
Smith v. Lewis, 530 P.2d 589, 595 (Cal. 1975), overruled on other grounds by In re Marriage of
Brown, 544 P.2d 561 (Cal. 1976).
131
Davis v. Damrell, 174 Cal. Rptr. 257, 260261 (Cal. Ct. App. 1981). See Village Nurseries, L.P.
v. Greenbaum, 123 Cal. Rptr. 555, 562 (Cal. Ct. App. 2002) (judgmental immunity defense
requires proof law was unsettled and advice was based upon the exercise of informed judgment);
Gimbel v. Waldman, 84 N.Y.S.2d 888, 891892 (N.Y. Sup. Ct. 1948) (where court opinions are in
hopeless conflict, attorney not liable for allegedly erroneous advice on which client relied in
accepting settlement).
132
Spiegel, M. (1979). Lawyers and Client Decisionmaking: Informed Consent and the Legal
Profession. University of Pennsylvania Law Review, 128, 70.
133
Spiegel, M. (1979). Lawyers and Client Decisionmaking: Informed Consent and the Legal
Profession. University of Pennsylvania Law Review, 128, 70, fn. 107.
229
North, Mullin & Kratz,134 the Nebraska Supreme Court court stated that, since the
client bears the risk when deciding whether to settle a case, it is the client who
should assess whether the risk is acceptable, not the attorney. The clients assessment of that risk, in turn, requires the attorney to inform a client of unsettled legal
issues relevant to a settlement agreement and, in particular, how the proposed
settlement resolves those issues. The Wood court rejected the California courts
position, as articulated in Davis v. Damrell135 (an attorney should not be required to
compromise his or her good faith and informed judgment by advising the client of
the unsettled nature of relevant legal principles). Adopting a position opposite to the
California courts, the Wood court stated: If we conclude that the judgmental
immunity rule applies to an attorneys failure to inform a client of unsettled legal
issues relevant to a settlement, an attorney could forgo conducting research or
providing a client with information on a relevant legal issue once he or she determined that the legal issue at hand was unsettled in this state. We fail to see how this
result promotes the settlement of disputes in a clients best interests.136
The absence of a consistent, clear disclosure requirement has serious practical
implications for clients, many of whom would regard disclosure of the laws
uncertainty as more important than knowledge that their attorney made an informed
judgment call regarding that uncertainty. If informed of the uncertainty, many
clients presumably would direct their attorneys to refrain from choosing among
alternative strategies, all founded on uncertain legal premises. The judgmental
immunity rule thus is missing an essential disclosure requirement to inform clients
when they are treading on uncertain legal ground; in its present form it protects the
attorney experimenters more than the client subjects. Because the absence of
disclosure is inconsistent with the fiduciary relationship between attorneys and
clients and incompatible with ethical requirements to inform clients of all relevant
considerations, prudent practitioners should anticipate that liability may be
imposed on attorneys exercising professional judgment without full disclosure of
legal uncertainties and their attendant risks.
Another impending basis for malpractice liability is an attorneys failure to
anticipate and advise a client of the risks and costs of possible judicial error and
take action to prevent damage resulting from an erroneous ruling. For malpractice
liability purposes, the fact that an attorney properly discharges her specific duties
may be immaterial if the attorney fails to anticipate the courts mistaken discharge
of the judicial function. In Lombardo v. Huysentruyt,137 the court reversed a
summary judgment in favor of the defendant attorney who had represented a client
attempting to amend a trust. The probate court, ruling on a petition for conservatorship of the clients person and estate, had issued an order enjoining the client
from amending or revoking the trust without prior court approval. (This order was
134
589 N.W.2d 103 (Neb. 1999).

174 Cal. Rptr. 257 (Cal. Ct. App. 1981).
136
Wood, supra n. 134, at 108.
137
110 Cal. Rptr. 2d 691(Cal. Ct. App. 2001).
135
230
later characterized by expert witnesses as unique, ambiguous, confusing, and

astonishing.) The client subsequently amended the trust without court approval,
and upon his death, the probate court found the amendments to be invalid and void,
having been executed without prior court approval.
The malpractice plaintiffs in Lombardo, beneficiaries under the amended trust,
then sued the attorney for an alleged failure to apply for court approval of the
amendment immediately after it was executed. The trial court dismissed the
malpractice action on the ground that the probate courts orders were erroneous;
a reasonable court should have interpreted the order in such a way that it did not
limit the testamentary capacity of Mr. Winters.138 The court rejected as speculative the malpractice plaintiffs argument that the probate courts erroneous ruling
was foreseeable.
In reversing the summary judgment in favor of the attorney defendant, the
appellate court stated:
As appellants point out, even if the probate courts ruling was erroneous, it cannot be
viewed as unforeseeable as a matter of law. As an abstract principle, it is always foreseeable
that a trial court will err, as evidenced by the existence of appellate courts. . . . Even if the
probate court was in fact wrong to insist on prior approval of the amendment, there was
abundant evidence that respondent [attorney] could have foreseen from the language of the
conservatorship order that it might do so, and might have been able to protect against this
result by seeking the prior approval the order appeared to require, or attempting to clarify
the interpretation of the order.139
(The courts opinion cites Temple Hoyne Buell Foundation v. Holland & Hart,140 a
case imposing malpractice liability for failing to prevent foreseeable, erroneous
actions by a third party. In that case, the court held that an attorney could be liable
for negligent drafting of a contract which, although legally valid, failed to protect
against the likelihood of litigation concerning its legal validity).141 Finding that
the probate courts erroneous rulings were reasonably foreseeable, the Lombardo
court stated that the defendant attorney could have headed off any such error by
acting to protect against the possibility that the probate court would enforce a
mistaken interpretation of the conservatorship order.142
The Lombardo decision, although couched in traditional tort concepts of foreseeability and causation, raises the duty of care to a level unanticipated by some
practitioners. Because judicial error is foreseeable under Lombardo, the practitioners advice and strategy must contemplate the occurrence of judicial error and
138
Id. at 697.
Id. at 700701.
140
851 P.2d 192, 198 (Colo. Ct. App. 1992).
141
Temple Hoyne Buell Foundaton also was cited in First Interstate Bank of Denver v. Berenbaum,
872 P.2d 1297 (Colo. Ct. App. 1993), cert. granted, May 2, 1994, stip. for dismissal granted, Aug.
15, 1994 (contract language that leads to litigation, even if resolved in clients favor, could be basis
of malpractice action, as reasonably prudent attorney might foresee that language could cause
litigation).
142
Lombardo, supra n. 137, at 667.
139
6.4 Malpractice Claims in Adjudicated Cases
231
incorporate legal procedures to prevent damage foreseeably resulting from the

courts error. Prudent legal representation apparently must encompass both the
law as customarily applied and, anticipating judicial error, the law as erroneously
applied. In advising clients about the comparative benefits and risks of settlements
and trials, practitioners arguably must consider both a usual trial, at which the court
properly applies the law, and an atypical trial, at which the courts rulings may be
erroneous. For many attorneys, the Lombardo decision simply reiterates what they
have always done, advising clients on both the applicable law and the practical
consequences of lawsuits; for other attorneys who thought knowledge of the
applicable law was sufficient, it represents a greatly enlarged responsibility for
anticipating and mitigating judicial error.
6.4
Malpractice Claims in Adjudicated Cases
Malpractice claims tendered after a verdict raise multiple issues about an attorneys
judgment calls throughout the case, ranging from the election of legal remedies to
the selection of witnesses, from the adequacy of pretrial discovery to the perspicacity of jury selection. The malpractice issues that pertain strictly to attorneys
settlement negotiations and advice are twofold: (1) was the attorney remiss in
failing to solicit a pre-trial settlement offer or effectuate a pre-trial settlement?
and (2) was the client adequately apprised of the risk of an adverse verdict? Unlike
the settled for too little claims discussed in the previous section, the tried for too
much claims assert that the cases settlement value was greater than the actual trial
award, and the case proceeded to trial when it should have been settled.
In Floro v. Lawton,143 the court philosophically observed, It would appear that
the possibility of a malpractice action is an occupational hazard for a lawyer. Of
necessity he cannot win every case and there is always the possibility of his having
as a client an irascible person who tenaciously clings to the belief, in the face of all
evidence to the contrary, that his claim is robust and that the claim of his opponent
is weak, and that it would be next to impossible for any lawyer to do otherwise than
to secure a judgment as and for all that is demanded. Attorneys sued by disappointed clients after adverse verdicts may find the converse also is true: of necessity
an attorney cannot settle every case and there is always the possibility of being sued
by a remorseful client who, emboldened by hindsight, tenaciously clings to the
belief that his claim was always weak, the claim of his opponent was always strong,
and it was next to impossible for any lawyer to do otherwise than to negotiate a
settlement superior to the result obtained at trial.
143
10 Cal. Rptr. 98, 108 (Cal. Ct. App. 1960).
232
6.4.1
Attorney Remiss In Failing To Initiate Settlement

Negotiations, Solicit A Pre-Trial Settlement Offer
Or Otherwise Effectuate Settlement
Despite the evident popularity of hyper-aggressive litigation tactics variously

described as Rambo, take no prisoners, hardball, scorched earth, and
mano a mano attorneys have an affirmative duty to attempt to settle their
clients cases. Aggressive, hostile and demeaning litigation tactics are generally
decried as unprofessional but their major harm is not to the legal profession but to
the attorneys own clients. By destroying the spirit of good faith and compromise
essential to productive settlement negotiations, these tactics contravene attorneys
duty to expedite litigation and attempt to settle a case. Clients may encourage these
tactics in the belief they are obtaining some pugilistic advantage and often do not
consider whether the tactics are consistent with their long-term intention to settle
the case. Although an ever-increasing number of attorneys contend that attempting
to settle a case is a mediators responsibility, that responsibility always has been an
integral part of attorneys duties and remains so today. The courts admonition in
Cannon v. Cherry Hill Toyota, Inc. is instructive for attorneys serious about
protecting their clients from unnecessarily protracted litigation and shielding themselves from malpractice liability for failure to attempt to effectuate a settlement:
Lawyers are not free, like loose cannons, to fire at will upon any target of
opportunity which appears on the legal landscape. The practice of law is not and
cannot be a free-fire zone.144
The courts have consistently imposed upon attorneys a duty to attempt to settle a
clients case. To fulfill that duty, an attorney is required to explore and timely
communicate to his client settlement offers, as well as other information important
to the objectives of the representation.145 Absent contrary instructions from the
client, exploring, and, indeed, developing and encouraging settlement opportunities have always been regarded as within the scope of an attorneys representation
and they are especially so today, as the courts struggle to handle efficiently the
increasing burdens placed upon them.146 An attorney who fails to make any
attempt to negotiate and effectuate a settlement may incur malpractice liability.147
144
190 F.R.D. 147, 161-62 (D.N.J. 1999) (quoting Thomason v. Norman E. Leher, P.C., 182 F.R.D.
121, 123 (D.N.J. 1998)).
145
Builders Square, Inc. v. Saraco, supra n. 86, 868 F. Supp. at 749.
146
147
Smiley v. Manchester Ins. & Indem. Co., 375 N.E.2d 118, 124 (Ill. 1978). See Lysick v. Walcom,
258 Cal. App. 2d 136, 151 (1968) (attorneys duty to a client includes "the obligation to attempt to
effectuate a reasonable settlement of the . . . action where the general standards of professional care
exacted of him required that the most reasonable manner of disposing of the action was by
settlement"); Bonha v. Hughes, Thorsness, Gantz, Powell & Brundin, 828 P.2d 745, 761 (Alaska
1992) (attorney liable for excess judgment when he fails to settle case within authorization);
Scognamillo v. Olsen, 795 P.2d 1357, 1361 (Colo. Ct. App. 1990) (plaintiff clients entitled to
recover damages, including punitive damages assessed against clients in underlying action, upon
233
In his article, Settlement Malpractice: The Duty To Give ADR Advice,

mediator John Blumberg explains the scope of an attorneys duty to effectuate
settlement:
This is not to say that every case must be settled. It is to say, however, that an attorneys
duty to a client includes the obligation to attempt to effectuate a reasonable settlement of
the . . . action where the general standards of professional care [require] that the most
reasonable manner of disposing of the action was by settlement. [Citation] A clients
opposition to settlement does not excuse an attorneys duty to consider and advise the client
about settlement. After all, the lawyers superior skill and knowledge is what the client is
paying for.148
It is not uncommon for the client to have an unwarranted faith in the righteousness
of his or her position, Blumberg explains. For those fervent clients, the attorneys
role may be to act as a professional counterweight and bring rationality, objectivity
and experience to bear on the matter.149
This mandate to attempt to effectuate a settlement is reiterated in Jackson v.
Philadelphia Housing Authority,150 where the court stated that it would deny an
award of attorneys fees unless the parties had attempted to informally resolve their
dispute. Noting that the Code of Professional Responsibility does not expressly
require attorneys to attempt to settle cases, the Jackson court held: Nonetheless, as
officers of the court, lawyers not only owe allegiance to their clients, but have a duty
to spare the courts from unnecessary litigation. Attorneys, according to the
Jackson court, should not commence legal actions before affording an adverse
party an opportunity to correct an error and following formal and informal dispute
resolution procedures. Criticizing the practice of filing first and asking questions
later, the court stated, When possible, attorneys should serve as gatekeepers to
the legal process by diverting disputes into mediative channels rather than translating them into adversary claims.151
Does the general duty to attempt to effectuate a settlement incorporate a specific
duty to advise clients of alternative dispute resolution procedures like mediation
proof that clients would have settled their case absent defendants attorneys negligence);
Mutuelles Unies v. Kroll & Linstrom, 957 F.2d 707 (9th Cir. 1992) (because attorneys duties
include an obligation to attempt to effectuate a settlement, a law firm may be liable for the
difference between the amount paid to settle after verdict and the amount for which case could
have settled before verdict); G. Heileman Brewing Co., Inc. v. Joseph Oat Corp., supra n. 25, at
1423 (trials are appropriate only after possibility of settlement has been exhausted); Gruenberg
v. Aetna Ins. Co., 9 Cal. 3d 566, 573 (1973) (failure to settle action sounds in tort and contract). Cf.
Whiteacker v. State, 382 N.W.2d 112, 116 (Iowa 1986) (in action for loss of settlement opportunity
client must prove the parties would have reached a settlement in an ascertainable amount and
adversary would have paid the settlement sum).
148
Blumberg, J. (1997, October 17). Settlement Malpractice: The Duty to Give ADR Advice. Los
Angeles Daily Journal, Verdicts and Settlements.
149
Blumberg, J. (1997, October 17). Settlement Malpractice: The Duty to Give ADR Advice. Los
Angeles Daily Journal, Verdicts and Settlements.
150
858 F. Supp. 464 (E.D. Pa. 1994).
151
Id. at 472.
234
and arbitration? The answer varies markedly among jurisdictions, some courts
implying the duty from the Model Rules of Professional Conduct and others
imposing the duty only to the extent it comports with the pre-existing duties to
act in the clients interests, keep the client informed and provide sufficient information to enable the client to make informed decisions. In his article, Should an
Attorney be Required to Advise a Client of ADR Options? Marshall Breger
surveys the law and ethical rules regarding ADR disclosure and concludes that
the real risk for an attorney who fails to advise clients about ADR options is the
possibility of a malpractice claim. He observes that, although the Model Rules do
not provide explicit guidance regarding ADR advice to clients, legal scholars have
advanced several reasons why courts may specifically impose liability on an
attorney for failure to advise a client about ADR.152 He also notes that ADR
disclosure standards may range from a weak requirement to simply inform his
client that ADR is an option to a hard requirement that the attorney analyze the
case at hand and recommend an [ADR] option to his client.153
Until the law regarding ADR disclosure is fleshed out through malpractice case
opinions and more specific ethical rules, the prudent practitioner will not only
apprise clients of their ADR options but specifically discuss the costs, suitability,
timing, evidentiary rules, probable outcome and finality of those options. In Nichols
v. Keller,154 the court observed that the client will fail to ask relevant questions
regarding the existence of other remedies and necessarily relies upon the consulting attorney to describe the array of legal remedies available.155 Although
Nichols dealt with the attorneys duty to advise regarding both workers compensation claims and third party claims, its reasoning regarding the clients reliance
upon counsel for advice about alternative remedies and forums is equally applicable
to ADR procedures. Considering that mediators routinely report a settlement rate of
90% or higher, attorneys defending malpractice claims regarding inadequate ADR
advice would encounter great difficulty rebutting clients evidence that their claims
and defenses would have been settled by a mediator instead of being rejected by a
jury. This vulnerability to malpractice claims is accentuated when the attorneys
failure to advise the client of ADR options is accompanied by either a contingency
fee agreement raising the attorneys percentage as the case nears trial or an hourly
152
Breger, M. (2000). Should An Attorney Be Required To Advise a Client of ADR Options?

Georgetown Journal of Legal Ethics, 13, 427. See Fortin , K. (2008). The Servant Leader Where
the Modern Lawyer Should Be and How the Modern Lawyer Can Get There: How the Professionalism Paradigm Fueled by a Lawyers Ethical Obligation to Inform Clients about Alternative
Dispute Resolution Can Revive the Lawyers Sense of Self, Sense of Vocation, and Sense of
Service. Georgetown Journal of Legal Ethics, 22. http://ssrn.com/abstract=1208642.
153
Breger, M. (2000). Should An Attorney Be Required To Advise a Client of ADR Options?
Georgetown Journal of Legal Ethics, 13, 427.
154
19 Cal. Rptr. 2d 601 (Cal. Ct. App. 1993).
155
See In re Consupak, Inc. 87 B.R. 529 (Bankr. N.D. Ill. 1988) (attorney may need to proffer
advice because client may be unaware of ramifications of intended procedure).
235
fee agreement effectively reducing an attorneys total fee income in the event of an
early resolution.
6.4.2
Client Inadequately Apprised of Risk of an Adverse Verdict
Attorneys frequently underestimate the extent to which clients especially clients

for whom litigation may be a one-time experience rely on their settlement advice
and recommendations. Consequently, they may misinterpret the clients failure to
push for a settlement of the case as acquiescence in proceeding to trial when in fact
the client is awaiting explicit direction from her attorney. The fact that the client
must approve a settlement and ultimately must decide whether to settle or try the
case an ethical requirement known to the attorney but not always made clear to
unsophisticated clients may lead to major misunderstandings and unintended
impasses. The attorney prepares for trial absent the clients instruction to the
contrary, while the client assumes that settlement is inadvisable absent the attorneys advice to the contrary. Some litigation attorneys are hesitant to explore
settlement, lest the client perceive them as reluctant advocates who have lost
confidence in the case, while some clients assume that if the terms and timing of
a settlement were propitious, their attorneys would have so informed them.
When attorneys carefully express their settlement recommendations, clients are
susceptible to self-serving biases and may hear promising opinions even when the
attorney has assiduously attempted to present a balanced assessment. Rough ranges
of recovery may be recalled as minimum amounts by plaintiffs and maximum
amounts by defendants, attorney fee estimates may be remembered as caps, slight
chances may be heard as likelihoods, strong cautions may be perceived as legal
formalities, and singular evidentiary shortcomings may be regarded as ordinary
case problems. Believing that no case is perfect, clients may overlook the fact that
their case is not only imperfect but hopelessly flawed. To the extent attorneys
confirm their admonitions in writing, clients may not accord the attorneys prophylactic missive proper weight, believing it was written for the attorneys protection,
does not supercede what the attorney really told them, and, in any event, should not
be billed because it was for the attorneys protection, not the clients benefit. In light
of these enormous sources of misunderstanding, it is not surprising that adverse trial
outcomes provoke malpractice claims, the clients contending that they were inadequately advised regarding the risks of an adjudicated outcome.
A quintessential fact pattern is presented in Sauer v. Flanagan and Maniotis, P.A.156
The plaintiff, Susan Sauer, declined a $1,000,000 settlement offer in the underlying
action and, following a jury trial which resulted in a defense verdict, was held liable for
the defendants attorneys fees and costs. She claimed her attorneys told her she had an
open and shut case and there was no way I was going to lose this case. She admitted
156
748 So. 2d 1079 (Fla. Dist. Ct. App. 2000).
236
that the attorneys told her theres always that slight percentage that something screwy
is going to go on so I cant put it down in writing but I guarantee you this right now Im
ninety-nine percent sure that this case is going to be won. Mrs. Sauer testified that she
was going to win more than a million dollars and was never warned about the risk of
paying the other sides fees:
Sauer also claims that Maniotis [her attorney] never spoke to her about the risks of going to
trial or that she could get less than the million dollars. Their discussions regarding how
much she could win were always in the millions. Sauer further testified that when she asked
Maniotis whether she could be responsible for paying opposing counsels attorneys fees if
they lost, Maniotis told her there was definitely no way that would ever happen.
Her attorney denied that he had provided assurances of any trial outcome and
produced a letter he wrote to Mrs. Sauer when she rejected the defendants
$1,000,000 offer. The letter confirmed that they had discussed the pros and cons
of rejecting the offer and stated, You recognize that there are no guarantees.
Citing Ziegelheim v. Apollo, supra, for the proposition that litigants rely heavily
on the professional advice of counsel when they decide whether to accept or reject
offers of settlement, the Sauer court reversed the trials court summary judgment
in favor of the attorney. The court specifically rejected the attorneys judgmental
immunity defense and held that Mrs. Sauers testimony presented issues of fact as
to whether the attorneys fell below the standard of reasonable care in representing
their client and, in particular, were negligent in misleading her and failing to
properly advise and furnish her with the information necessary for her to make an
informed decision. Assuming that Mrs. Sauer and her attorney had good faith
differences regarding their communications, the overall result is a mutually catastrophic mistake, the client foregoing a $1 million settlement and the attorney being
subjected to a legal malpractice action.
The Sauer case is not unusual. Consider Charnay v. Cobert.157 In the underlying
action, the Charnays were defendants in a limited civil action filed by a neighbor.
The maximum recovery in limited civil actions, at that time, was $25,000.158
Allegedly acting upon their attorneys advice, the Charnays filed a cross-complaint
in the municipal court action against the neighbor. After extensive pre-trial discovery and motions and a 15-day trial, judgment was entered in favor of the neighbors
on their complaint and against the Charnays on their cross-complaint. Because an
attorneys fee clause was contained in the neighborhoods Conditions, Covenants
and Restrictions (CC&Rs), the court also ordered the Charnays to pay their adversarys attorneys fees $580,000. This attorneys fee award was in addition to the
$360,000 attorneys fee obligation the Charnays owed to their own attorney. To
pay the judgment and their own attorneys fees, the Charnays allegedly sold their
home, drained their personal savings accounts and depleted their retirement
income.
157

As the court notes, attorneys fees are not included in the $25,000 ceiling for limited civil
actions. 51 Cal. Rptr. 3d, at n.10.
158
6.5 Defenses to Settlement Malpractice Claims
237
Mrs. Charnay then filed a legal malpractice complaint, asserting her attorney
breached his duty of care to her by failing to properly advise her of her obligation
to contribute to the slope repair and to pay homeowner assessments required under
the CC&Rs and, most particularly, to advise her of the potential exposure to the
opposing parties attorneys fees if she did not prevail in the Aronoffs action or her
cross-action. She alleged that, had she been properly advised, she would have
settled the lawsuit for no more than the maximum $25,000 amount recoverable in a
limited civil action, far less than the $600,000-plus judgment (exclusive of interest)
entered against her at the end of her protracted litigation.
The lower court in Charnay sustained defendants demurrer to the Charnays
complaint, ruling that their claim that they would have obtained a more favorable
result absent defendants negligence was too speculative. The appellate court,
however, reversed the order dismissing the case following the sustaining of defendants demurrer. Its opinion initially sets forth the four elements of legal malpractice action: (1) the duty of the attorney to use such skill, prudence, and diligence as
members of his or her profession commonly possess and exercise; (2) a breach of
that duty; (3) a proximate causal connection between the breach and the resulting
injury; and (4) actual loss or damage resulting from the attorneys negligence.159
Holding that Charnay had met these pleading requirements, the Court stated:
Charnay need only allege that, but for Coberts malpractice, she would have obtained a
"more favorable result" than the $600,000-plus judgment ultimately rendered against her.
(Citation). Of course, whether Charnay will be able to prove the element of damages or any
of the other elements of her legal malpractice cause of action remains to be determined. At
this stage of the proceedings, however, Charnay has alleged facts sufficient to state a
professional negligence claim.
The result in Charnay is consistent with other cases declaring attorneys responsible
for inadequate advice regarding the potential for adverse trial outcomes.160
6.5
Defenses to Settlement Malpractice Claims
The commonly asserted legal defenses to settlement malpractice actions have been
inferentially identified in the previous sections regarding malpractice claims.
Because the analysis of defenses in that context is necessarily oblique and incomplete, this section focuses solely on the legal defenses and, in particular, the
limitations of those defenses. Seven specific defense arguments are discussed
briefly in this section: (1) the clients consent to the settlement bars a claim that
the settlement was inadequate; (2) the client ratified the settlement agreement by
accepting its benefits; (3) the client did not rely on the attorneys advice; (4) the
159
Id. at 478.
See Hold v. Manzini, 736 So. 2d 138 (Fla. Dist. Ct. App. 1999); Scognamillo v. Olsen, supra,
n. 147.
160
238
attorneys decision is protected by the judgmental immunity rule; (5) the client
cannot prove damages proximately caused by the attorneys alleged negligence; (6)
the negligence of another attorney was an intervening or superceding cause of any
damage; and (7) any malpractice award should be reduced by the amount of
attorneys fees the client otherwise would have paid.161 Although clients may regard
many of these defenses as technical, they are more accurately regarded as
limitations on liability imposed to assure proportionate compensation to clients
and to protect attorneys from malpractice judgments exceeding the amount of
clients actual losses. These defenses, moreover, delineate the respective responsibilities of attorneys and clients in making settlement decisions, informing clients
that perceived shortfalls in attorney performance are not always compensable.
6.5.1
The Clients Consent Bars a Challenge to the Adequacy

of the Settlement Agreement
The doctrine of judicial estoppel (also referred to as the doctrine of preclusion of

inconsistent positions and often confused with collateral estoppel and direct
estoppel) bars a party from taking inconsistent positions in legal proceedings.
Successful invocation of the doctrine requires five elements of proof: (1) the
same party has taken two or more positions; (2) the positions were taken in a
judicial proceeding; (3) the prior position taken by the party was adopted or relied
upon by the court; (4) the partys present position is wholly inconsistent with the
prior position; and (5) the prior position was not caused by fraud or mistake,
ignorance or other circumstance equitably excusing enforcement of the first position.162 In the context of negligent settlement advice claims, the doctrine of judicial
estoppel has been asserted to bar a party from acknowledging its understanding and
acceptance of a settlement in the first action and then challenging the settlement as
improvident or ill-advised in a second action.
The majority of courts that have considered the estoppel argument have declined
to bar settlement malpractice claims despite the clients earlier consent to the
settlement. The courts statement in Ziegelheim v. Apollo, exemplifies the majority
view: The fact that a party received a settlement that was fair and equitable does
not mean necessarily that the partys attorney was competent or that the party would
not have received a more favorable settlement had the partys incompetent attorney
been competent.163 Even the Pennsylvania Supreme Courts decision in
161
Numerous other defenses, of course, have been invoked in legal malpractice actions. Other
defenses include release, waiver, the absence of an attorney-client relationship, comparative
negligence, lack of standing and the statute of limitations.
162
See Jackson v. Los Angeles, 70 Cal. Rptr. 2d 96 (Cal. Ct. App. 1997).
163
Ziegelheim, supra n. 18, at 1305. See Bruning v. Law Offices of Ronald J. Palagi, P.C., 551 N.
W.2d 266 (Neb. 1996); Edmondson v. Dressman, 469 So. 2d 571 (Ala. 1985); McCarthy v.
Pedersen & Houpt, 621 N.E.2d 97 (Ill. App. Ct. 1993); Thomas v. Bethea, supra, n. 19; Baldridge
239
Muhammad v. Strassburger, McKenna, Messer, Shilobod & Gutnick, supra has

been narrowed to permit claims regarding an attorneys failure to advise a client of
well-established principles of law and the impact of a written agreement.164
Some courts, however, emphatically apply the estoppel doctrine. In McKay v.
Owens,165 for instance, the Idaho Supreme Court dismissed a clients malpractice
complaint on the basis of estoppel. The McKay court strongly criticized the
plaintiff, who had appeared in open court and accepted the settlement in the
underlying action: where the client knows of the claim for legal malpractice before
settlement occurs, but deceives the court by accepting the settlement, he or she will
not be permitted to benefit from that deception.166 A similar result occurred in
Douglas v. Parks,167 where the court affirmed a directed verdict for the defendant
attorney: plaintiff had the election to either rescind or affirm the settlement. He
chose to affirm it, and his election precludes a malpractice action against his
attorney in the original action.168
The doctrine of judicial estoppel also has been asserted as a defense where the
settlement was approved not only by the client but also by the court. This defense is
no more successful when both the court and the client approve the settlement than it
is when only the client approves the settlement. In Grayson v. Wofsey, Rosen,
Kweskin and Kurinsky, the court affirmed the jurys verdict against the defendant
attorney, although the judge in the underlying action had approved the disputed
settlement. Acknowledging that the judge in the underlying action was obligated to
conduct a searching inquiry to make sure that the settlement agreement is substantively fair and has been knowingly negotiated, the Grayson court decided that the
courts inquiry does not serve as a substitute for the diligent investigation and
preparation for which counsel is responsible.169 Courts in other cases have held the
estoppel defense to be inapplicable despite court approval of a minors settlement
and a workers compensation claim settlement.170
v. Lacks, 883 S.W.2d 947 (Mo. Ct. App. 1994); Grayson v. Wofsey, Rosen, Kweskin & Kuriansky,
supra n. 28, 646 A.2d at 199; Martin v. Burns, 429 P.2d 660 (Ariz. 1967); Davis v. Damrell, 174
Cal. Rptr. 257, (Cal. Ct. App. 1981); Berman v. Rubin, 227 S.E.2d 802 (Ga. Ct. App. 1976); Muse
v. St. Paul Fire & Marine Ins. Co., 328 So. 2d 698 (La. Ct. App. 1976); Meagher v. Kavli, 97 N.
W.2d 370 (Minn. 1959); Gimbel v. Waldman, supra n. 131; Hodges v. Carter, 80 S.E.2d 144 (N.C.
1954); Bill Ranch Chevrolet, Inc. v. Burnett, 555 So. 2d 455 (Fla. Dist. Ct. App. 1990); White v.
Jungbauer, 128 P.3d 263 (Colo. Ct. App. 2005).
164
McMahon v. Shea, 688 A.2d 1179, 1181 (Pa. 1997).
165
937 P.2d 1222, 1226 (Idaho 1997).
166
Id. at 1230.
167
315 S.E.2d 84, 86 (N.C. Ct. App. 1984).
168
See also Irby v. Richardson, 298 S.E.2d 452, 454 (S.C. 1982) (where client had a full and fair
opportunity to litigate the question of an attorneys negligence or effectiveness in a particular case,
he should be collaterally estopped to adjudicate the same issue in a subsequent legal malpractice
action.).
169
Grayson, supra n. 28, 646 A.2d at 200.
170
Cook v. Connolly, 36 N.W.2d 287 (Minn. 1985); Bruning v. Law Offices of Palagi, P.C., 551 N.
W.2d 266 (Neb. 1996).
240
6.5.2
The Clients Ratification of the Settlement Agreement
Clients contemplating a suit against their attorney for settlement malpractice may
be unaware that their acceptance of the benefits of the settlement may bar their
malpractice action. Under the principles of ratification, the clients knowledge and
acceptance of the settlement consideration may constitute ratification, a legally
effective approval of the actions criticized in the malpractice action. The ratification
defense, although superficially similar to the estoppel defense discussed in the
previous section, is distinct; its gravamen is the clients knowing receipt of tangible
benefits flowing from the settlement agreement.171
6.5.3
The Clients Failure to Prove Reliance

on the Attorneys Advice
The element of reliance undeservedly receives short shrift in attorney malpractice

opinions. In some cases, the clients reliance on the attorneys advice is treated as a
matter of law, not requiring independent proof, while in other cases proof of
reliance is subsumed under the causation element of proof, requiring unspecified
adjunctive evidence or argument. In Grayson v. Wofsey, Rosen, Kweskin and
Kuriansky,172 the court independently found that litigants rely heavily on the
professional advice of counsel when they decide whether to accept or reject offers
of settlement; and in Thomas v. Bethea173 the court reiterated that premise, stating
clients rely heavily on their lawyers recommendations regarding settlement.
Rejecting the defendants claim that a client should have to prove reliance on the
attorneys advice, the court in Baldridge v. Lacks stated:
We do not believe reliance should be an explicit element in plaintiffs case, as it would be in
an action for negligent misrepresentation. An explicit reliance element is unnecessary
because it is implicitly included in the causation element of the traditional malpractice
action. Whether and to what extent the client detrimentally relied on the attorneys advice is
a matter for argument.174
171
See L.F.S. Corp. v. Kennedy, 337 S.E.2d 209, 210 (S.C. 1985) (motion for non-suit properly
granted in attorney malpractice action where client ratified disputed settlement by accepting
financial benefits of settlement and seeking legal advice regarding enforcement of the court
order confirming the settlement terms); Cook v. Sur. Life Ins., supra n. 115, 903 P.2d at 716
(clients failure to object to attorneys action in settlement negotiations within a reasonable time
after becoming aware of it will be construed as a ratification of it); Brady v. Bryant, 894 S.W.2d
144 (Ark. 1995) (clients continued acceptance of payments tendered in accordance with settlement agreement constitutes ratification). Cf. Crowley v. Harvey & Battey, P.A., 488 S.E.2d 334
(S.C. 1997) (clients enforcement of settlement no bar to malpractice claim alleging negligence in
advising client rather than attorneys lack of authority to settle case).
172
Grayson, supra n. 28, 646 A.2d at 199.
173
174
Baldridge v. Lacks, supra n. 163, 883 S.W.2d at 954.
241
Practitioners reading the Baldridge decision may not know whether reliance is to be
proven as an implicit element of causation in the plaintiffs case in chief or is
relegated to closing argument.
A similar state of evidentiary disorientation might be induced by the courts
discussion of reliance in Ishmael v. Millington.175 Rejecting the McGregor-Modica
rule, which implies that the attorneys conduct does not as a matter of law cause the
clients harm where there is no reliance, the Ishmael court stated:
To pose lack of reliance as a fixed doctrinal demand invades the jurys province as the trier
of causation in fact; alternatively, such a demand rests upon the inacceptable proposition
that all reasonable men will agree in rejecting the attorneys conduct (including his inaction
and silence) as a cause of damage where the client relies on other sources of information.
The McGregor-Modica demand for reliance cannot be regarded as a fixed condition of
recovery or as authority for a finding of noncausality as a matter of law.
After reading Ishmael it remains unclear whether a plaintiff has the burden of
proving reliance, whether an absence or a diminished degree of reliance may affect
the damages claim but not necessarily bar a finding of liability and whether a
finding of causation is implicitly a finding of reliance as well.
The uncertain treatment of the reliance element in malpractice cases invites
further appellate court litigation and, pending judicial clarification, engenders
confusion in advising clients and trying cases. As a practical matter, the extent of
reliance varies significantly among clients, and many sophisticated clients alleging
malpractice in settlement advice cases may have considered but not relied on their
attorneys advice. Sophisticated clients often seek counsel from multiple attorneys,
the least significant of whom may be the attorney of record. In some circumstances,
moreover, the client may have greater experience in resolving a particular type of
case and therefore independently assesses the case merits and settlement prospects
in light of its own business objectives and risk-taking propensities; this may be
particularly true when the client has its own general counsel. The attorney of
records settlement recommendations may have no material effect on the client,
but if the clients independent business judgment and the attorneys disregarded
advice both turn out to be wrong, the client probably has a prima facie case of
professional negligence and the attorney has an unpaid statement at the very least.
6.5.4
The Judgmental Immunity Rule and the California

Model Limitations
The judgmental immunity rule is the most commonly cited defense in settlement
malpractice cases. As indicated by the discussion above regarding malpractice
claims in settled cases, this defense protects judgment calls about which reasonable
attorneys could differ. Although the judgmental immunity rule is intended to shield
175
50 Cal. Rptr. 592, 598 (Cal. Ct. App. 1966).
242
a broad range of decisions made by informed, conscientious attorneys, California

courts have narrowed the defense to a small spectrum of cases in which the law is
unsettled.
Law professor Mark Cooney describes the California discrepancy in his article,
Benching the Monday-Morning Quarterback: The Attorney Judgment Defense
to Legal Malpractice Claims:
California adds a twist to this body of rules, in essence cutting the rules scope in half.
Californias appellate courts adhere to a rigid two-pronged inquiry: (1) whether the state
of the law was unsettled at the time the professional advice was rendered; (2) and whether
that advice was based upon the exercise of an informed judgment. This model is
significant in that it fails to account for situations when the law is settled but lawyers are
nevertheless forced to make true strategy choices.176
The limited version of the judgmental immunity rule was reiterated in Village
Nurseries v. Greenbaum.177 In that case, the court confirmed the California rule
that the judgmental immunity doctrine does not apply unless an attorney establishes both (1) the unsettled state of the law that was the subject of professional
advice and (2) the attorneys efforts to perform reasonable research in an effort to
ascertain relevant legal principles and to make an informed decision as to a course
of conduct based upon an intelligent assessment of the problem.178 Thus, in
California, the judgmental immunity rule does not apply broadly to tactical litigation decisions but is limited to advice given with respect to an unsettled issue of
law, according to Professor Cooney.179
California attorneys, as a practical matter, are not afforded the same protections
under the judgmental immunity rule as attorneys in other jurisdictions. Strategic
and tactical decisions regarding settled and unsettled areas of law are generally
protected from malpractice liability in other states, but those decisions, if made by a
California attorney regarding a settled area of law, may not be protected by the rule.
Noting that the California model rejects the national rule that protects lawyers
from liability for purely tactical trial or litigation decisions, Professor Cooney
assesses the overall impact of this discrepancy: Thus, the California models
hallmark is the openly inconsistent treatment of legal-malpractice defendants
whose alleged misconduct was identical: making a poor strategy choice. Some
California attorneys accused of making poor strategy choices benefit from a
formidable judgmental immunity defense, while others facing the same allegations have no such defense.180
176

177
178
Id. at 562.
179
180
Ibid., 1100.
6.5.5
243
The Client Cannot Prove Damages Proximately Caused

by the Attorneys Negligence
Malpractice claims are often dismissed because clients cannot establish the element
of damages proximately caused by the attorneys negligence. Although reliable trial
court outcome data are not available, the appellate court decisions suggest that
malpractice plaintiffs may be more likely to lose cases for failure to prove damages
than failure to prove liability. Successful defense arguments regarding damages
center on two assertions: (1) the client did not sustain any legally cognizable
damages because the client, if a plaintiff in the underlying action, would not have
recovered any additional money or, if a defendant in the underlying action, would
not have lost less money, absent the alleged negligence; and (2) any damages
sustained as a result of the alleged negligence were not collectible. The courts
have consistently dismissed malpractice claims, regardless of the attorneys carelessness or recklessness, when the client cannot prove that she would have obtained a
better result through a settlement or a trial absent the attorneys alleged malpractice.
6.5.5.1
No Legally Cognizable Damages Cases
The necessity of proving damages proximately caused by the attorneys negligence

is consistently declared by the courts. As stated in Hinshaw, Winkler, Draa, Marsh
& Still v. Superior Court:
To prove damages in a legal malpractice action, plaintiff must show the probable value of
the lawsuit which he or she has lost. Plaintiff must also prove that careful management of
his claim would have resulted in a favorable judgment and collection of same. [Citation]
There is no damage in the absence of these latter elements.181
A malpractice plaintiff must prove not only that a better result would have been
obtained but she must also establish to a high degree of certainty that the result
would have been materially superior. The mere probability that a certain event
would have happened will not furnish the foundation for malpractice damages, the
court held in Barnard v. Langer,182 affirming a judgment of nonsuit on the ground
that plaintiffs damages were too speculative. Damages, the court stated in Barnard,
must be proven as a legal certainty, and nominal damages or speculative or
uncertain harm does not support a malpractice cause of action.183 The legal
principle that damages must be certain is reiterated in multiple decisions.184
181
58 Cal. Rptr. 2d 791, 795 (Cal. Ct. App. 1996).

1 Cal. Rptr. 3d 175, 182 (Cal. Ct. App. 2003).
183
Id. at 182.
184
Budd v. Nixen, 491 P. 2d 433, 436 (Cal. 1971) (client must suffer appreciable harm as a
consequence of his attorneys negligence); Sukoff v. Lemkin, 249 Cal. Rptr. 42, 45 (Cal. Ct. App.
1988) (possibility that client could have established a property interest is insufficient in attorney
182
244
Although the decisions dismissing malpractice claims frequently declare that the
plaintiff was not damaged by the attorneys alleged negligence, it would be more
accurate for the courts to state that the plaintiff failed to prove legally cognizable
damages. In many cases in which the courts find no damages, the plaintiff in fact
sustained some damage or at least alleges he sustained financial losses as a result of
the attorneys negligence. The courts indulge in a slight fiction when they fail to
distinguish between cases in which the plaintiff did not sustain damages and those
cases in which the plaintiffs damages do not satisfy certain legal criteria, e.g., too
speculative, not appreciable, too remote, nominal or otherwise barred by policy
considerations. The courts are not so much dismissing cases filed by overreaching,
disgruntled clients who had already recovered everything that competent counsel
would have delivered as dismissing potentially meritorious cases alleging damages
too speculative, intangible or inchoate to merit legal compensation. Clients in many
malpractice cases have been financially damaged by an attorneys negligence but
the damages either were not proximately caused by the attorneys negligence or the
means of proving the damages were lost as a result of the attorneys negligence. In
either event, the extent and effects of attorney malpractice are obscured when that
type of case is judicially demarcated as a no damages case, damages being
disavowed when they are merely disfavored.
malpractice action); Smith v. Haden, 872 F. Supp. 1040, 1044 (D.D.C. 1994) (plaintiff must show
that she had a good cause of action against the party she wished to sue; otherwise the plaintiff
loses nothing by the conduct of [her] attorney even though the latter was guilty of gross
negligence); Marshak v. Ballesteros, 86, Cal. Rptr. 2d 1, 4 (Cal. Ct. App. 1999) (proof of
attorney negligence is insufficient, plaintiff must also prove that his ex-wife would have settled
for less than she did, or that, following trial, a judge would have entered judgment more favorable
than that to which he stipulated); Orrick Herrington & Sutcliffe v. Superior Court (Malcolm),
supra n. 124, 132 Cal. Rptr. 2d 658, 661 (Cal. Ct. App. 2003) (to prevent speculation and
conjecture plaintiff must prove that, but for the negligence of the attorney, a better result could
have been obtained in the underlying action); Praxair, Inc. v. Hinshaw & Culbertson, 235 F.3d
1028, 1036 (7th Cir. 2000) (better representation would not have saved [client] from a judgment); Campbell v. Magana, 8 Cal. Rptr. 32, 36 (Cal. Ct. App. 1960) (alleged damage fell in the
category of speculation, conjecture, and contingency); Anthony v. Kaplan, 918 S.W.2d 174 (Ark.
1996) (client did not prove appeal would have been successful if timely filed); Loube v. Loube, 74
Cal. Rptr. 2d 906, 909 (Cal. Ct. App. 1998) (issue is not what might or even what would have
happened absent the alleged malpractice, but what should have happened); Carlton v. Quint, 91
Cal. Rptr. 2d 844, 849-850 (Cal. Ct. App. 2000) (sheer speculation that, absent attorneys
alleged negligence in failing to serve a defendant, action would have been brought to trial within
five-year period mandated by statute); Jalali v. Root, 1 Cal. Rptr. 3d 689, 696 (Cal. Ct. App. 2003)
(not even possible for a court to value the loss of the intangible psychic satisfaction of public
vindication); Thompson v. Halvonik, 43 Cal. Rptr. 2d 142, 145 (Cal. Ct. App. 1995) (plaintiff
must show appreciable and actual harm, mere possibility or even probability that damage will
result from wrongful conduct does not render it actionable); Ross v. Adelman, 725 S.W.2d 896,
897 (Mo. Ct. App. 1987) (record totally devoidof proof that result would have been any
different had respondent adequately prepared their defenses).
6.5.5.2
245
Non-Collectibility Cases
Proof of damages in a malpractice action conventionally requires a trial within a

trial. The plaintiff must prove what the recovery would have been absent the
defendant attorneys negligence, necessitating expert testimony regarding the merits of the underlying case and, in particular, the likely settlement or judgment in the
underlying action. The trial within a trial format, taken to its logical conclusion,
requires proof not only of the settlement or judgment that would have been but
also the amount of the settlement or judgment that actually would have been
collected. Otherwise, the plaintiff client would recover from the negligent attorney
an amount totally unrelated to the clients actual loss.185
The jurisdictions that have addressed the collectibility issue have concluded it
is a requisite element of a malpractice case.186 The courts, however, have split on
the issue of which party has the burden of proof, the majority concluding that the
burden is on the plaintiff since it is an element of proximate cause.187 A minority of
courts regard collectivity as an affirmative defense to be raised by the defendant
attorney, since the difficulty of proving collectivity may be the result of the
attorneys own delay and dereliction. In Smith v. Haden,188 for instance, the court
decided that the fairer approach is to wait until after malpractice has been proven
and then to impose on the negligent attorney the burden of going forward with
evidence to show that the damages imposed could not in fact have been recovered
from the wrongdoer in the original case.189
6.5.6
Another Attorneys Negligence as an Intervening

or Superseding Cause
Legal malpractice defense counsel also argue that, notwithstanding the defendant
attorneys alleged negligence, the actions of a different attorney were the proximate
cause of the clients alleged damages. In Musser v. Provencher,190 for example, the
client sued her attorney for malpractice, and her attorney, in turn, cross-complained
for indemnification against another attorney retained by the client. Although other
courts had barred such indemnification claims for policy reasons to avoid conflicts
185
Garretson v. Miller, 121 Cal. Rptr. 2d 317 (Cal. Ct. App. 2002).
See Kituskie v. Corbman, 714 A.2d 1027, 1029 (Pa. 1998) and cases cited therein (collectibility of damages in the underlying action should also be part of the analysis in a legal malpractice
action).
187
See Sitton v Clements, 257 F. Supp. 63 (E.D. Tenn. 1966), affd 385 F.2d 689 (6th Cir. 1967);
Campbell v. Magana, 8 Cal. Rptr. 32 (Cal. Ct. App. 1960).
188
872 F. Supp. 1040, 1054 (D.D.C. 1994).
189
See Kituskie v. Corbman, supra n. 186.
190
48 P.3d 408 (Cal. 2002).
186
246
of interest between attorneys and clients and to protect the confidentiality of

attorney-client communications the California Supreme Court held that these
public policy reasons do not obtain in this concurrent counsel case. The courts
have reached similar conclusions in other jurisdictions.191 A related issue is
whether an attorneys reliance on another attorneys investigation is justified and,
if justified, whether it is a complete defense to a malpractice action. In the limited
circumstance of associated counsel, the court in Jeansonne v. Bosworth192
answered those questions affirmatively, holding that an attorney receiving a case
from another attorney is entitled to place some reliance upon that attorneys
investigation.
6.5.7
Reduction of Malpractice Awards by the Amount

of Attorneys Fees the Client Otherwise Would
Have Paid the Attorney
If the purpose of a trial within a trial is to ascertain what the judgment and the
clients recovery should have been absent the attorneys negligence, is the defendant attorney entitled to reduce his liability by the attorneys fees that the client
would have paid had the attorney properly discharged his duties? The majority of
courts that have addressed this issue conclude that, for public policy reasons, the
costs that would have been incurred had the attorney met the standard of care
generally are not an offset.193 Allowing a deduction for attorneys fees from the
malpractice award, the courts reason, would penalize the client by forcing him to
pay for both the negligent attorney and the malpractice lawsuit attorney and would
compensate the attorney for negligently performed services. In refusing to offset the
fees the attorney would have earned had he performed completely, the court in
Kane, Kane & Kirtzer v. Altagen stated, crediting the defendant with a fee he failed
191
See Gursey, Schneider & Co. v. Wasser, Rosenson & Carter, 92 Cal. App. 4th 15 (2001)
(where the indemnity suit is between lawyers who concurrently represented the same client in the
same matter, and neither party still represents the client at the time of the indemnity suit, an
indemnity suit generally should be permitted to proceed); Crouse v. Brobeck, Phleger &
Harrison, 80 Cal. Rptr. 2d 94 (Cal. Ct. App. 1998) (indemnity action permissible by subsequent
attorney against former attorney); and Parler & Wobber v. Miles & Stockbridge, P.C., 756 A.2d
526 (Md. 2000) (clients former attorney allowed to sue clients successor counsel). Cf. Olds v.
Donnelly, 696 A.2d 633, 643 (N.J. 1997) (former attorney cannot sue successor attorney); Beck v.
Wecht, 48 P.3d 417 (Cal. 2002) (no fiduciary duty owed by associated counsel to co-counsel).
192
601 So. 2d 739, 741 (La. Ct. App. 1992).
193
See McCafferty v. Musat, 817 P. 2d 1039, 1045 (Colo. Ct. App. 1990); Andrews v. Cain, 406
N.Y.S. 2d 168 (N.Y. App. Div. 1978); Kane, Kane & Kritzer v. Altagen, 165 Cal. Rptr. 534 (Cal.
Ct. App. 1980); Togstad v. Vesely, Otto, Miller & Keefe, 291 N.W.2d 686 (Minn. 1980); Christy v.
Saliterman, 179 N.W.2d 288 (Minn. 1970); Winter v. Brown, 365 A.2d 381 (D.C. 1976); Duncan
v. Lord, 409 F. Supp. 687 (E.D. Pa. 1976).
6.6 Chapter Capsule
247
to earn not only rewards his wrongdoing but places on plaintiffs shoulders the
necessity of paying twice for the same service.194
6.6
Chapter Capsule
An increasing number of legal malpractice claims relate to settlement counseling

and decisions about whether to settle or try a case. Nearly one-half of all malpractice claims allege errors relating to the professional skills required in pre-trial case
evaluations, negotiations and settlements.
Clients asserting settlement malpractice claims generally fall into two categories: dissatisfied clients who resolved their cases by entering into settlement
agreements and later claimed the settlements were inadequate, coerced, unauthorized or otherwise egregious; and hapless clients who proceeded to trial and later
contended the case should have been settled. In the first category, the client claims
center on eleven different types of alleged attorney negligence: (1) the client was
inadequately advised regarding the settlement and trial prospects; (2) the attorney
coerced the client into settling the case; (3) the attorneys mistakes prevented the
plaintiff from obtaining a better settlement or prosecuting the case to trial; (4) the
attorneys delays caused the client to forego more favorable settlement terms; (5)
the attorney failed to disclose a conflict of interest, colluded with an adverse party
or otherwise defrauded the client; (6) the attorney did not transmit settlement
proposals; (7) the attorney failed to conduct adequate legal research, discovery or
investigation before the settlement; (8) the attorney was not authorized to consent to
the settlement agreement; (9) the settlement agreement was defectively drafted;
(10) the client did not understand the settlement agreement; and (11) the attorney
did not anticipate changes in the law or errors by the court. With respect to the
second category of claims, clients allege two basic deficiencies: the attorney was
remiss in failing to solicit a pre-trial settlement offer or effectuate a pre-trial
settlement; and the client was not adequately apprised of the risk of an adverse
verdict.
Commonly asserted defenses to settlement malpractice claims include: (1) the
clients consent to the settlement bars a claim that the settlement was inadequate;
(2) the client ratified the settlement agreement by accepting its benefits; (3) the
194
165 Cal. Rptr. 534, 538 (Cal. Ct. App. 1980), quoting Andrews v. Cain, (1978) 406 N.Y.S.2d
168 (N.Y. App. Div. 1978). See Lewis v. Uselton, 480 S.E.2d 856 (Ga. Ct. App. 1997) (attorney
who violates clients settlement instructions not entitled to a set-off of 40% contingency fee);
Campagnola v. Mulholland, Minion & Roe, 555 N.E.2d 611 (N.Y. 1990) (offset for contingent fee
due under retainer agreement impermissible). Cf. Titsworth v. Mondo, supra n. 57, 407 N.Y.S.2d
at 799; Moores v. Greenberg, 834 F.2d 1105 (1st Cir. 1987); Sitton v Clements, supra n. 188;
McGlone v. Lacey, 288 F. Supp. 662, 665 (D.S.D. 1968).
248
client did not rely on the attorneys advice; (4) the attorneys decision is protected
by the judgmental immunity rule; (5) the client cannot prove damages proximately
caused by the attorneys alleged negligence; (6) the negligence of another attorney
was an intervening or superceding cause of any damage; and (7) any malpractice
award should be reduced by the amount of attorneys fees the client otherwise would
have paid.
Chapter 7
Ethical Implications of Attorney-Client

Counseling and Decision Making
Your representative owes you, not his industry only, but his judgment; and he betrays
instead of serving you if he sacrifices it to your opinion.
Edmund Burke, Speech to the Electors of Bristol (November 3, 1774)
Attorneys may avoid legal malpractice liability for adverse case outcomes but
nevertheless find themselves ensnared in state bar disciplinary actions regarding
the client interactions that preceded the adverse outcomes. State bar disciplinary
agencies operate independently of the civil liability system, and although they share
some common concepts regarding professionally acceptable conduct, they differ
markedly in purposes, procedures and governing principles. Civil liability, consequently, does not delimit professional responsibility.
Although disciplinary actions in some jurisdictions require a higher degree of
attorney culpability or willfulness than legal malpractice actions, the principal difference between civil liability and ethics discipline is not the standard of proof but
rather the basis of liability.1 Legal malpractice actions require a breach of the standard
of care, while disciplinary actions require a violation of an ethical rule. Malpractice
actions also require legally cognizable damages, while disciplinary sanctions may be
imposed without a showing of client harm.2 Disciplinary actions, accordingly, do not
require proof of the standard of care exercised by reasonably careful attorneys; a violation of an ethical rule can be established without expert testimony; and an attorneys
See Disciplinary Bd. v. Dvorak, 580 N.W.2d 586 (N.D. 1998), citing Wolfram, C. (1986). Modern
Legal Ethics } 3.4, 109: the standards of proof in disciplinary proceedings vary, with some courts
using the preponderance of the evidence standard, others using the clear and convincing evidence
standard, and others using the evidence beyond a reasonable doubt standard. See also Munneke, G.,
& Davis, A. (1998). The Standard of Care in Legal Malpractice: Do the Model Rules of Professional
Conduct Define It? Journal of the Legal Profession, 22, 44 (In contrast to malpractice, the
disciplinary system is designed to protect the interests of the public and the integrity of the legal
profession from the misconduct of lawyers. Because law is a self-regulating profession, the integrity
and credibility of all lawyers is impugned by the unsanctioned conduct of any.)
2
See, for instance, Toledo Bar Assn. v. Bridgeforth, 531 N.E.2d 317 (Ohio 1988) (client not
harmed by attorneys delay).

249
250
7 Ethical Implications of Attorney-Client Counseling and Decision Making
license may be suspended or revoked without a showing of monetary damages sustained by the client. Sometimes the issues in legal malpractice and disciplinary actions
overlap and the evidence is duplicative; but attorneys who are confident that they
meet the standard of care practiced by their peers and do not cause financial damages
to clients should never assume their conduct also satisfies the pertinent ethical rules.
Consistent with this books emphasis on attorney-client decision making, this
chapter does not catalog all the rules of professional conduct that regulate attorneys lives but instead narrowly focuses on the rules most likely to affect settlement
negotiations and decision making. These rules are treated conceptually rather than
sequentially so that attorneys comprehend the underlying ethical principles in
the American Bar Associations Model Rules of Professional Conduct and the
states versions of these rules. After distilling the 58 rules in the Model Rules of
Professional Conduct into precepts governing attorney-client decision making,
eight principal duties emerge:
l
l
l
l
l
l
l
l
The duty to communicate all material facts and events to clients.

The duty to exercise independent judgment and render candid advice.
The duty to provide adequate advice to clients to enable them to make informed
decisions.
The duty to identify and protect clients with diminished capacity.
The duty to competently, diligently and expeditiously represent clients.
The duty to abide by client decisions.
The duty to prevent conflicts of interests in aggregate settlements.
The duty to be candid and truthful in communications with clients, opposing
counsel and the courts.
Although these rules appear to be elementary, attorneys acting with the best of
intentions may fail to appreciate their extensive scope and strict application to
interactions with clients, judges and opposing counsel. One of the most commonly
voiced reasons for violating these ethical rules is an attorneys misdirected effort to
protect a client from worry and anxiety. In explaining why she did not inform a client
that a judge had dismissed the clients case, for example, an attorney explained: If I
told the client, the client would get hysterical. I am reasonably confident that I will
get it straightened out.3 This attitude may protect the client from unwarranted
concern and the attorney from unwelcome scrutiny, but it disregards the attorneys
ethical duty to inform the client of all material developments in her case.
7.1
A Profile of Disciplinary Actions
Before analyzing the eight cardinal principles of ethical decision making, it is

instructive to dispel the belief that disciplinary actions are a remote consideration
for civil litigation attorneys, affecting only the stereotypical solo practitioner
3
Lerman, L. (1990). Lying to Clients. University of Pennsylvania Law Review, 138, 728.
7.1 A Profile of Disciplinary Actions
251
afflicted with substance abuse problems and unable to keep his hands off client trust
funds. In reality, disciplinary actions are a potential exposure for responsible,
experienced and occasionally fallible litigators acting in good faith consistent
with the attitudes and practices of their peers. An analysis of the type of behavior
sanctioned by state bar disciplinary boards and the demographic characteristics of
disciplined attorneys demonstrates that, in the words of one discipline defense
attorney, discipline is not just for solos and small firm practitioners anymore.4
Contrary to popular perceptions, most violations of ethical rules occur as a result of
unintentional, inadvertent or ignorant actions. In a study of 3,500 disciplinary cases
from all fifty states, law professors Patricia Hatamyar and Kevin Simmons found that
only 29% of disciplinary actions related to patently intentional misconduct (mismanagement or misappropriation of property 12%; fraudulent activity 9%; and
criminal activity 8%).5 Violations of rules often perceived by attorneys as being
advisory, ambiguous, or aspirational, constituted most of the disciplinary
actions. Ethical lapses related to the duties of competence and diligence, for example,
comprised 17% of all violations, and the broad category of communications with
clients comprised 14% of the total violations. Other non-intentional conduct included
conflicts of interest (4%), improper litigation conduct (5%) and fee disputes (6%).6 In
only 8% of all cases was harm to client cited as an aggravating factor, indicating
that, unlike legal malpractice actions, disciplinary actions may result in sanctions
without proof of a tangible loss to the client.7
The fact that ethical violations often entail the soft skills that underpin
attorney-client decision making is further evidenced by a study of complaints
against attorneys filed with the State Bar of California in 2007. The category
handling of client funds, which includes misappropriation and commingling,
represented only 12% of all complaints, while the categories performance and
duties to clients comprised 50% of all complaints.8 This allocation of allegation
types has remained relatively constant for five years, the percentage of performance allegations, for example, varying from 34% to 38% of all complaints filed
between 2003 and 2007.9
The profile of client complaints filed with the State Bar of California mirrors
attorneys inquiries to the State Bar Ethics Hotline, a toll-free confidential service
that responded to 20,992 calls from attorneys in 2007. Attorney questions related to
conflicts of interest, communications with clients and adverse parties, and client
4
Weinberg, D. (2008, Sept. 26). Discipline Is Not Just For Solos And Small Firm Practitioners
Anymore. State Bar Talks: New and Novel Ways to Lose Your License. 81st Annual Meeting of the
State Bar of California, Program #86.
5
Matamyar, P., & Simmons, K. (2004). Are Women More Ethical Lawyers? An Empirical Study.
Florida State University Law Review, 31, 811812.
6
Ibid.
7
Ibid., 815.
8
Cerro, J. (2008, Sept. 26). Top Problem Areas for Honest Lawyers. State Bar Talks: New and
Novel Ways to Lose Your License. 81st Annual Meeting of the State Bar of California, Program #86.
9
State Bar of California. (2008). 2007 Report on the State Bar of California Discipline System, 3.
252
confidential information comprised 31% of all inquiries, while questions regarding

a broad category of intentional misconduct (Misconduct/Moral Turpitude/Trial
Conduct) comprised only 8% of all inquiries.10 Like their clients, attorneys raise
performance and communication issues far more often than they cite archetypal
misconduct like misappropriation of client trust account funds. For litigation
attorneys whose image of a disciplined attorney is the shattered, beaten-down,
rummy lawyer, as played by Paul Newman in The Verdict, the data suggests this
image should be updated to include successful, confident attorneys who occasionally exercise poor judgment in representing clients.
Similarly unfounded is the perception that attorney inexperience the absence
of mature judgment honed by years of practical experience in attorney-client
relationships is the real culprit in disciplinary actions. An attorneys length of
experience actually is negatively correlated with disciplinary actions, professors
Hatamyar and Simmons found. A disproportionate number of disciplined attorneys have been in practice more than 25 years, they state, and disciplined
attorneys on average are older than attorneys generally and male disciplined
attorneys on average are older than female disciplined attorneys.11 The median
age of disciplined attorneys in 2000 was 50 for men and 46 for women. In cases
where the disciplinary agency found aggravating factors in meting out punishment, moreover, the attorneys had substantial experience as a lawyer.12 Practice,
it appears, does not always make the exercise of judgment perfect but may tend to
make it perfunctory.
7.2
The Duty to Communicate all Material Facts

and Events to Clients
Model Rule 1.4(a) lays the foundation of sound attorney-client decision making:
(a) A lawyer shall:
(1) promptly inform the client of any decision or circumstance with respect to
which the clients informed consent, as defined in Rule 1.0(e), is required
by these Rules;
(2) reasonably consult with the client about the means by which the clients
objectives are to be accomplished;
(3) keep the client reasonably informed about the status of the matter;
(4) promptly comply with reasonable requests for information; and
(5) consult with the client about any relevant limitation on the lawyers
conduct when the lawyer knows that the client expects assistance not
permitted by the Rules of Professional Conduct or other law.
10
Ibid., 31.
Matamyar, P., & Simmons, K. (2004). Are Women More Ethical Lawyers? An Empirical Study.
Florida State University Law Review, 31, 833.
12
Ibid.
11
7.2 The Duty to Communicate all Material Facts and Events to Clients
253
The underlying premise of Rule 1.4(a), as explained in Comment 1, is that reasonable communication between the lawyer and the client is necessary for the client
effectively to participate in the representation.
Under Rule 1.4(a), a lawyer must promptly consult with and secure the clients
consent prior to taking action regarding decisions to be made by the client; keep
the client reasonably informed about the status of the matter, such as significant
developments affecting the timing or the substance of the representation; and
promptly comply with a clients request for information concerning the representation.13 Specifically, attorneys must promptly return or acknowledge client telephone calls and inform the client of any offer of settlement, unless the client has
previously indicated that the proposal will be acceptable or unacceptable or has
authorized the attorney to accept or reject the offer.14 Although an attorney may
withhold information temporarily when the client would be likely to react imprudently to an immediate communication, the attorney is prohibited from withholding information to serve the lawyers own interests or convenience or the
interests or convenience of another person.15
The general principles in Rule 1.4(a) requiring thorough and ongoing attorneyclient communications are complemented by a precise proscription against false or
misleading communications in Rule 7.1: A lawyer shall not make a false or
misleading communication about the lawyer or the lawyers services. A communication is false or misleading if it contains a material misrepresentation of fact or
law, or omits a fact necessary to make the statement considered as a whole not
materially misleading. A truthful statement may be misleading if there is a
substantial likelihood that it will lead a reasonable person to formulate a specific
conclusion about the lawyer or the lawyers services for which there is no reasonable factual foundation.16
State disciplinary agencies interpret an attorneys duty to communicate broadly
and have imposed disciplinary sanctions in a wide range of cases. Conduct declared
to be violative of attorneys ethical duties include failures to return client phone
calls within periods ranging from five days to two years;17 retain an interpreter
when necessary to bridge a communication barrier with a client;18 inform a party
that an attorney does not represent him;19 advise an unrepresented spouse of a
13
A.B.A. Model Rules of Profl Conduct R. 1.4 cmts. 2-4.

A.B.A. Model Rules of Profl Conduct R. 1.4 cmts. 2, 4.
15
A.B.A. Model Rules of Profl Conduct R. 1.4 cmt. 7.
16
17
In re Matson, 512 S.E.2d 15 (S.C. 1999); In the Matter of Bach, 1 Cal. State Bar Ct. Rptr. 631,
642 (Review Dept 1991); Matter of Blankenburg, 694 P.2d 195 (Ariz. 1984); In Re Hull, 767 A.2d
197 (Del. 2001); In Re Hiner, Board Case No. 54 (2002), affd, 813 A.2d 1140 (Del. 2002).
18
New York City Bar Op. 1995-12 (1995). See Gold v. State Bar, 782 P.2d 264 (Cal. 1989)
(attorney may be required to employ interpreter or refer case to another attorney).
19
Butler v. State Bar, 721 P.2d 585 (Cal. 1986).
14
254
possible tort claim;20 respond to clients inquiries;21 provide advice or offer opinions even when not requested by the client;22 inform a client of statutory deadlines
and the consequences of missing deadlines;23 notify a client that his attorney did not
take action because the attorney deemed it futile or frivolous;24 inform clients of
court hearings and orders;25 advise a client of a potential conflict of interest;26
disclose payments from non-clients;27 inform clients of a law firm dissolution or the
departure or death of a paralegal or attorney;28 explain an attorney fee agreement
and the basis for payment;29 disclose that temporary attorneys will handle certain
motions and depositions;30 advise a client that his attorneys negligence constitutes
grounds for a malpractice claim against the attorney;31 and supervise administrative
staff, paralegals and attorneys to insure that clients are adequately informed of the
status of their cases.32 These examples are by no means exhaustive but rather
illustrate the wide scope of the duty to communicate.
Of particular concern to disciplinary agencies is an attorneys failure to inform
clients of settlement proposals. Because an attorney cannot accept a settlement
proposal without the clients consent, it is imperative that attorneys promptly
inform clients of settlement proposals and explain the content, conditions and
consequences of the proposal. Disciplinary agencies have not hesitated to revoke
or suspend an attorneys license to practice law when an attorney violates the duty
20
Meighan v. Shore, 40 Cal. Rptr. 2d 744, 754 (Cal. Ct. App. 1995). See Nichols v. Keller, 19 Cal.
Rptr. 2d 601 (Cal. Ct. App. 1993).
21
In re Riccio, 517 N.Y.S.2d 791 (N.Y. App. Div. 1987); In re Sousa, 915 P.2d 408 (Or. 1996);
Friedman v. State Bar, 786 P.2d 359 (Cal. 1990); Matter of Curtis, 908 P.2d 472 (Ariz. 1995).
22
Nichols v. Keller, supra n. 20.
23
Nassau County Bar Op. 94-1 (1994). In the Matter of Ward, 2 Cal. State Bar Ct. Rptr 47 (Review
Dept 1992); Lister v. State Bar, 800 P.2d 1232 (Cal. 1990).
24
Cuyahoga Bar Assn v. Britt, 846 N.E.2d 39 (Ohio 2006). In the Matter of Respondent C, 1 Cal.
State Bar Ct. Rptr. 439, 451 (Review Dept 1991); Board Cases Nos. 44 & 45, 197 (Office of
Disciplinary Counsel, Del., Nov. 25, 1997).
25
In re Fulton, 463 S.E.2d 319 (S.C. 1995). Cuyahoga Bar Assn v. Belkin, 748 N.E.2d 21 (Ohio
2001); Matter of Brady, 923 P.2d 836 (Ariz. 1996); Matter of Mulhall, 822 P.2d 947 (Ariz. 1992).
26
Cincinnati Bar Assn v. Schwartz, 660 N.E.2d 422 (Ohio 1996).
27
Office of Disciplinary Counsel v. Linick, 705 N.E.2d 667 (Ohio 1999).
28
Vollgraf v. Block, 458 N.Y.S.2d 437 (N.Y. Sup. Ct. 1982); Arizona Ethics Op. No. 99-14 (1999);
Florida Ethics Op. 86-5 (Aug. 1, 1986).
29
Matter of Chard, 881 P.2d 1150 (Ariz. 1994); Colorado Bar Assn (1997). Use of Conversion
Clauses in Contingent Fee Agreements (Formal Op. 100). In re Marriage of Pitulla, 559 N.E.2d
819 (Ill. Ct. App. 1990).
30
Illinois State Bar Assn Advisory Op. No. E92-07 (Jan. 22, 1993).
31
See Illinois State Bar Assn. Op. 88-11 (1988); Rhode Island Supreme Court Op. 94-70
(September 28, 1994) and Restatement (Third) of the Law Governing Lawyers, }31, cmt. c. (2000).
32
Matter of Struthers, 877 P.2d 789 (Ariz. 1994); Matter of Galbasini, 786 P.2d 971 (Ariz. 1990);
Columbus Bar Assn. v. Flanagan, 674 N.E.2d 681 (Ohio 1997); In the Matter of Ward, supra n.
23, 2 Cal. State Bar Ct. Rptr. at 204-205; Matter of Lenaburg, 864 P.2d 1052 (Ariz. 1993); Kaplan
v. Kentucky Bar Assn., 76 S.W.3d 921 (Ky. 2002).
7.2 The Duty to Communicate all Material Facts and Events to Clients
255
to communicate settlement offers or usurps the clients right to accept or decline an

offer.33 Attorneys, accordingly, have been disciplined for failing to transmit offers
deemed by the attorney to be ambiguous or invalid,34 failing to adequately explain a
settlement offer,35 and settling a case without the clients permission.36 Because
every attorney has an independent professional duty to inform clients of settlement
offers, an associate attorney who fails to transmit a settlement offer to a client,
despite express direction from a senior attorney to decline the offer, is subject to
disciplinary action.37
Although the Comments to Rule 1.4 state that an attorney is not required to
transmit a settlement proposal when the client has previously indicated that the
proposal will be acceptable or unacceptable or has authorized the lawyer to accept
or to reject the offer, attorneys assume an extraordinary risk in relying on this
exception to the general rule requiring transmission of the proposal.38 The better
practice is to transmit and advise clients regarding all settlement proposals, avoiding any misunderstanding. Even if a client has delegated settlement authority to the
lawyer, prudent practice dictates that the attorney expressly inform the client of the
proposal.39 In at least one jurisdiction, an express delegation of the clients right to
accept or reject a settlement offer was found to be unethical, even if the client
disappears or the lawyer is otherwise unable to communicate with the client.40
Violations of the general duty to communicate regularly and truthfully to clients
occur in seemingly routine conversations between attorneys and clients, and attorneys often overlook their own misconduct in these familiar interactions. As law
professor Lisa Lerman found in her study of attorney-client communications,
lawyers deceive their clients more than is generally acknowledged by the ethics
codes or the bar. In some cases the deception may be appropriate (if, for example, it
is used to protect a clients from injury); in other situations it is unethical and
exploitative.41 Professor Lerman asked attorneys to recall circumstances where
33
Matter of Tarletz, 789 P.2d 1049 (Ariz. 1990); Matter of Coburn, 832 P.2d 186 (Ariz. 1992);
Florida Bar v. Glick, 693 So. 2d 550 (Fla. 1997); Toledo Bar Assn v. Slack, 725 N.E.2d 63 (Ohio
2000); In re Ring, 464 S.E.2d 328 (S.C. 1995); Levin v. State Bar, 767 P.2d 689 (Cal. 1989). See
Burton v. Estrada, 501 N.E.2d 254 (Ill. App. Ct. 1986).
34
Miller v. Byrne, 916 P.2d 566 (Colo. Ct. App. 1995).
35
In Re Wolhar, Board Case No. 21 (1992), aff d, 670 A.2d 1341 (Del. 1995).
36
Levin v. State Bar, supra n. 33.
37
Philadelphia Bar Assn Profl Guidance Comm., Pennsylvania Ethics Op. 9425, (1994).
38
See Matter of Wolfram, 174 Ariz. 49, 847 P.2d 94 (Ariz. 1993).
39
Colorado Rules of Profl Conduct 1.4, cmt. 1 (in order to avoid misunderstandings and hence to
maintain public confidence in law and lawyers, a lawyer shall fully and promptly inform the client
of material developments in the matters being handled for the client).
40
Arizona Ethics Op. No. 06-07 (2006).
41
Lerman, L. (1990). Lying to Clients. University of Pennsylvania Law Review, 138, 669, fn. 37.
Lerman cites Burke, R. (1984). Truth in Lawyering: An Essay on Lying and Deceit in the
Practice of the Law. Arkansas Law Review, 38, to support her controversial findings: For years we
have winked, blinked and nodded at blatant, if not outrageous, lying and deception in pleading,
256
they or other attorneys had deceived clients, and she concluded some forms of
deceptions may be widespread. Common instances of deception included stories
about fees, exaggerations about an attorneys expertise or case results, mischaracterizations of mistakes made while representing clients and misstatements about
case status in general and settlement negotiations in particular.
Professor Lerman cites an attorneys explanation of his usual approach to case
evaluation as an example of a commonplace, deceptive communication:
In evaluating the value of a case I always lowball. Clients have misconceptions from the
newspapers. They think they won the lottery when they get hurt. . . . I understate what is
likely. Sometimes they get a lawyer who gives a higher number . . . If I tell them [honestly]
what I think the case is worth, then they think they got what was coming to them.42
Some attorneys in Professor Lermans study expressed a reluctance to share their

assessment of the case with the client, and one attorney stated that he almost
never confirms his estimate in writing. Another attorney explained that, in giving
an estimate to a client, one risked losing the client if the estimate was either too
high or too low.43 Although these practices might be regarded as somewhat
paternalistic attempts to protect the client from unrealistic expectations, Professor
Lerman argues the lawyer should disclose what she knows about the value of the
case and the uncertainty of the outcome. If the lawyer withholds any information,
then the conduct is deceptive.44
In addition to fibbing about the value of a case, some lawyers also misrepresent
the substance or progress of settlement negotiations. In Douglas Rosenthals study
of personal injury cases in 1974, one lawyer described how he modulated clients
expectations:
Theoretically, its unethical not to report accurately negotiations with an insurer to the
client. But you cant, and no lawyer does. You tell him about it in such a way that he is
prepared to be satisfied. Say the other side offers $5,000. You tell the client that they offered
$3,000. Hell say, Thats no good. You agree and say, casually, that you will try to get
$4,500 out of them which would be fine. Hes still not happy, but reluctantly agrees. Two
days later you call him back with the good news that you got him more than he expected,
$5,000. Now the client is prepared to be happy. You know what is a good settlement and
what he should take. If it is necessary to lie and cheat him to get him to accept whats good
for him you do it.45
The attorneys remarks in Rosenthals study were substantively replicated in Lermans

interviews, conducted about 16 years later. An attorney she interviewed acknowledged
he might say to a client that in dealing with his adversary, weve gone round and
negotiating, investigating, testifying and bargaining. In almost every aspect of our professional
practice, we have come to accept, in fact to expect, a certain amount of lying and deception.
42
Ibid., 734.
43
Ibid., 734735.
44
Ibid., 735.
45
Rosenthal, D. (1974). Lawyer and Client: Whos in Charge?, cited in Lerman, L. (1990). Lying
to Clients. University of Pennsylvania Law Review, 138, 700701.
7.3 The Duty to Exercise Independent Judgment and Render Candid Advice
257
round on this when in fact they had not.46 Another attorney conceded: I am not sure
I always accurately portray the negotiations [with opposing counsel] to the client.
I always portray that I had to fight for it. I have never called a client and said, My God,
he just gave in I didnt have to do anything.47
Whether these attorneys comments reflect adroit management of client expectations in a competitive business or a sanctionable violation of professional ethics is
partially answered in disciplinary proceedings like Matter of Varbel48 and In Re
Reid.49 In Varbel, the attorney was suspended from the practice of law for two years
for failing to promptly inform his client of a settlement offer and, following a
specific client inquiry about settlement offers, misrepresenting the offer to be
$10,000 when in fact it was $18,000. In Reid, an attorney was disciplined for telling
a client that the amount of the settlement was $6,000 when it was actually $9,000.
Ethical client relations, it appears, permit no margin for manipulating client expectations, spinning settlement offers and portraying the attorney as a masterful
negotiator when the performance is prosaic.
7.3
The Duty to Exercise Independent Judgment

and Render Candid Advice
Model Rule 2.1 imposes a comprehensive duty of professional independence,

breadth and candor: In representing a client, a lawyer shall exercise independent
professional judgment and render candid advice. In rendering advice, a lawyer may
refer not only to law but to other considerations such as moral, economic, social and
political factors, that may be relevant to the clients situation. These duties are
imposed despite their potential to offend, alienate or discourage clients, as
explained in Comment 1:
A client is entitled to straightforward advice expressing the lawyers honest assessment.
Legal advice often involves unpleasant facts and alternatives that a client may be disinclined to confront. In presenting advice, a lawyer endeavors to sustain the clients morale
and may put advice in as acceptable a form as honesty permits. However, a lawyer should
not be deterred from giving candid advice by the prospect that the advice will be unpalatable to the client.
Because clients are entitled to candid assessments, lawyers are required to disclose
information which the client finds unpleasant or objectionable and are prohibited
from allowing avarice or a desire for professional recognition to affect the advice
given to a client.50 At a minimum, lawyers must inform clients of all relevant
46
Ibid., 733.
48
897 P.2d 1337 (Ariz. 1995).
49
540 A.2d 754 (D.C. 1988).
50
47
258
considerations and the lawyer should initiate the decision making process if the
client does not do so.51
Consistent with the broad duties delineated in Rule 2.1, an attorney may be
required to render advice regarding non-legal considerations when practical considerations are predominant and purely technical legal advice would be inadequate.52 An attorney also may have an affirmative duty to proffer advice when a
lawyer knows that a client proposes a course of action that is likely to result in
substantial adverse legal consequences to the client.53 Broad discretion is accorded
to an attorney in initiating advice to a client when doing so appears to be in the
clients interests, although a lawyer ordinarily has no duty to initiate investigation
of a clients affairs or to give advice that the client has indicated is unwanted.54
When a competent attorney would recommend a consultation with a professional in
another field, an attorney is obligated to make such a recommendation and then
recommend a course of action in the face of conflicting recommendations of
experts.55
Although the language of Rule 2.1 is permissive in allowing attorneys to refer to
non-legal considerations, Comment 2 indicates that the omission of non-legal
factors may result in inadequate advice because moral and ethical considerations
impinge upon most legal questions and may decisively influence how the law will
be applied. This Comment and the other Comments to Rule 2.1 imply that a
lawyers general duties to provide competent representation and to communicate
with his client may require nonlegal counseling in certain instances.56 Read in
conjunction with Rule 1.4, discussed in the previous section, the Comments to
Rule 2.1 indicate that attorneys, in some cases, can properly communicate with
their clients only if they explain both the legal and nonlegal considerations at
issue.57 The Restatement (Third) of the Law Governing Lawyers, in fact, states
that counseling regarding nonlegal matters may be required: A lawyers advice on
significant nonlegal aspects of a matter may be particularly appropriate when the
client reasonably appears to be unaware of such considerations or their importance
or when it should be apparent that the client expects more than narrow legal
51
Office of Disciplinary Counsel v. Hardesty, 687 N.E.2d 417 (Ohio 1997).

53
54
55
56
Gantt, L. (2005). More Than Lawyers: The Legal and Ethical Implications of Counseling Clients
on Nonlegal Considerations. Georgetown Journal of Legal Ethics, 18, 372. Professor Gantt also
notes that attorneys should be cautious in providing nonlegal advice, as it may violate the duty of
competence under Rule 1.1.
57
Ibid., 375.
52
7.3 The Duty to Exercise Independent Judgment and Render Candid Advice
259
counsel. A lawyer is required to provide such assistance when necessary in the

exercise of care [to meet the standard of care and attorneys fiduciary duties].58
The practices of withholding negative opinions and molding legal advice to
satisfy clients business interests may violate an attorneys duties of candor and
professional independence. Both of these practices are described by the attorneys
interviewed in professor Lermans study. She found that many lawyers keep these
[negative] opinions to themselves and flatter their clients.59 As one attorney
explained, You dont bite the hand that feeds you.60 Because some attorneys
will not risk offending their clients, they refrain from providing an independent,
professional evaluation of a clients case:
Where a client has a really weak case . . . and I know its going to be an issue, instead of
saying to the client, well I think you really fucked up here, Ill say . . . I know this is going to
be an issue. How would you respond if you are asked this . . . without . . . accusing them of
misconduct. . . . Its important for most clients that their lawyers believe that what they did
was right.61
Another attorney said he would not tell a client that he disbelieved the clients
defense in an assault case. Yet another attorney acknowledged that a lot of times
he had agreed with opposing counsel that his own client was a jerk, overdemanding, and unreasonable, but he would not disclose those conversations to the clients
Im a member of [the clients] development team, he demurs.62
Displaying a similar lack of candor and independence, some attorneys consciously provide inadequate or incorrect legal advice, according to an associate in
a medium size firm:
I think misstatements of the intent of the law is [sic] one of the most prevalent and odious
forms of deception in the legal business. There are certain corporate practices perceived by
certain industries to be necessary to survival, and many of them are clearly illegal. . . .
Clients will shop around until they find a law firm that will sanction in an opinion letter
the doing of an illegal act. The letters are usually written with a thousand escape hatches: if
the facts are as you have presented them, blah, blah, but the bottom line message is, yes
you can do it even though the law is intended not to permit it. The firm writes the letter to
keep the faith of the large client and to keep the business coming.63
Both of these practices withholding negative assessments and smoothing legal

advice may violate the duty to provide candid and independent advice.64
Restatement (Third) of the Law Governing Lawyers, }20 cmt. h (2000), cited in Gantt, L. (2005).
More Than Lawyers: The Legal and Ethical Implications of Counseling Clients on Nonlegal
Considerations. Georgetown Journal of Legal Ethics, 18, 372.
59
60
Ibid., 735.
61
Ibid., 736.
62
Ibid., 736.
63
Ibid., 733734.
64
See Simon, W. (2007). The Market for Bad Legal Advice: Academic Professional Responsibility Consulting as an Example. Columbia Public Law Research Paper No. 07-158; Stanford
Public Law Working Paper No. 1025984. Available at SSRN: http://ssrn.com/abstract=1025984.
58
260
The lawyers job, explains former Yale Law School Dean Anthony Kronman, is
not merely to supply whatever means are needed to achieve the clients goals but
also to deliberate with the client and on his behalf about these goals.65 This duty
may not be compromised to meet the vicissitudes of a highly competitive market for
law firm clients.66
7.4
The Duty to Provide Adequate Advice to Enable Clients

to Make Informed Decisions
Model Rule 1.4, delineating the duty to communicate, includes both an obligation
to transmit case information to a client and a responsibility to obtain and clearly
explain information essential to client decision making. Under Rule 1.4(b), an
attorney shall explain a matter to the extent reasonably necessary to permit the
client to make informed decisions regarding the representation. The degree to
which a clients decision must be informed is guided, in some circumstances, by
the definition of informed consent in Rule 1.0(e): Informed consent denotes
the agreement by a person to a proposed course of conduct after the lawyer has
communicated adequate information and explanation about the material risks of
and reasonably available alternatives to the proposed course of conduct.67
The concept of an attorney acting as a passive, neutral conduit in settlement
negotiations, relegating evaluation of a settlement proposals terms to the client
after dutifully following the clients direction to commence litigation, is antithetical
to Rule 1.4. As a preliminary matter, an attorney representing a client in a case
likely to involve litigation may be required to inform the client of forms of dispute
resolution that might constitute reasonable alternatives to litigation.68 Once in
litigation, an attorney should explain the general strategy and prospects of success
and ordinarily should consult the client on tactics that are likely to result in
significant expense or to injure or coerce others.69 When a settlement proposal
has been received, the attorney should review all important provisions with the
client before proceeding to an agreement.70 The determination of whether information is important or material for a client to make an informed decision often
is resolved in favor of the client, as the attorney is in a superior position to discern
Le Mire, S. & Parker, C. The Client is King: Ethics in the Relationship between Large Law Firm
Lawyers and their Corporate Clients through the Eyes of In-House Counsel. U of Melbourne Legal
Studies Research Paper No. 362. Available at SSRN: http://ssrn.com/abstract=1285323.
65
Quoted in Akron Bar Assn v. Miller, 684 N.E.2d 288, 291 (Ohio 1997).
66
See Office of Disciplinary Counsel v. Hardesty, supra n. 51.
67
See A.B.A. Model Rules of Profl Conduct R. 1.4 cmt. 5.
68
69
70
Id.
7.4 The Duty to Provide Adequate Advice to Enable Clients to Make Informed Decisions
261
and ameliorate any misunderstandings.71 Thus, an attorney may breach her ethical
duties through a wide range of impermissible omissions and erroneous assumptions: failing to volunteer information,72 limiting advice to strictly legal issues,73
failing to explain the risks and benefits of alternative legal procedures,74 unilaterally deciding not to file an appeal because, in the attorneys opinion, it would be
fruitless,75 neglecting to update the client on the amount of attorneys fees as they
are incurred76 and making unilateral decisions that usurp the clients prerogatives.77
Although attorneys routinely obtain clients consent before undertaking major
legal procedures and accepting or rejecting settlement proposals, it is uncertain
whether the informed component of informed consent is fully realized. For many
contemporary practitioners, consent is more likely to connote liability protection
for the law firm than an explanation of alternatives and an assessment of risks for
the client, frustrating the underlying purpose of informed consent requirements.
Like the medical profession, the legal profession is assiduous in obtaining consent
but ambivalent about what constitutes informed consent. This ambivalence arises
because courts have not focused on the question of what standard governs disclosure, and to the extent standards have been enunciated, they are far from clear.78
One opinion, for instance, vaguely defines the scope of disclosure as embracing
material facts which, if known to the client, might well have caused him, acting as
a reasonable man, to alter his proposed course of conduct.79 Absent the prescient
ability to discern what might well have caused a client to elect a different course
of action, practitioners must err on the side of presenting comprehensive explanations and expansive options.
Cognizant of the imprecision and inconsistency in defining informed consent,
law professors have attempted to specify the governing principles. Law professor
Mark Spiegel emphasizes two fundamental duties: (1) the obligation to identify for
his client the alternative courses of action, the attorneys professional expertise
determining the range of options and the clients needs determining whether a
particular option should be communicated; and (2) the duty to evaluate the likely
71
Matter of Curtis, supra n. 21.

Nichols v. Keller, supra n. 20.
73
Office of Disciplinary Counsel v. Hardesty, supra n. 51.
74
Metrick v. Chatz, 639 N.E.2d 198, 201 (Ill. App. Ct. 1994); Columbus Bar Assn v. Flanagan,
supra n.33. See Kentucky Bar Assn E-404 (June 1998) (obtaining the full and informed consent
of other clients could prove problematic given the absence of benefit to such clients and the
potential effects of misuse or abuse of such information).
75
See Delaware Board Case Nos. 44 & 45 (Nov. 25, 1997).
76
Florida Bar v. Vining, 761 So. 2d 1044 (Fla. 2000).
77
See Matter of Shannon, 876 P.2d 548 (Ariz. 1994).
78
Spiegel, M. (1999). Lawyering and Client Decisionmaking: Informed Consent and the Legal
79
Spector v. Mermelstein, 361 F. Supp. 30, 40 (S.D.N.Y. 1972), modified on other grounds, 485
F.2d 662 (1970), cited in Spiegel, M. (1979). Lawyering and Client Decisionmaking: Informed
Consent and the Legal Profession. University of Pennsylvania Law Review, 128, 68.
72
262
consequences of each alternative, disclosing as clearly as possible the certainty or

uncertainty of his judgments.80 Another model of informed consent is proposed by
law professor Susan Martyn, who asserts that liability should be imposed when the
lawyer failed to disclose reasonably foreseeable choices of action in a manner
permitting the client to make a knowledgeable evaluation of the legal consequences
of the choices.81 Under her proposed standard, when the law is unclear, or when
the law is well-defined but different practical alternatives are available, the test of
any attorneys adequate performance does not depend upon the correctness of the
choice made, but rather upon who made the choice.82 Professor Martyns position
is premised on the conviction that clients are entitled to be fully informed of the
nature and course of the attorneys representation and must consent to decisions
that may affect the outcome of the case.83
7.5
The Duty to Identify and Protect Clients

with Diminished Capacity
Often neglected is the duty to observe clients behavior and determine whether their
capacity to make rational decisions is impaired. This duty and the attendant
responsibility to take protective action are described in Rule 1.14:
(a) When a clients capacity to make adequately considered decisions in connection with a representation is diminished, whether because of minority, mental
impairment or for some other reason, the lawyer shall, as far as reasonably
possible, maintain a normal client-lawyer relationship with the client.
(b) When the lawyer reasonably believes that the client has diminished capacity, is
at risk of substantial physical, financial or other harm unless action is taken and
cannot adequately act in the clients own interest, the lawyer may take reasonably necessary protective action, including consulting with individuals or
entities that have the ability to take action to protect the client and, in appropriate cases, seeking the appointment of a guardian ad litem, conservator or
guardian.
(c) Information relating to the representation of a client with diminished capacity is
protected by Rule 1.6. When taking protective action pursuant to paragraph (b),
the lawyer is impliedly authorized under Rule 1.6(a) to reveal information
about the client, but only to the extent reasonably necessary to protect the
clients interests.
80
Spiegel, M. (1979). Lawyering and Client Decisionmaking: Informed Consent and the Legal
81
Martyn, S. (1980). Informed Consent in the Practice of Law. George Washington Law Review,
48, 346.
82
Ibid., 348.
83
Ibid., 332.
7.5 The Duty to Identify and Protect Clients with Diminished Capacity
263
Rule 1.14, therefore, imposes upon every attorney a duty to appraise a clients
ability to understand, deliberate upon, and reach conclusions about matters affecting the clients own well-being.84
To assess a clients mental condition, the attorney may be required to employ
skills far beyond an ordinary attorneys experience and training. Comment 6 to
Rule 1.14 specifies the wide scope of the attorneys inquiry: In determining the
extent of the clients diminished capacity, the lawyer should consider and balance
such factors as: the clients ability to articulate reasoning leading to a decision,
variability of state of mind and ability to appreciate consequences of a decision; the
substantive fairness of a decision; and the consistency of a decision with the known
long-term commitments and values of the client. In appropriate circumstances, the
lawyer may seek guidance from an appropriate diagnostician. A clients mental
incapacity may be evidenced by (1) a pattern demonstrating an inability to
recognize as relevant to decisions of significance, facts or considerations that one
would expect reasonable and competent persons to recognize as relevant to such a
decision; (2) a pattern demonstrating an inability to reason with respect to
decisions that are relatively simple but personally important, in a way that is
internally consistent; or (3) a mental disease or condition that interferes with
perceptions or reasoning to such an extent as to raise a substantial likelihood
that decisions relating to matters of importance have been affected by the mental
disease or condition.85 As a practical matter, these psychological factors would be
difficult for most attorneys to evaluate while representing fully functional adults,
let alone mentally impaired clients, in litigation cases.
The prevalence of mental disease in the United States demonstrates that many
attorneys would be required to assess their clients mental capacity to make legal
decisions, even if the attorneys are uncertain about their own qualifications to make
that assessment. Nearly one-quarter of adult Americans have a diagnosable mental
disorder, and 5% of the population suffers from a major depressive disorder.
Bipolar disorder and schizophrenia affect 1.1% and 1.2% of the population, respectively.86 Among adults over 65 years of age, 10% are afflicted with Alzheimers
disease; for those over 85 years of age, nearly 50% suffer from the disease.87 That
these types of mental disorders may cause a client to be mentally impaired has been
recognized in multiple disciplinary actions and opinions involving depression,88
84
A.B.A. Model Rules of Profl Conduct R. 1.14 cmt. 1. See First Christian Church v. McReynolds,
241 P.2d 135 (Or. 1952).
85
In Re Gordy, 658 A.2d 613, 617 (Del. Ch. 1994), citing Del. Code Ann. tit. 12, }3901.
86
National Institute of Health. (2001). The Numbers Count: Mental Disorders in America (NIH
Publication No. 01-4584). Washington, DC: U.S. Government Printing Office. See U.S. Public
Health Service. (1999). Mental Health: A Report of the Surgeon General. Washington, DC: U.S.
Government Printing Office.
87
Alzheimers Association. (2005). Basics of Alzheimers Disease, 8.
88
Hill v. Hill, C.A. No. S-85-9-17C, 1989 Del. Fam. Ct. LEXIS 19 (Jan. 24, 1989).
264
threatened suicide,89 hostility,90 alcoholism,91 physical abuse,92 advanced age,93

substance abuse,94 unstable behavior,95 schizophrenia,96 Downs Syndrome,97
senility,98 and dependent personality disorder.99
When an attorney determines that a client is at risk of substantial physical,
financial or other harm unless action is taken, and that a normal client-lawyer
relationship cannot be maintained . . . because the client lacks sufficient capacity
to communicate or to make adequately considered decisions, a lawyer may take
protective measures.100 These measures include consulting with family members,
using a reconsideration period to permit clarification or improvement of circumstances, using voluntary surrogate decision-making tools such as durable powers of
attorney or consulting with support groups, professional services, adult protective
agencies or other individuals or entities that have the ability to protect the client.101
In weighing alternatives, an attorney should consider the clients best interests,
goals, values and wishes, intruding into the clients decision-making autonomy to
the least extent feasible.102 If necessary to protect the clients interests, an attorney
may consider appointment of a guardian, conservator or legal representative, but an
attorney generally should advocate the least restrictive action.103 In the specific
circumstance where a lawyer believes a client is acting irrationally in declining a
settlement offer, an attorney may petition the court for a personal representative.104
In any event, the attorney may not represent a third party in a proceeding for
appointment of a guardian for the client but must file the petition on her own
authority.105
One of the most controversial issues in seeking appointment of a representative
is whether the attorney may reveal the conditions constituting the grounds for the
petition. Information regarding the clients mental condition usually is acquired in
the course of representing the client and, therefore, is protected from disclosure by
89
Arizona Ethics Op. No. 91-18 (1991). Connecticut Informal Op. 00-5 (2002).
Connecticut Informal Op. 92-26 (1992).
91
Connecticut Informal Op. 98-17 (1998).
92
See Arizona Ethics Op. No. 200102.
93
In re Girard, 548 N.E.2d 1051 (Ill. 1989). ABA Formal Op. 95-393 (Apr. 24, 1995).
94
In re Ronell A., 52 Cal. Rptr. 2d 474. (Cal. Ct. App. 1996).
95
In re: Indira, C.A. No. 8901-NC, 1999 Del. Ch. LEXIS 117, at *1 (Del. Ch. June 4, 1999).
96
Office of Disciplinary Counsel v. Liviola, 763 N.E.2d 588 (Ohio 2002).
97
In re M.R., 638 A.2d 1274 (N.J. 1994).
98
Office of Disciplinary Counsel v. Slavens, 586 N.E.2d 92 (Ohio 1992).
99
In re R.S., 213 Cal. Rptr. 690 (Cal. Ct. App. 1985).
100
101
Id.
102
Id.
103
Id.
104
State Bar of Michigan Standing Comm. on Profl Ethics, RI-76.
105
ABA Formal Op. 96-404 (Aug. 2, 1996).
90
7.5 The Duty to Identify and Protect Clients with Diminished Capacity
265
the attorney-client privilege.106 Disclosure of that information could violate the

attorneys duty of confidentiality under Rule 1.6 and may result in the clients
involuntary commitment.107 Noting that the attorneys dilemma in these circumstances is an unavoidably difficult one, Comment 8 to Rule 1.14 states, When
taking protective action [consulting with individuals or entities and seeking the
appointment of a guardian ad litem, conservator or guardian], the lawyer is impliedly authorized to make the necessary disclosures, even when the client directs the
lawyer to the contrary.
The ABAs position, permitting limited disclosure of otherwise confidential
communications, has been adopted by many states. In Arizona, for instance, a
clients statement threatening suicide may be revealed to a mental health professional to facilitate an assessment of the clients ability to act in the clients best
interests.108 The disclosure, however, is limited to the extent reasonably necessary
to protect the clients interests.109 In Connecticut, a similar exception to the
attorney-client privilege is afforded where the client communicates an intent to
commit suicide.110 In less serious circumstances, where a client is intermittently
cogent and manifests deep hostility toward her attorney, accusing the attorney of
conspiring against her, the attorney should send a letter to the client stating his
evaluation of the case, urging the client to obtain new counsel, and notifying the
client of his intent to file a motion to withdraw as counsel.111 The least intrusive
measure is preferable, as the appointment of a guardian is a serious deprivation of
the clients rights and ought not be undertaken if other, less drastic solutions are
available.112
In California, which did not adopt Model Rule 1.14, an attorney is ethically
constrained from petitioning a court for appointment of a conservator for the client
and disclosing client confidences in connection with a proceeding for appointment
of a conservator. Both actions, according to California ethics opinions, would
violate an attorneys duties of loyalty and confidentiality and could constitute a
conflict of interest.113 San Diego County Bar Association Ethics Opinion No. 1978-1
is emphatic in this regard: Since the attorney could not either initiate the conservatorship proceedings, nor cause them to be initiated by other individuals, without
revealing the confidences of the client, the attorney could not initiate conservatorship
106
See Model Rule 1.6, prohibiting the disclosure of information relating to the representation of
a client except under specified conditions.
107
108
Arizona Ethics Op. No. 91-18. See Arizona Ethics Op. No. 90-12 and No. 200102.
109
Arizona Ethical Rule 1.14(c).
110
Informal Op. 00-5 (2000).
111
Informal Op. 92-26 (1992).
112
ABA Formal Op. 96-404 (Aug. 2, 1996).
113
See C.O.P.R.A.C. [Committee on Professional Responsibility and Conduct, a standing committee of the State Bar of California Board of Governors] Op. 1989-112, L.A. [Los Angeles
County Bar Association Professional Responsibility and Ethics Committee] Op. 450; S.D. [Legal
Ethics Committee of the San Diego County Bar Association] Op. 1978-1.
266
proceedings. This opinion asserts that California attorneys responsibilities vary

according to the intelligence, experience, mental condition or age of a client, and
attorneys representing incompetent clients must faithfully protect their confidences. If
the clients disability forces the attorney to make decisions for the client, the attorney
must consider all the circumstances and act with care to safeguard in advance the
interest of his client.114
7.6
The Duty to Competently, Independently, Diligently

and Expeditiously Represent Clients
Four rules, seemingly distinct, impose upon attorneys a comprehensive duty to

represent clients interests competently, independently, diligently and expeditiously. Model Rule 1.1 embodies the duty of competence: A lawyer shall provide
competent representation to a client. Competent representation requires the legal
knowledge, skill, thoroughness and preparation reasonably necessary for the representation. The duty of competent representation is augmented by Rule 3.1, which
prohibits an attorney from filing frivolous claims: A lawyer shall not bring or
defend a proceeding, or assert or controvert an issue therein, unless there is a basis
in law and fact for doing so that is not frivolous, which includes a good faith
argument for an extension, modification or reversal of existing law. Additional
duties of diligent and expeditious representation are declared in Rule 1.3, which
requires an attorney to act with reasonable diligence and promptness in representing a client, and Rule 3.2, which requires a lawyer to make reasonable efforts to
expedite litigation consistent with the interests of the client. In aggregate effect,
these rules establish a high standard of client care with little deference to the time
demands placed upon busy attorneys with heavy caseloads. Under these rules, the
clients right to attentive, efficient and proper legal representation is paramount, and
an attorneys personal convenience and difficulty in juggling multiple client commitments are inconsequential. Not surprisingly, these rules clash with the normal
operations of many law firms and the daily practices of time-constrained attorneys.
At a minimum, the duty of competence requires a reasonable inquiry into and
analysis of the factual and legal elements of the problem, and use of methods and
procedures meeting the standards of competent practitioners. It also includes
adequate preparation.115 The duty of competence, moreover, requires supervising
attorneys to monitor the performance of subordinate attorneys and may require a
subordinate attorney to submit work product for a supervising attorneys review
and make sure that the supervising attorney actually reviews the work product.116
114
San Diego County Bar Assn, Ethics Op. 1978-1, citing EC 7-12.
116
Beverly Hills Concepts, Inc. v. Schatz and Schatz, Ribicoff and Kotkin, 717 A.2d 724 (Conn.
1998). See A.B.A. Model Rules of Profl Conduct R. 5.1, 5.2.
115
7.6 The Duty to Competently and Expeditiously Represent Clients
267
Because the duty of competence is broad, sanctionable incompetence may include

the prosecution of a meritless claim for the purpose of eliciting a settlement
offer,117 procrastination,118 strategic delay neither communicated to nor
approved by the client,119 losing an insurance company check,120 filing a general
denial when the client has no defense to an action,121 a two-month delay in
transmitting a settlement check to a client,122 and the failure to inform a client of
the option of obtaining substitute counsel when the attorneys performance is
hindered by personal problems like divorce and sickness.123
The duty of competence is enhanced and reinforced by Rule 3.1s prohibition
against the prosecution or defense of a meritless claim and the assertion or denial of
an issue without a good faith basis in law and fact. Rule 3.1 confirms that attorneys
must exercise independent professional judgment in representing clients, and an
attorneys advocacy of frivolous claims will not be protected under the guise of
zealous advocacy. Adherence to client directions to pursue or defend a claim, which
the attorney knows or should know are not legally justified or factually supported,
may be grounds for disciplinary sanctions.124 Although plaintiffs counsel are
required to objectively evaluate their clients claims and any supporting documentation, the proscription against meritless claims extends to defense counsel as
well.125 Defense attorneys, therefore, may be disciplined for filing an answer before
interviewing the client, disputing facts without corroborating evidence, and asserting defenses devoid of legal authority tactics described by one former corporate
defense attorney as deflecting allegations by raising all sorts of misdirections,
counterpoints, and counterclaims, which did not necessarily have any basis in
fact.126
117
Matter of Bloomfield, 916 P.2d 224 (N.M. 1996).

Texas Disciplinary Rules of Profl Conduct R. 1.01 cmt. 7.
119
See Hartford v. State Bar, 791 P.2d 598 (Cal. 1990) and Calvert v. State Bar, 819 P.2d 424
(Cal. 1991).
120
In the Matter of Broderick, 3 Cal. State Bar Ct. Rptr. 138 (Review Dept 1994).
121
New York State Bar Assn Comm. on Profl Ethics, Op. No. 469, 1977 WL 15697 (June 7,
1977). See Malone v. Papesh, 627 N.E.2d 1211 (Ill. App. Ct. 1994).
122
Matter of Sorid, 597 N.Y.S.2d 125 (N.Y. App. Div. 1993).
123
See Matter of Sexton, 647 N.Y.S.2d 587 (N.Y. App. Div. 1996); Matter of Whitbread, 591 N.Y.
S.2d 117 (N.Y. App. Div. 1992).
124
See Fontaine v. Ryan, 849 F. Supp. 242 (S.D.N.Y. 1994); Rindner v. Cannon Mills, Inc., 486 N.
Y.S.2d 858 (N.Y. Sup. Ct. 1985); Bankers Trust Co. v. Hogan, 589 N.Y.S.2d 338 (N.Y. App. Div.
1992); Matter of Feeley, 859 P.2d 1329 (Ariz. 1993); Simmons v. City of Philadelphia, 471 A.2d
909 (Pa. Commw. Ct. 1984).
125
On plaintiff attorneys duty to refrain from following clients instructions and to withdraw from
the representation, see Cosenza v. Kramer, 200 Cal. Rptr. 18 (Cal. Ct. App. 1984).
126
See Chicago Title and Trust Co. v. Anderson, 532 N.E.2d 595 (Ill. App. Ct. 1988); Malone v. Papesh,
627 N.E.2d 1211 (Ill. App. Ct. 1994); In re Caruso, 542 N.E.2d 375, 378 (Ill. App. Ct. 1989). Attorney
quoted is James Jamie Perdigao, who pled guilty in 2008 to bank fraud, money laundering and tax
evasion, as described in McCollam, Douglas, (2009, June 1), The Boy Wonder, American Lawyer,
available at http://www.law.com/jsp/tal/PubArticleTAL.jsp?id=1202430856132&The_Boy_Wonder.
118
268
The duties to competently represent clients and independently assess a claims

legal merits and factual basis are complemented by the duty to act diligently and
expeditiously under Rules 1.3 and 3.2. These rules are underscored by the ABAs
recognition that dilatory practices bring the administration of justice into disrepute and perhaps no professional shortcoming is more widely resented than procrastination.127 Acknowledging that a clients legal position may be destroyed
by delay and even financially inconsequential delays may cause a client needless
anxiety and undermine confidence in the lawyers trustworthiness, the ABA
Model Rules condemn multiple postponements for the convenience of attorneys
and delays for the purpose of slowing or preventing a final resolution.128 The fact
that the bench and bar may tolerate dilatory conduct and delaying tactics is not a
justification for an attorney to engage in similar behavior.129
To fulfill the fundamental duty of competence, an attorney must manage his
time, control his workload and supervise other attorneys so that each matter can be
handled competently.130 Although a lawyer may exercise professional discretion
in determining the means by which a matter should be pursued, he must act with
reasonable promptness and take whatever lawful and ethical measures are
required to vindicate a clients cause or endeavor, despite personal inconvenience
to the lawyer.131 If necessary to achieve a manageable workload, an attorney may
be required to decline new cases and withdraw from existing cases.132 In the context
of settlements, an attorneys duty of diligence may be violated by delays in
distributing settlement funds to clients or third parties,133 failing to inform a client
of the attorneys conclusion that a case was meritless,134 ceasing work on a case
after settlement negotiations fail,135 neglecting to inform a client of settlement
proposals,136 failing to provide documentation to an insurance company to effectuate settlement,137 neglecting to inform a client that the attorneys assessment of the
case had changed,138 and falsely stating to a client that a settlement offer had been
127
A.B.A. Model Rules of Profl Conduct R. 1.3 cmt. 3; R. 1.3 cmt. 1; R. 3.2.
A.B.A. Model Rules of Profl Conduct R. 1.3 cmt. 3; R. 3.2 cmt. 1.
129
130
131
132
Arizona Ethics Op. No. 90-10 (1990). See Lopez v. Larson, 153 Cal.Rptr. 912 (Cal. Ct. App.
1979).
133
See Matter of Sorid, supra n.122; People v. Genchi, 824 P.2d 815 (Colo. 1992); Statewide
Grievance Comm. v. Wechsler, No. CV 960566673S, 1997 WL 321575 (Conn. Super. Ct. May 30,
1997).
134
Dayton Bar Assn v. Gerren, 853 N.E.2d 302 (Ohio 2006).
135
Laviano v. Statewide Grievance Comm., No. CV 990497413S, 2000 WL 1196427 (Conn.
Super. Ct. July 28, 2000).
136
People v. Holmes, 921 P.2d 44 (Colo. 1996).
137
Toledo Bar Assn v. McGill, 717 N.E.2d 709 (Ohio 1999).
138
Baranowski v. State Bar, 593 P.2d 613 (Cal. 1979).
128
7.6 The Duty to Competently and Expeditiously Represent Clients
269
received and then transmitting the attorneys check purportedly representing the
settlement offer.139
Although violations of the duty of diligence generally reflect neglect and delay,
the duty also may be violated by taking counter-productive, baseless or purposeless
action.140 Such actions violate the attorneys duty to use his best efforts and
reasonable speed to accomplish the purposes for which he was employed.141
Consequently, the failure to develop, implement and oversee any case strategy to
effectuate the clients objectives, resulting in redundant and inefficacious billings
by the responsible attorney and subordinate attorneys, may violate the duties of
diligent representation and conscientious supervision. The duty to supervise is
implicated because Rule 5.1 not only requires a supervising attorney to make
reasonable efforts to ensure that the other lawyer conforms to the Rules of Professional Conduct but also imposes personal responsibility for another lawyers
violations if the supervising attorney knows of the conduct at a time when its
consequences can be avoided or mitigated but fails to take reasonable remedial
action.142
Misdirected legal representation often is more damaging to the client than
neglect, as the substantive damage to the clients interests is compounded by
attorneys fees incurred for work of minor, inconsequential or negative value;
mere neglect offers the peculiar advantage of delivering similar results with
lower fees. Misdirected legal representation generally takes two forms, both of
which may be unintentionally promoted in law firms as successful rainmaking or
fee generation. In one form, the attorney does not have the subject matter expertise
necessary for the assignment, and the client incurs substantial fees for work neither
necessary nor appropriate to accomplish the clients objectives. An associate
attorney describes this type of problem at his firm in his response to Judge Harry
Edwards survey:
[B]ig law firms pull the wool over clients eyes and often agree to take on something they
know nothing about but which has come their way because of their panache. I have so often
seen situations where practicing lawyers dont know what they are doing. New associates
will then be set a task with totally ignorant and uninformed supervision where a lot is at
stake.143
139
In re Foley, 604 N.Y.S.2d 467 (N.Y. App. Div. 1993).

See Cuyahoga County Bar Assn v. Kelley, 822 N.E.2d 302 (Ohio 2004) (defective bankruptcy
schedule); Matter of Feeley, supra n. 124 (allegations in complaint that cannot be substantiated);
Matter of Righter, 975 P.2d 343 (N.M. 1999) (calling witnesses with no evidentiary value to
client); Matter of Coburn, supra n.33 (lis pendens filed but action did not concern title to real
property); Matter of Hanratty, 796 P.2d 112 (N.M. 1990) (attorney disregarded clients objectives
in deciding to convert bankruptcy case to Chapter 11).
141
Hartford v. State Bar, supra n.119, citing Van Sloten v. State Bar, 771 P.2d 1323 (Cal. 1989)
and Matthew v. State Bar, 781 P.2d 952 (Cal. 1989).
142
A.B.A. Model Rules of Profl Conduct R. 5.1(b), (c).
143
Edwards, H. (1992). The Growing Disjunction Between Legal Education and the Legal
Profession. Michigan Law Review, 91, 69.
140
270
In the second form, the responsible attorney has subject matter expertise but does
not manage the case to achieve the clients objectives. An attorney describes this
type of problem in an engagement involving eight attorneys working full-time and
producing multiple documents that would have no impact on the clients who were
paying for the work.144 After several months, the attorney says, disaster struck
when the clients came to the law firm:
It was like a customer going to the kitchen of a restaurant. They saw eight people running
around . . . [who] didnt have carefully defined ends and means. . . . They just saw what was
actually going on and they were utterly horrified. The shit hit the fan and there were lots of
fights. Ultimately, we had a reconciliation, and we kept doing the work. But not too long
after that . . . they said enough . . . no more . . . no more time billed to this matter.145
In both conditions lack of subject matter expertise and lack of case management
skills the attorneys duty to use his best efforts and reasonable speed to
accomplish the purposes for which he was employed is severely compromised.146
Both circumstances display a near total disconnect between the clients right to
diligent representation and expeditious resolution and the law firms performance.
This shortcoming also may constitute a violation of Rule 1.2, in that the clients
objectives in retaining the law firm bear little relation to the attorneys choice of the
means by which those objectives are to be achieved.
7.7
The Duty to Abide by Client Decisions
Rule 1.2 allocates legal decision-making authority between attorneys and clients,
assigning to clients decision-making authority to settle a case:
(a) Subject to paragraphs (c) and (d), a lawyer shall abide by a clients decisions
concerning the objectives of representation and, as required by Rule 1.4, shall
consult with the client as to the means by which they are to be pursued. A
lawyer may take such action on behalf of the client as is impliedly authorized to
carry out the representation. A lawyer shall abide by a clients decision whether
to settle a matter. In a criminal case, the lawyer shall abide by the clients
decision, after consultation with the lawyer, as to a plea to be entered, whether
to waive jury trial and whether the client will testify.
(b) A lawyers representation of a client, including representation by appointment,
does not constitute an endorsement of the clients political, economic, social or
moral views or activities.
(c) A lawyer may limit the scope of the representation if the limitation is reasonable under the circumstances and the client gives informed consent.
144
Ibid., 708.
146
Hartford v. State Bar, supra n.119.
145
7.7 The Duty to Abide by Client Decisions
271
(d) A lawyer shall not counsel a client to engage, or assist a client, in conduct that
the lawyer knows is criminal or fraudulent, but a lawyer may discuss the legal
consequences of any proposed course of conduct with a client and may counsel
or assist a client to make a good faith effort to determine the validity, scope,
meaning or application of the law.
At the beginning of a case, a client may effectively delegate its decision-making
authority to an attorney by authorizing the attorney to take specific action on the
clients behalf without further consultation.147 Absent a material change in circumstances, and provided that the client is not mentally impaired and the attorney
has fulfilled her ability to communicate with the client under Rule 1.4, discussed
above, a lawyer may act in accordance with the clients prior authorization.148 The
clients authorization, however, may be revoked at any time.149
Rule 1.2 neatly and somewhat impractically distinguishes client decisionmaking responsibilities from attorneys discretionary choices. Although the clients
sole authority to settle a case is emphatically clear, the attorneys authority to take
such action as is impliedly authorized to carry out the representation is manifestly
ambiguous. The apparent impracticalities and ambiguities in Rule 1.2 are not erased
by Comment 2:
Clients normally defer to the special knowledge and skill of their lawyer with respect to the
means to be used to accomplish their objectives, particularly with respect to technical, legal
and tactical matters. Conversely, lawyers usually defer to the client regarding such questions
as the expense to be incurred and concern for third persons who might be adversely affected.
Because of the varied nature of the matters about which a lawyer and client might disagree
and because the actions in question may implicate the interests of a tribunal or other persons,
this Rule does not prescribe how such disagreements are to be resolved.
Although Comment 2 urges attorneys and clients to seek a mutually acceptable

resolution of disagreements about legal representation, it ultimately adopts the
my way or the highway approach to conflict resolution. If a fundamental
disagreement between an attorney and a client cannot be resolved, Comment
2 states that the attorney may withdraw from the representation or the client may
discharge the attorney.150
State court cases and disciplinary agency opinions help to clarify the respective
responsibilities of clients and their attorneys. Attorneys generally are afforded wide
discretion in making tactical decisions, which may include selection of evidence,151
presentation and order of witnesses,152 determination of issues to raise on appeal,153
147

149
150
151
See State v. Williams, 794 N.E.2d 27 (Ohio 2003); United States v. Morrison, 98 F.3d 619 (D.C.
Cir. 1996), cert. denied, 117 S. Ct. 1279 (1997).
152
Nahhas v. Pac. Greyhound Lines, 13 Cal. Rptr. 299 (Cal. Ct. App. 1961).
153
See Jones v. Barnes, 463 U.S. 745 (1983).
148
272
drafting of pleadings,154 and objections to the admission of evidence.155 Clients, for

their part, have an exclusive right to accept or reject a settlement, even if the
settlement affects the attorneys payment.156 The clients right to consent to a
settlement cannot be delegated to an attorney in some jurisdictions, and an attorney
cannot require a client to agree in advance on acceptable settlement terms.157 An
attorney, moreover, cannot require a client to obtain his prior approval before
accepting a settlement proposal.158 Other substantive or dispositive decisions,
such as filing and dismissal of an appeal,159 incurring expenses,160 submitting a
case to binding arbitration,161 splitting attorneys fees with or associating other
counsel,162 waiving a statute of limitations,163 forgoing rent payments,164 and
payment of third-party liens,165 are within the clients purview.
7.8
The Duty to Prevent Conflicts of Interest

in Aggregate Settlements
Model Rule 1.8(g), the aggregate settlement rule, specifies disclosure and consent
requirements where an attorney represents multiple clients: A lawyer who represents two or more clients shall not participate in making an aggregate settlement of
the claims of or against the clients, or in a criminal case an aggregated agreement as
to guilty or nolo contendere pleas, unless each client gives informed consent, in a
writing signed by the client. The lawyers disclosure shall include the existence and
nature of all the claims or pleas involved and of the participation of each person in
the settlement. Elementary on its face, this rule has proven problematic to
154
Buehman v. Smelker, 68 P.2d 96 (Ariz. 1937).

United States v. Morrison, supra n.151.
156
Evans v. Jeff D., 475 U.S. 717 (1986); In re Nugent, 624 A.2d 291 (R.I. 1993); Garn v. Garn,
745 P.2d 604 (Ariz. Ct. App. 1987); In the Matter of A. Indeglia, 765 A.2d 444 (R.I. 2001); Trans
World Airlines, Inc. v. Summa Corp., 394 A.2d 241 (Del. Ch. 1978); Chiapetti v. Knapp, 314 N.
E.2d 489 (Ill. App. Ct. 1974); Sampson v. State Bar, 524 P.2d 139 (Cal. 1974). Cf. Collins v.
Bisson Moving & Storage, Inc., 504 S.E.2d 347 (S.C. Ct. App. 1998).
157
In re Grievance Proceeding, 171 F. Supp. 2d 81 (D. Conn. 2001); District of Columbia Ethics
Op. 289 (1999).
158
Charles Gruenspan Co., L.P.A. v. Thompson, 2003 Ohio 3641, 2003 Ohio App. LEXIS
(Cuyahoga).
159
In re Sherburne, 492 N.Y.S.2d 349 (N.Y. Surr. Ct. 1985); Rhode Island Ethics Op. 90-3 (1990);
Silver v. State Bar, 528 P.2d 1157 (Cal. 1974); Bradshaw v. State, 806 A.2d 131 (Del. 2002).
160
See Kentucky Rules of Profl Conduct 1.2 cmt. [2].
161
Alvarado Community Hosp. v. Superior Court, 219 Cal. Rptr. 52 (Cal. Ct. App. 1985).
162
See Henshall v. Coburn, 169 P. 1014 (Cal. 1917); Ohio Rules of Profl Conduct R. 1.5(e)(2).
163
See In re Horton, 813 P.2d 1335, 1342 (Cal. 1991); Carroll v. Abbott Labs., Inc., 654 P.2d 775
(Cal. 1982); People v. Sifford, 617 N.E.2d 499 (Ill. App. Ct. 1993).
164
Gordon v. Town of Esopus, 486 N.Y.S.2d 420 (N.Y. App. Div. 1985).
165
Rhode Island Ethics Op. 96-33 (1996).
155
7.8 The Duty to Prevent Conflicts of Interest in Aggregate Settlements
273
implement and easy to violate. In attempting to accommodate the interests and

protect the confidences of multiple clients, attorneys inadvertently run afoul of Rule
1.8 and often fail to comprehend its intricate disclosure requirements. As the ABA
delicately and understatedly observes, Unique and difficult conflicts between the
clients and their lawyer, and between the clients themselves, are possible.166
Under ABA Formal Opinion 06-438, the aggregate settlement rules apply when
two or more clients who are represented by the same lawyer together resolve their
claims or defenses or pleas. The rule applies even if the attorneys clients are
represented in separate cases or some of the attorneys clients are not participating in
the proposed settlement. (The rule, however, does not apply to derivative lawsuits
and certified class actions). The scope of Rule 1.8 is illustrated by the example cited
in Formal Opinion 06-438: the rule would apply to claims for breach of warranties
against a home builder brought by several home purchasers represented by the same
lawyer, even though each claim is filed as a separate lawsuit and arises with respect
to a different home, a different breach, and even a different subdivision.
The specific disclosure and consent requirements of Rule 1.8 are described
below by Eileen Libby, associate ethics counsel for the ABA Center for Professional Responsibility. Practitioners will immediately recognize the potential client
confidentiality issues that follow from compliance with Rule 1.8 and Formal
Opinion 06-438. Ms. Libby explains that, under Rule 1.8 and Formal Opinion 06438, an attorney must disclose the following information at a minimum:
l
l
l
The total amount of the aggregate settlement or the result of the aggregated
agreement.
The existence and nature of all claims, defenses, or pleas involved in the
settlement or aggregated agreement.
The details of every other clients participation in the settlement or agreement.
The total fees and costs to be paid to the lawyer if they are to be paid from the
proceeds of the settlement or by an opposing party.
The method by which costs are to be apportioned.167
Because the disclosures required under Formal Opinion 06-438 often entail the
disclosure of client information deemed confidential under Rules 1.6 and 1.8, a
lawyer must first obtain informed consent from all his clients to share confidential
information among them. The best practice would be to obtain this consent at the
outset of representation if possible, or at least to alert the clients that disclosure of
confidential information might be necessary in order to effectuate an aggregate
settlement or aggregate agreement.168 Additional recommended disclosures under
166
A.B.A. Formal Op. 06-438 (2006).

Libby, E. (2006, July). Were in This Together: Lawyers Should Heed Client Consent Rules in
Reaching Aggregate Settlements. ABA Journal Law News Now.
168
A.B.A. Formal Op. 06-438, supra n. 166.
167
274
Formal Opinion 06-438 include the facts that one clients refusal to consent to a
proposed settlement could result in the termination or withdrawal of the proposal,
and the attorney-client privilege may not protect communications between a single
client and the attorney with respect to issues of commonly given advice.
William Robinson, president of the structured settlement company, Strategic
Settlements, offers some practical advice for complying with Rule 1.8. After a
defendant makes a settlement offer, Mr. Robinson recommends sending a written
communication to clients that describes the aggregate offer, explains how the
settlement proceeds would be allocated for each client, and, if the settlement
proceeds will not be shared equally, shows the rationale for and amounts of
disparate allocations. In a large products liability case, this information could be
presented in a spreadsheet summarizing the clients injuries and the intended
monetary allocation for each client. Mr. Robinson also advises that a mediator,
consultant or other neutral party, not motivated to complete the settlement to obtain
a fee award, prepare the detailed disclosure. Absent written compliance with the
disclosures mandated by Rule 1.8(g), he warns, your previously well-controlled
client could emerge from the next cocktail party with a new lawyer complaining
about how inadequate that clients share of the settlement was. Your attorney fee
could become the source of money used by the court to restore to the client the
perceived shortfall.169 And fee forfeiture may be the least of a non-compliant
attorneys concerns; disciplinary sanctions have been imposed for violations of the
aggregate settlement rule.170
7.9
The Duty to be Candid and Truthful in Communications

with Clients, Opposing Counsel and the Courts
An attorneys duty to communicate truthfully is not limited to attorney-client

communications; under Model Rules 3.3, 3.4, 4.1, 5.2 and 8.4, the duty extends
to judges, arbitrators in a binding arbitration, legislative bodies and administrative
agencies acting in an adjudicative capacity, opposing counsel and other third
parties. While preserving an attorneys obligation to act as a forceful and persuasive
advocate on behalf of her client, these rules circumscribe false representations and
evidence. As explained in Comment 1 to Rule 3.3, although an attorney in an
adversary proceeding is not required to present an impartial exposition of the law or
to vouch for the evidence submitted in a case, the lawyer must not allow the tribunal
to be misled by false statements of law or fact or evidence that the lawyer knows to
be false. In the context of pre-trial settlement negotiations with opposing counsel,
these rules foster a near-priggish image of attorneys and belie the concept of cagey
169
Robinson, W. (2005, April/May). Settlement Tools and Tips. GP/Solo Magazine.

See Butler County Bar Assn v. Barr, 591 N.E.2d 1200 (Ohio 1992). Cf. In re an Anonymous
Member of the South Carolina Bar, 377 S.E.2d 567 (S.C. 1989).
170
275
negotiators outwitting their adversaries through strategic misstatements and skillful

obfuscation.
Rule 3.3 imposes upon attorneys a broad duty to communicate truthfully and
prevent the introduction and consideration of false evidence before any tribunal:
(a) A lawyer shall not knowingly:
(1) make a false statement of fact or law to a tribunal or fail to correct a false
statement of material fact or law previously made to the tribunal by the
lawyer;
(2) fail to disclose to the tribunal legal authority in the controlling jurisdiction
known to the lawyer to be directly adverse to the position of the client and
not disclosed by opposing counsel; or
(3) offer evidence that the lawyer knows to be false. If a lawyer, the lawyers
client, or a witness called by the lawyer, has offered material evidence and
the lawyer comes to know of its falsity, the lawyer shall take reasonable
remedial measures, including, if necessary, disclosure to the tribunal. A
lawyer may refuse to offer evidence, other than the testimony of a defendant in a criminal matter, that the lawyer reasonably believes is false.
(b) A lawyer who represents a client in an adjudicative proceeding and who knows
that a person intends to engage, is engaging or has engaged in criminal or
fraudulent conduct related to the proceeding shall take reasonable remedial
measures, including, if necessary, disclosure to the tribunal.
(c) The duties stated in paragraphs (a) and (b) continue to the conclusion of the
proceeding, and apply even if compliance requires disclosure of information
otherwise protected by Rule 1.6.
(d) In an ex parte proceeding, a lawyer shall inform the tribunal of all material facts
known to the lawyer that will enable the tribunal to make an informed decision,
whether or not the facts are adverse.
The term tribunal includes a court, an arbitrator in a binding arbitration proceeding, or a legislative body, administrative agency, or other body acting in an
adjudicative capacity.171 Tribunal also includes an ancillary proceeding conducted pursuant to the tribunals adjudicative authority, such as a deposition.172
Court-supervised settlement negotiations are considered as ancillary proceedings to
which Rule 3.3 applies.173 The issue of whether Rule 3.3 and its state counterparts
would apply to court-ordered mediation has not been resolved in all jurisdictions.174
171
Rule 1.0(m) states: A legislative body, administrative agency, or other body acts in an
adjudicative capacity when a neutral official, after the presentation of evidence or legal argument
by a party or parties, will render a binding legal judgment directly affecting a partys interests in a
particular matter.
172
A.B.A. Model Rules of Profl Conduct R. 3 cmt. 1. Cf. Flynn v. Edmonds, 602 N.E.2d 880, 889
(Ill. App. Ct. 1992).
173
ABA Formal Op. 06-439 (2006) and ABA Formal Op. 93-370 (1993).
174
See Romano Brothers Beverage Co. v. DAgostino-Yerow Assoc., Inc., 1996 U.S. Dist. LEXIS
10730, at *57 (N.D. Ill. 1996) (term tribunal encompasses entire judicial process).
276
The duty of truthfulness extends not only to affirmative misrepresentations but

also encompasses failures to disclose material facts and adverse legal authorities in
connection with court-supervised settlements and motions to approve settlements.
An attorneys license to practice law, for instance, was suspended following his
denial that a judge ordered his client to personally appear at mediation and his claim
that he did not receive a minute order also requiring the client to appear at the
mediation.175 Attorneys also have been disciplined for failing to disclose important
facts such as the death of a party,176 a collateral agreement with the client under
which the attorney would receive a higher fee award than the amount stipulated in
the settlement agreement,177 the existence of a statute which limits an attorneys fee
recovery,178 and an agreement to try a case without objection to evidence.179 The
duty of truthfulness to a tribunal is paramount and has been considered to supersede
the attorneys duty to preserve client confidences.180
The duty of truthfulness to a tribunal, under Rule 3.3, is complemented by a duty
of truthfulness toward third parties under Rule 4.1. On its face Rule 4.1 prohibits
both misrepresentations and failures to disclose material facts in connection with
settlement negotiations:
In the course of representing a client a lawyer shall not knowingly:
(a) make a false statement of material fact or law to a third person; or
(b) fail to disclose a material fact to a third person when disclosure is necessary to
avoid assisting a criminal or fraudulent act by a client, unless disclosure is
prohibited by Rule 1.6.
A misrepresentation for purposes of Rule 4.1 can occur if the lawyer incorporates or affirms a statement of another person that the lawyers knows is false.
Misrepresentations can also occur by partially true but misleading statements or
omissions that are the equivalent of affirmative false statements.181 And third
person, as used in Rule 4.1, includes opposing counsel.182
175
Bach v. State Bar, 740 P.2d 414 (Cal. 1987).

In the Matter of Jeffers, 3 Cal. State Bar Ct. Rptr. 211 (Review Dept 1994). See Rhode Island
Ethics Op. 97-01 (1997).
177
In Matter of Fee, 898 P.2d 975 (Ariz. 1995).
178
In the Matter of Harney, 3 Cal. State Bar Ct. Rptr. 266 (Review Dept 1995). Cf. Shaeffer v.
State Bar, 160 P.2d 825 (Cal. 1945) (no intent to mislead).
179
In Re Alcorn, 41 P.3d 600 (Ariz. 2002); Hmielewski v. Maricopa County, 960 P.2d 47 (Ariz. Ct.
App. 1997).
180
See Arizona Ethical Rule 3.3 cmt. 2 (duty to maintain client confidences limited by duty of
candor).
181
182
In re Zeiger, 692 A.2d 1351 (D.C. 1997); Dime Savings Bank v. Aziz, No. CV95-0248107, 1995
WL 681535, at *1 (Conn. Super. Ct. Nov. 7, 1995).
176
277
To distinguish between customary puffery in negotiations and unethical conduct, Comment 2 to Rule 4.1 describes two circumstances which do not constitute
statements of fact under Rule 4.1: Under generally accepted conventions in
negotiations, certain types of statements ordinarily are not taken as statements of
material fact. Estimates of price or value placed on the subject of a transaction and a
partys intentions as to an acceptable settlement of a claim are ordinarily in this
category . . . ABA Opinion 06-439 amplifies these exceptions: A party in a
negotiation also might exaggerate or emphasize the strengths, and minimize or
deemphasize the weaknesses, of its factual or legal position.
The exceptions to the duty of truthfulness under Rule 4.1 are relatively narrow,
and both civil liability and ethical sanctions have been imposed for conduct which
many attorneys regard as routine bluffing or blustering in a battle where guile is
vital and candor is baneful. In Trudeau v. Gold, for instance, defense counsels
representation in settlement negotiations that he would forego legal action to
recover personal property from the plaintiff, when in fact he subsequently filed an
action, was held to violate Rule 4.1 and constitute grounds to impose tort liability.183 Similarly, in Slotkin v. Citizens Casualty Co.,184 counsels representation
that defendants insurance coverage was limited to the primary coverage was found
to be actionable fraud when, in fact, he had custody of client files containing letters
received from excess carriers. Cases and opinions illustrating the broad application
of Rule 4.1 and its state counterparts include Dyke v. Zaiser185 (failure to correct
prior misrepresentations); Dime Savings Bank v. Aziz186 (misrepresentation regarding payment toward indebtedness); In re Pierson187 (false statement regarding
status of settlement funds); In re Reid188 (misrepresentation of amount of settlement
proceeds); Illinois State Bar Association Opinion 95-10189 (failure to disclose
unilateral revision in document submitted for signature); Rhode Island Ethics
Opinion 93-81190 (duty to disclose overpayment of judgment); and In re Glickman191
(failure to disclose known liens). See also Cicone v. URS Corp.192 (attorney has
duty not to defraud another, even if that other is an attorney negotiating at arms
length) and Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone193
(attorney may be liable for misrepresentations regarding extent of insurance coverage
183
No. 320519, 1996 WL 176386, at *1 (Conn. Super. Ct. Feb. 29, 1996).
614 F.2d 301 (2d Cir. 1979), cert. denied, 449 U.S. 981 (1980).
185
182 P.2d 344 (Cal. Ct. App. 1947).
186
Dime Savings Bank v. Aziz, supra n. 182., at *1.
187
690 A.2d 941 (D.C. 1997).
188
540 A.2d 754 (D.C. 1988).
189
Illinois State Bar Assn Op. 95-10 (Jan. 1996).
190
Rhode Island Ethics Op. 93-81 (1993).
191
246 S.E.2d 174 (S.C. 1978).
192
193
184
278
if opposing counsel relied on misrepresentation in agreeing to accept less than

face amount of judgment).
Violations of Rule 4.1 often implicate Rule 8.4 as well. That rule states, in part,
that it is professional misconduct to engage in conduct involving dishonesty,
fraud, deceit or misrepresentation. Although the negotiation exceptions under
Rule 4.1 are recognized as valid exceptions under Rule 8.4,194 the conduct prohibited under Rule 8.4 has been broadly construed to include a lack of fairness and
straightforwardness.195 Conduct that might not meet the narrow legal definition of
fraud, deceit or misrepresentation may nevertheless be subject to disciplinary
sanctions if it is dishonest.196
Nor is Rule 8.4 limited to actions taken by a member of the bar in her capacity as
an attorney.197 A lawyers abuse of public office or abuse of positions of private
trust such as trustee, executor, administrator, guardian, agent and officer, director or
manager of a corporation or other organization may evince an inability to fulfill
professional responsibilities.198 Hence, an attorney may be disciplined for conduct
unrelated to the practice of law, including flight from the scene of a car accident,199
misrepresentations in connection with a personal insurance claim,200 false statements in a loan application,201 and alteration of a law school transcript.202 In the
practice of law, violations of Rule 8.4 entail the receipt of undisclosed attorneys
fees in settlements,203 borrowing monies from clients,204 settling a case without
client consent,205 settling cases for unreasonably low amounts,206 misrepresenting
the settlement status of a case,207 and inaccurate billing.208
194
A.B.A. Formal Op. 06-439 (2006); In re Carmick, 48 P.3d 311 (Wash. 2002).
In re Shorter, 570 A.2d 760, 768 (D.C. 1990).
196
See Attorney Grievance Commn v. Glenn, 341 Md. 448 (1996), quoting In re Shorter, supra n. 195.
197
See Rhode Island Ethics Op. 93-94 (1993); District of Columbia Ethics Op. 336 (2006); Comm.
on Profl Conduct v. Jones, 509 S.W.2d 294 (Ark. 1974).
198
199
In re Souls, 669 A.2d 532 (R.I. 1996); In re Tidwell, 831 A.2d 953 (D.C. 2003).
200
In re Scanio, 919 A.2d 1137 (D.C. 2007).
201
Statewide Grievance Comm. v. Egbarin, 767 A.2d 732 (Conn. App. Ct. 2001).
202
In re Hawn, 917 A.2d 693 (D.C. 2007).
203
In re Bernstein, 774 A.2d 309 (D.C. 2001); In re Hager, 812 A.2d 904 (D.C. 2002).
204
In re Austin, 858 A.2d 959 (D.C. 2004).
205
In re Nugent, 624 A.2d 291 (R.I. 1993); In the Matter of A. Indeglia, 765 A.2d 444 (R.I. 2001).
206
See In re Segall, 509 N.E.2d 988, 990 (Ill. 1987).
207
See In re Mason, 522 N.E.2d 1233, 1237 (Ill. 1988).
208
See Brown v. Hammond, 810 F. Supp. 644 (E.D. Pa. 1993); Matter of Ort, 631 A.2d 937 (N.J.
1993).
195
7.10 Chapter Capsule
7.10
279
Chapter Capsule
The American Bar Associations Model Rules of Professional Conduct and the
states versions of these rules impose eight principal duties on attorneys representing litigation clients and counseling them regarding settlement alternatives: (1) the
duty to communicate all material facts and events to clients; (2) the duty to exercise
independent judgment and render candid advice; (3) the duty to provide adequate
advice to clients to enable them to make informed decisions; (4) the duty to identify
and protect clients with diminished capacity; (5) the duty to competently, diligently
and expeditiously represent clients; (6) the duty to abide by client decisions; (7) the
duty to prevent conflicts of interest in aggregate settlements; and (8) the duty to be
candid and truthful in communications with clients, opposing counsel and the
courts. Conscientious practitioners acting consistent with ordinary settlement negotiation tactics and conventional client development and retention practices may
inadvertently overlook the scope and specificity of these ethical duties.
Part IV
Solutions
Chapter 8
Obstacles to Becoming an Expert Decision

Maker
What is the first business of one who practices philosophy? To get rid of self-conceit. For it
is impossible for anyone to begin to learn that which he thinks he already knows.
Epictetus, Discourses, bk. 1, ch. 17
Michelangelo visually sculpted a block of marble before touching his chisel: In

every block of marble I see a statue as plain as though it stood before me, shaped
and perfect in attitude and action. I have only to hew away the rough walls that
imprison the lovely apparition to reveal it to the other eyes as mine see it.
Perfection in attitude and action, for effective decision makers, requires a similarly
keen vision and the skill to remove all the material that mars the contours of a fine
decision and leave only the form and durability of a sound decision. This simultaneous discipline of excising biases, illusions and defenses, while retaining solid
objectivity, discernment, and deliberateness, distinguishes the novice from the
expert decision maker.
To advance decision makers from the novice level to the expert stage, this part of
the book addresses six questions:
l
l
l
What are the personal defenses and barriers to learning how to improve decision
making?
What are the stages of decision making in litigation cases and what practical
steps can be taken to improve personal decision making in each of those stages?
Are group decisions better than individual decisions?
Which groups show the best performance in decision making and how can
attorneys and clients replicate their successes?
What are the dangers of group decisions and how can attorneys and clients
counter them?
How can peer review procedures, client surveys and law firm audits improve the
quality of decision making in law firms?
As explained in these four chapters on developing decision-making expertise, solid

research delineates the detrimental beliefs to cut and highlights the constructive
practices to burnish. This chapter, accordingly, illuminates the defenses, delusions

283
284
8 Obstacles to Becoming an Expert Decision Maker
and myths that stand in the way of acquiring decision-making skills. The next
chapter shows the specific actions individuals can take to start improving their
decision making in all phases of litigation. The following chapter demonstrates how
group decisions tend to reinforce extreme positions and quash dissent and explains
how dynamic organizations counter the dangers and enhance the benefits of group
decision making. The final chapter in this section describes specific programs peer
review, client evaluations and law firm audits successfully employed by attorneys
and law firms committed to improving their decision-making acumen.
8.1
Defenses and Barriers to Sound Decision Making
Deliberate decision-making improvements start with a candid acknowledgment of

two major shortcomings in human decision making. First, as Daniel Kahneman and
numerous other psychologists discovered, peoples impressions of how they
reason and of how well they reason could not be taken at face value. They simply
misunderstand and misrepresent their own decision making. Second, studies of
clinical judgment consistently show a substantial discrepancy between the objective record of peoples success in prediction tasks and the sincere belief of these
people about the quality of their performance.1 In addition to misunderstanding
and misrepresenting their decision-making processes, people misjudge the outcomes of their cognitive processes. The task for attorneys and clients, thus, is no
less than changing their evaluation of their decision-making skills and bridging the
persistent gap between self-assessment and objective performance. As Professor
K. Anders Ericsson, the nations expert on expertise, states, The journey to truly
superior performance is neither for the faint of heart nor for the impatient. The
development of genuine expertise requires struggle, sacrifice, and honest, often
painful self-assessment.2
Attorneys and clients, like other decision makers facing a new problem- solving
challenge, need to realistically assess the difficulty of upgrading their decisionmaking skills and the distinct possibility of defeat in this learning challenge. They
need to recognize the complexity of the task and to avoid simplifying the assignment respecting, in short, H.L. Menckens admonition that for every complex
problem, there is an answer that is clear, simpleand wrong. This assignment
requires an objective evaluation of the obstacles to learning, awareness of the
personal defenses that prevent smart people from accurately evaluating their performance and learning from their mistakes and failures, and knowledge of the
illusions and biases that distort information, mischaracterize people and warp
1
Kahneman, Daniel, Slovic, Paul, & Tversky, Amos, Eds. (1982). Judgment under uncertainty:
Heuristics and biases (p. xi). Cambridge: The Press Syndicate of the University of Cambridge.
2
Ericsson, K. Anders, Prietula, Michael J., and Cokely, Edward T. (2007, JulyAugust). The
making of an expert. Harvard Business Review, pp. 114121.
8.1 Defenses and Barriers to Sound Decision Making
285
decision-making frames. In undertaking that task, attorneys and clients may be

surprised to learn that they are more resistant to learning than less intelligent
people, and only a few methods have proven to be successful in overcoming
cognitive biases and illusions.
8.1.1
Defenses to Learning
The major impediment to improving decision-making skills is the inability of

highly successful people, like attorneys and their clients, to turn a critical focus
onto themselves, recognize their contribution to poor quality outcomes and learn
how to change their behavior. Intelligent, confident and successful executives, as
Kate Ludeman and Eddie Erlandson explain in their article, Coaching The Alpha
Male, are typically stubborn and resistant to feedback. After all, they havent
gotten where they are by being self-reflective.3 Alphas, both male and female,
often are quick thinkers, impatient, opinionated, analytical, unemotional and confident about their opinions, insights and instincts. Consequently, they deflect criticism, rarely change their opinions, resist feedback and fixate on the faults of other
people. Intimidating, blaming, criticizing and interrupting, many highly successful
people lack self-awareness and resist behavioral changes required to improve their
problem-solving skills.
In his classic article, Teaching Smart People How to Learn, business professor
Chris Argyris describes the unique difficulties successful people experience when
faced with a learning opportunity: Those members of the organization that many
people assume to be the best at learning highly educated, strongly committed,
results-oriented professionals are, in fact, not very good at it. 4 The learning
function in these dominant yet frequently impermeable professionals is eclipsed by
four entrenched defenses: (1) trying to remain in unilateral control by refusing to
test old and tightly held assumptions, behaviors and theories; (2) maximizing
winning and minimizing losing so that one never learns how to recognize,
accept, deal with and learn from failure; (3) suppressing negative feelings of
inadequacy, vulnerability, incompetence, embarrassment and failure by adopting
a psychological framework that is profoundly defensive; and (4) appearing to be
consistently rational and successful by distorting self-assessments to match
goals and objectives which themselves may be retroactively re-defined to create the
appearance of perpetual achievement. Many of the most successful professionals
3
Ludeman, Kate, and Erlandson, Eddie. (2004, May). Coaching the alpha male. Harvard Business
Review, p. 60.
4
Argyris, Chris. (1991). Teaching smart people how to learn. Harvard Business Review, 69(3), 99,
103. See Coutu, Diane L. (2002, March). The HBR interview: The anxiety of learning. Harvard
Business Review, p. 105 (In organizations, individual learners lie, cheat, go underground they
do whatever they have to do to remain invisible. And in large organizations, going underground
isnt that difficult).
286
are self-sealing, shutting out any introspection and learning that could challenge
their self-perceptions and bring about new insights and adaptive behaviors.
Successful, highly paid professionals in an organization frequently are the most
adept at deflecting responsibility for bad results away from themselves and blaming
others for problems. Because they focus on solving external problems and feel
uneasy when the excitement of an external challenge subsides without a replacement stimulus, they tend to avoid introspection, dislike feedback and counseling
and ignore their own contribution to problems. As much as they love talking about
accountability, Ludeman and Erlandson state, they often fail to see that their own
communication style, rather than someone elses shortcomings, is whats creating
the roadblock.5 Thus, when confronted with evidence of failure, they blame
stupid clients, ambiguous goals and incompetent leaders, refusing to acknowledge how their own behavior affected a problem. By blaming, bad-mouthing and
denying, Professor Argyris explains, professionals bring learning to a grinding
halt.6
In their extensive study of executives fired from major companies like General
Electric, Home Depot, Morgan Stanley, Apple, Staples and Hewlett-Packard,
business professors Jeffrey Sonnenfeld and Andrew Ward found that an individuals ability to learn and recover from major career setbacks is often impeded by
high self-esteem.7 This high self-esteem is accompanied by a persistent manipulation of facts and messages to enhance the executives image for external audiences
to such an extent that the executive himself cannot distinguish the enhanced,
projected self from his actual self. When the facts and the spin become seriously
disjoined, the executives often are surprised and bewildered to learn that their
attempts to disguise their failures were themselves failures:
Ironically, lower self-esteem individuals are sometimes better prepared for failure because
they are more likely to have expected adverse events and even to have prepared by perhaps
devaluing the opportunity. Higher self-esteem people, however, are more focused on
augmenting the perceptions others have of their strengths and will use more self-enhancing
language that often attempts to deny failure. When the language explanations used by fallen
high-self-esteem individuals is not credible or convincing, they are surprised and frustrated.8
Sonnenfeld and Ward note that many high self-esteem executives lack resiliency
because they cannot acknowledge and learn from their performance mistakes and
failures, electing to deny reality, failing to re-calibrate their self-perceptions and
refusing to adapt to new conditions and challenges. These victims of failure, as
Sonnelfeld and Ward describe them, cling to the pathetic hope that if they hide
under the covers, perhaps the monsters will go away.9
Ludeman and Erlandson supra note 3 at 60.

Argyris supra note 4 at 99109.
7
Sonnenfeld, Jeffrey, and Ward, Andrew. (2007). Firing back: How great leaders rebound after
career disasters. Boston, Massachusetts: Harvard Business School Press.
8
Id. at 68.
9
Id.
6
287
Do attorneys avoid the cognitive traps of suppressing, deflecting, blaming,

resisting and distorting? Extensive interviews of attorneys conducted by law professors Samuel Gross and Kent Syverud suggest not. They interviewed 735 attorneys who represented clients in cases litigated to verdict in 19901991, many of
which resulted in losses to their clients caused by ineffective, financially detrimental settlement negotiations. In these interviews, Gross and Syverud attempted to
understand why the plaintiffs were clear losers in most of these cases, since most
could have settled for more than the verdict, and why the defendants made puny
settlement offers and then got hammered in court. They interviewed the parties
attorneys by telephone, asking them, Why did this case go to trial rather than
settle? The attorneys answers were divided into three categories: Did the attorney say that their side (the party or its attorneys) was responsible for the trial, or did
she say that the other side was responsible, or did she mention some other cause?
Gross and Syveruds finding: A clear pattern emerged immediately. Each side says
the other did it.10
The incidence of attorneys blaming the other side, Gross and Syverud discovered, was not influenced by the results of the case. Winners and losers were equally
strident faultfinders. Among the plaintiffs lawyers whose clients recovered nothing, 54% blamed the defense for refusing to settle; among the plaintiffs lawyers
whose clients recovered more than $500,000, 64% blamed the defense for forcing
the case to trial. Self-reflection was noticeably absent: Attorneys who won
hundreds of thousands of dollars said they were forced to court by the defendants
stupidity and others, who successfully defended big claims, said trial was caused by
the plaintiffs greed or craziness. Almost nobody said We gambled and lost, or
We decided to fight, and we won. 11
Similar results are shown in law professor Ward Farnsworths interviews of
attorneys handling injunction cases. In explaining why the parties could not negotiate, or in some cases even attempt to negotiate, a monetary settlement of their claims,
the attorneys invariably blamed the adverse party. Knowing that Farnsworth was
interviewing both sides attorneys, the attorneys nevertheless uniformly depicted the
adverse party as the cause of the bargaining impasse. The defendants, according to
the plaintiffs attorneys, were unreasonable, discourteous, and unneighborly, truculent, obdurate, the most unreasonable people in the community, too stubborn
to accept a deal. The plaintiffs, according to the defense attorneys, were intent on
pursuing a vendetta, would not have agreed to do anything for the benefit of the
defendant for any amount of money, were exceptionally hard-headed and would
not have accepted anything.12
10
Gross, Samuel, & Syverud, Kent. (1996). Dont try: civil jury verdicts in a system geared to
settlement. UCLA Law Review, 44(1), 49.
11
Id.
12
Farnsworth, Ward. Do parties to nuisance cases bargain after judgment? A glimpse inside the
cathedral. In Sunstein, Cass, Ed. (2000). Behavioral law & economics (pp. 302321). Cambridge:
288
On a smaller scale, but nevertheless instructive, is the experience of Orange

County Superior Court Judge Charles Margines, who has presided over civil and
criminal trials for more than 15 years. During the trials, he keeps copious notes of
the attorneys objections, questions and arguments. At the end of the trial, he invites
the attorneys into his chambers to evaluate their performance, telling them what
questions they asked but should not have asked and, as one attorney said, coaching
me on some of the objections I did right and did wrong. Judge Margines recalls
asking for similar feedback from judges when he was a trial lawyer: I used to ask
judges to take off the gloves. I think its very instructive.13 Given this singular
opportunity to learn from an experienced and attentive judge who frequently has
spent days watching their courtroom performance, many attorneys nevertheless
decline Judge Margines invitation to meet in his chambers and discuss their
performance. Very interestingly, Judge Margines muses, I notice that a lot of
the lawyers who really could use that dont take advantage of it.
8.1.2
Distortions of Reality
This near-universal tendency to avoid self-evaluation and criticism, even when

faced with objective evidence of fallibility, is demonstrated in psychology professor Philip Tetlocks study of 284 highly successful, internationally acclaimed
political experts.14 The majority of these experts political scientists, journalists,
economists, and diplomats employed in academia, government, think tanks and the
private sector had doctoral degrees, and 96% had postgraduate training. Their
average age was 43, and the average number of years of direct experience in the
field was 12.2. Journalists routinely sought their opinions; 61% of the experts had
been interviewed by a major media company, and 21% had been interviewed on
more than ten occasions.
Over a 20-year period, ending in 2003, these experts made 82,361 forecasts
about numerous political events with objectively verifiable outcomes, e.g., Will
Quebec secede from Canada? Will Gorbachev be removed by a coup? Will the
European Monetary Union collapse?15 Tetlocks study compares the experts predictions about these major political events with the actual outcomes. He concludes
that the experts claim to know more about the future than they actually know.
When confronted with objective evidence of their predictive shortfalls, Tetlock
found that the experts rarely acknowledge their mistakes but rather balk at
changing their minds and dogmatically defend their deterministic explanations
13
(2007, January 31). San Francisco Daily Journal, p. 5.

Tetlock, Philip. (2005). Expert political judgment. Princeton, New Jersey: Princeton University
Press.
15
Id. at 132137, 165.
14
289
of the past.16 Ironically, the lowest scoring experts expressed the highest level of
confidence in their forecasts; confidence was inversely related to accuracy.
To preserve the illusion of competence, the study participants displayed a
remarkable capacity to deflect and rationalize, and they rarely changed their
evaluations in the light of disconfirming evidence. Some erring, recalcitrant study
participants actually revised their assessments in the opposite direction of the
empirical evidence and nudged up their confidence in their prior point of
view.17 Tetlock attributes these painful attempts at cognitive self-preservation to
two psychological factors: cognitive conservatism (the disconnect between new
information and the ability to update positions and acknowledge mistakes); and
self-serving attribution biases (the tendency to attribute success to personal attributes and blame failures on the external environment).
The study participants excuses for poor predictive accuracy were ingenious and
displayed an impressive range of cognitive defenses. To understand how forecasters who got it wrong managed to preserve so much confidence they were right,
Tetlock identifies and describes some of the rationalizations he calls them belief
system defenses most commonly employed. Some of the self-serving rationalizations evoked by these extraordinarily intelligent yet self-deceiving experts are
discussed below, illustrating that even among experts pontification frequently
trumps edification. They bear an uncanny resemblance to the rationalizations
proffered by attorneys and clients when their expectations clash with reality and
reveal how attorneys and clients indulge in the same cognitive defenses that
occlude experts self-evaluation and learning.
8.1.2.1
The I Was Almost Right Defense and the Close-Call Defense
In this self-serving exercise, the expert labels his forecasting mistake as a close call
and conjures up a close-call counterfactual. He argues that he would have been right
absent some relatively minor, impossible-to-anticipate event. The decision maker,
the argument goes, was fundamentally right on the big picture event but was
ambushed by a very small picture event. An example from one of Tetlocks study
participants: I predicted Gore would defeat Bush in the presidential election; I was
basically right because he would have won if he had not been such an abysmal
debater.
For attorneys a similar almost right rationalization is, I expected us to win,
and I would have been right if the alternate juror had not replaced the sick juror.
Or, I thought the other side would lose, and with just one more juror on our side
we would have at least deadlocked. In a bench trial, the rationalization may be that
we would have won if the judge knew anything about commercial disputes. How
16
Id. at 189.
Id. at 128.
17
290
could anyone have expected to get a former district attorney who practiced only
criminal law before his appointment to the bench? The allure of this rationalization
is that it is superficially persuasive, cannot be tested and masks the fundamental
fallacy of the initial assessment. It suggests a near victory when the reality is defeat.
Because it protects attorneys from the anxious dissonance resulting from a clash
between expectations and reality, this rationalization thwarts the learning process
required for judgment recalibration.
8.1.2.2
The Just-Off-On-Timing Defense
This timing defense also gives the errant decision maker a pass card at the
recalibration gate. The errant decision maker asserts she was basically correct,
and the appearance of error is due to an arbitrary, temporary disjunction of facts and
predictions. Tetlock observed that, when presented with facts disconfirming their
forecasts, the low scorers express considerable confidence that they are already
pretty proficient forecasters, at least in the long term.18 One participant in Tetlocks study rationalized his inaccurate prediction that Quebec would separate from
Canada with this qualification: Quebec eventually will secede from Canada; the
fact that it did not occur within the period I predicted is irrelevant.
Even highly successful attorneys may succumb to this defense rather than
acknowledge a problem with the initial case assessment. Ted Wells, the attorney
who represented Vice President Dick Cheneys chief of staff, Scooter Libby, in his
2007 perjury trial, is regarded as one of the best trial lawyers in the country. He is a
partner in the highly esteemed, 500 attorney law firm Paul, Weiss, Rifkind,
Wharton & Garrison. In 2001, he represented Mitsubishi in a criminal antitrust
case in which Mitsubishi, a Japanese conglomerate, was charged with price-fixing.
At trial, Mitsubishi was convicted. Wells attributed the verdict, in part, to bad
timing: One reason he lost the case, he has said, is because a week before jury
deliberations began, the movie Pearl Harbor came out.19 Wells may be right
about the biasing effect of Pearl Harbor on the jury; alternatively, his rationalization may illustrate how even the best attorneys occasionally indulge in defensive
misconception.
8.1.2.3
The Inherently Indeterminate or Hopelessly Cloudlike Defense
This is another ex-post defense in which the difficulties and risks of prediction are
re-characterized to explain an adverse outcome. Initially the decision maker confidently predicts an outcome but subsequently learns that the prediction is erroneous.
18
Id. at 7.
Weeks, Linton. (2007, February 21). Ted Wells, Center of the defense. The Washington Post,
p. C01.
19
291
He then obliquely acknowledges the forecasting error but explains that the outcome
was inherently unpredictable and not susceptible of accurate assessment by even
the most skilled expert. When faced with evidence that other professionals accurately assessed the outcome, the decision maker asserts that the accurate predictors
were just lucky, as the forecasting task was impossible. Tetlock describes this
attitudinal reversal: Some forecasters who thought they could say quite a bit about
the future at the onset of our exercise, who certainly thought they had more to offer
than a dart-throwing chimpanzee, sounded like radical skeptics by the end of our
exercise a transformation that raises the suspicion that some of the radical
skeptics . . . were bold forecasters who had yet to recover from recent muggings
by reality.20
Some attorneys follow a similar pattern of projecting confidence in their initial
predictions and later portraying outcomes in legal cases as unpredictable and
dependent on the idiosyncrasies of individual judges and jurors. In their study of
law firm clients, law professors Felsteiner and Sarat found a disturbing sequence of
attorney-client interaction, shifting from an initial explanation of rules and procedures to a subsequent depiction of knavish attorneys and erratic judges. The clients
claim that lawyers start out with formalism explaining the law as a set of rules.
Attorneys subsequently emphasize people over rules and the judges discretionary power. Attorneys then describe legal rules as unnecessarily technical and
having limited effect in controlling behavior outside the courtroom. Later still in
the representation, they emphasize differences in judges as crucial to outcomes.
Near the end of the case, attorneys criticize judges and opposing counsel and
underscore the importance of the attorneys contacts and reputation, conveying
an overall message of a system that is arbitrary and unjust.21 Like some of the
experts in Tetlocks study, the attorneys in Felsteiner and Sarats study begin as
bold forecasters, relying on solid rules, and end as skeptics, decrying the arbitrary
nature of the entire process.
8.1.2.4
The I Made the Right Mistake Defense
In this argument, decision-making error is transformed into a virtue, the ostensible

error being explained as a deliberate strategy to advance a larger objective. One
professor in Tetlocks study explained that inaccurately estimating the power of the
Soviet Union and overlooking the possibility of its dissolution was the right
mistake because its better to be safe than sorry. As one study participant
explained, Crying wolf is the price of vigilance.22
20
Tetlock supra note 14 at 134135.

Sarat, Austin, and Felstiner, William L.F. (1989). Lawyers and legal consciousness: Law talk in
the divorce lawyers office. Yale Law Journal, 98, pp. 1663, 1674, 1676, 1679, 1685. See also
Felsteiner, William. Abel, Richard L. & Sarat, Austin. (198081). The emergence and transformation of disputes: Naming, blaming, claiming. Law & Society Review, 15(34), pp. 631654.
22
21
292
In the financial sector, analysts have their own version of I made the right
mistake. Albert Edwards, an asset allocator at Dresdner Kleinwort and a volunteer
magistrate, predicted in 1996 that stock valuations would be pushed into the Ice
Age and would return to the levels of the 1950s and 1960s.23 In fact, the S&P
500 produced record returns after this prediction, increasing more than twofold
after three years. Acknowledging the inaccuracy of some past predictions while
making a new prediction in early 2007 that equities will drop 10%, Mr. Edwards
explained his strategy: We know we are a lone voice. It may yet prove to be wrong,
but at least it is clear. Kleinwort attributes his skill in giving clear but occasionally
inaccurate guidance to his 13 years as a justice of the peace: You learn to see all
the evidence and come with a verdict no matter how hard. Outside the financial
sector, an emphasis on clarity over accuracy has been called the strong but wrong
and often wrong but never in doubt approach.
Edwards is not alone in attributing the strong but wrong decision-making
philosophy to a judges responsibilities. Justice Brandeis endorsed this philosophy
in a 1932 opinion, stating Stare decisis is usually the wise policy, because in most
matters it is more important that the applicable rule be settled than that it be settled
right.24 Jonathan Swift, writing Gullivers Travels, also noted the rigidity of
judicial decisions, seeing them in a less benevolent light than Justice Brandeis:
It is a maxim among . . . lawyers that whatever hath been done before may legally
be done again: and therefore they take special care to record all the decisions
formerly made against common justice and the general reason of mankind.
These, under the name of precedents, they produce as authorities to justify the
most iniquitous opinions, and the judges never fail of directing accordingly.25
For attorneys and their clients, making the right mistake often means pummeling an adversary whose claim or defense never posed a serious financial threat or
filing a plethora of motions of dubious merit and nominal benefit on the off chance
they may be granted the better to be safe than sorry strategy. Although this
overkill approach may be justified in some cases, it often is an invitation to
indiscriminate billing and a poor substitute for sound judgment. The urge to take
forceful, redundant and potentially counter-productive action is most acute when
the risks of an adverse outcome are high, the magnitude of the action itself
appearing to reduce the probability of a large-scale loss. Anxious clients seem
relieved to know that, consistent with their public pronouncements, the action is
being defended vigorously, although they may benefit most from it being evaluated thoroughly. Consequently, cases with a high potential for loss generate a
considerable amount of churn, temporarily shifting attention to the resultant foam
while the underlying claim solidifies.
23
Xydias, Alexis. Dresdner strategist Edwards is often wrong, always opinionated. (2007, March 9).
Available at http://www.bloomberg.com/apps/news?pid20601109&sidagIbqcUWrV48&refer=
news
24
Bodenheimer, Edgar. (1962). Jurisprudence (p. 372). Cambridge, Massachusetts: Harvard
University Press.
25
Id. at 369.
8.1.2.5
293
The Low Probability Outcome Just Happened to Happen Defense
With this defense, the mistaken decision maker insists that his initial probability
assessment was correct, and the actual outcome, to which the decision maker
initially assigned a very low probability of risk, was just a fluke. This provides a
complete defense to inaccurate assessments, as adverse outcomes always have
some statistical possibility of occurring and most clients will not litigate the same
type of case often enough to learn whether their perfect storm was actually a
common squall with a highly predictable downdraft. The increasing frequency of
events labeled the perfect storm, implying a terribly unpredictable alignment of
chance and loss, suggests that the underlying probability assessments may require
recalibration.
Although each of the five cognitive defenses discussed above presents a different
rationale for dismissing predictive error, they are a united force in opposing any
recalibration of the decision makers initial positions. They suffocate dissonance
the discomfort antecedent to self-improvement before it becomes sufficiently
aggravating to provoke introspection and learning from failure. As professor
Argyris notes, their ability to learn shuts down precisely at the moment they
need it the most.26
Instead of learning from errors, many experts and other professionals simply
become more adamant about their original positions and their justifications for
taking those positions. As expert predictive performance decreases, their reliance
on belief system defenses increases. Professor Tetlocks statistical analysis demonstrated that belief system defenses were most frequently endorsed by the experts
who had just lost reputational bets. The experts who had won their bets never
showed more enthusiasm for defensive cognitions than experts who had just lost
them.27 In the group of mistaken experts, those who were most adamant about
preserving their original positions and refusing to adjust them to incorporate real
world events endorsed roughly twice as many defenses as did their less recalcitrant colleagues.28 As the objective need for judgment re-calibration increased,
resistance intensified and the number of defenses deployed by the mistaken experts
doubled.
8.1.3
Attorney Belief System Defenses
For attorneys, the most common defense against an adverse, unanticipated trial
outcome is the stupid juror defense. It is popular because it resonates with urban
myths about jurors caprice and provides a persuasive cover for erroneous
26
Argyris supra note 4 at 99100.

28
27
294
perceptions and probability assessments, absolving attorneys and clients of any

responsibility for an unanticipated trial outcome. It endures because the stupid
juror defense usually cannot be refuted in a specific case, jurors deliberations
generally being private and inadmissible to impeach a verdict. But if attorneys and
clients sincerely believed that jurors are as blameworthy and irrational as they are
portrayed after an adverse outcome, would not any pre-trial settlement have been
preferable to adjudication by twelve jurors retrospectively characterized as dense,
ignorant, biased, wayward and inattentive? When the quality of the fact-finder is
deemed adequate before trial but deficient after trial, clients may well question
whether self-protective defenses are preventing serious self-assessment.
The allure and fallacy of the stupid juror defense is described by DecisionQuest, a leading trial consulting and research firm, in its article, Beware the Stupid
Jury Theory:
It is nice, almost pleasurable in an odd sort of way, to have a convenient scapegoat for our
disappointments at trial. But what is the cost of this psychological gratification? If it leads to
improper case evaluation, poor voir dire and ineffective trial strategy and tactics, is it worth
it? How would case preparation and implementation be affected by assuming what the
research has shown for years: jurors are motivated to do a good job, are very good at sorting
out fair from unfair and can get the gist of a case even if they never master the micro-details
like experts. The answers may be beyond our comprehension.29
The stupid juror defense, DecisionQuest cautions, may become a self-fulfilling

prophecy: to the extent trial attorneys actually begin to believe jurors are not
competent to decide their cases, they run the risk of introducing a subtle but
dangerous bias into their case evaluation and preparation. An attorneys perception
that the jurors are ignorant and incompetent inevitably is conveyed to the jurors and
may affect the jurors perception of that attorney and her client. Attorneys who
think they can mask an underlying contempt for the jury should not be surprised if
the jurors find their evidence and arguments to be unpersuasive and reach seemingly irrational verdicts.
When attorneys attribute adverse trial outcomes to dumb or biased judges, a
runaway jury, the 1 in a 1,000 chance, the witness who screwed up and
changed his testimony at the last minute, the opposing counsel who just got
lucky, the expert witness who fooled the jury, the client who told a different
story on the stand, or the unanticipated case that just came down from the
appellate court, clients may question whether the brilliant professional describing
this apparently aberrational event is providing objective professional advice or, like
Tetlocks errant experts, is dispensing palliative defenses from a highly stressed
belief system. The attorney may well be exhibiting the pernicious habits of
respected experts and accomplished professionals: deflecting responsibility, blaming others and ultimately not learning from experiences that less intelligent people
recognize as failures.
29
(1993, October). Beware the stupid jury theory. Decision Points Litigation Library. Available at
http://www.decisionquest.com/litigation_library.php?NewsID=153
8.2 Myths and Misconceptions About Decision-Making Expertise
295
Warning signs of these deflections and rationalizations, after an adverse trial

outcome, include this case was never about winning anyway, theres a lot more
at issue here than money, the company had no choice but to take this to trial,
you had to send a strong message to anyone else thinking of suing that its going to
cost them, no one could have predicted this result and we always knew we were
rolling the dice. When clients are initially informed that they have a good claim or
defense on the merits and later are counseled that they lost to vindicate a principle,
for instance, the clients objectives probably are being defensively manipulated to
reify a latent idealism and camouflage a patent loss. If the same strategies and
objectives were not endorsed at the outset of the case, or if the same justifications
would not be given following a favorable outcome, the response likely is crafted
especially for the exigency of losing and displays the hallmarks of self-serving,
hindsight and confirmation biases.
Following an adverse outcome, one often hears that this case was always about
a principle. This declaration elevates the trial outcome above the mundane issue of
who won or lost and implies that strategic considerations overrode conventional
measures by which the decisions of the attorneys and their clients could be
evaluated. Losing a case or declining a favorable settlement offer, however, rarely
advances a clients interests, regardless of how much principle is involved or
strategic rationalization is adduced. Despite rationalizations about principle,
setting a precedent and the deterrent effect of taking every adversary to the mat,
few parties benefit, tangibly or intangibly, from losing at trial. Although imaginative attorneys and creative communications departments have presented every
conceivable argument to justify a poor trial outcome, the reality is that a financial
loss at trial usually is a comprehensive loss outside the courthouse as well. Trials
are undertaken for the purpose of winning, and a litigation outcome worse than the
settlement offered by the other side usually represents a decision-making failure.
Plaintiffs taking unreasonable settlement positions and then losing at trial do not
vindicate their positions or enhance the prospects of similar plaintiffs. Defendants
refusing reasonable settlement demands and then losing at trial do not deter similar
cases but rather convey the message that they are obdurate and other plaintiffs
contemplating a legal action should retain a law firm with staying power on a pure
contingency basis. Poor decision-making results in individual cases, whether made
by plaintiffs or defendants, rarely reflect sound decision-making policies, and even
the most persuasive conversions of trial losses into policy victories should be
scanned closely for self-serving misconceptions.
8.2
Myths and Misconceptions About Decision-Making

Expertise
The cognitive defenses of blaming, deflecting and rationalizing, as discussed above,

are endemic among experts and professionals and inevitably block learning and
judgment recalibration. Equally harmful are the myths and misconceptions about
296
how professionals acquire decision-making expertise and what type of people are
experts in decision making. The main misconceptions about decision-making
expertise are threefold: (1) intelligent people are usually good decision makers;
(2) sound decision-making skills are acquired through higher education and extensive experience; and (3) effective decision makers follow their intuition. Because
many attorneys and clients are intelligent, well-educated, experienced and intuitive,
they believe they are excellent decision makers and will become even more
proficient by continuing their present practices.
The belief that decision-making expertise is both an intuitive enterprise and a
natural offshoot of intelligence, education and experience is ill-founded, as professors J. Edward Russo and Paul Schoemaker explain:
Yet those same people who would not hesitate to schedule a series of private lessons with
the local golf pro are largely self-trained in decision making. In this arena, and perhaps this
arena alone, they assume that intuition, repeated experience, and their general intelligence
will see them through. Unfortunately, intuition and repetition are unreliable teachers at
best.30
Although attorneys and clients do not intentionally denigrate the importance of

decision making or consciously avoid improving decision-making skill, the short
shrift given to developing it suggests that they seriously misunderstand and undervalue this skill. Attorneys and their clients regard sound judgment and effective
decision making as essential components of an attorneys professional skill set, yet
judgment and decision making are the only fundamental lawyering skills omitted
from explicit study, practice and testing in nearly all law school curricula. Not
surprisingly, then, law students show no improvement whatsoever in statistical
and methodological reasoning when tested in their first and third years of law
school.31
8.2.1
Intelligence
High intelligence does not imbue a professional with a commensurate skill in

decision making. The presumed association between high intelligence and accurate
judgment is misleading and discourages the acquisition of discrete decision-making
skills. Professionals resistance to introspection and their consequent reluctance to
accurately evaluate their decision-making skills and adopt new decision-making
practices stem from a strong, and usually well-placed, sense of confidence in their
own intelligence. Their intellectual acumen having been confirmed by a solid
30
Russo, J. Edward and Schoemaker, Paul J.H. (2002). Winning decisions: getting it right the first
time (p. xiii). New York: Doubleday.
31
Gilovich, Thomas. (1991). How we know what isnt so (pp. 191192). New York: The Free
Press. See discussion of law student testing in Chapter 5 of this book.
297
record of academic, financial and career success, professionals have learned to trust
and rely on their own intellectual strength and instincts. In the context of decision
making, however, this confidence is dangerous; the empirical evidence does not
link high intelligence with superior decision-making skills, and thus bright people
have no proven advantage in the decision-making arena. Decision making is a
distinct skill and is neither an extension nor a by-product of high intelligence. As
Sharon Begley, the former editor of Science Journal, writes, A tendency to
employ critical thinking, according to studies going back a decade, goes along with
certain personality traits, not necessarily with intelligence.32
In fields as diverse as chess, music, sports and medicine, there is no correlation
between IQ and expert performance.33 The absence of an empirical link between
intelligence and problem-solving skills is counter-intuitive, as psychologists Jens
Beckmann and Jurgen Gutke explain: It is very common, even for psychologists,
to assume that a persons intelligence is closely related to the persons ability to
solve complex problems. The higher a persons intelligence, so the assumption, the
better the persons problem solving skills.34 In reality, studies show that the level
of problem-solving and decision-making expertise is unrelated to what in our
society is the conventional measure of intelligence.35 In tests of practical intelligence knowledge about how to accomplish tasks to help people achieve specific
goals performance is unrelated to IQ scores.36
Although bright people often score high in tests of declarative knowledge
(knowledge of facts), they do not necessarily demonstrate superior scores in
procedural knowledge (knowledge about how to do things). In the context of
legal practice, a litigation attorney may possess an encyclopedic knowledge of
applicable statutes and decisions but lack the practical skills to achieve the clients
objectives. Sheppard Mullin, a 500-attorney firm with 11 offices in the United
States and China, exploits this distinction in marketing its legal services. Its
advertisement depicts a pair of running shoes placed among pairs of identical,
indistinct shoes. Below a photograph of the shoes, the advertisement declares:
Many people believe that law firms are pretty much the same. We dont. We believe that
what separates us from the pack is not what we do, but how we do it aggressive not
32
Begley, Sharon. (2006, October 20). Critical thinking: Part skill, part mindset and totally up to
you. Science Journal, The Wall Street Journal, p. B1. See Weiss, Debra Cassens. (2008,
October 16). School rank and GPA arent the best predictors of BigLaw success. ABA Journal
Law News Now. Available at http://abajournal.com/news/school_rank_and_gpa_arent_the_best_
predictors_of_biglaw_success/.
33
Ericsson, Prietula, and Cokely supra note 2 at 116.
34
Wenke, Dorit, and Frensch, Peter A. Is success or failure at solving complex problems related to
intellectual ability? In Davidson, Janet E., and Sternberg, Robert J., Eds. (2003). The psychology of
problem solving (p. 94). Cambridge: The Cambridge University Press.
35
Hogarth, Robin M. (2001). Educating intution (p. 164). Chicago, Illinois: The University of
Chicago Press.
36
Id. at 246.
298
conservative, team players not one-man-bands, problem solvers not just legal practitioners.
Out clients clearly understand and value this difference. How can we help you?37
In a similar vein, HinckleyAllenSnyder advertises a skill that people unfamiliar

with the legal industry would regard as generic, An experienced lawyer will not
only help you win battles but will help you decide which ones to fight.38 The
implicit message is that other law firms are populated by intelligent, knowledgeable
and ultimately ineffectual attorneys but Sheppard Mullin and HinckleyAllenSnyder
attorneys are purposeful, pragmatic and effective. Turning other firms lemons into
their prospective clients lemonade, these firms make the most of the declarative
knowledge vs. procedural knowledge disparity by asking prospective clients, in
effect, Do you want book smarts or street smarts, abstract knowledge or practical
advice?
8.2.2
Education and Experience
Although research indicates that intelligence alone does not produce superior decision-making and problem-solving skills, one may presume that a professional
education cures any deficiencies in these skills. The studies, however, establish
that professional education itself does not enhance decision-making skills unless it
is coupled with calibration training. The danger of excluding calibration training
from professional education is that graduates confidence levels increase without a
commensurate increase in performance. Many graduates of professional programs
clinical psychologists, managers, executives, civil engineers, for example thus
demonstrate high levels of overconfidence unburdened by their actual
performance.39
If intelligence and education are not correlated directly with decision-making
acumen, can one rely on experience to produce superior levels of decision-making
competence? Again, the empirical evidence counters an intuitive understanding of
decision making, as research consistently shows little or no correlation between
experience and decision-making expertise. As psychologists David Faust and Jay
Ziskin relate, Virtually every available study shows that amount of clinical
training and experience are unrelated to judgmental accuracy.40
37
(2008, October 21). The Palo Alto Daily News, p. 28.

(2008, November 3). The Wall Street Journal, p. A6.
39
Fischoff, Baruch. Debiasing. In Kahneman, Daniel, Slovic, Paul, and Tversky, Amos., Eds.
(1982). Judgment under uncertainty: Heuristics and biases (p. 439). Cambridge: Cambridge
University Press.
40
Faust, David, and Ziskin, Jay. The expert witness in psychology and psychiatry. In Connolly,
Terry, Arkes, Hal R., Hammond, Kenneth R., Eds. (2000). Judgment and decision making (p. 340).
Cambridge: Cambridge University Press.
38
299
In an article whose title succinctly conveys its findings, The Process-Performance Paradox in Expert Judgment: How Can Experts Know So Much and Predict
So Badly, business professors Colin Camerer and Eric Johnson review extensive
research on the presumed correlation between experience and decision-making
expertise. Their surprising conclusion: Training has some effects on accuracy,
but experience has almost none.41 In the medical field, for instance, the correlations between clinical experience and accuracy are roughly zero. This conclusion
is buttressed by multiple studies of decision makers including auditors, medical
residents, surgeons, radiologists, psychologists, secretaries, and blackjack players
demonstrating that experience unaccompanied by calibration training does not
increase decision-making expertise.42
Increased experience, in fact, may be detrimental to sound decision making, as it
fosters overconfidence. In one study of clinical psychologists diagnostic skills, for
instance, psychologist Lewis Goldberg found no relation between years of experience and accuracy but observed that the psychologists confidence in their diagnoses did increase with experience.43 Confidence independent of outcomes is a
potentially dangerous product of performance without systematic feedback and
experience without calibration.
In the leading compendium on expertise, The Cambridge Handbook of Expertise
and Expert Performance, psychology professor K. Anders Ericsson reviews a
massive body of empirical research establishing that experience-based indicators
of expertise do not guarantee superior performance.44 He notes that most professionals reach a stable, average level of performance, and then they maintain this
pedestrian level for the rest of their careers.45 They abandon a commitment to
superior performance at an early stage in their careers and resort to automation,
prematurely terminating cognitive development and the feedback mechanisms
essential to deliberate practice and recalibration.
Research showing either a weak or non-existent correlation between experience
and competence is consistent over a wide range of fields and professions, from
software designers to wine experts, from financial advisors to auditors. Worse yet, in
some professions, professor Ericsson writes, performance decreases systematically
41
Camerer, Colin, and Johnson, Eric J. The process performance paradox in expert judgment:
How can experts know so much and predict so badly? In Goldstein, William M. and Hogarth,
Robin M., Eds. (1997). Research on judgment and decision making (p. 347). Cambridge:
42
See Wenke, Dorit, Frensch supra note 34 at 105106. Ericsson, K. Anders. The influence of
experience and deliberate practice on the development of superior expert performance. In Ericsson, K. Anders, et al., Eds. (2006). The Cambridge handbook of expertise and expert performance
43
Shanteau, James, et al. How can you tell if someone is an expert? Performance-based assessment
of expertise. In Schneider, Sandra LL. And Shanteau, James Eds. (2003). Emerging perspectives
on judgment and decision research (p. 622). Cambridge: Cambridge University Press.
44
Ericsson supra note 42 at 686.
45
300
in accuracy and consistency with the length of professional experience after the end
of formal training.46 Empirical studies of the legal and medical fields substantiate
Ericssons finding that experience and performance may be inversely related, as
explained in Chapter 3 and below.
The California dataset suggests that attorneys representing plaintiffs reach the
apex of their predictive capacity about 1015 years after graduation from law
school, while defense attorneys exhibit relatively low decision error rates early in
their career and then start an upward trend in decision error rates after 1015 years
in practice. This association may be confounded, and any association between
attorney characteristics and decision error is tempered by the fact that the client,
not the attorney, ultimately decides whether to accept or decline a settlement
proposal. The correlation between experience and decision error, though, is consistent with malpractice claim data showing that inexperienced attorneys actually are
less likely to be sued for malpractice. In their recent study of malpractice claims,
professors Kara MacKillop and Neil Vidmar state, Most claims activity occurs
between the 7th and 25th years of practice. New lawyers, those in practice less than
three years, tend to have a better claims experience than those in practice longer.47
The correlation between judgment error and experience has been noted in the
medical field as well. In a special article for the The New England Journal of
Medicine, Dr. Maxine Papadakis and her colleagues write, Evidence indicates that
physicians who have been in practice for more than 20 years are at increased risk for
disciplinary action.48 In Papadakis study of physicians disciplined for unprofessional behavior and incompetence ranging from billing fraud to failure to meet
minimum standards of acceptable medical practice and from sexual misconduct to
inappropriate prescribing the mean age at discipline was 44.1, and the more
experienced physicians represented a disproportionate percentage of disciplined
physicians. Looking at disciplined physicians who graduated from three different
medical schools between 1970 and 1999 and were disciplined by medical boards
between 1990 and 2003, Papadakis study finds that a higher level of clinical
experience is associated with a higher incidence of unprofessional behavior:
Graduation Year
19701979
19801989
19901999
Disciplined Physicians (%)

55.3
33.2
11.9
Practice does not make perfect, at least in the case of disciplined physicians, and it
may instill a false and heightened sense of confidence.
46

MacKillop, Kara and Vidmar, Neil. (2006, June 29). Legal malpractice: A preliminary inquiry,
p. 18. Available at SSRN: http://ssrn.com/abstract=912963
48
Papadakis, Maxine A., et al. (2005, December 22). Disciplinary action by medical boards and
prior behavior in medical schools. The New England Journal of Medicine, 353(25), 26732682.
47
301
Papadakis findings are consistent with the demographic characteristics of attorneys subject to disciplinary proceedings by some state disciplinary and professional
ethics organizations. The Attorney Registration and Disciplinary Commission in
Illinois, for instance, reported in 2006 that attorneys practicing 10 years or more
constituted 71% of all practicing attorneys but account for 84% of all disciplinary
complaints and 80% of all disciplinary investigations.49 A report of the attorney
discipline system in New Jersey in 2004 shows that attorneys licensed to practice
for eight years or less comprise 26% of the attorney registration database but
account for only 2.6% of the disciplinary actions. Attorneys who have practiced
law for more than eight years, but fewer than 19 years, constitute 40% of the
attorney registration database and 37.5% of the disciplinary actions; and attorneys
who have practiced at least nineteen years comprise 34% of the attorney registration database and 59.8% of the disciplinary proceedings.50 And because substance
abuse is closely correlated with attorney disciplinary actions, it is noteworthy that
the average age of barristers, solicitors, and legal executives reporting alcohol
dependency in one study is 48 years, compared with an average age of 41 years
for all solicitors with practicing certificates.51
Papadakis findings also are consistent with medical malpractice data. In one of
the most extensive studies of physicians and malpractice claims, first presented at
the RAND Institute for Civil Justice in March 2006, business and law professor
John Rolph and his co-authors analyzed 8,000 physicians and 9,300 claims. Their
study analyzed only negligence claims, defined as a paid claim or a non-paid
claim with a medical peer review opinion of negligence. Attempting to construct
predictors of a physicians likelihood of being a party in a malpractice claim, Rolph
analyzed numerous explanatory factors including physician demographics, specialty, number of patients, practice setting, procedures and hospital characteristics.
Rolph concluded that physician characteristics have high predictive power and
specifically, as expected, doctors who are male and who are older have higher
claims rates.52 As measured by predictive information, Rolph states, physician
characteristics are superior to 10 years of claims history.53 Because physician
characteristics like age and gender are readily obtained, and both male gender and
older age up to 50 years were predictive of negligence claims, Rolph believes
49
2005 Annual Report of the Attorney Registration and Disciplinary Commission, pp. 3, 5, 9, filed
with the Supreme Court on April 28, 2006. Available at https://www.iardc.org/2005AnnualReport.
pdf.
50
Office of Attorney Ethics of the Supreme Court of New Jersey. (2004, August 6). 2003 State of
the Attorney Discipline System Report, pp. 5864, 149. Available at http://www.judiciary.state.nj.
us/oae/annual_report03.pdf.
51
Goodliffe, Jonathan, and Brooke, Deborah. (1996, January). Alcoholism in the legal profession.
New Law Journal.
52
Rolph, John E., Adams, John L., and McGuigan, Kimberly A. (2007, March). Identifying
malpractice-prone physicians. Journal of Empirical Legal Studies, 4(1), p. 142.
53
Id. at 125.
302
demographic variables can be helpful in designing targeted quality of care

improvement policies.54
8.2.3
Peer Ranking
If intelligence, education and experience are not guarantors of superior decisionmaking competence, as indicated above, can one at least rely on the judgment of
professional peers to select the most competent decision makers? Are peer recognition and prestige within a profession represented by surveys like The Best
Lawyers in America, Top 100 Super Lawyers, and The 100 Most Influential
Lawyers reliable symbols of decision-making expertise? The short answer is
probably not. Although professional reputation is a popular tool for identifying
exceptional professionals, research suggests it may not be a reliable indicator of
superior problem-solving capabilities.
Numerous studies have challenged the conventional view that social reputation
and experience are reliable emblems of expertise. Being revered as an expert
practitioner, state Camerer and Johnson, is not enough. Care should be given to
assessing actual performance.55 Psychology professor K. Anders Ericsson concurs: When individuals, based on their extensive experience and reputation, are
nominated by their peers as experts, their actual performance is occasionally found
to be unexceptional.56 Ericsson notes that the performance of experienced,
respected computer programmers is not consistently better than computer science
students and that professors in the Physics Department at U.C. Berkeley rated as
one of the five best physics departments nationally by The National Research
Council and U.S. News and World Report were not necessarily superior to
students in solving introductory physics problems. Similarly, the University of
California-San Francisco Medical Center, though ranked highly by U.S. News
and World Report in its Best Hospitals edition, was rated worse than average
in a government study of actual mortality rates in heart bypass surgeries, statistically adjusted to give credit to doctors and hospitals that treat sicker patients.57
Peer ratings may exaggerate the performance of some long-time performers and
neglect the advances made by future leaders in a field. In the relatively infrequent
circumstance where peer recognition does accurately identify decision-making
geniuses and could be considered a proxy for expertise, it tends to be a lagging
indicator. For that reason, peer ratings may not accurately gauge current performance. Peer esteem also suffers from the popularity effect, as better-known or
54
Id.
Camerer and Johnson supra note 41 at 359.
56
57
Russell, Sabin, Colliver, Victoria, and Allday, Erin. (2007, July 13). Top heart centers, docs
stung by bypass study. San Francisco Chronicle, p. B2.
55
303
more popular colleagues are frequently cited as experts. People outside a peer group
may be on the cutting edge of new insights and are frequently out of step with
their peers at the time of their breakthroughs, notes psychology professor James
Shanteau. Thus, peer identification is more likely to identify yesterdays expertise
than tomorrows expertise.58
The California dataset shows no statistically significant relation between decision-making performance and the existence of a peer rating. Attorneys ranked by
Martindale-Hubbell as AV (Very High to Preeminent) and BV (High to Very
High) were not correlated with a lower incidence of decision error when compared
with attorneys who had no peer rating by Martindale-Hubbell, based on a small
sample of cases in the primary California dataset. Although AV-rated attorneys
were correlated with lower decision error rates than BV-rated attorneys, the decision error rates correlated with the AV-rated attorneys were not significantly
different from the non-rated attorneys. The preliminary results from the sample
indicate that clients were no more likely to avoid an adverse outcome at trial when
represented by an attorney with a superior peer rating than when represented by an
attorney with no rating at all.
8.2.4
Intuition
A final misconception regarding decision-making acumen, after recognizing that

intelligence, experience, education and peer ratings may be poor proxies, is that one
can rely on intuition to make good decisions going with the gut. Although
intuition and other visceral reactions may be reliable in resolving routine or sensory
problems, they are notoriously unreliable in resolving analytical problems requiring
probabilistic reasoning skills. As Eric Bonabeau, the Chief Scientist at Icosystem,
explains, anyone who thinks that intuition is a substitute for reason is indulging in
a risky delusion. Detached from rigorous analysis, intuition is a fickle and undependable guideit is as likely to lead to disaster as to success.59 Intuition represents
an experiential and hereditary response to graphic rewards and threats and is best
confined to the elemental decisions for which it evolved avoiding vicious animals,
rotten food and diseased people and finding vulnerable prey, clean water and
healthy mates. Few of those cognitive challenges are presented in litigation.
Research demonstrating the shortcomings of intuitive decision making took a
huge step forward with the publication of Paul Meehls 1954 book, Clinical Versus
Statistical Prediction: A Theoretical Analysis and a Review of the Evidence.60
58
Shanteau et al supra note 43 at 624.

Bonabeau, Eric. (2003, May). Dont trust your gut, Harvard Business Review, p. 117. Cf.
Gigerenzer, Gerd, et al. (1999). Simple heuristics that make us smart. New York: Oxford
University Press.
60
Meehl, P.E. (1954). Clinical versus statistical prediction. Minneapolis, Minnesota: University of
Minnesota Press.
59
304
In this book, Meehl made the controversial assertion that statistical or actuarial
methods consistently produced more accurate results than unaided human judgment. Since its publication, more than 150 studies have proven that almost any
formal, statistical model of decision making is superior to clinical reasoning, the
ad hoc, largely intuitive practice of decision making.61 A recent article, for example, studied 136 comparisons of clinical and mechanical prediction and found the
mechanical procedure to be equal or superior in all but eight.62 Decades after the
publication of his groundbreaking book in 1954, Paul Meehl surveyed the research
and declared, There is no controversy in social science which shows such a large
body of qualitatively diverse studies coming out so uniformly in the same direction
as this one. When you are pushing over 100 investigations predicting everything
from the outcome of football games to the diagnosis of liver disease, and when you
can hardly come up with a half dozen studies showing even a weak tendency in
favor of the clinician, it is time to draw a practical conclusion.63 Employment
interviews, college admissions, loan applications, and portfolio investments all
have better outcomes when simple statistical models, rather than clinical judgments, are utilized to make decisions.64 Even in fields where experts predictions
are more accurate than novices predictions, they are rarely better than simple
statistical models.65
Despite the overwhelming evidence that statistical methods beat unaided judgment, the legal profession generally has ignored the effectiveness of mechanical
models for decision making and resists using decision support software.66 As Russo
and Schoemaker note, in situations truly central to peoples lives, like medical,
legal and personal financial decisions, people have been far less quick to recognize
the increased quality of decision-making they could achieve by using more formal
61
See Dawes, Robyn M., Faust, David, and Meehl, Paul E. (1989). Clinical versus actuarial
judgment. Science, 243(4899), pp. 16681674.
62
Dawes, Robyn M., Faust, David, and Meehl, Paul E. Clinical versus actuarial judgment. In
Gilovich, Thomas, et al., Eds. (2002). Heuristics and biases: The psychology of intuitive judgment
63
Ayres, Ian. (2007). Super crunchers (p. 127). New York: Bantam Dell.
64
The relatively crude mechanical models of decision making were initially thought to provide a
floor to which the judgment of the experienced clinician could be compared. The floor turned out
to be a ceiling. Dawes, Robin M., and Corrigan, Bernard. (1974). Linear models in decision making.
Psychological Bulletin, 81, pp. 97106. See Faust, David, and Ziskin supra note 40 at 336347.
See also Tetlock supra note 14 at 54.
65
Camerer, Colin, and Johnson supra note 41 at 357. See Dawes, Robyn M. Proper and improper
linear models. In Connolly, Terry, Arkes, Hal R., Hammond, Kenneth R. (2000). Judgment and
decision making (p. 382). Cambridge: Cambridge University Press.
66
Litigants and parties increasingly use decision trees, which are effective decision- making tools
when they know the probability that various events will occur, e.g. prevailing on a summary
judgment motion. These probabilities, however, may not be known with any degree of precision
and usually are derived from attorneys experience. As attorney Henry Welch points out, The
inherent difficulty in building and then trusting a decision tree is knowing if the correct payouts,
costs and probabilities are selected. Welch, Henry. (2009, March 2). Branching out. San
305
decisions rules and systematic models.67 Reflecting this bias against quantitative
decision-making tools, many lawyers perpetuate the mystique of professional
judgment as being too rich, nuanced and complex for algorithms. In reality,
assessments and decisions in the legal field are too consequential to be refined in
the cognitive distillery of intuition, anecdote, selective memory and unfounded
optimism. Legal decisions need to be guided by reliable data and methods, not the
conventional admixture of public advocacy tempered by private caveats and
recommendations obscured by disclaimers. Although most sophisticated businesses
use statistical models for every critical aspect of their operations, from assessing
product demand to scoring borrower creditworthiness and from measuring productivity to projecting revenues, attorneys and their clients generally rely on a personal
counseling model to make decisions, indulging in the myth that experts are
accurate predictors or the hope that an expert will never err.68
When I discuss with attorneys and mediators the advantages of systematic
decision making and the disadvantages of intuitive decision making, they frequently
mention how much they liked Malcolm Gladwells book, Blink: The Power of
Thinking Without Thinking.69 The book, they relate, confirms everything they
always thought about relying on intuition how initial impressions turn out to be
right and how going with your gut produces the best results. The allure of
thinking without thinking is especially attractive in complex cases, as factually
opaque cases without clear legal precedents resist an inductive assessment and invite
an intuitional evaluation. All too often, however, going with your gut is little more
than relying on stereotypes and avoiding the cognitive strain required for complex
decision making.
In employing mental shortcuts, decision makers avoid the cognitive burden of
analyzing and weighing all pertinent information and instead focus on attributes
that are accessible, plausible, and easy to verbalize.70 As Ap Dijksterhuis explains
in his article, On Making the Right Choice: The Deliberation-Without-Attention
Effect, people tend to resort to stereotypes more when engaged in conscious
thought, and when faced with a task that requires the consideration and processing
of large amounts of information (such as when serving as a juror) tend to quickly
form a sense as to the appropriate result and then interpret subsequent information
in light of that expectancy.71 The instantaneous thin-slicing of information,
67
Russo and Schoemaker supra note 30 at 158.

Camerer, Colin, and Johnson supra note 41 at 356.
69
Gladwell, Malcolm. (2005). Blink: The power of thinking without thinking. New York: Little,
Brown & Co.
70
Dijksterhuis Ap, et al. (2006). On making the right choice: The deliberation-without-attention
effect. Science, 311(5763), p. 1005, quoted in Oldfather, Chad M., (2008), Writing, cognition and
the nature of the judicial function, Georgetown Law Journal, 96(4), pp. 1283, 1313.
71
Id.
68
306
which drives intuitive thinking, necessarily disregards the realities of most complex
disputes; if those disputes could have been resolved by thinking without thinking,
the parties themselves would have done it before retaining counsel.
I doubt that Malcolm Gladwell, in writing Blink, intended to inspire an entire
generation of attorneys to bypass the dorsal lateral prefrontal cortex and shoot
directly from the amygdala, making rapid judgments, strategic decisions and
settlement recommendations sparked by split-second reactions to briefs, memoranda, statutes, witnesses, adversaries and judges. Attorneys and clients do not
expect accountants, engineers, physicians and psychologists to rely on intuitive
judgments to calculate their tax liability, design bridges, diagnose illnesses and
evaluate mental competence; and they should not exempt themselves from clients
justified expectation of objective judgment untainted by hunch, suspicion, intimation, instinct, premonition and impulse. Since attorneys and clients would be
alarmed if judges based their decisions entirely on intuition, they should be no
less alarmed when they find themselves indulging in the same intellectual
shortcut.72 When decision makers feel the impulse to go with your gut, they
should question whether they are relying on intuition because it is accurate or
because it is easy.
A close reading of Gladwells remarkable and captivating book suggests that
thin-slicing detecting patterns and making judgments from a quick, limited
observation is best suited for perceptual problems like detecting the fake statue he
describes in the first chapter. For complex, analytical problems, thin-slicing is an
inferior tool and a major contributor to poor quality decision making. One of the
most frequently observed decision-making mistakes is a premature evaluation
based on perceived patterns and similarities that, in fact, do not apply to the
problem at hand. When it comes to intuition, explains scientist Eric Bonabeau,
the most dangerous cognitive flaw is our deep-seated need to see patterns.73
Dependent on pattern matching, thin-slicing is a rapid and efficient system of
processing encrypted patterns and making instantaneous judgments based on
those patterns. It assists in the limited task of matching a new carpet with an
existing carpet but fails in the more important, non-perceptual task of learning
whether one can afford the carpet, whether the carpet will be as durable as the old
carpet, whether another retailer sells the identical carpet at a lower price and
whether the new carpet contains higher levels of toxins like toluene, benzene, or
formaldehyde. As Nicholas Taleb notes, Our minds are not quite designed to
understand how the world works, but, rather, to get out of trouble rapidly and
have progeny.74 Thus, if the only decision-making challenge in litigation is
whether to run away from the courtroom bailiff or flirt with opposing counsel,
72
See Polsner, Richard. (2008). How judges think. Cambridge, Massachusetts: Harvard University
Press. Guthrie, Chris, Rachlinski , Jeffrey J. and Wistrich, Andrew J. (2007). Blinking on the
bench: How judges decide cases. Cornell Law Review, 93(1).
73
Bonabeau supra note 59 at 118. See Whitson, Jennifer, and Galinsky, Adam. (2008, October 3).
Lacking control increases illusory pattern perception. Science, 322(5898), 115117.
74
Taleb, Nassim Nicholas. (2004). Fooled by randomness (p. 56). New York: Random House.
8.3 Chapter Capsule
307
intuitive judgment works well; otherwise, systematic, data-driven decision-making

models are superior for the less exciting but complex tasks of forecasting case
outcomes and solving client problems.
If intuition were reliable or at least reliable in solving problems that are largely
sensory the outcomes would be demonstrably better. Consider the level of
accuracy humans demonstrate in detecting liars, an intuitive judgment honed by
centuries of evolution. In trying to determine whether someone is lying, humans
have the benefit of nearly all the senses. Their eyes detect nervous shifting, muscle
tension, eye twitching, and exaggerated gestures. Their noses smell perspiration,
clothing odors that waft outside the normal range and excessive anti-perspirants,
perfumes or colognes applied to mask nervous perspiration. Their handshakes
signal the strength, sincerity, gender, age, manners and even social class of the
person behind the telltale grasp. They hear the slightest change in the speakers
intonation, words per minute, inflection and volume. Engaging their full panoply of
senses, people are sure they can spot a grifter a mile away. Nearly 90% of people, in
fact, are certain they can tell when someone is lying to them. A meta-analysis of 200
deception studies, however, demonstrates that people detect liars only fifty-four
percent of the time no better than chance. They are so confident in their ability to
detect liars and so notoriously inaccurate that liars themselves experience a type of
euphoria described by deception researchers as duping delight.75
8.3
Chapter Capsule
Personal defensiveness and misconceptions about decision-making expertise

impede professional development. A major obstacle to improving decision making
skills is the inability of highly successful people to accurately evaluate their own
performance, turn a critical focus onto themselves, recognize their contribution to
poor quality outcomes and learn how to change their behavior. Highly intelligent,
confident and successful people often deflect criticism, resist changing their opinions, avoid feedback and fixate on the faults of other people. Intimidating,
blaming, criticizing and interrupting, many highly successful people lack selfawareness and resist behavioral changes required to improve their problem-solving
skills.
In predicting outcomes, professionals may be overly confident. When confronted with objective evidence of their predictive shortfalls, many professionals
do not take advantage of the opportunity to reassess and improve their skills but
instead refuse to change their minds and insistently defend their initial positions.
75
Talbot, Margaret. (2007, July 2). Duped. The New Yorker, p. 52. Paul Ekman, an expert in lie
detection, states: Weve tested about 15,000 people in every profession you can think of CIA,
judges, lawyers. Less than 1 percent are any good at it. Most people are only at about the level of
flipping a coin. Tucker, Neely. (2009, February 15). The truth is, spotting a lie isnt as easy as it
looks. The Washington Post, p. M01.
308
To preserve the illusion of competence after encountering disconfirming evidence,

even recognized experts in a field deflect criticism and generate a series of rationalizations to justify their prior opinions.
The main misconceptions about decision making expertise are threefold: highly
intelligent people are good decision makers; superior decision making skills are
acquired through higher education and extensive experience; and effective decision
makers follow their intuition. Research in the decision-making field, however,
indicates that decision making is a distinct skill, and intelligence, education and
experience do not automatically produce decision-making acumen. Intuition, moreover, may be poorly suited for complex tasks like negotiating settlements and
predicting jury verdicts.
Chapter 9
Personal Expertise in Legal Decision Making
Good sense is of all things in the world the most equally distributed, for everybody thinks he
is so well supplied with it, that even those most difficult to please in all other matters never
desire more of it than they already possess.
Rene Descartes, Le Discours de la Methode (1637)
Like other individuals making decisions under uncertainty, attorneys and their
clients want succinct answers and practical, easily implemented solutions. To
meet this need, and at the risk of oversimplifying research results, the opinions of
many experts in the fields of law, psychology and economics are presented in this
chapter to rapidly enhance decision-making skills and reduce adverse case outcomes. If, as Pearl Buck wrote, every great mistake has a halfway moment, a split
second when it can be recalled and perhaps remedied, any one of the 45 corrective
steps discussed below could prevent a very great mistake.1
The corrective steps are grouped to track the following six phases of litigation
decision making: Finding, Binding, Solving, Testing, Choosing and Checking. This
litigation decision-making model can be viewed as a linear, yet iterative, process of
problem solving similar to other decision-making models but tailored to the unique
challenges of litigation. The phases, a summary description of the phases and
comparable phases in other decision-making models are shown in Table 9.1. The
specific decision-making requirements of these six stages and some decisionmaking tools to meet those demands are presented below.2
Finkelstein, Sydney. (2003). Why smart executives fail (p. 47). New York: The Penguin Group.
For comparable phases see Kleindorfer, Paul R., Kunreuther, Howard C., and Schoemaker, Paul J.H.
(1993). Decision sciences (pp. 9, 25, 68). Cambridge, United Kingdom: Cambridge University Press.
Russo, J. Edward and Schoemaker, Paul J.H. (2002). Winning decisions (p. 268). New York:
Doubleday.

309
310
9 Personal Expertise in Legal Decision Making
Table 9.1 Phases of litigation decision making

Phase
Process/purpose
Finding
Discovering, identifying, and
tentatively defining a problem
Binding
Investigating and evaluating the
parties and their claims to
categorize the type and specify
the scope of the problem
Solving
Generating and reviewing
alternatives and settlement
ranges
Testing
Proposing, responding to,
negotiating and evaluating
possible solutions
Choosing
Selecting settlement alternatives or
third-party resolutions (trial or
arbitration)
Checking
Monitoring compliance, evaluating
the cost of non-compliance,
considering alternatives to
compliance and measuring the
quality of decision making
9.1
Comparable phases
Framing
Problem finding
Gathering intelligence
Coming to conclusions
Problem solving
Searching and evaluating
Coming to conclusions
Legitimizing
Learning from experience
Phase One: Finding
In the finding phase, attorneys and clients are alerted to a problem that initiates and
necessitates serial decision making. At this stage, attorneys and parties form
preliminary opinions of the claims, motivations, and credibility of the players and
begin to assess the range of outcomes. For a plaintiff in this phase, the problem has
evolved from a perceived injury to a grievance, from a grievance to blaming and
faultfinding, and then to a specific claim against the perceived cause of the injury.
Professor William Felstiner and his colleagues call this cycle naming, blaming,
and claiming.3 For a defendant, the finding phase signals that a potential threat or
claim is now material; it has evolved from a perceived injury of indeterminate cause
to a grievance directed against a specific party or parties, then from a grievance to a
claim either ignored or denied, in whole or in part, and ultimately from a claim to
a legal action.
Five questions dominate this phase: (1) What is this problem? (2) Who caused it?
(3) Can it be ignored? (4) Does it require a routine or an exceptional response? (5)
What will it take to solve it? The cognitive dangers in the Finding phase are
premature framing of the cause, magnitude and resolution of the problem; reliance
Felstiner, William L.F., Abel, Richard L. and Sarat, Austin. (1980 1981). The emergence and
transformation of disputes: naming, blaming, claiming. Law & Society Review, 15(34), 631, 636.
9.1 Phase One: Finding
311
on misleading comparisons with prior, ostensibly similar claims; the tendency to

search for confirming facts and disregard disconfirming evidence; the impulse to
attribute motives to parties actions; ineffective or inefficient legal representation
resulting from attorneys dual roles of counselor and advocate; and the defense
mechanism of denial, the state of rational apprehension that does not result in
appropriate action.4 To counter these decision-making pitfalls, attorneys and
clients may find the ten corrective steps discussed below helpful.
9.1.1
Still the Messenger
In businesses, public entities and other organizations, the first and primary source of
information regarding a conflict frequently is a person who caused it or could not
resolve it. Due to the primacy effect, information received first from problem
instigators and facilitators not only serves as a salient starting point for the
judgment, but it biases the nature of the additional information that is sought and
retrieved downstream in the later stages.5 Because self-serving biases and attribution errors can cloud the perceptions and memories of these conflict inciters and
abettors, they may be the least reliable sources of information for describing the
background facts, defining the problem or forming constructive solutions. Kindly
still these messengers by promptly including in the initial evaluation phase other
key players and the future decision makers. As Albert Einstein observed, the
significant problems we face today cannot be solved at the same level of thinking
we were at when we created them.
9.1.2
Bottom-Up Decisions Beat Top-Down Decisions
Expert decision makers are bottom-up thinkers: they start with facts and build up to
positions.6 Ordinary decision makers, however, are top-down decision makers,
looking first at values, needs, opinions, prior experiences and objectives and then
selecting positions. With a top-down decision-making process, one imposes a panoply
of aspirations, desires, demands and expectations on the facts, and the facts have to
conform or else theyre disregarded. As Peter Drucker, the preeminent management
4
Tedlow, Richard. Leaders in denial. (2006, July August). Harvard Business Review, p. 18. See
Felstiner, Abel, and Sarat supra note 3 at 632.
5
Hastie, Reid, & Dawes, Robyn M. (2001). Rational choice in an uncertain world (p. 102).
6
See Jorgensen, Magne. (2004). Top-down and bottom-up expert estimation of software development effort. Journal of Information and Software Technology, 46(1), 316. See also Lindsay,
Daryl. (1989). Financial statement users perceptions of factors affecting the ability of auditors to
resist client pressure in a conflict situation. Accounting & Finance, 29(2), 118.
312
theorist, comments, people look for the facts that fit the conclusion they have already
reached. And no one has ever failed to find the facts he is looking for.7
Sociologist Maureen Cains study of attorney-client interactions illustrates the
top-down decision-making process. Analyzing attorney-client interactions, she
found that attorneys did not act as independent, objective counselors. On the
contrary, the clients controlled and directed the attorneys. Most of the attorneys
in her study simply translated the clients expectations into legal terminology and a
legally cognizable claim. She writes: [I] n sixty-seven of the eight-two cases which
I observed and recorded the client announced his needs and set the objective for the
solicitor. The lawyers then translated client objectives into legal frames and
when successful, delivered the objective the client sought.8 Clients who would
scoff at a relative who diagnoses his own illness and selects a drug from the
Physicians Desk Reference at the public library evidently do not hesitate to tell
their attorneys the cause and expected resolutions of their legal problems. Instead of
seeking and considering their attorneys independent advice, the clients in Cains
study essentially dictated the terms of the assignment; and instead of rendering an
objective, professional evaluation, the attorneys routinely served as willing accomplices, accepting and implementing the clients directives.
The attorneys task of building a case is a benevolent description of a topdown, deficient process the client and the attorney focus on the clients intentions
and desired outcomes and then amass evidence and implement a strategy to animate
those intentions and achieve the desired outcomes. In transforming a clients
specific, individualized grievance into a judicially cognizable ground for relief,
participants in the judicial system prefer not to know why anything has happened,
but rather what occurred, or even more narrowly, what can be shown to have
occurred.9 To facilitate this endeavor, facts are subsumed under objectives; the
objectives determine the facts to be sought, selected, and presented. This process is
directive, not educative, and manipulates the attorney as well as the client:
She is selling herself on the case, so that she can effectively sell it to judge and jury. This
involves a certain amount of deletion and distortion. That is, the lawyer ignores or downplays the importance of facts which do not fit the story and spins other facts so that they
do fit. The lawyer is also selling the client on the case as the story gets worked out and as the
clients role as hero becomes clear.10
7
Drucker, Peter. (2001). The essential Drucker (p. 252). New York: HarperCollins Publishers.
Cain, Maureen. (1979). The general practice lawyer and the client: Towards a radical conception.
International Journal of the Sociology of Law, 7, 331.
9
Moore, Sally. (1977). Individual interests and organizational structures: Dispute settlements as
events of articulation. In L. Hamnett (Ed.), Social anthropology and law (pp. 182183). New
York: Academic Press, cited in William L.F. Felstiner, Richard L. Abel and Austin Sarat. The
emergence and transformation of disputes: naming, blaming, claiming. (1980 1981). Law &
Society Review, 15(34), 631, 647. Cf. Macaulay, Stewart. (1979). Lawyers and consumer
protection laws. Law and Society Review, 14, 115 (finding that in minor consumer problems,
attorneys discourage clients from pursuing claims).
10
Coyne, William F. (1999). The case for settlement counsel. Ohio State Journal on Dispute
Resolution, 14, 367, 385.
8
313
Although these mental deceptions may be an integral part of the attorneys preparation for trial advocacy, William Coyne, an attorney and mediator, believes they
are precisely contrary to the steps which must be taken in a problem-solving
approach to negotiation.11
In implementing the top-down problem-solving process, attorneys may confuse the ethical duty to zealously represent a client, which is rooted in the fiduciary
duty to protect a clients interests, with zealous advocacy of a clients position,
which is rooted in the attorneys desire to placate the client. Zealous advocacy,
explains Illinois Circuit Judge Richard Curry, is the doctrine which excuses,
without apology, outrageous and unconscionable conduct so long as it is done
ostensibly for a client, and, of course, for a price. Zealous advocacy is the modern
day plague which infects and weakens the truth-finding process and which makes a
mockery of the lawyers claim to officer-of-the-court status.12 Invoking the zealous advocacy principle, attorneys overlook the fact that their primary fiduciary
duty is to protect the clients interests, not the clients position; the clients position,
if ill-founded, may be injurious to the clients interests.13
9.1.3
Challenge Your Perceptions
Perceptions are distorted by cognitive and motivational factors that tend to confirm
initial opinions. As Karl Weick notes, seeing is not believing. Its the other way
around. Believing is seeing. You see what you expect to see. You see what you have
the labels to see.14 Before making important decisions, answer four key questions
posed by psychology professor Scott Plous: Am I motivated to see things a certain
way? What expectations did I bring into the situation? Would I see things differently without these expectations and motives? Have I consulted with others who
dont share my expectations and motives?15 These questions offset detrimental
decision-making biases and encourage objective insights from individuals unaffected
by those biases.
11
Id.
Kathleen P. Browe. (1994). Comment, a critique of the civility movement: Why rambo will not
go away. Marquette Law Review, 77, 751, 767.
13
See Center for Professional Responsibility. (2007). Model Rules of Professional Conduct (p. 13)
(lawyers obligation zealously to protect and pursue a clients legitimate interests) and Model
Rule 1.3 (p. 15) (A lawyer must also act with commitment and dedication to the interests of the
client and with zeal in advocacy upon the clients behalf). Chicago, Illinois: American Bar
Association.
14
Weick, Karl E. and Sutcliffe, Kathleen. (2001). Managing the unexpected (p. 46). San Francisco,
California: Jossey-Bass. See Coutu, Diane. (2003, April). Sense and reliability. Harvard Business
Review, p. 87.
15
McGraw-Hill, Inc.
12
314
9.1.4
Give Vivid Pictures Time to Fade
Most people reason dramatically, observed U.S. Supreme Court Justice Oliver
Wendell Holmes, not quantitatively.16 This cognitive bias often called the
availability or representativeness heuristic causes people to remember the
horrendous crime committed two blocks away, not the actual crime rate in their
community. They also are certain that chainsaws, scissors and hammers cause more
injuries than beds, mattresses, and pillows. But they are wrong.17 For similar
reasons, Americans remember that nearly 2,800 people died at the World Trade
Center on September 11, 2001, but they are not aware that just as many people are
killed every ten days as a result of medical errors.18
Vividness activates the rat brain, the more primitive, instinctual area of the
brain, and hijacks objective decision making. Decision makers, consequently,
underestimate the overwhelming power of vividness and fail to counter it, believing
they are rationally responding to facts when they are reacting to stimuli. Epictetus,
writing in the first century, cautioned against the distortion of vividness: Be not
swept off your feet by the vividness of the impression, but say, Impression, wait for
me a little. Let me see what you are and what you represent. Let me try you.19
Recognizing the minds high susceptibility to vividness, science writer Clive
Thompson warns decision makers in terms more terse than Epictetus: theres a
sucker born in every medial prefrontal cortex.20 As a result of the vividness
illusion, the sucker in every prefrontal cortex will pay more for a policy insuring
against death from terrorism than death from any cause, death caused by cancer
than death from any cause, or loss of a home caused by flooding than all causes. As
Nicholas Taleb, a former derivatives trader and the author of The Black Swan and
Fooled by Randomness comments, I noticed that people do not like to insure
against something abstract; the risk that merits their attention is always something
vivid.21
Because decision makers reason dramatically and focus on recent, vivid events,
they do not accurately evaluate the source, magnitude, frequency, cause and cost of
problems and solutions. They fixate on salient case facts that seem significant and
memorable to them but may have little impact on a jury. The fact that a driver was
belligerent, intoxicated, or unlicensed strikes a personal injury plaintiff as
16
Myers, David G. (2002). Intuition: Its powers and perils (p. 203). New Haven: Yale University
Press.
17
Id.
18
Wachter, Robert M. and Shojania, Kaveh G. (2004). Internal bleeding (p. 20). New York:
Rugged Land.
19
Epictetus, Discourses, Bk. I, ch.18.
20
Thompson, Clive. (2003, October 26). Theres a sucker born in every medial prefrontal cortex.
The New York Times. Available at http://www.nytimes.com/2003/10/26/magazine/26BRAINS.
html
21
Taleb, Nicholas. (2005). Fooled by randomness (p. 37). New York: Random House.
315
important, the antagonistic remarks of a competitor seem damning to an antitrust

plaintiff, and an employees fraudulent employment application may appear dispositive to a defendant employer in a wrongful termination case but none of these
facts may be admissible or, if admissible, as persuasive to the jury as they are to a
litigant. Attorneys who have stared at twelve impassive jurors, expecting some
reaction after thoroughly impeaching a witness with his own deposition testimony,
are surprised to see that the jurys sense of significance does not always comport
with their own. Both litigants and attorneys, therefore, must persistently question
their own perceptions and evaluations to test whether the sound bites and exhibits
they find to be devastating actually are more vivid than probative.
9.1.5
Credit Randomness its Due
In attempting to affix motives to a party or causes to an effect, attorneys and clients

underestimate the role of chance. Like other people, they develop an illusion of
control, imagining that they have more control over events than they do and
imputing motivations and intentions to make sense of otherwise disconnected
events. We believe we can influence affairs more than the objective evidence
justifies, explains Paul Kleindorfer, a professor of decision sciences and economics. This illusion, he adds, seems rooted in a deep-seated need to have mastery
over our destiny and environment, and indeed to most of us the perception of no
control would be highly debilitating.22 In reality, chance plays a major role in both
successes and failures, and the links between opportunity and execution, motivation
and realization and capabilities and results are tenuous at best. Decision makers,
consequently, confuse correlation with causation and perceive causal relationships
where none exist. Although cases appear more appealing when spun as compelling
narratives of avarice and opportunism, the benefits from permitting surmise to
trump facts are chimerical and short-lived.
In the context of lawsuits, the attribution and hindsight biases link predilections
to actions, ill motives to harm, and causes to effects despite the absence of
empirical proof. Given any adverse event especially a tragic accident or astronomical damages an ordinary person is inclined to find a tangible cause rather
than attribute the event to happenstance. Worn tread is more likely to be seen as the
cause of an accident than the freak hailstorm preceding the skid, just as fraudulent
financial statements are more likely to be seen as the cause of a publicly traded
companys demise than an industry-wide revenue decline.
The search for explanations is inexorable and misleading. Nicholas Taleb
describes this natural desire to see causation: we often have the mistaken impression that a strategy is an excellent strategy, or an entrepreneur a person endowed
22
Kleindorfer, Paul R., Kunreuther, Howard C., and Schoemaker, Paul J.H. (1993). Decision
sciences (p. 113). Cambridge, United Kingdom: Cambridge University Press.
316
with vision, or a trader a talented trader, only to realize that 99.9% of their past
performance is attributable to chance, and chance alone.23 As a result of this
mistaken attribution and the general reluctance to accept the inherent randomness
of life, Taleb explains, people confuse luck with skills, probability with certainty,
theories with reality, anecdotes with facts, randomness with determinism and
coincidence with causality.24 In litigation, the cognitive need to denigrate randomness and to present a tidy package of cause and effect means that litigants may
develop psychologically compelling ideas without judicially admissible evidence.
Cases often rest on premises abundantly clear to a client but indiscernible to a trier
of fact lacking the clients history of experiences and interactions with its opponent.
After an adverse judgment, attorneys and clients conclude that the jury just didnt
get it or didnt buy it, when in reality the jury did get it and just saw a very
different picture.
9.1.6
Deal with Attribution Errors Early
As explained in Chapter 4 (Psychological Factors), parties quickly imbue an

adversarys actions with malevolent motivations. Once the attribution bias is
activated, parties cannot see the evidentiary forest for the dispositional trees.
Recognizing the powerfully negative effect of attribution biases, proactive attorneys direct disputes into early mediation or early neutral evaluations. Mark
LeHocky, general counsel for Ross Stores, Inc., enforces a policy of early stage
mediation because the interaction at mediation may reduce distrust and misapprehension and promote objective case evaluation:
But, even if they arent able to settle the case at the early stage, a tremendous thing happens,
which is the parties get rid of a lot of the fog in the room misunderstandings, sometimes
misunderstandings about peoples objectives. And so even if it doesnt settle early on,
youve gotten rid of a lot of subsidiary issues. If the dispute remains past that point, its a
confined dispute thats clearly stated, and the parties can evaluate much more efficiently
later on.25
LeHocky adeptly averts the initial attribution error that may occur when a party
proposes early mediation the adversary thinks they must be scared otherwise
they would not propose mediation by informing counsel that the company takes
every case to early mediation as a regular business practice.
Early neutral evaluation (ENE) is an alternative to early mediation and can be
equally effective in countering motive mongering and blocking the cycle of
rumination and blame that reinforces parties self-serving views. In ENE, the
23
Taleb supra note 21 at xliii.

Id.
25
A thriving retail company in the middle of an economic storm. (2009, February 17). San
24
317
parties attorneys typically submit evaluation statements to the evaluator(s) prior to

the ENE session, and the parties attorneys make informal presentations of their
case during the session. Although cross-examination does not occur, the parties are
permitted to make responsive presentations after hearing the other partys side. The
evaluator usually asks questions to clarify the issues and evidence; she then
identifies the issues and prepares a written or verbal evaluation. At various phases
of the session, both before and after the evaluation is submitted, the evaluator may
ask whether the parties wish to discuss settlement. If a settlement does not occur,
the evaluator may schedule another session or assist the parties in preparing a case
development plan for discovery and pre-trial motions.26
A major advantage of ENE over mediation, explains Magistrate Judge Wayne
Brazil, is that the bases for the evaluative component of the process are systematically developed, fully visible to all parties, and as comprehensive as the parties
knowledge permits each party knows every piece of evidence and every
argument that the evaluator is considering.27 The ENE process differs from
many mediations, where private caucuses may retard interactive exchanges of
information, and has strong potential for accelerating case evaluations and resolutions. ENE introduces contrary evidence and an independent evaluation before
parties have invested tens of thousands of dollars in litigation expenses and
have become unyieldingly fixated on the merits of their claims or defenses.
9.1.7
Diversify the Team
Decision makers feel comfortable working with people similar to them in background, race, experience, values, age, status, income and education. This compatibility bias, however, hinders creative problem solving and undermines negotiating
outcomes. In simulated negotiations, teams comprised of nonfriends perform better
than teams of friends, and heterogeneous groups achieve higher joint outcomes in
team negotiations than homogeneous groups.28 Because diverse team members
have a broader range of experiences and contacts, they incorporate more new
information into decisions and demonstrate higher levels of creativity. Dissimilar
26
This overview of the early neutral evaluation process is based on Magistrate Judge Wayne D.
Brazils description in Early neutral evaluation or mediation? When might ENE deliver more
value? Dispute Resolution Magazine, Fall 2007, pp. 1015.
27
Brazil, Wayne D. (2007, Fall). Early neutral evaluation or mediation? When might ENE deliver
more value? Dispute Resolution Magazine, pp. 11, 12.
28
Zhong, Chenbo James. (2001, Fall). Group heterogeneity and team negotiation. Kellogg Journal
of Organization Behavior, p. 6. See Hong, Lu, and Page, Scott E. (2001, March). Problem solving
by heterogeneous agents. Journal of Economic Theory, 97(1), 123163. Cf. Bar, Michaela,
Niessen, Alexandra, and Ruenzi, Stefan. (September 2007). The impact of work group diversity
on performance: Large sample evidence from the mutual fund industry; and Niessen, Alexandra
and Ruenzi, Stefan. (February 2007). Sex matters: Gender differences in a professional setting.
Available at http://ssrn.com/abstract966243.
318
teams also make fewer assumptions, and, when they do make assumptions, are
more likely to make those assumptions explicit, avoiding critical misunderstandings.29 Although heterogeneous groups can drive bosses and coworkers crazy,
explains Stanford business professor Robert Sutton, they increase the range of
what is thought, noticed, said, and done in a company.30 The bottom line when
assembling a problem-solving team: mix it up.
9.1.8
Time Does Not Take Sides
Parties often remark, Time is on our side. For plaintiffs this can mean that the
pressure on defendants to settle mounts as a trial date draws near. For defendants it
often means that they are receiving a return on money that otherwise would have
been paid to settle the case or that plaintiffs expectations diminish the longer they
are forced to wait for a resolution. In reality, the passage of time rarely favors any
party. Over time animosities are heightened, expectations are reinforced, perceptions are hardened, the number of observers and stakeholders increases, litigation
expenses mount and damage claims increase. Regardless of the relative economic
strengths of the parties, few parties obtain superior bargaining positions simply
because they delay resolution.
Decision makers who think they benefit from the passage of time often lauded
as iron butt negotiators overlook two problems. First, they incorrectly assume
that at least one factor will work to their advantage over time while all other factors
remain static or shift in their favor. A defendant, for example, may assume it is
earning interest by delaying payment of a settlement sum while the plaintiffs
damages and minimum settlement requirements are fixed. In fact, all settlement
factors and stakeholders are constantly changing, and myopically focusing on one
anticipated advantage gained by the passage of time may obscure unanticipated
risks posed by other factors. While an executive receives accolades for hanging
tough in settlement negotiations, a wrongfully discharged employees damages
may be increasing due to widening unemployment in his field; a plaintiffs personal
injuries may be exacerbated by unanticipated medication side-effects; key company
witnesses may resign or otherwise lose their enthusiasm for testifying; international
currency fluctuations may increase the damages sustained by an antitrust plaintiff;
or a co-defendant may settle and provide incriminating information to the plaintiff.
All case variables favorable and unfavorable change over time.
Second, iron butt negotiators assume that the framework for evaluating the
quality of a decision remains static. When they continue to believe that time is
on our side, they are overlooking material changes in the parties objectives and
29
See Page, Scott. (2008). The difference: How the power of diversity creates better groups, firms,
schools, and societies. Princeton, New Jersey: Princeton University Press.
30
Sutton, Robert. (2001, September). The weird rules of creativity. Harvard Business Review,
p. 98.
319
their criteria for an acceptable outcome. This oversight can foster the illusion that a
single decrement in an adversarys position is an improvement in their position.
While a party may enjoy a single and temporary advantage derived from delay,
other risks not contemplated by their original decision-making framework
adverse publicity, governmental investigations, and incipient class actions may
be fostering multiple and persistent disadvantages. Because decisions are invariably
based on the facts, policies and objectives pertaining at the time the decision is
made, and those facts, policies and objectives inevitably change over time, it is
imprudent for decision makers to avoid settlement negotiations with the justification that time is on their side. The Romans recognized this fallacy early in their
maxim, Omnia mutantur, nos et mutamur in illis (all things are changing, and we
are changing with them).
9.1.9
Align Client Objectives and Attorney Incentives
Considering the billions of passenger miles flown every year, air traffic fatalities are
remarkably low. This low fatality rate is due, in part, to the close alignment between
the pilots incentives and the passengers interests. Because pilots share the consequences of adverse outcomes in equal measure with passengers, pilots lack any
motivation to take imprudent risks. In law firms operating under traditional hourly
fee arrangements, however, the clients and attorneys fly in separate capsules; the
risk of loss is borne almost entirely by the client, and the law firm often emerges
financially unscathed regardless of whether the adverse outcome was avoidable or
unavoidable with prudent case management and strategic decision making.
Sensitive to the disincentives inherent in the traditional hourly billing system,
both clients and law firms have attempted to shift some cases from hourly billing
arrangements to flat fees or some form of premium billing camouflaged as discounted billing. In this endeavor, clients may overlook the dangers of miscalculated
flat fees, and law firms may minimize the conflict of interest inherent in simultaneously advising clients about likely case outcomes and devising fees structures
intended to increase profit margins for results achieved above a threshold determined, in part, by the law firm. For law firms, these alternatives to hourly billing
rates are not designed to ease partners into lower tax brackets but rather to prevent
client defections while enhancing profit and loss statements. Firms are approaching the limit of how hard they can ask lawyers to work, states Scott Turow, noted
author and Sonnenschein partner. Without alternative billing schemes, he says,
lawyers will not be able to maintain the rapid escalation in incomes that big firms
have seen.31 The critical issue thus becomes whether the alternative billing
structure, like the alternative minimum tax, is truly alternative or merely additional.
31
Glater, Jonathan. (2009, January 30). Economy pinches the billable hour at law firms. The New
York Times, p. A1.
320
The flat fee vs. hourly rate debate presents two extreme positions and a false
choice. Both arrangements have great potential to harm the client because nearly all
large law firms impose minimum billable hour requirements on their attorneys
regardless of the firms fee arrangement with the client. Recognizing that a firms
minimum billable hour requirement may be the ethics culprit under both flat fee and
hourly rate compensation arrangements, the Los Angeles County Bar Association
issued this candid ethics opinion in 1994:
The use of an attorney productivity standard based upon a minimum number of hours billed
carries the possibility that the attorney, in order to meet the standard, will either perform
unnecessary work, thus padding the clients fees; will bill the client for work not actually
performed, thus defrauding the client; or will fail to act competently in performing legal
services due to the pressure or fatigue of working an excessive number of hours, or to the
lack of personal capacity of the attorney to work a sufficient number of hours in order to
meet the productivity standard. Alternatively, an attorney productivity standard which
limits the amount of time an attorney may spend on a matter may have the effect of
preventing an attorney from allocating sufficient time to handle a matter competently.32
Any of these consequences, the opinion concludes, would violate ethical standards, and could preclude the recovery of any fees for services.
Under a flat rate, the clients interests may be prejudiced and the firm may have
serious conflicts when the case budget for two years of litigation, on which the flat
fee is based, is busted in the first six months of discovery and law and motion
practice. With overhead costs varying from 55% 80% of gross law firm income,
few law firms can afford to underwrite litigation after the projections underpinning
the flat fee are proven to be erroneous. And no savvy client really wants to be
represented by a firm that regards its case as a financial albatross and reduces its
attorney staffing to the lowest possible level commensurate with minimum professional liability standards. Flat fees only work effectively when the law firm is at
least maintaining its historic profit margins and the client believes that the flat rate is
less painful than the tyranny of the billable hour.
Similar maladies afflict the fixed fee/premium billing arrangements under which
clients, for example, pay a fixed fee and a bonus if the case settles for less than the
clients worst case scenario or more than the clients best case scenario. In one
of these hybrid fee arrangements, the client achieved a negotiated resolution in an
amount far less than its worst-case scenario. The effective hourly rate achieved by
the firm, according to its former chairman, was something like 150% of our hourly
rates. We made money, the client was happy.33 A potential problem with these
hybrid fee arrangements is that the clients assessment of the worst or best outcomes may be affected, at least in part, by the attorneys who concurrently assess the
likely outcomes and their ability to obtain premium compensation by delivering a
better result than the likely outcome anticipated by the client. Unless the client
32
Los Angeles County Bar Association Professional Responsibility And Ethics Committee. (1994,
November 21). Opinion No. 479.
33
Glater supra note 31.
321
incurs the additional expense of retaining two law firms, one to evaluate the risk and
negotiate the fee arrangement and another to represent the client in the subject
action, the potential conflict of interest is enormous.
Instead of choosing between hourly billing and flat fee arrangements, both law
firms and clients may be better served by matching clients interests with attorney
incentives. The business realities are that clients prefer early, practical and
financially reasonable resolutions, and law firms may reduce substantially their
efforts on a flat fee case that no longer covers the rent, insurance, salaries and
other fixed costs required to prosecute or defend a case. A suitable alternative for
clients and law firms is simply to recognize that a law firms standard hourly rates
represent the value obtained when the firm provides its highest level of client
service, and if the firm does not perform at the high level of competence and
efficiency reflected in its standard hourly rates, the hourly rate should be reduced.
For cases satisfactorily resolved within 90 days, for instance, the standard hourly
rate may be entirely appropriate. When a case drags on for 48 months, however,
the standard hourly rate no longer reflects the value obtained by the client, and
the hourly rate should be adjusted downward to cover the law firms overhead,
including associate salaries, and reduce or eliminate the partners or shareholders
incentives to prolong the litigation. An illustrative billing tier would be the full
hourly rate within the first 6090 days of representation, 90% of the regular
hourly rate for the next 90 days, 80% for the following 180 days, and 70% for the
remaining representation. This assures that the law firm is not operating at a loss
as a result of the clients representation while eliminating any financial incentives
for delay. Clients may notice that the gratuitous attorney antagonism that often
attends the first 90 days of litigation and retards settlement discussions throughout
the litigation does not exist when the attorneys financial incentives are identical
to the clients financial objectives. Although attorneys will argue that this
arrangement is fundamentally unfair because they have no control over an
adversarys behavior, it does little more than place law firms in the ordinary
business world where companies are paid for results and the difficulties of
competition and the stubbornness of counterparties are simply part of the business
landscape.
9.1.10 Consider Appointing Separate Settlement Counsel

Although they work under a united command, the negotiating team usually is
separate from the SWAT team. Both the negotiating team and the SWAT team
know its difficult to negotiate, snipe and rescue at the same time. It is equally
difficult, and sometimes counterproductive, for litigation attorneys to function as
both the negotiating team and the trial team.
Roger Fisher, a co-author of Getting To Yes and professor at Harvard Law
School, wrote a hypothetical letter from a CEO to the companys litigation attorney,
322
expressing his concern that litigation counsel are doing battle in court when they
should be negotiating speedy settlements. He thinks this conflict in roles and
objectives may be inevitable for litigation counsel and can be overcome only by
appointing separate settlement counsel:
I propose that for every major case we have one lawyer pursue litigation and another
develop, at the earliest possible date, the best settlement option obtaining. This advocate
for settlement would be expected to press on us the reasons for accepting a settlement and
would provide a counterweight to the litigators partisan bias by pointing out weaknesses in
our litigation position. This two-track approach should benefit both the litigator and the
settler. The litigator would be under no pressure to pull his punches for fear that an unduly
adversarial approach might damage the chances of settlement. And the harder the litigator
pursued that option, the more it would strengthen the hand of the lawyer working toward
settlement.34
Because Fisher thinks it is probably impossible for litigators to abandon the fight
to vindicate the clients cause, he urges clients to keep their brave Sir Galahads
but add wise Merlins to negotiate settlements.
Mediator William Coyne reiterates the value of independent settlement counsel.
He contends that the mind-set needed to do effective problem-solving is incompatible with the mind-set needed to pursue litigation whole-heartedly. Put simply, it
is difficult to do creative problem-solving while beating on your chest and throwing
clumps of grass in the air.35 He describes the counter-productive cycle of a
litigator trying to force a settlement by pummeling the other side and then
realizing that the aggressive and expensive tactics intended to produce a settlement
have actually made the adversary more resistant to settlement and convinced that its
antagonist is determined to proceed to trial. Absent the appointment of settlement
counsel, the litigation attorney finds herself in a paradoxical situation: The Litigator really wants to settle, but use of litigation as a negotiation tool amplifies all of
the communication and psychological barriers to settlement.36 When the litigation
strategy collapses, and it becomes evident that continued aggressiveness simply
escalates the conflict and prevents settlement, the client is forced to execute an
about-face before trial and often settles on terms inferior to those that could have
been obtained earlier by settlement counsel.
9.2
Phase Two: Binding
In the binding phase, attorneys and clients literally try to wrap the problem within a
legal construct, binding it between an assessment of legal liability at one end and an
evaluation of the recoverable damages at the other end. Five key questions require
34
Fisher, Robert. (2002, April). Dear lawyer. What goes around. Harvard Business Review, p. 128.
Coyne supra note 10 at 393.
36
35
9.2 Phase Two: Binding
323
attention in the binding phase: (1) What type of problem is this? (2) How did this
problem arise? (3) Do our policies and practices deal with this issue and did the key
players follow those policies and practices? (4) Who is responsible for fixing the
problem? (5) What can I expect to happen? In this phase, both plaintiffs and
defendants essentially strive to define the problem and its causes and ramifications.
Plaintiffs attempt to identify the most favorable legal theories for prevailing on their
claims and then maximizing the range and amount of damages recoverable under
those legal theories. Defendants, meanwhile, attempt to categorize the legal theory
of relief in a manner most likely to bar or limit the claim, and failing that, to
minimize the damages recoverable under a plaintiffs claim.
In the binding phase, the primary impediments to sound decision making are
over-simplification of the problem; selective search for facts and legal authorities;
excessive reliance on legal precedents and recent trials or settlements in other cases
that are tenuously related to the subject case; the failure to solicit and incorporate a
broad range of opinions; and premature elimination of possible resolution alternatives. Six methods of avoiding these impediments and improving the quality of
decision making in the binding phase are described below
9.2.1
Start with Ideals
People pride themselves on being pragmatic, realistic, practical and downto-earth. In formulating possible solutions, however, effective decision makers
must start with ideal solutions and then make adjustments and compromises
working from a well-defined concept of the ideal solution. As Peter Drucker
explains in The Effective Executive, the problem with asking What is acceptable?
instead of What is right? is that the decision maker usually loses any chance to
come up with an effective, let alone with the right, answer.37 It is inevitable that
the ultimate decision will represent a solution short of the ideal, but if decision
making does not begin with ideals, the evaluative framework is flawed and further
compromises are wrested from narrow, expedient positions that already embody
compromised policies and objectives.
One has to start with what is right rather than what is acceptable, asserts
Drucker, because one always has to compromise in the end.38 He recalls his
emphatic instructions from Alfred Sloan, then chief executive officer of General
Motors, for his first major consulting project: And dont you, above all, concern
yourself with the compromises that might be needed to make your recommendations acceptable. There is not one executive in this company who does not know
37
Drucker, Peter. (1996). The effective executive (p. 136). New York: Harper Business.
Drucker supra note 7 at 247.
38
324
how to make every single conceivable compromise without any help from you. But
he cant make the right compromise unless you first tell him what right is.39
In a similar vein, economist Barry Nalebuff and law professor Ian Ayres
encourage creative problem solving by asking, What would Croesus Do
(WWCD)?40 (Croesus was the king of Lydia, famous for great wealth and the
first minting of pure silver and gold coins). Instead of asking what is the most
practical solution, they suggest that decision makers imagine the ideal solution,
regardless of costs, and ask the overriding question, Are there any solutions at
all?41 By putting themselves in King Croesus position, decision makers generate
alternatives spinning off from the base of the ideal solution. Adopting, modifying,
standardizing, and automating a WWCD answer, Nalebuff and Ayres explain, is
often easier than coming up with the solution from scratch.42
9.2.2
Switch Sides to Debias Judgment
Debiasing techniques force one to mentally switch sides in the game43 and
consider reasons why your judgment might be wrong.44 Keith Evans, an English
barrister and legal educator, presses this idea on litigation attorneys: As soon as
you have an approximate idea of what a new case is about sit down and write your
closing argument. And immediately afterward, he instructs, sit down and write
your opponents closing argument.45 Creative attorneys may consider reversing
this sequence.
Peter Drucker earned a law degree from the University of Frankfurt about two
decades before he started teaching management at New York University. He
considered it imperative that attorneys promptly draft the strongest argument in
support of their opponents position:
It trains him not to start out with, I know why my case is right, but with thinking through
what it is that the other side must know, see, or take as probable to believe that it has a case
at all. It tells him to see the two cases as alternatives. And only then is he likely to
understand what his own case is all about.46
39

Nalebuff, Barry, and Ayres, Ian. (2003). Why not? (p. 16). Boston, Massachusetts: Harvard
Business School Press.
41
Id. at 17.
42
Id. at 48.
43
44
45
Evans, Keith. (2004). Common sense rules of advocacy for lawyers (pp. 8586). Alexandria,
Virgina: The Capitol.Net .
46
40
325
Both attorneys and executives, Drucker argued, must assume that an adversary is as
intelligent and fair-minded as they are and perceives a different reality or at least a
different problem. Therefore, they must always ask, What does this fellow have to
see if his position were, after all, tenable, rational, intelligent?47
9.2.3
Think Divergently
How you define a problem usually carries with it an explanation of what caused
it, explains psychology professor Mihaly Csikszentmihalyi. Although our first
impulse is to label problems by relying on tried-and-true prejudices, he notes,
creative minds avoid rushing to define problems. Instead, they employ divergent
thinking: produce a multitude of options, generate different and opposite ideas and
formulate unlikely and original answers.48 Divergent perspectives, write Karl
Weick and Kathleen Sutcliffe, provide you with a broader set of assumptions and
sensitivity to a greater variety of inputs. This discourages simplification and also
increases the chances of seeing a greater number of problems in the making.49
The benefits of divergent thinking are reflected in some of the litigation decisionmaking guidelines developed by Kevin Kennedy, the Chief Executive Officer of
JDS Uniphase: actively seek independent views; dont be a prisoner of your own
mind; look beyond conventional wisdom; there is rarely one path; and consider alternatives and back-up plans.50 These guidelines foster divergent thinking
about the parties positions and possible settlement options and ensure that clients
and their attorneys get beyond mutually reinforcing opinions. In successfully
defending itself against a securities fraud action, for instance, JDS Uniphase sought
input from four independent sources: it engaged an outside law firm to conduct a
three-month investigation; it retained a former federal judge to evaluate the case; it
obtained demographic information about the likely jury pool from a consulting
firm; and it presented the case to multiple focus groups. Its board of directors,
moreover, explicitly considered the full range of outcomes, instructing Kennedy,
If youre willing to go to trial you have to be willing to see this company in and out
of bankruptcy if the verdict goes against you.51
Divergent thinking promotes sound case evaluation and creative settlement
solutions without signaling weakness to opponents. Maintaining a strong and
confident front in dealing with adversaries does not require a myopic perspective,
47
Id.
Csikszentmihalyi, Mihaly. (1996). Creativity (pp. 365, 368369). New York: Harper Collins
Publishers.
49
Weick and Sutcliffe supra note 14 at 162.
50
Jones, Ashby. (2008 June 2). JDS wins investor lawsuit, bucking a trend. The Wall Street
Journal, p. B4.
51
Id.
48
326
rigid attitudes and dogged tactics but rather is bolstered by intellectual receptiveness, creative ideas and flexible strategies. Toughness, in fact, can be a serious
impediment to resolving cases through divergent thinking: The tough lawyers
can provide assurance to the client that everything is under control. But this very
assurance can lead to yet another barrier to settlement, because it affects the way the
client perceives his situation.52 When both client and attorney become tough and
obdurate, divergent thinking halts and settlement becomes nearly impossible
because the tools necessary to defuse a conflict understanding, empathy, foresight, imagination and tact are blocked.
9.2.4
Stop Pattern Matching
Pattern recognition is an evolutionary overhang. Homo sapiens genetic pool was

narrowed millions of years ago to those wary pithecanthropoids who scaled tree
trunks whenever they saw stripes whether they were on tigers or zebras. Irving
Janis, author of Groupthink, recommends skepticism about solutions derived from
vivid historic analogy and suggests asking two questions: What are the likenesses
and what are the differences between then and now?53 He cautions against
searching for historical analogies and metaphorical thinking and argues that
these simple approaches to decision making interfere with careful search, critical
thinking and planning.54
Successful decision makers are particularly vulnerable to pattern matching, as
their success leads to observations that are concentrated in the same or similar
situations, states management professor James March. Decision reliability consequently suffers because their perspective limits evidence to phenomena in the
neighborhood of current practice.55 To counter this decision-making myopia, Karl
Weick, a psychology professor at the University of Michigan, advises: If you
update and differentiate the labels you impose on the world, the unexpected will be
spotted earlier and dealt with more fully, and sustained high performance will be
more assured.56
Because legal argumentation is based on precedent and analogy, attorneys are
trained to be overachievers in pattern matching. Effective legal advocacy the
persuasive art of relating case facts to favorable precedents rests on analogies,
patterns, metaphors, and enthymemes. Malcolm Gladwell describes how an attorney carefully orders facts to fit patterns: each detail is adduced, considered, and
laid on the table and then adjusted and readjusted so that the corners of the new
52

Janis, Irving, (1989). Crucial decisions (p. 240). New York: The Free Press.
54
Id. at 152.
55
March, James. (1994). A primer on decision making (p. 243). New York: The Free Press.
56
53
327
fact are flush with the corners of the fact that preceded it.57 The adversarial system
encourages attorneys to find common patterns in remotely similar cases with
favorable precedents and, conversely, to distinguish fact patterns in nearly identical
cases with unfavorable precedents. Attorneys may strain to see patterns where none
exist and to disregard patterns when they do exist.
David Balabanian, a partner at Bingham McCutchen and one of the most
respected commercial litigators in the country, credits part of his success to treating each case as new and cautions attorneys against pattern matching:
You know some people say you shouldnt be reinventing the wheel. I believe in reinventing
the wheel; this time you may make a better wheel. Maybe there is a new way; maybe you
can come at it from a different angle. And maybe the interests of this client are not the same
as the interests of the last client, even if the case is very similar.58
This exceptional litigator likes to work with young lawyers on his cases because
theres a lot to be said for having no baggage from the last case. For many young
lawyers, its easy to think outside the box, because they dont know where the
box is.
The pitfalls of pattern matching are compounded by legal specialization.
Because attorneys specialize in discrete practice areas, cases are quickly categorized by case type to facilitate the selection of counsel by their subject matter
expertise. Clients or corporate counsel frequently determine the case type before
consultation with outside counsel and then select outside counsel based on the
attorneys reputation for handling that type of case. The designated counsel, in turn,
is likely to analyze the case through the prism of her discrete knowledge and
experience in a specialized field. Many cases, however, do not fit tightly into
legal compartments. An intellectual property attorney with an undergraduate degree
in engineering may understand design defect issues better than a law firms
products liability litigator, and a real estate transactional attorney may be more
familiar with in-house brokerage practices than the employment law attorney
defending the client against a brokers wrongful discharge case. Clients need to
make sure that, at least in the binding phase, the attorneys expertise corresponds
with the issues raised by the case, not the legal practice area designated on an intake
form or a new matter memoranda before the case was thoroughly analyzed.
9.2.5
Work Well with Others
When stymied by limited information, decision makers may find it easier to expand
the number of observers and observations than the available information.59 Large
57
Gladwell, Malcolm. (2006, October 16). The formula. The New Yorker, p. 138.
Oberthur, Anna. (2005, December 1). Work draws lawyer seven days a week. San Francisco
Daily Journal, p. 4.
59
March supra note 55 at 243.
58
328
groups of diverse individuals, states James Surowiecki, author of The Wisdom of

Crowds, will come up with better and more robust forecasts and make more
intelligent decisions than even the most skilled decision maker.60 One of the
simplest ways to increase the reliability of case assessments is averaging the
forecasts that were made independently by several individuals, since group average
forecasts generally are superior to those of the groups individual members.61 For
lawyers, spending 30 minutes discussing a case and then polling their colleagues
regarding likely trial or arbitration outcomes probably will yield a more accurate
assessment of the case than 30 billable hours spent on additional discovery.
Attorneys also benefit from reaching beyond their own specialty areas and
appropriating ideas from other attorneys and departments. David Balabanian uses
an inter-disciplinary approach to develop novel and creative solutions for client
problems:
Practice doesnt make perfect. Practice makes permanent. Doing the same thing too many
times can be the real enemy of creative thought. I find it very valuable to be working in
several different areas at once because ideas that have found favor in one area may not yet
have penetrated to another. An approach that worked really well in one kind of case may
work in another where it hasnt been tried before.62
Ironically, Mr. Balabanian studied philosophy at Oxford University and was tutored
by Isaiah Berlin, the historian and philosopher who explicated the two different
thinking styles of hedgehogs (which fit observations into a central thesis) and
foxes (which allow observations to foster polymathic intelligence). Isaiah Berlin
presumably would have placed this student, Mr. Balabanian, among the foxes
which lead lives, perform acts, and entertain ideas that are centrifugal rather
than centripetal, their thought is scattered or diffused, moving on many levels,
seizing upon the essence of a vast variety of experiences and objects.63 Capitalizing on broad sources of knowledge and information, foxes demonstrate superior
decision-making skills and avoid the hedgehogs vulnerability in relying on a single
source or rule.
9.2.6
Consider Whether a Litigation Attorney or a Trial

Attorney is Required
The difference between an office lawyer and a trial lawyer, observed the celebrated trial lawyer Louis Nizer, is as great as between an internist and a surgeon.
60
Surowiecki, James. (2004). The wisdom of crowds (p. 32). New York: Doubleday.
Stewart, Thomas R. and Lusk, Cynthia. Seven components of judgmental forecasting skill:
Implications for research and the improvement of forecasts. In Connolly, Terry, Arkes, Hal R., and
Hammond, Kenneth R. (2000). Judgment and decision making (p. 411). Cambridge: Cambridge
University Press.
62
Oberthur supra note 58 at 5.
63
Berlin, Sir Isaiah. (1953). The hedgehog and the fox. New York: Simon & Schuster.
61
329
Both require high talents, but the specialized skills and tools are so different that
they may as well be in different professions. The same could be said of trial
lawyers and litigators, a distinction frequently lost on clients. The failure to
understand the critical distinction between good litigators and good trial lawyers
leads many corporate counsel to select the wrong person to try their cases.64
Before the advent of pre-trial discovery and the extensive motion practice which
characterizes modern litigation, very few attorneys described themselves as litigators. Attorneys who represented clients in lawsuits were trial attorneys, and
attorneys with little or no trial experience were simply considered inexperienced.
They carried the trial bags, wrote the briefs and learned trial practice through
observation and an occasional examination of an unimportant witness. As the
connection between representation in lawsuits and experience in courtrooms
became more attenuated, attorneys increasingly referred to themselves as litigators, connoting a specialization in litigated matters with or without actual trial
experience.
The essential difference between litigators and trial attorneys is described by
DecisionQuest, a national trial consulting firm, in its article Wanted: A Good Trial
Lawyer to Take My Case To Court Litigators Need Not Necessarily Apply:
A good litigator will know all the facts and issues. He or she will be brilliant at motion
practice, discovery and preparing briefs. A good litigator is an inductive thinker, and if you
want to know the most minute point of evidence, the good litigator can tell you about it.
In contrast, a good trial lawyer thinks deductively and understands that telling the jury more
does not lead to increased comprehension. . . . The good trial lawyer teaches the jurors for
the moment, hoping they will gain some momentary insight the impression of which they
will carry to deliberations. . .
Good trial lawyers can try any kind of case on any subject. They can do that because they
know how to create a story. They build a team they can rely on for support and, more
importantly, they can successfully connect with a jury.65
Effective trial lawyers are credible, organized, tenacious, and most importantly,
persuasive storytellers. They generally do not emulate the inductive thought patterns of litigators, nor do they generally possess the subject matter expertise of
litigators.
DecisionQuest warns that clients mistakenly choose an attorney to try a case
based on the attorneys subject matter expertise. Its concern is substantiated by a
survey of 635 corporate counsel, 88% of whom rated expertise as the most
important factor in selecting counsel for high stakes matters.66 Instead of
relying on subject matter expertise, a client may be better served at trial by an
64
DecisionQuest. (1993, October). Wanted: A good trial lawyer to take my case to court - litigators
need not necessarily apply. DecisionQuest Litigation Library. Available at http://www.decisionquest.com/litigation_library.php?NewsID235
65
Id.
66
Martindale-Hubbell. (2005). How corporations identify, evaluate and select outside counsel,
p. 4. Available at http://www.martindale.com/go/corpbuy05/Executive_Summary.pdf
330
experienced and successful trial attorney. The clients question should not be,
Who is a good patent lawyer? or Who is a good employment lawyer?,
according to DecisionQuest. Rather, it should be, Who has tried a lot of cases
and won them?67
In cases that appear unlikely to settle, clients should begin to consider whether
trial counsel will be required and whether their present attorney is effective as
both a litigator and a trial attorney. Starting this inquiry in the binding phase
provides ample time to evaluate this issue and, if necessary, select trial counsel
when settlement negotiations are unavailing. To be fully prepared for both
negotiated and adjudicated outcomes, clients often need to retain both litigators
and trial attorneys and know when to utilize their complementary but distinct
skills.
9.3
Phase Three: Solving
In the solving phase, the parties evaluate alternative methods of resolving a dispute.
Six questions predominate: (1) Who needs to participate in resolving this problem?
(2) What are the minimum requirements for a negotiated resolution? (3) What are
the possible methods of resolving this problem? (4) What will it cost? (5) How long
will it take? (6) How will the possible resolutions affect future interactions with
these parties and other affected people and organizations? In this phase the threats
to effective decision making are restricting the range of acceptable solutions,
making unfounded assumptions about what is advantageous or acceptable to
other parties, confusing aspirations with requirements, forming overoptimistic
predictions of likely adjudicated outcomes and their total costs, and minimizing
the subjective barriers to settlement. Six methods of mitigating these risks are
presented below.
9.3.1
Dont Follow Your Gut
Only gastroenterologists make money on guts. Despite the popular attention given
to business and political leaders who rely on instincts and go with their gut, the
dorsal lateral prefrontal cortex is far superior to the ileum when people are making
complicated decisions. To those who study decision-making, declare Russo and
Schoemaker, the most striking feature of intuitive judgment is not its occasional
brilliance but its rampant mediocrity.68 Eric Bonabeau, the chief scientist at
Icosystem, concurs in his article, Dont Follow Your Gut: The more options
67
DecisionQuest supra note 64.

68
9.3 Phase Three: Solving
331
you have to evaluate, the more data you have to weigh, and the more unprecedented
the challenges you face, the less you should rely on instinct and the more on reason
and analysis.69
To generate constructive solutions in litigated cases, attorneys and clients need
to rely on signals more concrete than their intuitive, gut level sense of what will
happen if the case does not settle. Intuitive decisions, plagued by self-serving
biases, inevitably blur the line between what one wants to happen and what one
predicts will happen. For litigants, the desired solution becomes the right result, and
the right result becomes the inevitable outcome. The attorneys dual, sometimes
conflicting roles of advocate and counselor further cloud deliberative thinking.
Effective resolutions in litigation cases, therefore, avoid intuitive evaluations and
are based on realistic, statistically reliable assessments of the likely case outcomes.
This assessment requires a basic understanding of statistics and probability, in
addition to the exercise of sound legal judgment.
In Kullar v. Foot Locker Retail, Inc.,70 the court confirmed that gestalt evaluations are insufficient evidence of the reasonableness, fairness and adequacy of a
settlement. Describing those intuitional, experiential case evaluation methods,
attorney Steve Katz, a partner at Reed Smith, states: Most lawyers will tell you
that determining the settlement value of a case is a mysterious art. Throw in some
legal knowledge, practical experience, familiarity with the judge and jury pool,
intuition, common sense, eye of newt and stir out comes a highly accurate
estimate from the best practitioners, and a guesstimate of dubious reliability
from the rest.71 Barrister surmise was criticized and deemed insufficient in Kullar
when counsel submitted conclusionary pleadings (the class representative has
vigorously prosecuted this case, counsel thoroughly reviewed all available evidence, the parties have engaged in adequate discovery, investigation and
research, settlement was in the best interests of the class) and sought court
approval for the settlement. Characterizing these recitations as generalities that
would apply in any case, the court confirmed that the evidentiary standards
required the production of data, not just attorneys opinions:
l
69
Informed evaluation cannot be made without an understanding of the amount

that is in controversy and the realistic range of outcomes of the litigation.
[O]ther data must be provided that will enable the court to make an independent
assessment of the adequacy of the settlement terms.
The court cannot approve a class action settlement if is not provided with basic
information about the nature and magnitude of the claims in question and the
basis for concluding that the consideration being paid for the release of those
claims represents a reasonable compromise.
Bonabeau, Eric. (2003, May). Dont trust your gut. Harvard Business Review, p. 117.
168 Cal. App. 4th 116 (2008).
71
Katz, Steven B. The giving tree. (2008, December 31). San Francisco Daily Journal, p. 7.
70
332
Noting that the parties had not submitted a class-wide damage study, the court
found insufficient the attorneys averments that the settlement was reached in an
arms-length bargaining and settlement negotiations were conducted with the
assistance of a highly qualified and widely respected mediator.
9.3.2
Search for Disconfirming, Discrepant Facts
After a series of accounting fiascos in 2005, Mike Zafirovski, the CEO of Nortel
Networks Corporation, thought he had put all the bad news behind him. Then in
March 2006 he learned that another accounting mess would require the company to
restate financial results for a third time. To avoid yet another accounting irregularity
and loss of credibility, he lies awake at night and asks himself: Am I making the
right decisions? Are people telling me what I need to hear? Am I being naively
optimistic and ignoring warning signs?72 Although the top of a mattress at
2:00 a.m. may not be the most conducive place to ask these questions, they are
the right questions for decision makers seeking disconfirming evidence and discrepant facts.
Accurate forecasting the ability to anticipate clarion events from faint signals,
discern trends from ambiguous data, and ascertain a range of probable outcomes
requires a relentless search for contrary evidence. A forecasters reputation for
accuracy does not rest on a few strongly held, permanently correct observations but
rather a series of observations continually changed, refined or withdrawn to match
new evidence. One of the worlds foremost forecasters and a Fellow at the Institute
for the Future, Paul Saffo, describes how expert forecasters work: If you must
forecast, then forecast often and be the first one to prove yourself wrong. The way
to do this is to form a forecast as quickly as possible and then set out to discredit it
with new data.73 Expert forecasters, he explains, have strong opinions, weakly
held.
Forecasters develop strong opinions by relying on a large quantity of weak,
interlocking, and sometimes contradictory data, and they avoid the common trap of
reaching major conclusions based on one or two salient facts.74 Having strong
opinions, Saffo declares, gives you the capacity to reach conclusions quickly, but
holding them weakly allows you to discard them the moment you encounter
conflicting evidence.75 For attorneys, cognitive agility requires rapid abandonment of legal theories shown to be inapposite, replacement of witnesses proven to
72
(2007, January 2). How a rookie CEO is testing his limits. The Wall Street Journal, p. A1.
Saffo, Paul. (2007, July-August). Six rules for effective forecasting. Harvard Business Review,
pp. 122131.
74
Saffos preference for multiple information sources highlights the ongoing debate about foxes
and hedgehogs. The Greek poet Archilochus wrote, The fox knows many things, but the
hedgehog knows one big thing.
75
Saffo supra note 73 at 129.
73
333
be incautious, revision of cost estimates advanced without adequate study or superceded by an adversarys tactics, and correction of recommendations premised on
insufficient evidence.
9.3.3
Pay Attention to Base Rates
Relying on instincts, intuition, heuristics and other cognitive shortcuts, states Louis
Menand, recipient of the Pulitzer Prize in History, is not a faster way of doing the
math; its a way of skipping the math altogether.76 Dont skip the math. Base rates
are consistently better predictors of likely outcomes than unaided human judgment,
or, in Robyn Dawes less charitable phrase, our cognitive conceit.77 More than
136 studies of judgment in widely diverse contexts prove that, whenever results can
be quantified or otherwise objectively determined, statistical methods yield vastly
more accurate predictions than human judgment.78
To learn base rates, and counter attorneys tendency to be cheerleaders as well as
counselors, clients should ask the same type of questions suggested by Stephen
Schenider, a Stanford biology professor and climate scientist. In his book, The
Patient From Hell, Schneider explains, I learned from being a climate guy that its
less threatening to use a hypothetical frequency.79 The key hypothetical question
to ask is: If there are 100 patients like me and if we follow the standard protocol,
how many will lose their remission and get their cancer?80 Clients can circumvent
their attorneys well-intentioned efforts to be supportive rather than statistical by
asking similar hypothetical questions:
l
l
l
How many similar cases have been (won) (lost) and what damages are usually
awarded?
How similar are those cases to mine in the type of damages claimed?
If you tried this case 100 times, what would be the results?
If attorneys cannot answer those questions, clients cannot make informed decisions
any more than a medical patient could make an informed decision about alternative
treatments without knowing the results of clinical trials.
The shift from anecdotal advice to fact-based probability assessments has
occurred in most other high risk, high consequence domains and greatly benefits
76
Menand, Louis. (2004, August 30). The unpolitical animal: How political science understands
voters. The New Yorker, p. 95.
77
Myers, David G. (2002). Intuition:Its powers and perils (p. 199). New Haven: Yale University
Press.
78
Hastie & Dawes supra note 5 at 5558.
79
Schneider, Stephen, and Lane, Janica. (2006). Patient from hell. Cambridge, Massachusetts: Da
Capo Press.
80
Id. quoted in Anderson, L.J. With doctors, question and persevere. Palo Alto Daily News,
February 14, 2007, p. 34.
334
attorneys and clients in trying to make effective decisions in litigated cases.

Knowing the probable case outcome, instead of relying on intuition, recent experience and anecdotal evidence, is not only desirable but may be required to meet an
attorneys standard of care in some jurisdictions. As the court stated in Prande v.
Bell,81 an attorney advising a client regarding settlement must know what the
outcome is likely to be if the case proceeds further, based not only on the relevant
law but also on what triers of fact in the community are doing in similar kinds of
cases. Under Rule 1.4 of the Model Rules of Professional Conduct, moreover, a
litigation attorney should explain not only the general strategy but the prospects of
success as well.82 The Prande decision and Rule 1.4 indicate that attorneys must
gauge the strength of a claim not only by its legal merits but its probable outcome as
well.
9.3.4
Prepare to Justify Your Case
Reliability increases when decision makers have to justify their decisions and their
forecasts of the likely outcomes. Research subjects who anticipate having to justify
their positions show improved calibration and reduced confidence.83 Professor
Philip Tetlock summarizes many studies that document changes in judgment and
decision in response to new information when people realized that they would be
accountable to others for their choice.84 In one study, academic judges were
receptive to new information when advised their actions would affect applicants
graduate school admission and they would be required to explain and defend their
actions to a review committee. Absent this information regarding the consequences
of their decisions and the need to justify them to a third-party, the judges were
found to display relatively little responsiveness to new factual information about
the persons being judged.85
The quality of decision making by attorneys and clients improves if they assume
they will have to explain and justify their decisions to a third party. The efficacy of
accountability may explain, in part, why insured defendants exhibit an overall
decision error rate of 22%, compared with a decision error rate of 30% for
uninsured defendants.86 The additional layer of accountability to the insurance
81
660 A. 2d 1055, 1065 (Md. App. 1995).

Center for Professional Responsibility. (2007). Model Rules of Professional Conduct Comment
5, Rule 1.4 (p. 17).
83
Stewart and Lusk supra note 61 at 413.
84
Janis supra note 53 at 104.
85
Id.See Frink D.D. and Ferris G.R. (1999). The moderating effects of accountability on the
conscientiousness-performance relationship. Journal of Business and Psychology, 13(4), 515524.
86
See Table 3.12, Chapter 3. See also Guthrie, Chris and Rachlinski, Jeffrey J. Insurers, illusions of
judgment & litigation. Vanderbilt Law Review, Forthcoming; Vanderbilt Law and Economics
Research Paper No. 0628. Available at SSRN: http://ssrn.com/abstract952493
82
335
company and the necessity of providing a justification to the insurer to obtain

settlement authority may enhance the quality of legal decision making. The beneficial effect of justifying a decision is higher in low predictability than in high
predictability conditions write professors Roger Hagafors and Berndt Brehmer in a
study entitled Does Having to Justify Ones Judgments Change the Nature of the
Judgment Process?87 This means that requiring a decision maker to justify a
decision is particularly beneficial in highly uncertain cases with few precedents
and limited data regarding similar case outcomes. The tougher it is to predict a case
outcome, the greater the benefit from methodically delineating the justification for
a decision.
9.3.5
When in Doubt, Act it Out
Absent base rate data and systematic decision-making processes, most people are
poor forecasters of outcomes in conflict situations. In simulated conflicts, moreover,
research participants exercising unaided judgment perform no better than chance
when predicting decisions made in conflicts.88 Forecasting accuracy, however,
may be improved when people engage in role-playing exercises to simulate how
people would react in actual conflicts. In these exercises, participants are assigned
roles and given a description of the parties roles, background information regarding the dispute and a list of decision options. Playing the role of a disputant, each
participant then meets with an antagonist and negotiates a resolution.
Role-playing is expected to be useful in conflicts like legal actions because it is
so difficult to think through the many actions and reactions among the parties
involved.89 Consistent with this expectation, experiments show that role-playing
appears to result in more accurate predictions about what will actually occur in a
conflict than some other forecasting methods. Using six scenarios based on actual
disputes (e.g., pay disputes between nurses and hospital management and a conflict
between directors of a pharmaceutical company and consumers of its products)
business professor and forecasting expert Kesten Green found that role-playing was
significantly more effective in generating accurate predictions than game theory or
unaided judgment. Averaged across all six scenarios, 64% of the forecasts made
after role-playing were correct, compared with an accuracy rate of 37% for game
theorists forecasts and 28% for unaided judgment forecasts.90 Green also found
that role-playing exercises were under-utilized in organizations; among practitioner
87

Green, K.C. (2002). Forecasting decisions in conflict situations: A comparison of game theory,
role-playing and unaided judgment. International Journal of Forecasting 18, 321, 324.
89
Armstrong, J. Scott. (2006). Findings from evidence-based forecasting: Methods for reducing
forecast error. International Journal of Forecasting, 22(3), 583598.
90
Green supra note 88 at 321, 333.
88
336
members of the International Institute of Forecasters, 85% relied on expert

opinions, 8% employed game theory and only 7% used role-playing.91
9.3.6
Step Off the Information Treadmill
Seeking more information before making a decision is alluring and quickly

achieves two goals: it simultaneously delays the decision while enhancing the
decision makers image as a thoughtful, inquisitive and objective deliberator.
Quite often, though, attorneys and clients have adequate information to make a
decision and will not benefit from additional information. Additional information
either exceeds their processing capabilities or is selectively interpreted and
weighted, adding debilitating complexity and biases to the decision-making process. In their article, The High Cost of Accurate Knowledge, Kathleen Sutcliffe
and Klaus Weber declare: for senior managers at least, its less important to know
a lot of facts about a situation than to have a clear and consistent framework for
interpreting them.92
Numerous studies show that people use only a subset of available information
and increasing information does not affect the accuracy of predictions or the quality
of judgments.93 We reach the point of diminishing marginal predictive returns for
knowledge disconcertingly quickly, states Philip Tetlock.94 Economist Barry
Nalebuff and law professor Ian Ayres voice a similar concern about the search
for additional information, urging decision makers to emphasize what they do
know, not what they dont know. Its all too easy, they explain, to get caught
up in what you dont know instead of working from what you do know. Knowing 75
percent of the answer makes it easier to find the other 25 percent.95 Convinced that
waiting for additional information is counter-productive, Sheldon Bonovitz, Chairman Emeritus of 600-lawyer Duane Morris, relies on an 80 percent theory of
decision making: I believe that when youre 80 percent sure, make the decision.
Dont wait any longer for more certainty because youll just become paralyzed.96
Although attorneys and clients often insist that a settlement is premature because
discovery is not completed, an objective decision maker may question whether
further discovery would be productive.97 No empirical evidence proves that
91
Green supra note 88 at 322.

Sutcliffe, Kathleen, and Weber, Klaus. (2003, May). The high cost of accurate knowledge.
Harvard Business Review, p. 76.
93
94
Menand, Louis. (2005, December 5). Everybodys an expert. The New Yorker, pp. 98101.
95
Nalebuff and Ayres supra note 40 at 137.
96
Carter, Terry. (2006, December). A heck of a good story. ABA Journal, p. 30.
97
See Korobkin, Russell B., and Ulen, Thomas S. (2000). Law and behavioral science: Removing
the rationality assumption from law and economics. California Law Review, 88(4), 1094 (More
information provided, perhaps in the form of expanded pretrial discovery is unlikely to be
92
9.4 Phase Four: Testing
337
extensive discovery facilitates settlements. The limited evidence, in fact, shows

otherwise. Most theories of legal discovery assume that sharing information
among disputing parties will lead to convergence of expectations and will facilitate
settlement, explain professors George Loewenstein and Don Moore. However,
psychological research shows that shared information, if it is open to multiple
interpretations, is likely to be interpreted egocentrically by the disputants, which
can cause beliefs to diverge rather than converge.98 Two researchers at the Federal
Judicial Center, Judith McKenna and Elizabeth Wiggins, report that the number of
days spent in discovery was associated with both increases in the number of
disagreements between the sides concerning factual and legal issues and lower
proportions of cases settling before trial.99 Citing William Glassers study published in Pretrial Discovery and the Adversary System, they note that 97% of the
cases settled when neither party conducted discovery, compared with a 76%
settlement rate when both sides conducted discovery. Mediator William Coyne
dismisses the idea that cases cannot be settled until discovery is completed and
major factual issues are resolved: Any lawyer in a litigation practice knows that
this is nonsense. Cases settle every day, some of them on the courthouse steps,
without a resolution of factual disputes.100
9.4
Phase Four: Testing
Problem solving in litigation cases differs from other types of problem solving in at
least one major respect: a settlement decision cannot be made or implemented
without the acquiescence of an adversary. Although nearly all business decisions
require buy-in to approve and implement a decision, litigation cases are unique in
granting veto power to an adversary at the inception of the settlement decisionmaking process. Absent an adversarys consent, solutions to problems cannot even
proceed to the presentation and consideration levels. Since attorneys and litigants
cannot compel consideration of alternative resolutions, let alone unilaterally choose
among settlement alternatives, the pre-settlement phase is called the testing
phase. The parties in this phase can do little more than test possible resolutions
to probe an adversarys receptiveness, priorities and objectives. If an adversary
effective because, as we have seen in the experiments cited above concerning the death penalty
controversy people seem to use additional evidence to solidify their views, rather than to alter
them).
98
Loewenstein, George, and Moore, Don A. When ignorance is bliss: Information, fairness, and
bargaining efficiency, p. 2. Available at http://www.som.yale.edu/faculty/keith.chen/negot.%
20papers/LoewMoore_BiasAssimNegOut00.pdf
99
McKenna, Judith A., and Wiggins, Elizabeth. (19971998). Empirical research on civil discovery. Boston College Law Review, 39, 785, 796.
100
338
unilaterally cancels this test, decision making halts and the costly litigation twins,
pre-trial discovery and law and motion practice, escort the case to trial.
Because the testing phase determines whether alternatives to litigation will ever
be considered, accepted and adopted, the key questions in this phase are: What are
the parties needs and objectives? What are the parties vulnerabilities and sensitivities? What prior positions and commitments could hinder settlement? What is
the range of potentially acceptable resolutions (the reservation zone)? What are
the risks and costs of proposing alternatives which may be rejected by an adversary? If a proposal is acceptable, will it be performed? In many respects, this phase
is the most delicate of all the decision-making phases and requires the deftest
analytical and communication skills. Contradictions between covert messages and
explicit statements, individual needs and organizational goals, current preferences
and prior commitments, and private overtures and public statements require negotiators to act discretely and strategically. Nine methods of upgrading and enhancing
these skills in the testing phase are outlined below.
9.4.1
Find Your Inner BATNA
Roger Fisher and William Ury, authors of Getting to Yes, state the most fundamental rule of negotiation:
The reason you negotiate is to produce something better than the results you can obtain
without negotiating. What are those results? What is that alternative? What is your BATNA
your Best Alternative To A Negotiated Agreement? That is the standard against which
any proposed agreement should be measured. That is the only standard which can protect
you both from accepting terms that are too unfavorable and from rejecting terms it would be
in your interest to accept.101
Since a partys BATNA is the standard for judging the quality of a settlement, it is
imperative for parties to determine their BATNA before settlement negotiations
begin and to recalibrate their BATNA in light of new information. Surprisingly,
many parties enter negotiations without a BATNA, determined to stonewall negotiations even when they could be beneficial or resigned to wait and see what the
other side comes up with. Former California Superior Court Judge John Flaherty,
now a full time neutral, expresses his dissatisfaction with parties who fail to prepare
for negotiations and draft their mediation briefs by cutting and pasting paragraphs
from their complaint or a motion: Its disappointing the lawyers havent given
enough thought to where the mediation should be going. It doesnt appear to leave
any room to negotiate.102
101
Fisher, Roger & Ury, William. (1991). Getting to yes: Negotiating agreement without giving in
(p. 100). New York: Penguin Books USA.
102
Anderson, Craig. (2008, June 20). Settling well into retirement keeps jurist busy. San Francisco
Daily Journal Verdicts & Settlements, p. 1.
339
High quality settlement decisions require a deliberate assessment of the alternatives to a negotiated settlement. Parties who proceed into settlement negotiations
without a BATNA and then settle their case during a mediation session or a
settlement conference invariably succumb to a coerced, disadvantageous settlement
because they cannot discern when a negotiated outcome is inferior to an adjudicated
resolution. As business crisis manager David James states, A contingency plan is
the guarantee of survival, and the day you cannot walk away from a negotiation is
the day you will lose the company.103
At a recent American Bar Association conference on alternative dispute resolution, one of the panelists remarked that trials are not good BATNAs, echoing
some mediators sense that nearly all disputes should be settled and virtually any
settlement is better than a trial. If this were true, negotiations with adversaries
would invariably produce better outcomes than adjudicated resolutions but
neither history nor experimental research indicates parties in disputes are always
better off relying on the fairmindedness of their foes than the judgments of jurists
and jurors. If an opposing partys settlement position is markedly inferior to a
litigants BATNA, a rational negotiator will decline settlement and proceed to trial.
But that decision can only be made when a litigants BATNA is well defined, amply
supported by research regarding likely trial outcomes, and broad enough to include
all factors, economic as well as emotional, relevant to the BATNA appraisal.
9.4.2
Separate Facts from Theories, Values and Beliefs
Facts invariably are melded into theories, values and beliefs. Because they underpin
and transform strategies, commitments and alternatives, facts can be dangerously
immutable especially when they are not facts to begin with. Karl Weick warns of
the dangers of building perceptions and positions upon unproven facts:
Be careful when you label something a fact. Once you call something a fact you pay less
attention to it. If you pay less attention, there will be less chance that you will see
exceptions that call into question its facticity. There are two problems here. First, you are
likely to attribute more stability to events than is warranted. Second, you may unwittingly
treat your behavior of not monitoring as evidence of factualness. In either case, you
overestimate the stability of an event and may miss its continuing contribution to the
unexpected.104
Mediators sometimes ask parties whether an assertion is a fact or a value. Their

point is to distinguish evidence from opinions and spark some objective thinking.
This technique, however well intended, often backfires because it puts parties on the
defensive and has the opposite effect of forcing them to claim that values are facts
before they have thoroughly contemplated the question. Long before filing or
103
James, David. The trouble Ive seen. (2002, March). Harvard Business Review, p. 48.
104
340
mediating a claim, parties benefit from bisecting convictions into those based on
evidentiary facts and those based on personal beliefs. Each type of conviction may
be equally important but only one type is admissible.
9.4.3
Enlarge the Pie Before Cutting
Negotiators talk about win-win solutions but they routinely negotiate as though
they are in zero-sum scenarios. Studies show that most negotiators make the
default assumption that the pie of resources is of fixed size, state professors
Richard Birke and Craig Fox, that is, they perceive the other partys interests to be
diametrically opposed to their own.105 When negotiators perceive interests to be
antagonistic and resources to be finite and contested, they negotiate lose-lose
resolutions. Their assumption that resources are fixed, options are restricted, and
positions are mutually exclusive, however, is often inaccurate. In one study of
simulated negotiations, for instance, the parties interests actually were similar on
some issues and the negotiated outcomes could have been superior in at least half of
the negotiated lose-lose solutions.106
To overcome zero-sum negotiating mentalities, business administration professors Deepak Malhotra and Max Bazerman advocate investigative negotiation
questioning assumptions and probing for information and insights into the other
partys negotiation positions.107 They have presented to hundreds of executives a
real-life scenario where a vendor refuses to grant a buyer an exclusive right to
purchase an ingredient essential to the buyers health care product. The buyer had
been willing to pay $18 a pound for one million pounds of the ingredient every year
but cannot risk the competitive disadvantage of purchases by its competitors. To
overcome the sellers reluctance to grant exclusivity, the buyer increases the price
and offers guaranteed minimum orders. Although it is unlikely the seller could ever
sell one million pounds to any other buyer, the seller steadfastly refuses to grant
exclusivity. The deal then collapses, the buyer distrustful of the sellers intentions
and convinced the seller is coercing a higher price and planning to sell large
quantities of the product to competitors.
Presented with this scenario, 90% of business executives in Bazermans class
recommend practical solutions like increase your offer price, buy out the
supplier, ask for a shorter exclusivity period and threaten to walk away.108
In real life, however, the buyer surmounted the impasse by bringing in a new
105
Birke, Richard, and Fox, Craig. (1999, Spring). Psychological principles in negotiating civil
settlements. Harvard Negotiation Law Review, 4, 1, 30.
106
Id. at 31.
107
108
Id.
341
negotiator within its company. With a fresh perspective, he asked open-ended

questions about the sellers reticence and quickly learned that the seller could not
enter into an exclusive agreement without disrupting an established relationship
with a relative who purchased 250 pounds of the ingredient every year. The new
negotiator then quickly completed the deal by carving out an exception to the
exclusivity clause for the relatives small purchase. The companys previous
negotiators and the executives in Bazermans class simply made assumptions
about the other sides motivations and then proposed solutions to a problem that
has not been diagnosed.109 They continued to tweak issues like price and quantity
while failing to probe deeper into the needs and constraints of the other party. In
attempting to cut to the chase by varying price and quantity, they missed it
entirely.
9.4.4
Subjective Fairness Matters
Attorneys may recall the ultimatum game, a simulated negotiation in which

Player #1 proposes to divide a fixed sum, $10 for example, with Player #2. If no
agreement is reached, Player #2 gets nothing. Theoretically, Player #2 is in a better
financial position if he accepts any amount offered by Player #1. In the studies,
however, Player #2 frequently refuses proposals deemed to be unfair, leaving
Player #2 worse off than she would have been had she accepted any amount offered
by Player #1. The point in legal negotiations, as explained by business professors
Max Bazerman and Margaret Neale, is that people give weight to fairness norms
even where there is no economic reason to do so. In addition, people realize that
others will sacrifice gains rather than accept unfair allocations.110
To settle cases, litigants necessarily have to mollify an adverse partys sense of
fairness. The price of mollifying that subjective sense of fairness, however, may
well exceed the cost of a litigated outcome. When an adverse party is financially
self-destructive and willing to sacrifice a likely gain offered in a settlement negotiation, trial might be a necessary and superior economic alternative. Settlement
always is an alternative, not an imperative, and negotiating parties simply cannot
accommodate every litigants subjective sense of fairness or curb every adversarys
risk-taking propensities. A critical premise in every effective settlement negotiation
is that settlement is not the only option. Parties who convince themselves that any
negotiated settlement is better than a trial often pay a risk avoidance premium far
beyond any range of likely trial outcomes.
109
Id.
Bazerman, Max and Neale Margaret. The role of fairness considerations and relationships in a
judgmental perspective of negotiation. In Arrow, Kenneth, et al. (Eds.). (1995). Barriers to conflict
resolution (p. 91). New York: W.W. Norton & Company, Inc.
110
342
9.4.5
Think and Communicate Affirmatively
Adding the no or the but word increases the amount of time required to
understand communications and heightens the risk of being misunderstood.111
Effective negotiators who eliminate these words find their positions are more
sharply defined and more clearly expressed. Consider how long it takes to understand this judicial opinion: An attorney need not make a wasted effort and file suit
against a non-viable defendant. Bordelon was not found liable to plaintiff, not
because this was a weak products liability case, but because the rope was not
discovered by the previous lawyer or the client during the whole year112 To
understand this relatively simple statement, the recipient has to spend seconds, if
not minutes, to translate it into an affirmative statement. Or consider this slightly
less opaque posting by the brilliant jurist, Judge Richard Posner: Intelligence is not
designed for coping with situations that are not complex, but rather are profoundly
uncertain. Having great information-processing skills is not worth a lot if you have
no reliable information.113 Are these statements not sufficiently complex and
uncertain to not be understood by most people who are not trained in reading
compound negative sentences?
In negotiations, attorneys and parties often talk about what they do not want
because they have not ascertained specifically what they do want, or they are
convinced they will gain a strategic advantage by withholding a clear statement
of their objectives. So they make statements like, we dont want [insert past
problem de jour] to happen again, Im not interested in just [insert adversarys
recent proposal], or We tried [insert mediators alternative] before and it didnt
work. This emphasis on what is not acceptable sabotages negotiations because it
implies that the opposite of what a party dislikes may be acceptable and makes it
difficult for the other parties to identify the objectors requirements and attempt to
accommodate them. At a psychological level, it is a dysfunctional form of loss
aversion and regret avoidance, expressing what one is loathe to lose but not what
one aspires to gain.
Although it is much easier to state what a party dislikes or what it opposes,
effective problem solving requires people to take the time to understand and
articulate in affirmative terms what they actually want. In the extreme situation
where a recalcitrant party refuses to affirmatively express its negotiation objectives,
its adversary may conclude that the recalcitrant party is deriving a greater emotional
or financial benefit from maintaining an unresolved circumstance than it would
111
See Mante, Nieuwland, and Kuperberg, Gina. (2008). When the truth is not too hard to handle:
An event-related potential study on the pragmatics of negation. Psychological Science, 19(12),
12131218. Kellogg, Ronald Thomas. (2007). Fundamentals of cognitive psychology (p. 234).
112
Jeansonne v. Bosworth, 601 So. 2d 739, 741 (La.App. 1 Cir. 1992).
113
Posner, Richard. (2007, June 17). Intelligence and LeadershipPosner. The Becker-Posner
Blog. Available at http://www.becker-posner-blog.com/archives/2007/06/intelligence_an_1.html.
343
derive from resolving it and prefers to continue its investment in tumult. Thus,
parties inclined to settle conflicts but unable to evaluate their cases and present a
settlement option inadvertently default to trial. I get very upset, states Superior
Court Judge Frank Johnson, when were doing a jury trial and its very clear to me
that one side or the other has not taken the time to evaluate their case. They dont
know the strengths and weaknesses of their own case and of their opponents case,
and were essentially having this trial as a default mode because one or the other of
the attorneys is not bright enough to figure out that they should have settled.114
9.4.6
Depressed People Make Depressing Deals
Information processing under happy moods is faster and more thorough, efficient,
flexible, associative, integrative, creative and insightful than processing under sad
moods. Negative emotional states, moreover, are associated with a narrow focus of
attention.115 Positive affect, psychology professor Alice Isen and management
professor Aparna Labroo report, is correlated with numerous adaptive decisionmaking characteristics, including creativity, openness to information, exploration,
integration of ideas, effective problem solving, focus on important negative information when that is needed, ability to keep others perspectives as well as ones
own in mind seemingly simultaneously, and responsiveness to others behavior,
including moves in a negotiation situation, just to name a few.116
The role of positive affect in problem solving has important implications for the
legal profession. Because attorneys consistently exhibit high rates of depression,
clients may not be achieving optimal results in settlements negotiated by their
depressed counselors. Although many hard working, sardonic, cynical, and
depressed attorneys are pillars of their law firms and iconic trial lawyers, their
performance as problem-solvers may be suboptimal. Clients cannot be expected to
identify depressed attorneys, but the absence of creative ideas, receptiveness and
curiosity, accompanied by an inability to understand an adversarys perceptions and
positions, may be warning signs that their attorney is too depressed to function as an
effective problem solver.
114
Park, Erin. (2006, April 4). Making tough calls look easy. San Francisco Daily Journal, p. 3.
Schwartz, Norbert, and Skurnik, Ian. Feeling and thinking: Implications for problem solving. In
Davidson, Janet and Sternberg, Robert, Ed. (2003). The psychology of problem solving (pp. 270
271, 279). Cambridge: Cambridge University Press. Isen, Alice M. and Labroo, Aparna A. Some
ways in which positive affect facilitates decision making and judgment. In Schneider, Sandra L.
and Shanteau, James. (2003). Emerging perspectives on judgment and decision research (pp. 377
378. Cambridge: Cambridge University Press.
116
Isen and Labroo supra note 115 at 384.
115
344
9.4.7
Fatigue Stifles Creative Problem Solving
The public is alarmed to learn of medical residents working 22 hours per day and
sleeping fewer than seven hours over a three-day shift. Law firm clients give little
thought, however, to overworked attorneys, some of whom are seen wearing
yesterdays clothes after an all-nighter spent working on a brief due the next day.
When lawyers work incessantly for weeks, law firms rarely consider the effect on
attorneys mental acumen and efficiency and the attendant cost to clients when
attorneys lose their creative problem- solving abilities. Instead, over-worked attorneys are commended for their tenacity and dedication, rewarded by the firms
compensation committee and often become icons of the firms professional culture,
illuminated as an example for junior attorneys to emulate.
Fatigue takes a tremendous toll on decision-making quality. Psychiatrist Edward
Hallowell, who first identified Attention Deficit Trait (ADT), a disability caused by
environmental factors inducing brain overload, explains: There is ample documentation to suggest that sleep deprivation engenders a host of problems, from
impaired decision making and reduced creativity to reckless behavior and paranoia. He finds that a chronically excessive work overload accompanied by a triad
of coping devices sleep deprivation, increased alcohol consumption and habitual
inhalation of carbohydrates impair the brains ability to solve problems flexibly
and creatively and the number of mistakes increases.117
Extreme jobs, those that require more than 60 hours per week, exact a high toll
from professionals. In a recent survey, 69% of extreme jobholders conceded they
would be healthier if they worked fewer hours, and more than two-thirds reported
they did not get enough sleep. About half of the surveyed professionals said they do
not get enough exercise, and 45% report that after working a 12-hour or longer
workday, they are too fatigued to talk with their spouse or partner.118 A significant
number, write Sylvia Ann Hewlett and Carolyn Buck Luce, overeat, consume too
much alcohol, or rely on medications to relieve insomnia or anxiety.119 Despite the
enormous personal sacrifices made by these professionals, very few have an exit
strategy. Half of the extreme workers claim they do not want to work extreme hours
for more than another year, but only 19% of the workers in the 4560 age group
expect to leave their jobs within two years. The situation is worse for attorneys,
more than one-third of survey respondents saying they intend to leave their job
within a year but only 3%-5% actually doing so.120
117
Hallowell, Edward M. (2005, January). Overloaded circuits: Why smart people underperform.
Harvard Business Review, pp. 5760.
118
Hewlett, Sylvia Ann and Luce, Carolyn Buck. (2006, December). Extreme jobs: The dangerous
allure of the 70-hour workweek. Harvard Business Review, p. 54.
119
Id.
120
Neil, Martha. (2008, June 23). Why dont unhappy lawyers leave? ABA Journal Law News
Now. Fortney, Susan Saab. (2003). I dont have time to be ethical: Addressing the effects of
billable hour pressure. Idaho Law Review, 39, 309, fn. 20.
345
Overworked attorneys find themselves in a professional miasma fatigued and

upset about an excessive workload but unable to discern how they can simultaneously lead a healthier life, earn a salary sufficient to meet financial obligations
including student loans, continue to receive stimulating work assignments, advance
their career to partnership, exhibit commitment to the firm and clients and satisfy
billable hour requirements and expectations. Although many attorneys experience
chronic exhaustion, there is little or no prospect that the hours will improve, or the
job satisfaction, or the ability to balance work and family commitments.121 Their
creative problem solving skills, consequently, are exhausted early in their career;
64% of associate attorneys agree with the statement, Working long hours
adversely affects my ability to think critically and creatively.122
9.4.8
Use Email Carefully
Email, reports Richard Shell of the Wharton School, is a risky medium for use in
sensitive negotiations.123 Electronic communications generate more clashes, longer decision processes and more extreme decisions.124 Email messages often
appear more assertive than intended, and people using it feel less empathy for
others, less guilt about their own behavior, less concern with how their behavior
compares with others, and less constrained by the usual social conventions surrounding interpersonal communication than do people communicating face to
face.125 Email, when accompanied by face time and explicit schmoozing, however, does not hinder optimal negotiation outcomes.126
Richard Shells research regarding the limitations of email is independently
corroborated by professors Raymond Friedman and Steven Currall. They identify
the following dangers of email communications in negotiations:
l
121
Negotiators using email are less likely to employ cooperative or informationsharing methods than face-to-face negotiators.
Disputes are more likely to escalate in email communications than face-to-face
or telephone communications.
Zaring, David T. and Henderson, William D. (2007). Young associates in trouble. Michigan
Law Review, 105, 1087. Indiana Legal Studies Research Paper No. 67; Washington & Lee Legal
Studies Paper No. 67/2007. Available at SSRN: http://ssrn.com/abstract958053
122
Fortney supra note 120 at 305, 311.
123
Shell, Richard. Electronic bargaining: The perils of e-mail and the promise of computer-assisted
negotiations. In Hoch, Stephen J., and Kunreuther, Howard. (Eds.) (2001). Wharton on making
decisions (p. 219). New York, John Wiley & Sons, Inc.
124
Id. at 204205.
125
Id. at 206.
126
Id. at 208.
346
l
Recipients of emails interpret the content as more aggressive than the sender
intended, making inadvertent insults more likely.
The absence of non-verbal and visual cues lowers awareness of social norms and
conventions which, in turn, results in enhanced aggression and conflict escalation.
The added time available for responding to emails leads to excessive rumination,
making problems seem larger and lowering the chances of an implemented
solution.
Email promotes a sense of anonymity, separating the sender from the negative
consequences of his email.
Recipients of email focus on the most objectionable or anger-provoking issue in
the email rather than the sequential or give-and-take interaction that occurs in
personal communications.
Email heightens a sense of anger, promotes stronger commitment to ones
arguments, and reduces parties inclination to compromise.127
When email has already damaged parties relationships, professors Friedman and
Currall recommend that individuals generate interactive communications by limiting the number of arguments and issues raised in a single email.
Email frequently conveys settlement positions without advancing settlement
negotiations. It facilitates the misconception that cases can be resolved by barrister
cross-fire if combustibly charged, pointedly directed, and forcefully propelled a
technical godsend for conflict-avoidant personalities and maladroit negotiators.
Alternating e-mail salvos dictating positions and justifications, however, rarely
foster the objective re-evaluation and risk assessment essential to compromise
and settlement. Most importantly, they prevent genuine, real-time reactions to
settlement positions and options and preclude the trust, understanding, candor,
cooperation and empathy however nascent and fragile that underpin successful
negotiations.
To solve complex disputes, the ease of email negotiations must inevitably cede
to the discomfort of personal, extemporaneous conflict and stressful, interactive
compromise. Unfortunately, this essential personal interaction is often deferred
until the parties are required to appear at mediation or a settlement conference. If
mediation is usually successful regardless of the mediators techniques or personality, as some researchers claim, perhaps the key variable is the mandatory attendance and personal interaction of all essential decision makers.128
127
Friedman, Raymond A., Currall, Steven C. (2006). Conflict escalation: Dispute exacerbating
elements of e-mail communication. Available at SSRN: http://ssrn.com/abstract459429 or DOI:
10.2139/ssrn.459429.
128
Bowling, Daniel, and Hoffman, David. Bringing peace into the room: The personal qualities of
the mediator and their impact on the mediation, reprinted in Golann, Dwight, et al., Eds. (2005).
Resolving disputes: Theory, practice, and law (p. 268269). New York: Aspen. (These results
seem to occur regardless of mediation styles or the philosophical orientation of the individual
mediator. . . . Indeed, the history of mediation, as well as our own experience, shows that mediation
sometimes works even when the mediator is untrained.)
347
The potential for alienation, miscommunication and conflict escalation, as

described by professors Shell, Friedman and Currall assumes, of course, that emails
reach their intended audience. Hence, they are describing the best-case scenario for
email communications and setting aside the larger scale destruction wreaked when
emails take a populist bent and are inadvertently sent to a curious but unintended
audience. Attorneys may recall summer associate Jonas Blanks chagrin after he
mistakenly sent a personal email to 40 attorneys at Skadden, Arps, Slate, Meagher
& Flom: Im busy doing jack. Went to a nice 2hr sushi lunch today at Sushi Zen.
Nice place. Spent the rest of the day typing emails and [gabbing] with people.129
9.4.9
Get a Grip on Mongo
Nearly every litigator is familiar with Mongo, the inner beast described by law
professor James McElhaney: Mongo is the one who breaks your pencil or slams
your book when the judge gives you a bad ruling. And when a witness gives you a
hard time, your inner beast says, Mongo, kill witness now!130 Obsessed with
fighting and fleeing, Mongo has no sense of humor and, when aroused, no sense of
proportion.131
Hostility, whether felt by the client or the attorney, invariably results in inferior
negotiation outcomes. Worse yet, hostility distorts its hosts evaluative capabilities,
fostering an illusion of victory when the objective reality is that the hostile negotiator failed to accomplish his own objectives.132 Mediator Max Factor describes
three characteristics of angry negotiators: (1) anger distracts negotiators from
concentrating on whether they could negotiate a better deal; (2) angry negotiators
report relatively high levels of satisfaction with their negotiation outcomes; and (3)
their negotiation results are worse than the results achieved by neutral negotiators
whether the angry negotiator is in the buyer or seller role.133 The hostile negotiator,
therefore, forfeits both his judgment and his money.
Jennifer Lerner, a decision scientist at Carnegie Mellon, has studied extensively
the effect of hostility on decision making. She finds that anger is correlated with a
sense of injury and offense, confidence about the cause of the triggering event and a
conviction that someone other than the angry person is responsible. Anger and its
resultant assessments have a positive feedback relationship, she notes: The more
anger one feels, for example, the more one perceives others to be responsible for
129
Sandberg, Jared. (2006, February 21). Infamous email writers arent always killing their careers
after all. The Wall Street Journal, p. B1.
130
McElhaney, James W. (2007, April). The power of the proper mindset. ABA Journal, p. 30.
131
McElhaney, James W. (2006, October). Cross exam surprises. ABA Journal, p. 23.
132
Factor, Max. (2007, August 17). Time out can save a client from rash, expensive negotiation
outcomes. San Francisco Daily Journal.
133
Id.
348
a negative event; the more one perceives others as responsible for the negative
event, the more angry one feels.134
Angry people distinguish themselves in multiple respects that may negatively
affect decision making: they perceive themselves to be in control; they feel less
trusting of colleagues; they rely on stereotypes; they keep their mind focused on
angering events; they form optimistic risk assessments and predictions about their
likelihood of success; they tend to make risk-seeking choices; and they do not
employ systematic, deliberate, and careful methods of evaluating alternatives.135
Angry people also exhibit defensive optimism, enabling them to overlook the
effect of anger on themselves. Consequently and ironically angry people are
more likely to experience divorce, encounter problems at work and suffer from
heart disease, but they believe they are significantly less likely than the average
person to be afflicted by any of those traumas.136 Anger thus functions as a cognitive
anesthetic, rendering the hostile negotiator unaware of what is being lost in negotiations and unable to discern why the loss is occurring.
9.5
Phase Five: Choosing
In the choosing phase, litigants and their attorneys attempt to resolve the question,
Are any of the possible negotiated resolutions superior to an adjudicated resolution? In this phase, the major challenge is to maintain perspective and, when
necessary, brake the momentum that inevitably builds and pushes all parties toward
settlement. As negotiations move into the choosing phase, a litigants perspective
can rapidly evolve from a studied, comprehensive comparison of various settlement
options with anticipated trial outcomes to an incremental, time-pressured comparison of the most recent settlement proposal with the prior settlement proposal a
shift from the macro question, could we do better at trial? to the micro question,
were only x dollars apart, is it worth going through a trial for that?
Settlement decision making can be an insidious form of incremental decision
making leaving one knee deep in the big muddy, the term Professor Barry Staw
uses to describe seemingly minor but escalating commitments that ultimately put
decision makers in troubled waters with no way out.137 Settlement decisions that
would have been considered poor outcomes at the inception of negotiations are
134
Litvak, P.M., Lerner, J.S., Tiedens, L.Z. & Shonk, K. (in press). Fuel in the fire: How anger
impacts judgment and decision making, p. 8. Chapter to appear in M. Potegal, Stemmler, G., &
Spielberger, C. D. (Ed.), International handbook of anger. New York: Springer.
135
Id. at 11, 13, 14, 20, 25. See Loewenstein, G., & Lerner J. S. (2003). The role of affect in
decision making. In R. Davidson, H. Goldsmith, & K. Scherer (Eds.), Handbook of affective
science (pp. 619642). Oxford: Oxford University Press.
136
Litvak, Lerner, Tiedens, & Shonk supra note 134 at 17.
137
Staw B. M. (1976). Knee-deep in the Big Muddy: A study of escalating commitment to a chosen
course of action. Organizational Behavior and Human Performance, 16, 2744.
9.5 Phase Five: Choosing
349
more likely to be palatable when sequenced in a series of seemingly small,

incremental concessions. Although paying $2,450,000 to settle a case may have
been unacceptable at the onset of settlement negotiations, it can appear provident
after weeks of incremental concessions, starting at $1,350,000 and moving in
increments of $50,000 to an eventual $2,400,000, squeezed out by the deft hand
of a likeable and persuasive mediator. Asking the question, Would I have considered this settlement acceptable at the beginning of this negotiation? is a simple but
effective method for a decision maker to test whether she is still a value investor
or has become a momentum investor.
The dangers in the critical choosing phase stem from the gradual loss of
perspective caused by incrementalism, as discussed above, and a lack of confidence
in assessing likely trial outcomes. These dangers are compounded by excessively
optimistic views of the settlement terms, an adversarys long-term intentions and
the risks that an adversary will breach a settlement agreement; unrealistic assessments of the probable trial outcomes; insufficient adjustments for new information;
and the conventional belief that a partys positions should be consistent and
concessions should be orderly and measured throughout settlement negotiations.
Eleven effective methods of detecting and countering these dangers are described
below.
9.5.1
Perform a Premortem on Overconfidence
Daniel Kahneman warns that overconfidence leads people to make decisions based
on delusional optimism rather than on a rational weighting of gains, losses and
probabilities.138 Unfortunately for decision makers, overconfidence is most
extreme with tasks of greater difficulty.139 Thus, when a decision regarding
settlement alternatives requires the highest level of analytical competence and
probabilistic reasoning skills, decision makers are most likely to be overly confident. Like a tire that blows out only at high speeds, overconfidence can seem
harmless until the consequences are catastrophic.
To counter overconfidence, Gary Klein asks his clients and co-workers to
perform a premortem exercise: imagine that it is months into the future and that
their plan has been carried out. And it has failed. Then explain why it failed.140 A
similar approach is taken by Bruce Berkowitz and his colleagues at The Fairholme
Fund, a mutual fund whose returns were 11% per year during a period the Standard
& Poors 500-stock index lost 3% per year: We spend a lot of time thinking about
what could go wrong with a company whether its a recession, stagflation,
138
Lovallo, Dan & Kahneman, Daniel. (2003, July). Delusions of success: How optimism undermines executives decisions. Harvard Business Review, p. 57.
139
140
Klein, Gary. (1998). Sources of power: How people make decisions (p. 70). Cambridge,
Massachusetts: The MIT Press.
350
zooming interest rates or a dirty bomb going off. We try every which way to kill our
best ideas.141 These exercises counter overconfidence by forcing decision makers
to preview adverse outcomes and identify the assumptions most likely to precipitate
failure.
Judge Learned Hand, an esteemed jurist and sage observer of human fallibility,
recommended a similar consciousness of error, urging decision makers to continually contemplate the possibility of error and to vigilantly protect themselves from
overconfidence. He cherished Oliver Cromwells warning to the General Assembly
of the Church of Scotland, written in 1650, I beseech you, in the bowels of Christ,
think it possible you may be mistaken. Expressing his affinity for Cromwells
warning, Judge Learned Hand remarked, I should like to have that written over the
portals of every church, every school, and every courthouse, and, may I say, of
every legislative body in the United States. I should like to have every court begin,
I beseech ye in the bowels of Christ, think that we may be mistaken.142 If
mediators and judges could clean up the language a bit, Judge Learned Hands
admonition would be equally cogent in persuading attorneys and clients to evaluate
their beliefs and positions.
9.5.2
Take the Outside View
In estimating the probability of major life events, e.g., illness, marriage, college
graduation, and job promotion, people are impressively accurate about other
peoples chances and abysmally inaccurate about their own chances. When
informed that one in five people will die of heart disease, for instance, student
participants in psychology experiments accurately conclude that heart disease will
kill 20% of their classmates, but virtually none of the student participants expect to
die of heart disease themselves. Taking the outside view and assuming outcomes
will be the same for all similarly situated parties can temper this self-serving bias.
The outside view requires the decision maker to select a reference class similar to
the decision makers project, document outcomes in the reference class, and make
probability assessments based on that reference class.143 The outside view tempers
the deficiencies and offsets the biases of intuitive forecasting, which is invariably
skewed by unrealistically positive self-evaluations, the illusion of control and
optimistic overconfidence about future events.144 By forcing themselves to assume
they are just average, decision makers increase their predictive reliability.
141
Schiffres, Manuel. (2009, January). A bargain hunter stands tall. Kiplingers Personal Finance,
p. 36.
142
Hand, Billings Learned. (1951). Morals in public life.
143
Lovallo and Kahneman supra note 138 at 62.
144
Kahneman, Daniel and Lovallo, Dan. (1993). Timid choices and bold forecasts: A cognitive
perspective on risk taking. In Kahneman, Daniel, & Tversky, Amos (Eds.). (2000). Choices, values,
and frames, (pp. 406408). Cambridge: The Press Syndicate of the University of Cambridge.
9.5.3
351
Keep Positions Aligned with Facts
Facts and events run faster than perceptions and positions, outpacing decision
makers ability to concurrently detect, assimilate, evaluate and adapt to new and
more accurate information. When new information becomes available, decision
makers may integrate only confirming data and ignore or require further testing of
disconfirming data. Cognitive conservatism, defined as the reluctance to admit
mistakes and update beliefs, prevents decision makers from acknowledging and
assimilating new data which would require an adjustment in their beliefs and
positions.145 In his study of political experts, for example, Professor Tetlock
found that they did not adjust their beliefs and forecasts adequately to reflect new,
disconfirming data. When presented with new information, the foxes (experts who
know many things and draw upon an eclectic mix of traditions to solve problems)
move 59% of the prescribed amount, while the hedgehogs (experts who know one
major concept and use a formulaic approach to solve problems) move only 19% of
the prescribed amount. Some hedgehogs, moreover, nudged up their confidence in
their prior point of view after the unexpected happens sticking their heads in the
sand to a depth incompatible with all normative theories of belief adjustment.146
Cognitive conservatism, Tetlock found, is strongest among inaccurate forecasters. Political experts who performed poorly in predictive accuracy resisted revising their prior opinions. Ironically, inaccurate forecasters rely on twice as many
faulty belief system defenses to justify why they failed to update their beliefs in
light of new evidence.147 Like the sunk cost bias, cognitive conservatism appears
to be strongest when prior investments, monetary or egotistic, are high and present
conditions are discomfiting. Instead of forming new beliefs to fasten onto solid
facts, errant decision makers tenaciously clasp and vigorously polish the flotsam of
old ideas. For these errant forecasters and decision makers, cognitive conservatism
is reflexive, protecting against self-doubt and obscuring the recognition of mistaken
judgment.
This steadfast refusal to acknowledge mistakes and change opinions also is
rooted in the consistency bias, the tendency to adhere to a position regardless
of its original weakness or changed circumstances. The consistency bias reflects a
general reluctance to re-evaluate a decision that already has consumed valuable
time and mental effort. This bias is reinforced by societys preference for people
who present a unitary personality and its attendant aversion to people who flipflop or change horses in mid-stream. As psychology professor Robert Cialdini
explains in Influence: The Psychology of Persuasion, the person whose beliefs,
words, and deeds dont match may be seen as indecisive, confused, two-faced, or
even mentally ill. On the other side, a high degree of consistency is normally
145
Tetlock, Philip. (2005). Expert political judgment (p. 128). Princeton, New Jersey: Princeton
University Press.
146
Id.
147
Id. at 137.
352
associated with personal and intellectual strength.148 The expression often wrong
but never in doubt, applied to leaders in fields as diverse as surgery, cosmology,
geophysics and sports, conveys this preference for stalwart, consistent leaders.
Superior decision makers, however, are driven by facts and recognize that
dispositive facts continually change or were initially misjudged; these adaptive
decision makers have learned how to overcome their own cognitive conservatism
and alter their positions unencumbered by the weight of parochial consistency,
predictability and constancy. They show little course consistency and have no
qualms about changing their minds, mirroring Henry David Thoreaus casualness,
Do I contradict myself? Very well, I contradict myself. Although their objectives
remain steadfast, they are as adept as world-class sailors in discerning environmental changes and altering tacks and tactics to exploit these changes. In Nicholas
Talebs phrase, they have no path dependence of beliefs. They revise opinions
rather rapidly, without the slightest embarrassment; they do not feel bound by
their past actions; and for them and their decisions every day is a new slate.149
Although such inconstant people often are regarded as unreliable, flaky, and
uncertain, they see consistent decision makers as stubborn, plodding and maladaptive, easily manipulated by an overdeveloped need for consistency. Given a choice
between these two different decision making styles changing positions in light of
new evidence or maintaining an image of consistency effective decision makers
select the evidence-driven style. Instead of being strong but wrong, they choose to
be light but right.
Karl Weicks study of high reliability organizations like aircraft carriers and
nuclear power plants shows that the people and organizations most effective at
evaluating problems and handling unanticipated consequences continually update
their mental categories and the expectations that attend those categories. Weick
observes that placing labels or categories on people and events facilitates a sense of
control and simplifies planning but it inevitably limits the amount of information
acquired about a categorized condition. Categories often prevent problem solvers
from seeing new information about the categorized person or condition and fossilize their expectations and predictions; the categories themselves define and limit
expectations of performance, reliability and risk.
Weick urges people to avoid the dangers of categories and expectations through
mindfulness, which, he explains, exploits the fact that two key points of leverage
in managing the unexpected are expectations and categories. People who persistently
rework their categories and refine them, differentiate them, update them, and replace
them notice more and catch unexpected events earlier in their development. That is
the essence of mindfulness.150 Mindful decision makers expect their conceptions
and assumptions to be challenged and revised, and they invite and continually
recalibrate their judgments to incorporate different opinions and new data.
148
Cialdini, Robert. (1984). Influence (p. 60). New York: William Morrow and Company, Inc.
Taleb supra note 21 at 239.
150
149
9.5.4
353
Separate the Primary Decision from the

Secondary Decision
Many decisions consist of two components, a strategic decision and an implementation decision, an exceptional decision and a series of related but routine decisions,
or a primary decision and a seemingly related but non-dispositive secondary
decision. The decision to terminate an incompetent employee is an independent
decision but is often linked with the decisions on how to find a substitute employee,
how long the search should take, what qualifications should be required of applicants for the position, and what salary the new employee will expect. The decision
to sell an automobile when the repair costs exceed its value is an independent
decision but often is delayed until all issues regarding the replacement vehicle have
been resolved what car should be purchased, how should it be financed, where
should it be purchased, how much can be spent? Decision makers often agonize
over every implication of a decision, ultimately failing to make the primary
decision or melding unnecessary compromises between multiple-tier decisions.
Effective executives, Peter Drucker observes, do not make a great many
decisions, and they try to make the few important decisions on the highest level
of conceptual understanding.151 To be effective decision makers, litigants often
need to separate cardinal decisions from second-tier decisions and devote their
attention exclusively to the cardinal decision. Major decisions are determined by
overriding principles and strategies, and not all second-tier implementation decisions, however important, can be resolved at the optimal time for making the major
decision. The cost of settling an antitrust case, for instance, may necessitate layoffs,
the settlement of a wrongful termination case may harm the morale of other
employees, defense costs for a product liability case may reduce the research
budget of a pharmaceutical company but failing to make the right cardinal
decision until the fallout can be measured, funded, mitigated and managed can be
far more costly.
Even making the wrong decision is often better than making no decision. In the
process of making the wrong decision, decision-making criteria are analyzed and
established and metrics for evaluating decision outcomes are debated and adopted.
When a decision turns out to be a massive flop, a framework remains for evaluating,
selecting, and testing another decision. When parties avoid making any decision at
all, neither selection processes nor evaluation tools are developed. As David James,
a crisis manager who has rescued more than 90 companies, has learned, not
making a decision is worse than making the wrong one because it is often easier
to manage your way out of a bad decision than to recover from the consequences of
delay.152
151

James supra note 103 at 48.
152
354
9.5.5
Assumptions Were Made to be Explicit and Tested

Continuously
Assumptions initially underpin positions, but over time positions have more staying
power than the underlying assumptions. The problem with defining and refining
your hypotheses without testing them, explains Karl Weick, is that the world
keeps changing, and your analyses get further and further behind. So youve got to
constantly update your thinking while youre sitting there and reflecting.153 To
prevent implicit and outdated assumptions from undermining effective decision
making, all material assumptions should be identified at the outset of a conflict and
continually reevaluated during the conflict. Assumptions about claims, causes,
objectives, costs, motivations, and alternatives, moreover, should be in a tangible,
accessible form for all stakeholders to review, challenge and revise.
Although people seem to have investments in their assumptions, the only
assumptions that yield positive returns are those that are continually tested, modified and refined. Conversely, assumptions that are considered inviolate and preserved intact have preceded every serious error of judgment from Cains
assumptions about Abels intentions to investors assumptions about the credit
quality of securitized residential mortgages. Behind every catastrophe is at least
one major and entirely erroneous premise. The destruction of the United States air
fleet at Pearl Harbor, for instance, was ensured by the assumption that the threat of
sabotage was greater than the danger of external attack. The entire fleet of 190
planes was clustered closely together at Hickam Field and Wheeler Field for
guarding from local citizens assumed to be sympathetic to the Japanese; this tight
assembly presented an ideal configuration for aerial bombing. Protecting the planes
from domestic sabotage thus enabled a small quantity of bombs to turn the entire
fleet into a fireball. Because the law of unintended consequences is not slated for
repeal, effective decision makers routinely re-evaluate premises and are prepared
to answer economist John Maynard Keynes question, When the facts change,
I change my mind. What do you do, sir?154
9.5.6
Walk Around the Sunk Cost Trap
Bad decisions are often driven by previous bad decisions, creating an escalation of
commitment to avoid acknowledging a mistake or realizing a loss. When deciding
whether to extend additional credit to a defaulting borrower, for example, loan
officers who participated in the initial loan approval are much more likely to
153
Coutu supra note 14 at 88.

Li, Wei. (2007, October). Changing ones mind when the facts change: Incentives of experts
and the design of reporting protocols. The Review of Economic Studies, 74(4), 11751194.
154
355
approve the additional extension of credit than loan officers not previously
involved in the credit decision.155 Similarly, parties in litigation often feel compelled to continue conflict long past the point of diminishing marginal returns
because they have an investment in their attorney fees. In reality, attorneys fees
rarely are investments that consistently yield positive returns on each additional
increment of expense. Intelligent decision makers recognize the sunk cost bias and
not only solicit but defer to the opinions of people who were not involved in the
previous decisions. Even notably successful investors like Warren Buffet remind
themselves, When you find yourself in a hole, the best thing you can do is stop
digging.156
9.5.7
Past Performance is no Guarantee of Future Results
Clients tend to overweight pre-trial successes and assume those successes augur
well for the case at trial. In fact, strategies and tactics that seem brilliant in pre-trial
skirmishes frequently prove counterproductive at trial. Pre-trial successes often are
misleading and the first gust of blowback is the jurys verdict. Superficial interrogatory answers, intended to thwart an adversarys discovery efforts, can preclude or
make suspect the introduction of more informative explanations at trial; positions
taken to successfully oppose an adversarys pre-trial motions may be antithetical to
the clients position at trial; declarations that seemed so effective in defeating an
adversarys motion for a preliminary injunction can prove to be damaging when
subjected to full cross-examination at trial; and a successful pre-trial discovery
motion can become an element of an adverse partys attorney fee claim when it is
determined to be the prevailing party at trial. The efficacy of many pre-trial tactics
is not fully tested unless a case proceeds to trial, and many apparent victories before
trial are seen as Pyrrhic at trial. Although settlements bury deficiencies in pre-trial
tactics and strategies, trials turn them into exhibits.
A district courts dismissal of the indictments against 13 former KPMG executives, accused of promoting abusive tax shelters, demonstrates how successful pretrial tactics turn to liabilities at trial. Before trial, the executives former employer,
KPMG, halted its payment of the executives attorneys fees and agreed to pay $456
million to the United States government as part of a deferred prosecution agreement. Although the government denied that it pressured KPMG to stop paying the
attorneys fees for the former executives, U.S. District Court Judge Lewis Kaplan
found that KPMG withheld the fees because the government held the proverbial
155
Hammond, John S., Keeney, Ralph, and Raiffa, Howard. (1999). Smart choices (p. 193194).
New York: Broadway Books.
156
Id. at 193.
356
gun to its head.157 This pressure, ruled Judge Kaplan at trial, violated the defendants constitutional rights and prevented them from presenting the defenses they
wished to present and, in some cases, even deprived them of counsel of their
choice.158 If the government had settled with the 13 executives, its misdirected
pre-trial efforts to cut off the defendants attorneys fees would still be regarded as
tough, incisive and triumphant instead of coercive, overreaching and unlawful.
Before trial, the KPMG case, which the government billed as the largest criminal
tax prosecution in U.S. history, was the showpiece in the governments crusade
against questionable tax shelters. After trial, it became an icon of unlawful
government bullying.159 The governments successful effort to choke the defendants defense by blocking their attorneys fee payments, Judge Kaplan wrote,
shocks the conscience and is intolerable in a society that holds itself out to the
world as a paragon of justice. A seemingly successful pre-trial tactic thus resulted
in the cases dismissal, illustrating how pre-trial tactical victories do not reliably
portend favorable trial outcomes.
9.5.8
Funny Things Happen on the Way to the Forum
Attorneys breathe two sighs of relief when a case is settled, one for the satisfaction
derived from bringing a clients case to a certain conclusion instead of risking an
uncertain verdict and another for the relief that any mistakes made up to that point
in representing the client probably will never see the light of day. In virtually every
lengthy case, a multitude of errors, usually minor but sometimes major, occur, and
even well-managed law firms make embarrassing mistakes and well-intentioned
attorneys show lapses in attention and judgment. Confidential documents are
mailed to an adversary when they were intended for the client, a clients billing
statements are attached to a different clients statements, privileged documents are
inadvertently produced or left at depositions, and advisory letters are emailed or
faxed to the adversarys attorney instead of the client. The litigation itself may be
the result of a contract clause negligently drafted or a security interest unperfected
by a transactional attorney in the same firm as the clients litigation counsel.
Trials have an ugly tendency to bring these errors to light, and settlements have a
remarkable record of keeping them in the dark. Because trials reveal the innards of
both the client and the attorney, clients need to determine whether their counsel has
extrinsic motivations to settle their case and whether the client is factoring in all
risks in deciding whether to settle or litigate. Clients should specifically ask, and
157
Reilly, David, and Davies, Paul. (2007, July 17). KPMG ruling marks setback for prosecutors.
The Wall Street Journal, p. A2.
158
Browning, Lynnley. (2007, July 17). Charges dropped against 13 in KPMG tax-shelter case.
The New York Times.
159
Browning, Lynnley. (2007 July 17). Judge rejects charges for 13 on tax shelter. The New York
Times.
357
attorneys should be prepared to answer, the questions, Will I be surprised by

anything at trial?, Are there any problems with this case we have not discussed?,
Is there anything your firm has done or failed to do that could hurt us at trial?
9.5.9
Linear Thinking Leads to Impasse
Successful negotiators are not wedded to a single issue, offer or demand at one time.
They multitask to maintain negotiating momentum and prevent impasses, simultaneously negotiating multiple issues and presenting multiple settlement proposals.
Business administration professors Deepak Malhotra and Max Bazerman, who have
taught negotiation classes for both MBA students and executives for decades,
caution against sequential, linear bargaining:
In most complex negotiations, issues are discussed one at a time. . . . However, when there
is only one issue on the table at any given moment, both sides behave as if it is the most
important issue to them. When you move to the second concern, that concern appears to be
the most critical. And so you continue to clash on each issue and never learn what the other
party truly values or needs most.160
Instead of mechanistically dealing with one disputed issue at a time, Malhotra and
Bazerman recommend that negotiators identify all of the issues, shift the discussions back and forth among multiple issues, and make offers and counter-offers as
the discussion moves among the issues. This fluid process prevents negotiations
from breaking down over a single issue and ultimately reveals the other sides
priorities and sensitivities by testing which issues provoke the greatest stress, elicit
the least flexibility, and require the most attention.
Multiple, alternative offers also serve to flesh out an adversarys needs and
preferences. A vendor who will not directly answer the question, What is more
important to you advance payment, a guaranteed minimum order, or sole source
status? may indirectly signal a preference when presented with simultaneous
offers to pay for a small quantity of a commodity at the time of shipment, pay for
a minimum annual order within 30 days of shipment, or make all purchases of the
commodity from the vendor and pay within 60 days. Multiple offers provide
multiple insights into another partys negotiation objectives, and while generating
critical information multiple offers also convey an attitude of flexibility, cooperation and accommodation.161
160
161
Id. See Malhotra, Deepak, and Bazerman, Max. (2008). Negotiation genius: How to overcome
obstacles and achieve brilliant results at the bargaining table and beyond. New York: Bantam.
358
9.5.10 Appeals are Part of the Settlement Equation

Settlement negotiations center on predictions about the likely trial result; parties
bargain in the shadow of the law and, more particularly, in the shadow of expected
trial outcomes.162 Often overlooked in these negotiations is the next step after trial:
what will happen if the trial court judgment is appealed? This question is critical
because exceptional successes at trial whether favorable to a plaintiff or a
defendant provoke appeals and well-financed challenges in the appellate courts.
To comprehensively evaluate litigation outcomes, therefore, parties must calculate
the cost of an appeal and the likelihood of a reversal on appeal.
The most recent study of appellate court reversal rates, based on 8,038 state
court trials and 549 appeals, shows surprisingly high reversal rates, upending the
conventional advice to clients that appellate challenges to jury findings rarely
succeed.163 The overall reversal rate (meaning the trial court judgment was
reversed or the case was remanded for a new trial) was 32.1%, and defendants
were far more likely to prevail on appeal than plaintiffs.164 The reversal rate for
appeals filed by defendants was 41.5%, compared with 21.5% for plaintiffs. When
the results were categorized by case type, the reversal rate for defendants was 50%
or more in five case types: assault, slander and libel; professional malpractice (nonmedical); employment contracts; leases; and other contracts. For plaintiffs, the
reversal rates were highest in property (26.3%), products liability (37.5%), premises liability (26.1%), and employment contract (38.5%) cases. (The initial
decision to appeal a case also varied by case type; 20% or more of the judgments
in employment, product liability, professional malpractice, and property cases
were appealed.)
Integrating the frequency of appeals with the reversal rate produces a tale of
Dickensian proportions, suggesting that the result in Jaryndyce v. Jaryndyce was
relatively benign because the case remained within the chancery court system. For
modern litigants, the takeaway is that trial verdicts in certain types of cases are often
appealed and reversed. Because litigation may continue years after seemingly great
trial victories, settlement decisions must incorporate both probable trial results and
probable appeal outcomes, with further adjustments for attorneys fees, appeal
bonds, and delay costs.
162
Mnookin, Robert H., and Kornhauser, Lewis. (1979). Bargaining in the shadow of the law: The
case of divorce. Yale Law Journal, 88, 950997.
163
Eisenberg, Theodore, and Heise, Michael. (forthcoming 2009). Plaintiphobia in state courts?
An empirical study of state court trials on appeal. Journal of Legal Studies, 38.
164
Data regarding appeal and reversal rates is reported in Eisenberg and Heise supra note 163.
359
9.5.11 Moderate the Mediator

In contemporary civil litigation practice, mediator selection is more important than
jury selection. Investigating a proposed mediators experience, style and reputation
thus is a critical responsibility for litigation attorneys and their clients. This
responsibility is complicated by the lack of objective measures of mediator
quality, other than settlement rates, and the rapid increase in the number of
available mediators.165 Although research indicates that the supply of willing
mediators by far exceeds the demand for their services, it remains difficult for
attorneys and clients to obtain reliable information regarding many mediators
qualifications.166 Absent solid information about a mediators skills and background, obtained through personal experience or from reliable sources, attorneys
and clients should approach mediation with a receptive yet cautious attitude.
An ongoing debate among mediators centers on the efficacy and appropriateness
of evaluative mediation. Mediators sometimes prod parties by presenting the
mediators evaluation of the case, especially when the parties have reached an
impasse in their settlement negotiations. Mediators purpose in sharing their evaluations is to facilitate settlement and insure that the parties are rationally considering their settlement positions and decisions. Despite these good intentions,
mediators often lack a statistically valid basis for their evaluations; they have
litigated or decided too few cases to assemble a statistically valid sample of trial
results in specific types of cases and some have no recent experience in trying or
presiding over cases. The average federal district court judge, for instance, presided
over about six civil trials in 2006, a fairly narrow dataset for forecasting outcomes
in all civil case types. Many mediators, moreover, have very little actual civil trial
experience; some became mediators because they disliked their litigation practices
and exited the courthouse at their earliest opportunity.
Mediators tend to be diplomats and anecdotists, not statisticians or decision
scientists. Their extensive experience as mediators has taught them that people are
persuaded more by narratives than data, more by reading faces than charts. So they
may relate information about what happened in a case very much like your own
or quite similar to a case tried by a colleague a few years ago. They rely on their
own experiences and those of their colleagues and familiarize themselves with the
case by reading the parties briefs, not compiling all available similar case data for
summary judgment dispositions, average win rates, and median verdict amounts
from the National Center for State Courts, VerdictSearch, RAND, PACER and the
Administrative Office of the United States Courts. To forecast case outcomes and
steer the parties toward resolution, they focus more on the stormy dispositions in the
mediation room than historical records of juror temperament. They also know that,
165
Velikonja, Urska. (2009). Making peace and making money: Economic analysis of the market
for mediators in private practice. Albany Law Review, 72, 257. Available at SSRN: http://ssrn.com/
abstract1302891
166
Id.
360
since nearly all civil cases are resolved before trial, case evaluations are rarely
tested at trial and, in any event, an evaluation for settlement purposes may be
grounded on factors other than actual verdicts.
When adverse parties reach a negotiating impasse, some mediators stories have
a common theme, purpose and effect creating doubt and occasionally scaring
the bejesus out of recalcitrant litigants. A mediators narratives often reflect the
mediators bias in favor of settlement, her desire to maintain a high settlement
rate, and the fact that mediators generally do not assess the likely trial outcome
using predictive analytics.167 Recognizing that mediators may try too hard to
break real impasses, Magistrate Judge Wayne Brazil states, Their primary
goal cannot be to break impasse; mediators are not supposed to be in the business
of breaking anything. Rather their objectives should be to help the parties explore
and understand the source and character of their apparent impasse and to help the
parties determine whether they can move beyond it.168
Many mediators, like the attorneys and clients participating in mediation, bring
their own biases to the mediation session; these biases may affect their case
evaluations. They are in the mediation business because they generally favor
settlement over trials; many are risk averse and express little confidence in the
jury system; some mediators left litigation practice because they have conflictavoidant personalities; and many mediators measure and publicize success by the
percentage of cases settled, not the percentage of cases that settled for more than the
plaintiffs BATNA or less than the defendants BATNA.169 The emphasis on
quantity of cases settled rather than the quality of outcomes indicates that it may
be difficult to measure mediators actual financial contribution by an objective or
mutually agreed-upon standard.170 Parties may be subjectively satisfied but objectively disadvantaged, pleased with the mediation process but ignorant of superior
financial outcomes that could have been achieved. If no consensus exists regarding
how to measure the quality of mediated settlements and whether procedural satisfaction outweighs substantive satisfaction, how much weight should a litigant
assign to a mediators opinions regarding a reasonable settlement range? Is the
range reasonable because it is within all parties reservation price ranges and hence
likely to result in a settlement, or is it reasonable because it is a reliable assessment
167
Some research suggests that mediators do not reduce negotiating impasse rates. See Bazerman,
et al. The effects of agents and mediators on negotiation outcomes. In Connolly, Terry, Arkes, Hal
R., and Hammond, Kenneth R. (2000). Judgment and decision making (p. 450). New York:
168
Brazil, Wayne D. (2009, Winter). Thoughts about impasse for mediators in court programs.
Dispute Resolution Magazine, p. 11.
169
See Menkel-Meadow, Carrie J. (1995). Whose dispute is it anyway? A philosophical and
democratic defense of settlement (in some cases). Georgetown Law Journal, 83, 26632696.
Sander, Frank E.A. (1995, October). The obsession with settlement rates. Negotiation Journal, 11
(4), 329331.
170
See Bazerman, et al. supra note 167 at 450 (finding that use of a mediator does not decrease the
impasse rate in experiments using a no mediator control).
361
of the probable trial outcome? Because these questions evade definitive answers,
litigants may find that mediators are best utilized more as facilitators than forecasters; they are sagacious listeners, adroit communicators, wise diplomats, astute
observers of human behavior and improbable actuaries.
One retired federal judge, now a mediator, participated on a California State Bar
annual meeting panel and presented this fact situation for discussion: the plaintiff
confidentially tells the mediator that he is willing to settle for x dollars, and the
defendant confidentially tells the mediator he is willing to settle for an amount that
represents x $100,000. In other words, the plaintiff is willing to settle for an
amount that is $100,000 less than the defendant is willing to pay, but neither party
wants the other party to know its position. Other mediators on the panel and in the
audience fidgeted, raised their hands, and claimed they would never place themselves in this position because they do not allow the parties to express bottom line
positions. But the judge persisted and said this dilemma happens fairly often. That
was the end of the panel discussion on this topic.
The judge, in essence, was raising a fundamental and perplexing question for
mediators: what are the ethics and objectives of mediation? Should the mediator
facilitate a settlement for (1) an amount equal to or more than the amount the
plaintiff demands but less than the defendant is willing to pay; (2) $100,000 more
than the plaintiff wants but nevertheless an amount the defendant already said it
found acceptable; (3) $100,000 less than the defendant is willing to pay but
nevertheless an amount the plaintiff said is acceptable; (4) an amount less than
the plaintiff demands because the plaintiff is probably bluffing anyway and the
defendant will be happy with saving more than $100,000; or (5) some other
amount that cloaks one or both parties with the illusion of negotiating success? Is it
the mediators duty and sound dispute resolution practice to serve a compromise
confection, knowing the plaintiff is settling for less than it could have obtained from
the defendant and the defendant is paying more than the plaintiff was willing to
accept? These issues trouble mediators, attorneys and clients, and they evade
consensus.171 Until clients can reasonably assume that a common, explicitly articulated objective motivates both the mediator and the client, clients need to stay
focused on their own long-term objectives and sensibly cautious about the shortterm attraction of immediately resolving a case in mediation.172
171
See Bazerman, et al. supra note 167 at 444. (Whether mediators should be concerned with the
specific nature of the agreement is an ongoing dispute in the mediation literature.)
172
A longitudinal study comparing adjudicated outcomes with non-adjudicated outcomes indicates
that settling parties are not more satisfied than parties whose case is adjudicated by a third party.
Shestowsky, Donna, and Brett, Jeanne. (2008). Disputants perceptions of dispute resolution
procedures: An ex ante and ex post longitudinal empirical study. Connecticut Law Review,
41(1), 63, 101. See Hensler, Deborah R. (2003). Our courts, ourselves: How the alternative dispute
resolution movement is re-shaping our legal system. Penn State Law Review, 108, 165.
362
9.6
Phase Six: Checking
In the checking phase, attorneys and clients monitor and evaluate the results of their
decisions and the consequences of decisions imposed on them. For decisions that
culminated in negotiated resolutions, performance of the settlement agreement is
monitored to insure compliance with its terms; for decisions that resulted in
adjudicated resolutions, compliance with the judgment or award is monitored.
The cost of compliance, alternatives to compliance, and the cost of preventing
non-compliance also are evaluated at this phase. Key questions in this phase are:
Did we foresee the issues and understand the facts that preceded this resolution?
Did we accurately predict the direct and indirect costs of this result? Are all parties
complying with the requirements of this outcome? What are the alternatives to
compliance and what are the costs of circumvention? Are we receiving the benefits
contemplated by this resolution? In retrospect, did we excel in any aspect of
decision making and where could we have improved?
Monitoring and evaluation in the checking phase have external and internal
dimensions. While the parties compliance with the settlement agreement, judgment or award is scrutinized, attorneys and clients simultaneously evaluate their
own decision-making skills. The questions with the greatest value in the long term
are often neglected: What was the quality of the decision making that led to this
result and how can we accurately measure it? Did we select benchmarks for
evaluating the quality of the decision before we made the decision, or are we
defining and changing the benchmarks afterward to skew the evaluation? Looking
back on the assumptions we made and the risks we weighed, how could we have
made a better decision? Attorneys easily overlook these questions as they quickly
move on to another case, handling one urgent matter after another without ever
finding the time to assess their decision-making skills. As Myer Sankary, a mediator
and former president of the Southern California Mediation Association, has
observed, attorneys primarily rely on intuition and their past experience and fail
to analyze what they are doing or to learn how to improve their negotiation
skills.173
Although managers recognize that these evaluative questions are the most
important, they concede they rarely devote sufficient time to assessing their own
decision-making performance. Managers report that they spend only 13% of their
decision-making time on learning from experience, although they intend to
correct this allocation in the future by nearly doubling that allocation to 23%.174
Ironically, they report spending 35% of their time on the preceding stage, coming
to conclusions, and intend to reduce that allocation to 22%. At least at the
conceptual stage, managers recognize that they spend too much time on reaching
173
Sankary, Myer. (2003, September). Critical cross-roads: Good decision making is key to
successful negotiations. Big News for Smaller Firms. Solo and Small Firm Section of the State
Bar of California. Available at http://www.mediate.com/sankary/pg7.cfm
174
9.6 Phase Six: Checking
363
conclusions and too little time on learning how to evaluate and improve the
conclusions they reach. Due to misplaced priorities, these decision makers spend
inadequate time gathering and evaluating evidence, excessive time reaching conclusions based on insufficient evidence and comparatively scant time evaluating
their conclusions.
To start a rigorous program of self-evaluation in the checking phase and balance
the time allocated between reaching conclusions and evaluating them, decision
makers may adopt the three practices described below.
9.6.1
Pin Yourself Down for Some Real Feedback
To avoid hindsight and self-serving biases, decision makers intent on improving

their skills maintain a written record of their decisions. The record, at a minimum,
includes: (1) the decision made; (2) the major premises supporting the decision; (3)
the objectives to be achieved by the decision; and (4) the decision makers confidence level in the decision, stated as a percentage. After the decision has been
implemented and the outcome ascertained, decision makers add a fifth component,
the actual result. Decision makers who are strongly committed to becoming superb
decision makers make a copy of (1) (4) before the results of the decision are
known and file it or give it to a trusted colleague or friend with whom they can later
discuss the results. A systematic decision review, states Peter Drucker, can be a
powerful tool for self-development, too. Checking the results of a decision against
its expectations shows executives what their strengths are, where they need to
improve, and where they lack knowledge or information. It shows them their
biases.175
To be effective, training, feedback and recalibration have to generate dissonance. They necessarily push decision makers beyond their comfort zone by
forcefully signaling weaknesses, shortcomings and mistakes. A simple example
of the deliberate practice essential to improved decision making illustrates the
educational value of putting some self-esteem on the line:
Say you have someone in your company who is a masterly communicator, and you learn
that he is going to give a talk to a unit that will be laying off workers. Sit down and write
your own speech, and then compare his actual speech with what you wrote. Observe the
reactions to his talk and imagine what the reactions would be to yours.176
175
Drucker, Peter. (2004, June). What makes an effective executive. Harvard Business Review,
pp. 59, 61. On attorneys duty to inform clients of their own malpractice, see Cooper, Benjamin P.,
(2009, February 6), The lawyers duty to inform his client of his own malpractice, Baylor Law
Review, Forthcoming. Available at SSRN: http://ssrn.com/abstract1338807.
176
Ericsson, K. Anders, Prietula, Michael J., and Cokely, Edward T. (2007, JulyAugust). The
making of an expert. Harvard Business Review, pp. 115, 119.
364
That example is offered by K. Anders Ericsson, the nations expert on expertise.

The key element in Ericssons exercise is writing ones own speech, not just
showing up for the talk. Writing the speech forces one to compare actual performances and eliminates two calibration killers: deluding oneself about what one
would have said and indulging in the misconception that critiquing another persons
performance perforce improves ones own performance. Law firms routinely feed
these two calibration killers when they send summer clerks and associates to court
to watch a partners performance at trial, followed by collegial banter over toro
tartare about the strengths and weaknesses of the argument. If these adult field trips
were designed to have educative value, firms would ask attorneys to draft their own
arguments, circulate them among other attorneys, discuss and compare them to the
stars performance, and re-write them to reflect the discussions and comparisons.
That type of deliberate practice compels re-calibration and guides attorneys toward
expertise, but it inevitably is more self-revealing and potentially embarrassing than
evanescent observations. As Ericsson reminds would-be experts, the deliberate
practice that results in expert performance may require painful self-assessment, as
it focuses on tasks beyond your current level of competence and comfort.177
9.6.2
Dont Just Provide Feedback Discuss it
Providing feedback on outcomes may be ineffective in improving judgment calibration unless the feedback is accompanied by interactive discussion. Interactively discussing the outcome, like the exercise of justifying ones position to a third
party, increases the accuracy of probability judgments. In one notable study,
meteorologists received written feedback on their forecasts of temperature and
precipitation. They did not show an improvement in accuracy over time. The
research assistants conducting the study, however, showed significant improvements and actually outperformed the meteorologists. The research assistants had
extensive opportunities to discuss the forecasts and results, while the intended
subjects of the study, the meteorologists, received feedback only in a written
form without discussion. Similarly, another study found that the most successful
method of increasing decision-making quality and the accuracy of results was
interactive training with feedback and verbal suggestions.178
Noting that the debates in 1986 about launching the ill-fated Challenger spacecraft in abnormally cold temperatures were conducted over a telephone, not face to
face, professor Weick explains the importance of personal meetings in complex
problem solving:
Unexpected events are often confusing and people need to use rich media to build some
idea of what they face. Face to face communication is generally regarded as the richest
177
Id. at 115.
178
9.6 Phase Six: Checking
365
medium, and richness declines as people move to interaction by telephone, written personal
communiques (letters and memos), written formal communiques (bulletins) and numeric
formal communiques (printouts). Face to face is the richest because of the capacity for
timely feedback, the ability to convey multiple cues, the degree to which the message can
be personalized, the variety of language that can be used, and the range of meaning that can
be conveyed. As richness is lost, so is key information.179
Despite its inefficiency and costs, interactive feedback conveys information far
more effectively than unidirectional communications like faxes, emails, and voice
mail messages. Personal interaction may be tension-filled, frustrating, and timeconsuming, but for the most complex decisions it is imperative.
9.6.3
Learn from Surprises
Surprises are simply an indication that a decision makers concept of the world is
incorrect. Characterizing an event as predictable or surprising does not describe the
event itself but rather reveals ones degree of preparedness for the event. Surprise is
the emotional manifestation of unpreparedness, the upset, awkward, and embarrassed sense that a decision maker feels when reality appears outside the limited
range of consequences he anticipated.
Professors Karl Weick and Kathleen Sutcliffe urge decision makers to undertake
self-conscious auditing when they discover that the world does not conform to
their expectations, citing Winston Churchills surprise upon learning during World
War II that Singapore had few defenses to a Japanese invasion. Objectively assessing his own decision-making weaknesses, Churchill wrote, I ought to have
known. My advisors ought to have known, and I ought to have been told, and
I ought to have asked.180 Churchills self-enquiry, in essence, poses four critical
questions which overarch many decision failures, including those that arise in the
attorney-client context: (1) Why did I obtain and hold inaccurate and incomplete
information? (2) Why did my advisors obtain and hold inaccurate and incomplete
information? (3) If in fact my advisors had better information, why did they
withhold it? (4) Why did I not probe, express my curiosity or seek additional or
disconfirming information?
Surprises invariably are accompanied by semantic adaptations intended to
obscure disquieting oversights. These cognitive comforters assuage and mute the
inner conviction that negative consequences could have been anticipated and
avoided. Facts and events preceding surprises are variously described as imperceptible, unknown, undisclosed, impossible to have foreseen, unimaginable,
unprecedented, without warning, exceeding all previous records, or
bizarre. Decision makers committed to improvement and re-calibration remove
179

180
366
these palliatives from their vocabulary and replace them with realistic terms to
describe the facts, processes and events that precede surprises ignored, undetected, overlooked, neglected, unquestioned, underestimated, misjudged
and disregarded. When candid decision makers are surprised, they acknowledge
they were simply unprepared and had mistaken forerunners for outliers, harbingers
for histrionics.
9.7
Chapter Capsule
The 45 concrete steps to improved personal decision making, described above,

introduce new, substantiated ways of perceiving, thinking and deciding. These steps
facilitate quality decision making by requiring problem solvers to reconfigure their
perceptions, analyze problems in multiple dimensions and test numerous alternative
solutions. Because they describe complementary attitudes and actions, the steps are
only mildly effective when implemented selectively or sporadically and are most
effective when integrated into a composite model for decision making.
The aggregate effect of the steps is to improve decision making in seven
fundamental respects: (1) broadening the definition of the problem, time frames
for solving the problem, sources and types of information, potential resolutions,
personal and organizational objectives and the range of acceptable options; (2)
challenging and sometimes reversing a decision makers perspectives, positions,
goals, assumptions, stereotypes and beliefs to enable the decision maker to understand, counter, accommodate or defeat an adversarys claims; (3) probing to learn
more about the evidence, premises, prior experiences, purposes and values underpinning the dispute; (4) anticipating likely problems, delays, outcomes, surprises,
changes and objections; (5) imagining ideal and optimal resolutions and the full
range of possible failures, successes, effects, obstacles and outcomes; (6) numerating and becoming numerate about base rates, risks, probabilities, averages, and
costs; and (7) synchronizing new and evolving evidence with the clients values,
objectives, priorities, timing and positions.
Chapter 10
Group Expertise In Legal Decision Making
The fatal tendency of mankind to leave off thinking about a thing when it is no longer
doubtful is the cause of half their errors.
John Stuart Mill, On Liberty (1859)
Police officers call it contagious shooting the sight of an officer shooting a

suspect is followed instantaneously, almost uncontrollably, by multiple rounds fired
at the suspect by fellow officers. In 2006, five police officers shot 50 bullets and
killed an unarmed man whose car hit a minivan carrying police officers; earlier that
year, three officers fired 26 bullets at a dog that bit an officer.1 In previous incidents,
police officers shot 41 bullets at Amadou Diallo, an unarmed immigrant street
peddler, and 107 bullets at suspects in a Bronx bodega robbery, one officer alone
shooting 45 rounds.2 Describing the mesmerizing effect of the other officers firing,
a former police official said, He shoots, and you shoot, and the assumption is he
has a good reason for shooting. Acknowledging you see it in a lot of shootings,
the official elaborates: You just chime in. I dont mean the term loosely. But you
see your partner, and your reflexes take over.3 In some instances, officers mistakenly conclude that the muzzle flashes from another officers gun signal shots from
the suspect, triggering yet another burst of gunfire by fellow officers. Referring to
the bodega robbery, another former officer reflected, They were shooting to the
echo of their own gunfire.4
Group decision making has its own form of contagious shooting, often manifested in group polarization and groupthink, and it is aimed at independent
thinking and disconfirming facts. Like police officers caught up in contagious
shooting, group members start with shared allegiances, simultaneously perceive a
common threat, immediately adopt another members assumptions, unconsciously
1
Wilson, Michael. (2006, November 26). 50 shots fired, and the experts offer a theory. The
New York Times, p. A1.
2
Baker, Al. (2007, March 17). 3 detectives are indicted in 50-shot killing in Queens. The New York
Times, p. A1.
3
Wilson supra note 1.
4
Wilson supra note 1.

367
368
10 Group Expertise In Legal Decision Making
imitate each others reactions and allow reflexes, mimicry and conformity to hijack
objective decision making. They are cognitively shooting to the echo of their own
gunfire.
This chapter explains the decision-making errors unique to group deliberations
and identifies nine corrective measures. Although many precepts of individual
decision making are applicable to group decision making, three specific questions
relate to groups and are treated separately in this chapter:
l
l
What decision-making deficiencies are unique to group settings?

What are the characteristics of effective decision making in groups and organizations?
How can groups improve the quality of their decision making?
To answer these questions, this chapter describes the dangers of group conformity
and consensus building, the distinct characteristics of high reliability organizations
(HROs) and expert teams, and specific methods to achieve decision-making proficiency in groups. The research described in this chapter generally is based on
organizational behavior in corporations and governmental entities, but it applies
directly to group interactions in trial teams, litigation departments, law firm management committees, case selection and evaluation committees, and litigation
committees reporting to boards of directors.
10.1
Deficiencies in Group Decision Making
Group decision making has unparalleled advantages and devastating disadvantages.

Properly managed, group decision making has the potential to overcome the
weaknesses and biases of individual decision making and may result in greater
predictive accuracy than that achieved by the average decision maker in the group.
In most circumstances, explains former CIA analyst Morgan Jones, the analytic
power of a group of analysts is greater than that of any of its single members.5
When poorly managed, however, group decision making produces extreme outcomes reflecting the absence of deliberative assessment, planning and execution.
As flight director Gene Kranz sadly noted after the Apollo 1 fire in 1967, We were
too gung ho about the schedule and we locked out all the problems we saw each day
in our work. Every element of the program was in trouble and so were we . . .
Nothing we did had any shelf life. Not one of us stood up and said, Dammit,
stop!6
Although the causes and manifestations of sloppy group decision making are
abundantly clear in retrospect, they are rarely recognized until the consequences are
irreversible. Recent instances include financial institutions widespread extension
5
Jones, Morgan. (1995). The thinkers toolkit (p. 53). New York: Three Rivers Press.
Chiles, James. (2002). Inviting disaster (p. 111). New York: Harper-Collins.
10.1 Deficiencies in Group Decision Making
369
of credit to unqualified home buyers, institutional investments in Ponzi schemes

generating impossibly steady quarterly returns, extensive back-dating of stock
option grants by publicly traded corporations and the initial assumption that the
cost of reconstruction in the Iraq war would be paid by oil production revenues. In
each of these gross errors, the fundamental problem was not the absence of
conflicting data and opinions but rather the collective suffocation of conflicting
data and opinions. Judge Learned Hand warned of this tendency to ignore or
suppress independent thought in 1927: Our dangers, as it seems to me, are not
from the outrageous but from the conforming; not from those who rarely and under
the lurid glare of obloquy upset our moral complaisance, or shock us with unaccustomed conduct, but from those, the mass of us, who take their virtues and their
tastes, like their shirts and their furniture, from the limited patterns which the
market offers.7
The stifling of dissent and the social pressure to adopt prevailing opinions
distinguish group decision making from personal decision making and highlight
the social coercion inherent in collective decision making. At an elementary level,
though, group problem solving is similar to individual problem solving and roughly
follows these phases outlined by Professor Paul Kleindorfer: (1) problem finding
and representation; (2) problem analysis; (3) evaluation and choice; and (4) implementation, legitimation, and learning.8 Although the phases of decision making
may be similar for both individuals and groups, group decision making introduces
additional factors that exert strong and singular effects on its quality: the similarity
of member backgrounds and values; the relationships among group members; the
power, authority and credibility of each group member; the history of group
interaction; the group leaders communication and decision-making style;
group resources; the groups mission or goals; and the expectations imposed by
the group members and stakeholders.9 Group decision making, therefore, is more
complex than individual decision making and is affected by how group members
feel about each other and, in particular, whether they trust each other; how they feel
about what they are to accomplish; how others evaluate the groups processes and
performance; and the resources, processes and strategies that the group utilizes.10
The sheer complexity, scale and number of actors in group decision making
virtually insure that the costs of erroneous group decisions will vastly exceed the
costs of individual mistakes. Very few of the scandals that today rock the political
and business worlds are caused by the nefarious, surreptitious acts of a single
person. More often, they reflect a group decision-making process conducted deliberately, albeit defectively, by educated, experienced and intelligent executives and
Learned Hand. (1927, June 2). The Preservation of Personality, commencement address at Bryn
Mawr College, Bryn Mawr, Pennsylvania.
8
Kleindorfer, Paul R., Kunreuther, Howard C., and Schoemaker, Paul J.H. (1993). Decision
sciences (p. 214). Cambridge, United Kingdom: Cambridge University Press.
9
Id. at 215.
10
Id.
370
professionals succumbing to the insidious dynamics of group decision making. In

groups, the steady drift toward conformity and hence incompetent decision making
proceeds unconsciously and imperceptibly, and it is difficult to pinpoint the
moment when group consensus replaces independent judgment. Because group
consensus and conformity support a social system more tangible than an individuals ethical framework, the group members often feel no need to hide their
actions from later scrutiny. For ethically compromised group decision making,
the surprise is not its iniquity but its banality.
When the inevitably disastrous consequences of deficient group decision making
unfold, the discussions, events and decisions leading to the disaster are amply
documented in e-mails, meeting minutes, and notes to financial statements. The
confidence with which people execute fundamentally flawed decisions attests to the
enormous power of consensus and the strong sense of protection afforded by
collective action. Executives at Mercury Interactive Corp., for example, documented their manipulation of stock option dates in multiple e-mails. Explaining to a new
employee why her stock options were being repriced, Mercurys payroll manager
sent this e-mail closing with a smiley-face emoticon: The reason the paperwork
was not sent out is because the stock price drop made us change the grant date so
that you could get the lower price. . . I know it has been a while, but believe me, you
will be happier with the new price.11 Another e-mail referred to the Chief
Financial Officers use of her magic backdating ink.12 In yet another e-mail
Mercurys general counsel wrote to Mercurys finance chief, suggesting that the
option price for a grant to 30 new employees should be based on a date two weeks
before the e-mail, unless we think the price will be better than that later this month.
Let me know what youd like to do.13
10.1.1 Elements of Defective Group Decisions

Irving Janis, the psychologist who wrote Groupthink, has identified the elements of
defective group decision making. He believes incompetent group decision making
usually reflects seven fundamental deficiencies: (1) gross omissions in surveying
objectives; (2) gross omissions in surveying alternatives; (3) poor information
search; (4) selective bias in processing information at hand; (5) failure to
reconsider originally rejected alternatives; (6) failure to examine major costs and
risks of the preferred choice; and (7) failure to work out detailed implementation,
11
Boslet, Mark, and Maremont, Mark. (2007, February 20). Emails reveal backdating scheme.
The Wall Street Journal, p. A4.
12
Id.
13
Id.
371
monitoring and contingency plans.14 Each of these factors reflects a cognitive

shading or disregard of information easily accessible but uneasily discrepant, a
deference to social cohesion at the cost of social responsibility.
10.1.2 Group Polarization and Groupthink

The two most common causes of group decision-making deficiencies are described
as group polarization and groupthink. These cognitive maladies often are
lumped together and colloquially referred to as incestuous amplification or
more pejoratively, breathing your own exhaust. These colloquialisms share the
central idea that group members disregard external sources and stop challenging
each other, preferring the warm, secure, and affirming sense of internal deference
and congeniality. Although decision makers immediately recognize the symptoms
of groupthink and group polarization in other people and deplore the consequences
that flow from these deficiencies, they rarely recognize the symptoms when they
infect their own decision making. People instinctively seek group approval, conform to group behavior patterns, and exhibit very poor calibration in distinguishing
between a legitimate need for cooperation, consistency and integration, on the one
hand, and a counter-productive insistence on allegiance, conformity and submission, on the other hand. Human ambivalence about the conflicts between loyalty
and independence and between conformity and creativity is reflected in The New
Yorker cartoon depicting one senior executive remarking to his colleague, Encouraging dissent is a good way of finding out who the traitors are.15
Although attorneys and clients may feel confident in believing that they would
not succumb to the coercive effects of group decision making, their everyday
conversations belie this confidence. Attorneys and clients often engage in the
same behavior that preceded harmful incidents of group polarization and groupthink, and they regard their behavior as merely promoting teamwork and encouraging others to get with the program. Viewing other businesses and public
entities, for example, attorneys and clients may decry management and policymaking teams composed of yes men and women, but in their own leadership and
management roles they emphasize the importance of consensus building, getting
buy-in, being a team member, making sure were all on the same page,
presenting a united front, not airing our dirty laundry, and staying on message. Following the military adage that when you get too far ahead of your own
troops, you get mistaken for the enemy, they leave little ground between their
opinions and those of other group members.
14
Janis, Irving. (1972). Victims of groupthink (pp. 3233). Boston: Houghton Mifflin Company.
See Janis, Irving. (1989). Crucial decisions (p. 59). New York: The Free Press.
15
(2005, October 3). The New Yorker, p. 75.
372
10.1.2.1
Group Polarization
Until the early 1960s, social scientists assumed that group decisions were superior
to individual decisions the two heads are better than one premise. An unpublished masters thesis written in 1961 by MIT student James Stoner upended this
assumption, finding that group positions were more extreme and riskier than the
average of the individual positions initially held by the group members. Stoner
called this phenomenon risky shift.16 Psychologists Serge Moscovici and Marisa
Zavalloni later named the phenomenon group polarization, the term presently
used to describe the robust tendency of groups to radicalize their members and
produce extreme positions.17 Like polarized molecules, psychology professor
John Turner explains, group members become even more aligned in the direction
they were already tending.18
Group polarization, law professor Cass Sunstein states, occurs when members
of a deliberating group move toward a more extreme point in whatever direction
indicated by the members predeliberation tendency. He presents these examples:
professors disposed to be supportive of affirmative action will become more firmly
committed to affirmative action; voters tentatively in favor of greater gun control
will probably end up favoring gun control quite enthusiastically; and citizens
leaning in favor of impeachment will tend to favor impeachment.19 Jury
verdicts also exhibit group polarization, their verdicts ultimately being higher than
that of the individual judgments before deliberation. Sunstein explains the effect of
group polarization on jury verdicts: For any dollar award above zero, the general
effect of deliberation was to increase awards above those of the median voter.20
10.1.2.2
Groupthink
Groupthink is a characteristic of group decision making that causes otherwise

capable individuals to make manifestly poor decisions in a group setting.21
16
Stoner, J.A.F. (1961). A comparison of individual and group decisions involving risk. Unpublished masters thesis, Massachusetts Institute of Technology, Cambridge.
17
See Moscovici, S. and Zavalloni, M. (1969). The group as a polarizer of attitudes. Journal of
Personality and Social Psychology, 12, 125135. Moscovici, Serge, Zavalloni, Marisa, and
Weinberger, Monique. (2006). Studies on polarization of judgments: II. Person perception, ego
involvement and group interaction. European Journal of Social Psychology, 2(1), 9294.
18
Turner, John, et al. Rediscovering the social group, 142, 187, cited in Sunstein, Cass R., (1999,
December). The law of group polarization (John M. Olin Law & Economics Working Paper
No. 91, p. 4). University of Chicago Law School. Available at SSRN: http://ssrn.com/
abstract=199668 or DOI: 10.2139/ssrn.199668.
19
Sunstein, Cass R. (December 1999). The law of group polarization (John M. Olin Law &
Economics Working Paper No. 91, pp. 24). University of Chicago Law School. Available at
SSRN: http://ssrn.com/abstract=199668 or DOI: 10.2139/ssrn.199668.
20
Id. at 18.
21
Kleindorfer, Kunreuther, and Schoemaker supra note 8 at 217218.
373
Irving Janis, the psychologist who popularized the term groupthink, explains that
the underlying motivation for the groupthink tendency appears to be a strong
desire to avoid spoiling the harmonious atmosphere of the group upon which each
member has become dependent for maintaining self-esteem and for coping with the
stresses of policymaking.22 Members follow a simple decision rule: Preserve
group harmony by going along uncritically with whatever consensus seems to be
emerging.23
Groupthink is different from group polarization in at least two basic respects.
First, as Professor Sunstein explains, cascade effects lead people to fall in line with
an existing tendency, whereas polarization leads them to a more extreme point in
the same direction.24 Thus, groupthink generally reinforces a consensus reached
with limited consideration of alternatives but does not necessarily result in a more
extreme position than originally contemplated by the individual group members.
Second, group polarization does not appear to require the same antecedents as
groupthink; groups adopt extreme positions without necessarily exhibiting the
precursors of groupthink, e.g., external pressures and group cohesion, insulation
and homogeneity.
In his study of groupthink, Janis analyzed the decision-making history of policy
advisors in the following predicaments: Neville Chamberlains appeasement of
Hitler; Admiral Kimmels failure to heed warnings that Pearl Harbor would be
attacked; Harry Trumans decision to escalate the Korean War despite clear evidence that China would intervene; John Kennedys approval of the Bay of Pigs
invasion in Cuba without consulting knowledgeable experts in the CIA or the Joint
Chiefs of Staff; and Lyndon Johnsons decision to escalate the war in Vietnam
despite reports that this would be unavailing. Based on his study of these decisionmaking misadventures, Janis identifies the following antecedent conditions for
groupthink, many of which exist in law firms and attorney-client relationships,
especially in high-risk cases: insulation of the group from outside influences; lack
of a tradition of impartial leadership; the absence of norms requiring methodical
decision-making procedures; homogeneity of members social background and
ideology; high stress from external threats with low hope of a better solution than
the leaders proposed action; low self-esteem temporarily induced by recent failures; excessive difficulties on current decision-making tasks that diminish each
group members sense of self-efficacy; and an apparent lack of feasible alternatives
except ones that violate ethical standards.25 Stereotyping of people outside the
group may compound these antecedent conditions.26
The fallout from these antecedents to groupthink, Janis found, is a groups
illusion of invulnerability, a belief in the inherent morality of the group, collective
22
Janis, Irving. (1989). Crucial decisions (pp. 5657). New York: The Free Press.
Id. at 57.
24
Sunstein supra note 19 at 9.
25
26
Kleindorfer, Kunreuther, and Schoemaker supra note 8 at 218.
23
374
rationalizations, stereotypes of out-groups, self-censorship by group members, an

illusion of unanimity, pressure on dissenters, and self-appointed mind guards. He
broadly classifies these consequences into three categories: overestimation, closedmindedness and pressures toward uniformity.27 The homogeneous group susceptible to groupthink, Janis noted, is hostile to deviant views, including those that
may be important for future adaptation and survival.28
Janis deep insights into group decision making, unfortunately, have been
validated by numerous business and political fiascos during the 40-year period
after Groupthink was first published. The defective decision-making processes that
marred each of Janis case studies have been replicated precisely, albeit unintentionally, by executives, professionals, and politicians in debacles ranging from
Enrons financial scandals to the Department of Defenses conviction that the
Iraq war would pay for itself with oil revenues, from 60 Minutes airing of forged
records regarding George Bushs Air Force reserve service to Bill Clintons initial
denial of a sexual relationship with Monica Lewinsky, from the Soviet Unions
concealment of the Chernobyl nuclear plant release to Adelphias fraudulent
accounting practices. Despite Janis identification of the factors instrumental in
defective decision making and decision makers consequent ability to recognize
and avoid these pitfalls, defective decision making is perpetuated through assiduous
practice in board rooms, war rooms, classrooms and courtrooms throughout the
country.
10.1.2.3
Application of Groupthink Research to Business Decisions
Although Janis research focused primarily on political leaders, his main findings
are equally applicable to businesses. In 2001, after interviewing hundreds of
executives in failed organizations over a six-year period, business professor Sydney
Finkelstein concluded that businesses fail for surprisingly few causes. In Why
Smart Executives Fail, Finkelstein explains that business failures are rooted in
defective decision making: Leaders who are invariably crisp and decisive tend
to settle issues so quickly that they have no opportunity to grasp the ramifications.
Worse, because these leaders need to feel that they already have all the answers,
they have no way to learn new answers.29
Describing the Seven Habits of Spectacularly Unsuccessful People,
Finkelstein chronicles the common characteristics of decision-making failures
and the leaders who confidently dispatch their organizations over a cliff. These
characteristics are remarkably similar to the ultra-hazardous conditions depicted by
Janis 40 years earlier: (1) they overestimate the degree to which they control their
27

Janis supra note 22 at 62, citing Ouchi, W.G. (1981). Theory Z: How American business can
meet the Japanese challenge. Reading, Mass.: Addison-Wesley.
29
Finkelstein, Sydney. (2003). Why smart executives fail (p. 224). New York: The Penguin Group.
28
375
environment and underestimate the effect of chance and change, basking in an

illusion of personal and corporate preeminence; (2) they see no difference between
their personal interests and the companys interests, failing to recognize an obligation to a larger audience and often treating the companys assets as their own;
(3) they know they have all the answers and can infallibly make all the decisions;
(4) they ruthlessly eliminate any source of dissent, cutting themselves off from
their best chance of correcting problems as they arise; (5) they are obsessed with
image and cannot distinguish between actual accomplishments and the appearance
of accomplishment, overlooking operational details and complexity and elevating
public relations to the corporations highest priority; (6) they persistently underestimate major obstacles, fail to correct unrealistic expectations, and escalate commitments when the validity of the initial commitment is questionable, pursuing
their vision full steam into the abyss; and (7) they fail to learn new information
and strategies, solving todays problems with yesterdays responses and stubbornly
relying on the tried and true.30 The psychological qualities of Finkelsteins smart
but failed executives arrogance, isolation, insulation, self-delusion, intolerance of
dissent, overconfidence, maladaptation would appear to describe Janis maladroit
politicians and public servants as well.
10.1.2.4
Methods to Counter Groupthink
Janis argues that groupthink must be countered with vigilant problem solving.
Corrective steps advocated by Janis include: (1) invite experts and colleagues who
are not core members of the policy making group to participate in the groups
meetings and specifically question its members; (2) require leaders to present
problems in a neutral manner and delay stating their own preferences until a
broad range of options has been elicited; (3) consider alternative perceptions of
an adversarys intentions; (4) set up at least two independent groups to work on the
same issue, each led by a separate chairperson, and then assemble the groups at a
joint meeting to discuss their ideas; (5) hold a second chance meeting to discuss
lingering doubts and reconsider tentative choices; (6) remind the group of the entire
range of individuals and organizations to which they are responsible; (7) determine
whether group members are being subjected to implicit threats of retaliation;
(8) urge group members to seek new and discrepant information; (9) postpone
final decisions and buy time when faced with a short deadline; and (10) rigorously enforce a no punishment policy to encourage dissident viewpoints and
invite contrary information and arguments.31
30
Id. at 213237. See Sonnenfeld, Jeffey, and Ward, Andrew. Firing Back (p. 61). 2007. Boston,
Massachusetts: Harvard Business School Press.
31
376
10.2
Characteristics of Effective Decision-Making Groups
In this section, the focus shifts from the deficiencies of group decision making to the
characteristics of high performance groups. Serving as models of decision-making
proficiency, these high performance groups exist in every business, profession,
public entity and academic institution. For every organizational debacle chronicled
on todays New York Times website, attorneys and clients could find another
organization or a different group of people in the same organization that performed
an identical or comparable assignment differently and superbly. Defective decision
making in organizations is not endemic but simply receives more popular attention
than proficient decision making. The stellar performance of another group within an
organization may escape media attention because its superior performance embarrassingly demonstrates the avoidability of the mistaken groups decision-making
errors. These superior performances, though under-publicized, serve as examples of
comparative decision-making proficiency and the capacity for effective decision
making to surmount seemingly inevitable outcomes.
The media extensively covered the tragic deaths in 1988 of 290 civilians killed
when the USS Vincennes, a U.S. Navy cruiser, launched two missiles at an Iranian
Airbus 300. The Vincennes captain mistakenly believed the Iranian commercial jet
intended to attack the Vincennes. Unreported at the time was the decision not to
launch missiles at the Iranian aircraft by the captain of the USS Sides, a navy cruiser
in the same area as the Vincennes. The captain of the USS Sides was looking at
similar data at the same time the Vincennes captain authorized the missile strike.
Unlike the captain of the Vincennes, the captain of the Sides concluded that the
Iranian jet was ascending, not descending, toward the American ships and that the
jet was civilian, not military.32 It is unlikely that the general public ever heard about
the Sides or its captain. Although all crew members of the Vincennes were awarded
combat-action ribbons and its captain received The Legion of Merit, the commander of the Sides, according to military historian and retired U.S. Marine
Corps Lieutenant Colonel David Evans, has not received a scintilla of support
from the top echelon.33
Sixty years before the Vincennes accident, nine U.S. destroyers led by the
squadron commanders ship, the Delfy, crashed into the rocks at Point Pedernales,
a few miles off the California coast. Believing that his dead reckoning was more
accurate than bearings from a radio direction station, the squadrons commander
had ordered the ships to make a sharp course change toward the coast. The skipper
of the Kennedy, another boat in the same convoy, disregarded the commanders
order, concluding that the commander had erroneously interpreted the bearing data.
The Kennedy and the three destroyers following behind it escaped disaster, but
32
For a full description of the Vincennes accident, see Klein, Gary. (1998). Sources of power
(pp. 7587). Cambridge, Massachusetts: The MIT Press.
33
Evans, David. Crisis decision making: USS Vincennes case study, Naval Science 302: Navigation and naval operations II. University of Pennsylvania.
10.2 Characteristics of Effective Decision-Making Groups
377
there is no official recognition of the Kennedys skipper as an independent, lifesaving decision maker. Although the official history of the United States Navy
acknowledges navigational complacency as a cause of the Point Pedernales
disaster, it omits any mention of the Kennedys skipper and simply notes that the
intact destroyers steered completely clear.34
Although much can be learned from the leaders of the Vincennes and Delfy,
perhaps more can be learned from the captain of the Sides and the skipper of the
Kennedy. For that reason, this section examines models of sound decision making
instead of the highly publicized exemplars of erroneous decision making. Tasks and
accomplishments differ markedly among the organizations that excel in decision
making, but their values, priorities and systems remain remarkably constant. Like
Tolstoys depiction of happy families, all high performance groups resemble one
another.35
10.2.1 High Reliability Organizations (HROs)

What do nuclear power plants, air traffic control systems, wild land firefighting
crews, and aircraft carrier flight decks have in common? Answer: all are high
reliability organizations (HROs) required to make hundreds of operational decisions in a high stress environment with little margin for error. They are high risk,
low error organizations, adroitly managing unexpected events and consistently
delivering low error rate performances in exceedingly difficult conditions. They
specialize in error management and recognize that large-scale mistakes have
numerous antecedents and rarely are caused by single actors or events. HROs are
studied to identify the elements of effective group decision making in the most
demanding environments and to determine how these organizations systematically
avoid the financially and personally disastrous outcomes that often attend deficient
group decision making, including attorney-client decision making in corporations,
public entities and other organizations. Fortunately, extensive research documents
the low error rates in HROs and highlights the values, procedures, training, and
monitoring that significantly reduce errors in complex, rapidly evolving and dangerous conditions.
Organizational behavior experts first began studying HROs in the 1980s. They
observed that these organizations achieve remarkably high safety records while
operating under five common conditions: (1) the operating environment is risky and
unpredictable; (2) accidents are infrequent but when they occur, often involve
34
Ships History Branch of the Naval Historical Center. Honda (Pedernales) Point, California,
disaster, 8 September 1923. Navy Department Library, Department of the Navy: Washington,
D.C. Available at http://www.history.navy.mil/library/online/honda.htm.
35
Tolstoy, Leo. Anna Karenina, Chapter 1 (Happy families are all alike; every unhappy family is
unhappy in its own way. An alternative translation: All happy families resemble one another,
each unhappy family is unhappy in its own way.)
378
massive loss of life and/or property; (3) human error fatigue, workload, communication misunderstandings, fear, poor quality decision making causes most
accidents; (4) nearly all errors that occur are systematically observed and corrected
without serious loss; and (5) performance is continually and objectively measured
by outcomes, e.g., lives lost, unsafe landings, and assets damaged or destroyed.36
James Reason, the preeminent psychology professor and author of Human Error,
summarizes three distinct features of HROs: they are complex, dynamic, and
interactive; they perform demanding tasks under extreme time pressures; and
they function with low incident rates and a near-absence of catastrophic failures.37
Although every organization appears to function quite differently from other
organizations, the causes of accidents in all organizations show very similar
patterns. In surgical operating theatres, for example, the major causes of error are
poor communication, failure to follow procedures, unclear lines of responsibility in
the leadership team, interpersonal conflict between team members, failure to plan
for contingencies and negligence in monitoring conditions.38 In aircrew mishaps,
which superficially bear no resemblance to surgical theatres, 70% of mishaps are
caused by similar human errors: supervisory, leadership or organizational lapses;
missing, inaccurate and misinterpreted communication; faulty assessments of risk
conditions; failure to adhere to established procedures; and poor management of
known dangerous conditions.39 Human error appears to be the most common cause
of adverse outcomes in organizations, and HROs distinguish themselves from
ordinary organizations by their systematic anticipation and management of
human error.
HROs constantly attempt to detect and counter a principal cause of human error:
overconfidence. The majority of pilots, for instance, are convinced that their
decision making is as good in emergencies as under normal conditions, that they
can leave behind personal problems, and that they perform effectively when
fatigued.40 Demonstrating similar levels of overconfidence, physicians also
claim that their decision making is as good in emergencies as in normal situations,
and many outright deny that they commit any errors. 41 HROs systematically
attempt to reduce this pervasive overconfidence by requiring team members to
adopt a safety culture. Organizations with a safety culture display a collective
36
See Weick, Karl E., and Sutcliffe, Kathleen. (2001). Managing the Unexpected (pp. 51115).
San Francisco, California: Jossey-Bass.
37
Reason, James. (2000, March 18). Human error: Models and management. BMJ [British Medical
Journal], 320, 770.
38
Helmreich, Robert L. (2000, March 18). On error management: Lessons from aviation. BMJ
[British Medical Journal], 320, 783784.
39
Ciavarelli, Anthony, and Crowson, Jeffrey (2004 March). Organizational factors in accident risk
assessment (p. 1). Paper presented at Safety Across High-Consequence Industries Conference,
St. Louis, Missouri. Available at http://www.high-reliability.org/Documents/Articles/StLouispaper
12-03.pdf.
40
Helmreich supra note 38 at 782.
41
Helmreich supra note 38 at 783.
379
mindfulness of the risks, expectations, assumptions and connections in their highrisk operating conditions. HROs achieve low accident rates through keen awareness of their risks, close monitoring of high-risk operations, and encouragement and
use of standardized procedures, and continuous training. 42 Most importantly, they
identify, update and modify assumptions and routines to avoid the danger of
automaticity in a changing context.
Karl Weick, the psychology professor who first identified and defined HROs,
emphasizes five processes that distinguish HROs from ordinary organizations and
could be applied by law firms to distinguish their decision making from ordinary
law firms. First, they are preoccupied with failures rather than success.43 This
preoccupation with failure is manifested by a series of practices that are successful
in detecting small errors before they become major accidents:
l
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All performances are evaluated.

All group members are encouraged, indeed required, to report errors.
Reporting systems are designed to eliminate the threat of retaliation and retribution.
Minor lapses are treated as reflections of serious underlying deficiencies.
Anomalies are examined to detect possible problems with practices and procedures.
Members challenge each others decisions and actions.
Disconfirming information is sought and studied.
Second, HROs are reluctant to simplify risks and the complexity of their operations.
My worry when executives say, Keep it simple, stupid, is that theyre misunderstanding the complexity of their own organizations and environments, explains
Weick. Part of the solution to managing the unexpected, he says, is to get
executives to step back and acknowledge just how messy reality can sometimes
be.44 Third, HROs show a high level of situational awareness, sensitivity to
operations and constant attention to unexpected events. Surprises are neither dismissed nor rationalized; they are a solid cue that ones model of the world is
flawed.45 Fourth, HROs are resilient and adept at improvisation when old rules and
protocols interfere with quality outcomes. Fifth, HRO members defer to expertise;
missions are led and decisions are made by the person most knowledgeable about
the assignment regardless of seniority or hierarchy. In the Israeli Air Force, for
instance, pilots are graded by skill level, and the most skilled pilot leads the
formation even if this results in a general flying behind a captain.
Weick groups the first three qualities of HROs (preoccupation with failure,
reluctance to simplify, and sensitivity to operations) under the broad rubric anticipating and becoming aware of the unexpected. He categorizes the other two
42
Ciavarelli and Crowson supra note 39 at 2.

The five processes are described in Weick and Sutcliffe supra note 36 at 1017.
44
Coutu, Diane L. Sense and Reliability. (2003, April). Harvard Business Review, 8687.
45
43
380
qualities (commitment to resilience and deference to expertise) as containing the

unexpected. In anticipating, becoming aware of and containing the unexpected,
HROs collectively display the distinct characteristic Weick calls mindfulness a
vibrant, adaptive, systematic state of situational awareness and vigilance in sensing
and correcting errors that could become catastrophic.46
Attorneys who see little relation between HROs and law firms are invited to reconsider the role of attorneys and the context in which they operate. Like air traffic
controllers and operators of nuclear power plants, attorneys actually are in the
public safety business. They are licensed as attorneys but the most effective among
them serve as safety professionals, protecting clients from entering an unsafe
environment or, if the client already has fallen into a hazardous zone, extricating
it promptly with the lowest risk of harm. This responsibility for public welfare is
consistent with the quasi-public nature of law practice; even private-sector attorneys remain officers of the court, regulated by entities established by a state
legislature and governed by ethical standards which often elevate the clients
welfare over the attorneys benefit. Although the skills exercised by an attorney
are different from the skills demonstrated by safety professionals in HROs, their
task is identical: minimizing harm in inherently dangerous conditions. Each of the
five conditions that distinguish HROs from ordinary organizations also exist in law
firms: the professionals operate in uncertain and risky conditions; errors occur
infrequently but may be catastrophic; human error is the cause of most accidents;
most errors can be anticipated, detected and corrected before causing serious loss;
and performance can be continually measured by outcomes. The similarity between
HROs and law firms suggests that law firms are nascent HROs operating under
high-risk, high-consequence environments without the protective systems
employed by other safety professionals.
Consistent with their emphasis on objective evaluation and continual performance monitoring, HROs audit themselves regularly to test and track their performance.47 The audits usually focus on five dimensions of performance, applicable to
law firms as well as HROs:
46
HROs understand that disastrous consequences rarely occur spontaneously, and all possible
sources and signs of error merit serious attention. Catastrophic events, Weick states, are triggered
by a deceptively simple sequence in organizational life: A person or unit has an intention, takes
action, misunderstands the world; actual events fail to coincide with the intended sequence; and
there is an unexpected outcome. Weick and Sutcliffe supra note 36 at 2.
47
Weick and Sutcliffe supra note 36 at 115. Roberts, Karlene, and Libuster, Carolyn. HRO
hypotheses. (1993). Available at http://www.high-reliability.org/Documents/Articles/Roberts_
and_Libuser.pdf. VanStralen, Daved W., et al. (2008). Changing a pediatric sub-acute facility to
increase safety and reliability. In Advances in health care management, Vol. 7. Patient safety and
health care management (pp. 251274). Emerald Group Publishing. Libuser, Carolyn B. (1994).
Organization structure and risk mitigation. Unpublished dissertation, School of Management,
University of California, Los Angeles.

l
381
Process Auditing. Is there a system for continuous monitoring and correction of

anticipated and unanticipated problems and follow-up on shortcomings noted in
prior audits?
Reward System. Does an organizations reward system discourage safety and
encourage risk taking, discourage prompt reporting of mistakes and encourage
concealment of mistakes and discourage attention to small mistakes and close
calls and encourage the allocation of resources to evident crises?
Quality Control and Degradation. Does the organization have policies and
procedures to establish and promote work performance standards, and how do
these standards compare to other organizations quality standards?
Perception of risk/risk management. Are risks acknowledged, and if so, what
risks are accurately assessed and properly minimized or mitigated?
Command and Control. Does the person with the most expertise make the
decision; are back up systems and resources sufficiently redundant; does the
organization have an overall safety climate and systematic training?
The results of these audits, in turn, are analyzed closely, compared with prior audits,
and then evaluated again in light of subsequent audits.
When the performance of HROs is compared with that of non-HROs, HROs
exhibit remarkably greater sensitivity to safety and leadership and consequently
show significantly better operating results. A comparison of naval flight operations
on an aircraft carrier, a quintessential HRO operating in a high-risk environment,
with patient care in hospitals, typical non-HROs also operating in a high-risk
environment, illustrates the dramatic differences in attitudes and outcomes.48
In 2001, the U.S. Navys Command Safety Assessment Survey Questionnaire, a
61-item confidential survey used in studies of U.S. Navy and Marine Corps units,
was distributed to about 6,300 hospital personnel, including physicians, nurses,
technicians and management, at 15 hospitals. About 3,000 people completed the
surveys. The survey results for the hospital personnel later were compared with the
responses of about 6,900 naval aviators who completed the survey between 1998
and 2001.
The magnitude and consistency of the difference surprised us, said David
Gaba, the director of the Patient Safety Center of Inquiry at the Veterans Administration Palo Alto Health Care System.49 The differences reflected the enormous
attitudinal and organizational gaps between HROs like naval flight operations and
non-HROs like hospitals: Given the statement, Management provides adequate
48
Hospitals, professor Weick states, clearly are not HROs: To the currently controversial question
of how many people die each year from medical errors, the answers range as high as the equivalent
of two fully loaded 747s crashing with no survivors, each day of the year. Hospitals arent even
considered high reliability organizations. Weick and Sutcliffe supra note 36 at 19.
49
Center for Health Policy, Freeman Spogli Institute for International Studies and Center for
Primary Care and Outcomes Research, Stanford School of Medicine (2003, November 11).
Hospitals should learn from naval aviation on patient safety, suggests Stanford/VA research
(CHP/PCOR News). Palo Alto, California: Stanford University. Available at http://healthpolicy.
stanford.edu/news/11/2003/.
382
safety backups to catch possible human errors during high-risk activities, 23.7
percent of the hospital personnel disagreed, versus just 2.7 percent of the naval
aviators. For the statement, Management has a clear picture of the risks associated
with [the organizations] operations, 21.9% of the hospital personnel disagreed,
versus just 1.9% of the aviators.50 Overall, the hospital personnel were three times
more likely to state "problematic responses to the survey, illuminating serious
safety oversights and, in particular, the absence of standardized procedures and
policies. If hospitals truly aspire to be high reliability organizations, Gaba noted,
they ought to have a safety climate thats similar to successful HROs.51
Ironically, both the hospital personnel and the aviators reported that their
organization was committed to safety. As shown by the disparity in responses
between the hospital personnel and the naval aviators, however, this commitment is
meaningless when an organization has no system of assessing, measuring, monitoring and improving performance. The results speak for themselves; naval aviators
experience about two mishaps per 100,000 flight hours, while the number of
adverse events per hospital admission ranges from 2.9% to 20.2%.52
In explaining why hospitals performance falls so far below those of naval
aviators, Dr. Gabas study identifies four major reasons: hospitals lack standardized
training and procedures; hospitals dont regularly assess the performance of their
personnel; hospitals are highly decentralized; and hospitals cant exert much
control over how physicians practice because physicians are largely autonomous.53 These four impediments to organizational proficiency absence of
systematic training and procedures, failure to assess performance, decentralized
organization, and professional autonomy without standardized processes and outcome measurements describe the modern law firm as well. Like hospitals, law
firms display a similarly high-minded commitment to their customers, extolling
work product quality, professional dedication and client service. Like hospitals, few
law firms have moved beyond mission statements to a rigorous assessment of
their problem-solving culture, the establishment of systems and controls needed
to achieve problem solving-acumen, and the implementation of continuous training
and grading programs required of people who handle and control high-risk
operations for clients.
Although attorneys are entrusted with the responsibility for protecting clients
assets and reputations, their law firms generally lack the precise, ongoing evaluative
50
Id.
Id.
52
Erwin, Sandra. (2000, October). Navy aims to curtail aviation mishaps caused by crew error.
National Defense. U.S. General Accounting Office (1998, March). Military aircraft safety: Serious
accidents remain at historical low levels (Briefing report to the honorable Ike Skelton, ranking
minority member, Committee on National Security, House of Representatives, GAO Publications
No. NSIAD-98-95BR). Washington, DC: U.S. Government Printing Office. Adams, Charlotte.
(2006, February 1). Military FOQA next step in safety. Avionics. Office of Inspector General.
(2008, December). Adverse events in hospitals: Overview of key issues (OEI-06-07-00471).
53
Center for Health Policy and Center for Primary Care and Outcomes Research supra note 49.
51
383
systems employed by HROs. Naval pilots, for example, are graded on every landing
and must be recertified after a landing falls outside clearly defined standards;
attorneys, however, usually are evaluated, if at all, annually in connection with
compensation decisions. And the evaluation can be remarkably subjective, as the
former vice chair at OMelveny & Meyers, an 842-attorney firm, remembers: It
was very common to hear an associate evaluation as follows: For a male associate it
would read, They havent had the opportunities to get real trial experience, but we
have all the confidence in the world that he has all the capability to be a success.
Then for a female associate, and I am talking about some of the most exceptional
young attorneys, they would say, She has not had the opportunity to get any real
trial experience, and so the jury is still out.54 The evaluative band for attorneys is
flexible, ambiguous, idiosyncratic and manipulable; apart from determining
whether annual billable hour requirements have been met, it lacks the objective
performance standards that characterize HROs.
Although law firms operate in a high-risk environment and the impact of their
poor decision making can be as devastating as accidents in HROs, law firms have
proven reluctant to incorporate the procedures, practices, values and monitors that
inform and direct HROs. The major quality control procedure is the hiring process,
where law firms attempt to eliminate defective performers before they are hired.
Apart from the initial hiring decision, law firms generally do not perceive themselves to be responsible for designing and implementing a culture of safety and,
except for calendaring software and the idiosyncratic, uneven feedback between
associates and partners, do not have systematic quality control procedures and
audits. At firms where quality control committees exist, they often perform postaccident reporting and ameliorative functions. Like the American automotive
industry in the 1960s, many law firms have placed the quality control function at
the end of the production process and, all too often, have transposed it to the
consumer experience.
10.2.2 Expert Teams

Looking beyond HROs, scientists have studied a broad range of organizations to
identify the characteristics of expert teams. Whether studying cockpit crews,
military combat units, air-traffic controllers or surgical teams, researchers find
that certain characteristics distinguish expert teams and can be emulated by any
organization, including law firms. Nine characteristics of dream team members
are:
54
Matuszak, Peter B. (2007, June 29). Beyond the alpha-male culture. San Francisco Daily
Journal, p. 9.
384
l
Mental Models. They have common mental models of the team objectives, what
members can expect from each other, and how they can anticipate tacitly each
members requirements and actions.
Self-Correction and Adaptation. They reassign functions and form new routines
as necessary to adjust to different challenges.
Clear Roles and Accountability. Each team member has clearly defined but
moderately flexible responsibilities and understands the roles, skills and responsibilities of other members.
Explicit Purpose. They share and articulate explicit and common values and
purposes.
Routine Prebriefing and Debriefing. They regularly self-assess their effectiveness with prebrief/perform/observe/assess/debrief protocols to provide feedback, anticipate problems and confirm priorities.
Strong Leadership Skills. Leaders of high performance teams know how to lead
groups and exhibit strong leadership skills apart from technical competence.
They convey a sense of genuine interest in and caring about the people working
with them, and they understand how to motivate and direct people through
regular updates, coordination and clear tasks.
Confidence and Trust. Because they trust each others intentions, tend to play
down power differences and are highly confident about the groups abilities,
expert team members can confront each other with relative ease and resolve
conflicts promptly.
Managed Outcomes. Expert teams make better quality decisions and are less
likely to commit errors than ordinary teams. Their optimal decision-making
performance results, in part, from a highly efficient system of disseminating
information critical to task accomplishment; each individual understands not
only what information she needs to perform effectively but anticipates and
comprehends what information another team member will require to achieve
the teams objectives.
Organization and Coordination. Expert teams in general and emergencymanagement teams in particular assign work deliberately to optimize individual
expertise while balancing out the workload; they exhibit a keen ability to assess
the precise requirements of a task and match those requirements with team
members expertise and availability.55
Applying this research to a law firm, an expert litigation team would integrate all
members partners, associates, paralegals, contract attorneys, administrative staff
and consultants into a highly purposeful, fluid, communicative, motivated and
effective problem-solving team. Like emergency-management teams, a litigation
team would thrive in persistently uncertain and stressful conditions by inculcating
each team member with a clear vision of the clients requirements and the law
55
Salas, Edward, et al. The making of a dream team: When expert teams do best. In Ericsson,
K. Anders, et al., Eds. (2006). The Cambridge handbook of expertise and expert performance
(pp. 446449). New York: Cambridge University Press.
10.3 Steps to Improve Group Decision Making
385
firms objectives; cultivating a high level of trust among all team members regardless of seniority, compensation or position; and requiring team leaders to consistently display broad aptitudes and competence in communication, coordination,
empathy, judgment and execution as well as subject matter expertise. The team also
would continually adjust workloads to reflect individual competencies and time
limitations; regularly re-evaluate objectives, priorities and assignments and inform
all team members of adjustments and changes; resolve conflicts rapidly with direct
communication and confrontation grounded in shared concepts of individual roles,
responsibilities, and accountability; and routinely monitor, test and enhance performance with explicit and collectively acknowledged metrics.
10.3
Steps to Improve Group Decision Making
Personal decision-making skills include the ability to gather and integrate information, use sound judgment, identify alternatives, select the best solution and
evaluate the consequences.56 Supplementary skills for group decision making
include the ability to select and transmit information for collective consideration,
facilitate the evaluation of data, identify dubious assumptions, listen to and assess
other opinions, challenge and, if necessary, reverse policies previously adopted,
guide group members in deliberating and choosing among alternatives, motivate
group members to complete a decision-making task and alert group members to the
full range of consequences. Nine concrete methods of building these supplementary
skills, in addition to the HRO practices and expert team qualities previously
discussed in this chapter, are explained below.
10.3.1 Ask For Multiple Opinions

To reduce group conformity and enhance decision quality, ask each individual to
bring at least two alternative views on each major issue. Better yet, encourage three,
four or five options, urge Edward Russo and Paul Schoemaker, authors of Winning
Decisions. Not to be outdone, one aerospace company insists on generating at least
seven possible solutions to a problem. The first two or three might come pretty
easily, an executive explains. Then it becomes very difficult. We often find that
creates a whole other set of options.57 This insistence on multiplicity of options is
supported by studies indicating that groups superior performance in decision
making may be attributable primarily to aggregation simply having more people
56
Id. at p. 441.
Austin, Robert , et al. (2008, July 7). Oops! Accidents lead to innovations. So, how do you create
more accidents? The Wall Street Journal, p. R6.
57
386
working on the problem rather than group interaction per se.58 Soliciting multiple
options from group participants not only generates more alternatives but also helps
prevent anyone from being too closely identified with (or taking too much pride in)
a single view.59
When options are reduced to bivariate outcomes settle or try a case, file or
dont file a motion, mediate or dont mediate this signals that decision makers
may be pushing resolution ahead of objectives. Reducing choices to go/dont go
scenarios simplifies the decision-making task but obscures the decision makers
overall objectives and circumvents the cognitively challenging task of generating
multiple, practical and creative ways of achieving a clients principal objectives.
The use of the business case, which forces decisions into a yes-or-no framework,
explains Bob Frisch, the managing partner of The Strategic Offsites Group, is a
tacit admission that groups are not good at discussing and prioritizing multiple
options.60 To counter the tendency to reduce complex decision making into
yes-or-no frames, Frisch urges decision makers to develop and consider a wide,
nuanced range of options, avoid premature commitment to alternatives by taking
nonbinding votes, and discuss possible solutions over multiple meetings to encourage consideration of new information and facilitate individual reconsideration. Its
essential, he believes, to keep discussion of the desired outcome distinct from
discussion about how to achieve it. Sometimes, simply articulating the desired
outcome will forestall or dissolve disagreements about solutions because the
options can be tested against an accepted premise.61
10.3.2 Cross-Pollinate the Team

When teams consist of the usual suspects, state decision experts Kevin Hoffberg
and Clint Korver, you get all the usual ideas. Think messy. Think heterodoxy. Get
divergent people involved if you want divergent ideas.62 Medical teams have
worked with the Ferrari Formula One pit crew team to learn how to improve patient
handoffs between hospital departments and shifts, and law firms have partnered
with the Ritz Carlton to enhance client service and workflow management.63 Retail
marketing professionals work with military researchers for two weeks and discover
58
McGraw-Hill, Inc.
59
Russo, J. Edward & Schoemaker, Paul J.H. (2002). Winning decisions (p. 174) . New York:
Doubleday.
60
Frisch, Bob. (2008, November). When teams cant decide. Harvard Business Review, p. 122.
61
Id. at 123.
62
Hoffberg, Kevin, and Korver, Clint. (2003). Magic Questions (p. 19). DQI, LLC. Available at
http://www.bpmforum.org/DecisionROI/PDF/Magic_Questions.pdf.
63
Naik, Gautam. (2006, November 14). A hospital races to learn lessons of Ferrari pit stop. The
Wall Street Journal, p. A1. Chanen, Jill Schachner. (2007, January). Puttin on the Ritz. ABA
Journal, p. 18.
387
there is little difference between handling outgoing disaffected customers and

anticipating incoming ballistic missiles.64 IDEO, the design team that invented the
first Apple mouse, promotes creativity by forming multi-disciplinary teams of
engineers, linguists, marketing gurus, psychologists and biologists.65 Hot groups,
asserts Tom Kelley, the general manager of IDEO, tend to have at least one or two
certifiable weirdos.66
The superiority of diverse groups in complex problem solving and forecasting is
demonstrated in Professor Scott Pages book, The Difference: How the Power of
Diversity Creates Better Groups, Firms, Schools and Societies. Relying on quantitative analysis, prior studies and simulations, he concludes that the benefits of
diversity go straight to the bottom line of companies. Theres a lot of empirical
data, he states, to show that diverse cities are more productive, diverse boards of
directors make better decisions, the most innovative companies are diverse.67 His
conclusions are complemented by independent research showing that cognitive
and experiential diversity expands the scope of problem-solving perspectives;
work units composed of diverse members can tap into broad networks of contacts,
making it likely that useful new information will be incorporated into decisions,
which can increase commitment to choices and enhance responsiveness to rapidly
changing organizational environments.68
10.3.3 Proliferate Team Leaders

The scope of ideas that will be considered in a group and hence the ultimate
success of a group is largely pre-determined by the selection of a team leader. To
prevent decision drift toward a dominant leader, some problem-solving teams adopt
fluid leadership structures that continually shift leadership responsibilities based on
the problems presented and a group members expertise. Distributing leadership
responsibility among multiple team members, based on the specific problem presented and the group members expertise, produces superior team performance
among high-skill employees and reflects an historical shift from autocratic management to teams of knowledge workers. Hierarchies persist in the information
age, notes Professor Martin Merry, but the more successful organizations are
64
Snowden, David F., and Boone, Mary E. (2007, November). A leaders framework for decision
making. Harvard Business Review, p. 72.
65
Austin, et al. supra note 57.
66
Kelley, Tom. (2001). The art of innovation (p. 97). New York: Doubleday.
67
Dreifus, Claudia. (2008, January). In professors model, diversity productivity. The New York
Times. See Page, Scott. (2008). The difference: How the power of diversity creates better groups,
firms, schools, and societies. Princeton, New Jersey: Princeton University Press.
68
Zhong, Chenbo James. (2001, Fall). Group heterogeneity and team negotiation Kellogg Journal
of Organizational Behavior, p. 5.
388
likely to be those that can mobilize leadership behaviors and skills among not just a
few workers, but a majority.69
The traditional designation of a single leader actually may defeat the purpose of
forming a problem solving team. Professors Yves Doz and Mikko Kosonen note
that most companies choose leaders with strong records for new projects, but that
very experience can make them less open to new ideas or too confident of their
abilities.70 To avoid that result, they suggest balancing the leadership team with
leaders from other divisions or industries. Management professor Craig Pearce
describes another weakness in the single leader tradition:
But more often than not, the company makes one of those experts the sole team leader, and
immediately that leader is at a knowledge disadvantage. After all, the purpose of the team is
to bring together people with a diverse set of skills. So the leader often doesnt understand
enough about the other team members jobs to guide them at crucial moments.71
Modern teams avoid this disadvantage and exploit individual members expertise
by continually alternating leadership positions to match problems with proficiencies. Peter Drucker foresaw this shift from hierarchies to competencies as early as
1967, discerning that knowledge workers would change the nature of team leadership: In one way or another almost every knowledge worker in an organization
will either have to become a decision-maker himself or will at least have to be able
to play an active, an intelligent, and an autonomous part in the decision-making
process.72
Shared leadership should be delayed or not deployed at all under certain circumstances. Because its effectiveness depends on knowledge and utilization of individual expertise and team members initially may be unaware of each others expertise,
Professor Pearce cautions it might be a better idea to rely on a single strong
manager to run the show until the team members can suss each other out.73 Shared
leadership also appears to be most successful in highly complex and critical
problem solving tasks but can be counter-productive where the leaders are experts
in a particular domain yet lack basic management skills.
69
Merry, Martin D. (2004, April). Shared leadership: Reframing the hows and whys of leadership.
Psychiatric Services, 55(4), p. 463.
70
Dvorak, Phred. (2008, June 16). Experts have a message for managers: Shake it up. The Wall
Street Journal, p. B8. See Doz, Yves, and Kosonen, Mikko. (2008). Fast strategy: How strategic
agility will help you stay ahead of the game. Philadelphia, Pennsylvania: Wharton School
Publishing.
71
Pearce, Craig L. (2008, July 7). Follow the leaders. The Wall Street Journal, p. R8. See Pearce,
Craig L., and Conger, Jay A. (2002). Shared leadership: Reframing the hows and whys of
leadership. Thousand Oaks, California: Sage Publications, Inc.
72
Drucker, Peter. (1996). The effective executive (p. 162). New York: HarperCollins Publishers.
See also Clancy, Julia, M., et al. Command style and team performance in dynamic decisionmaking tasks. In Schneider, Sandra, and Shanteau, James. (2003). Emerging perspectives on
judgment and decision making (pp. 586619). Cambridge: Cambridge University Press.
73
Pearce supra note 71.
389
10.3.4 Appoint a Devils Advocate

Irving Janis counsels organizations to assign the role of devils advocate and
give him an unambiguous assignment to present his arguments as cleverly and
convincingly as he can.74 Because the role of the devils advocate can become
ritualized, the devils advocate role should be rotated among the most talented
members of the group. With one fresh contender after another on hand to challenge
the consensus of the majority, Janis adds, the devil could get his due at the
meetings and not afterward.75 Another technique for keeping the devils advocate
fresh and shifting focus from the source of the counter-argument to its content is to
designate more than one person to serve simultaneously as devils advocates.
Morgan Jones, the former CIA analyst, suggests that a devils advocate be
required to actively research and advocate a contrary position, not just pose
rhetorical questions and make insincere or insubstantial comments before slipping
back into the mainstream of conventional thought. In this more forceful model, the
devils advocate goes a step further by seeking out and obtaining new evidence,
evidence about which the prime advocate has no knowledge or curiosity or that was
disbelieved and discredited. This further step is the secret weapon of devils
advocacy, the extra dimension that makes it a formidable analytic technique.76
Yet another devilish role is suggested by professors Max Bazerman and Dolly
Chugh. Instead of designating a devils advocate, they recommend that groups
assign the role of devils inquisitor to a group member. The devils inquisitor
does not argue against any particular position but rather generates questions about
the position. By inquiring instead of arguing, the devils inquisitor pushes people
to look for evidence outside their bounds of awareness. Moreover, this role can be
comfortably worn by those who are reluctant to take on the majority; it gives them a
safe way to contribute.77
10.3.5 Seed the Brainstorm

Greg Krehel, the Chief Executive Officer of CaseSoft, encourages trial team
members to hold multiple brainstorming sessions. For plaintiff attorneys, he
believes the initial session should be held before the complaint is filed, and for
defense attorneys, he recommends scheduling the session shortly after the
74
Janis, Irving. (1989). Crucial decisions (p. 248). New York: The Free Press. Janis, Irving. (1972).
Victims of groupthink (p. 215). Boston: Houghton Mifflin Company.
75
Janis, Irving. (1972). Victims of groupthink (p. 216). Boston: Houghton Mifflin Company.
76
Jones, Morgan. (1995). The thinkers toolkit (p. 218). Emphasis in original. New York: Three
Rivers Press.
77
Bazerman, Max H., and Chugh, Dolly. (2006, January). Decisions without blinders. Harvard
390
complaint is filed (or pre-filing if a defendant expects the claim). The first session
should last about five hours, take place at an off-site location with whiteboards,
projection units and a screen, be limited to six members of the trial team and result
in four documents: Issue List, Cast of Characters, Chronology of Key Facts, and
Questions/To Do List. The Issue List should include both legal claims and factual
disputes and can serve as a reminder of facts to incorporate into the Chronology.
Once the Chronology is completed, trial team members should add prospective
facts facts we wish we had, as well as facts the opposition is probably hoping to
develop.78 In subsequent brainstorming sessions, Krehel explains, the trial team
shifts its focus from these initial issues to trial themes, trial strategy, and demonstrative evidence.
Consultant Kevin Coyne and his colleagues, though, caution against conventional brainstorm sessions, noting that few people respond well to on-the-spot
pressures to generate creative ideas, most people clam up in large groups and one
or two people invariably dominate brainstorm sessions.79 They suggest that these
sessions be re-structured to form smaller groups of four people and that the
dominant speakers (the pushy people) be placed in a single group. Noting that
few people are good at developing ideas without receiving guidance and conventional brainstorming sessions often fail to produce practicable ideas, he also
believes participants need some basic information to clarify what constitutes a
good idea and explain the organizations present financial or personnel constraints.80
Instead of the open-ended dialog that marks stereotypical brainstorming sessions, Coyne prefers concrete questions to structure and assist participants.81 An
open-ended question like How can we cut costs? should be replaced with What
element of our business would we have to eliminate to cut costs 50%, and are there
customers who do not need that element?82 Concrete questions, Coyne finds after
working with more than 150 clients, coax all those quiet, thoughtful souls who
have hated traditional brainstorming sessions dominated by blowhards to emerge
from the shadows and open up.83
78
Krehel, Greg. (1993). Brainstorming your way to a winning case strategy. Decision Points
Litigation Library.
79
Coyne, Kevin P., Clifford, Patricia Gorman, and Dye, Renee. (2007, December). Breakthrough
thinking from inside the box. Harvard Business Review, December 2007.
80
(2007, January 29). How brainstorming can frustrate creativity. The Wall Street Journal, p. B5.
81
Specific brainstorming questions posed by Coyne that could promote fresh thinking about law
firm operations and client service include: Which customers needs are shifting most rapidly?
What will they be in five years? What is the biggest hassle of purchasing or using our product?
Which customers does the industry prefer not to serve, and why? Which customers could be major
users, if only we could remove one specific barrier weve never previously considered? For which
current customers is our product least suited? Coyne, Gorman, and Dye supra note 79.
82
supra note 80.
83
Coyne, Gorman, and Dye supra note 79.
391
10.3.6 Promote a Good Fight

Sir Dennis Weatherstone, the former chief executive officer and chairman of
J.P. Morgan, had a remarkably deft way of disagreeing with a colleague while
encouraging divergent views. I dont think youre wrong, he would say, I just
disagree with you.84 This attitude encourages the good fight advocated by
organizational behaviorists, in which the emphasis is on the substance of ideas
rather than the clash of personalities. Group members engaged in a good fight
recognize that high quality decisions emerge out of disagreement, not consensus
and that dissent does not mean dissension.85
In their article entitled How Management Teams Can Have a Good Fight,
business professor Kathleen Eisenhardt and her colleagues outline six methods to
have a good fight, minimizing internal personal conflict while closely scrutinizing
positions and options: (1) analyze facts instead of debating opinions; (2) generate
multiple solutions so that a group member can easily change positions without
being aligned with a single position; (3) define common goals and evaluate alternatives as possible methods of achieving those goals rather than expressions of
group member preferences or biases; (4) use humor to ease interpersonal stress and
soften critical comments; (5) avoid autocrats who dominate decision making and
weak leaders who dodge it and foster a belief that all team members have participated in strategic decisions; and (6) accept the fact that consensus is not always
reached and ultimately a decision must be made by a manager after considering the
groups input (consensus with qualification).86
After studying numerous companies, Eisenhardt concludes that where there is
little conflict over issues, there is also likely to be poor decision making.87 In the
absence of conflict, she observes, groups become ineffective and managers become
impassive. Finding that the alternative to conflict is not harmony but rather apathy
and disengagement, she encourages companies to elicit conflicting views and
recognize that forcing consensus may heighten interpersonal conflict and delay
critical decisions.
84
Sidel, Robin. (2008, June 2122). J.P. Morgans former chief executive helped to lower barriers
on the banking industry. The Wall Street Journal, p. A6.
85
Surowiecki, James. (2004, March 8). The finance page: Board stiffs. The New Yorker, p. 30. See
Gandossy, and Sonnenfeld, Jeffrey, Eds. (2004). Leadership and governance from the inside out
(p. 20). New York: Wiley.
86
Eisenhardt, Kathleen, Kahwajy, Jean, and Bourgeois, L.J. (1997, July-August). How management teams can have a good fight. Harvard Business Review, pp. 7785. See Eisenhardt, Kathleen
and Bourgeois, Jay. (1997, Autumn). Strategic decisions and all that jazz. Business Strategy
Review, 8 (3), pp. 13.
87
Eisenhardt, Kathleen, Kahwajy, Jean, and Bourgeois, L.J. (1997, July-August). How Management Teams Can Have a Good Fight. Harvard Business Review, pp. 7785.
392
10.3.7 Build Trust

Organizational behaviorists previously determined that ineffective groups suffered
from relationship conflicts (interpersonal spats, tension, suspicion and antagonism) while effective groups limited their disagreements to task conflicts (disputes about the best way of achieving common goals). Recent studies, however,
indicate that the distinction between personal conflict and task conflict is
artificial and in reality organizations that experience task conflict invariably experience relationship conflict as well.88 These recent studies seem to present a
Hobbesian choice, as described by James Surowiecki, The New Yorkers staff writer
on financial matters: you can be collegial and friendly and make bad decisions, or
you can be locked in a room with people who cant stand each other and make better
decisions.89 The solution to this dilemma, Surowiecki writes, has emerged from
research performed by Tony Simons of Cornell University and Randall Peterson of
London Business School. These researchers discovered that a sense of mutual trust
enabled groups to focus on problem solving (task conflict) without degenerating
into personal disagreements (relationship conflict).90
Professor Peterson believes that vigorous debate has the potential to enhance the
quality of group decisions but also presents the risk of triggering personal hostilities. The management challenge, therefore, is to facilitate thorough evaluations of
alternatives without inviting nasty conflicts among the evaluators. In a survey of
380 chief executive officers and senior officers and managers, Peterson tested the
hypothesis that task conflict does not devolve into relationship conflict when a high
level of trust exists within the group. He measured trust along three dimensions: the
perception of group-wide trust; expectations of truthfulness, integrity and reliability; and respect for other group members competence. After analyzing the survey
results, Peterson concluded, Where trust is high, task conflict does not lead to
relationship conflict. For groups where trust is low, task conflict almost always
leads to relationship conflict.91 Petersons research demonstrates that, if groups
intend to gain the benefits of constructive debate (task conflict) without antagonizing each other (relationship conflict), an organization must generate high levels of
trust. Otherwise, soliciting the criticism and dissent essential to effective decision
making spills over into destructive animosities and interpersonal tensions.92
88
Surowiecki, James. (2006, October 9). The financial page: Zip it. The New Yorker, p. 31.
Id.
90
See Simons, T.L., & Peterson, R.S. (2000). Task conflict and relationship conflict in top
management teams: The pivotal role of intragroup trust. Journal of Applied Psychology, 85,
102111. Peterson, Randall S. & Behfar, Kristin Jackson. (2003). The dynamic relationship
between performance feedback, trust, and conflict in groups: A longitudinal study. Organizational
Behavior and Human Decision Processes, 92(12), pp. 102112.
91
Simons, Tony L., and Peterson, Randall. (2007, September). Why trust matters in top management teams (Cornell Hospitality Report, Vol. 7, No. 14), p. 12.
92
Id. at 7.
89
393
For lawyers and clients intent on stimulating group debates without triggering
personal enmity, the largest hurdle is creating trust. This is especially difficult in the
litigation field, which rewards skepticism, promotes adversarial relationships and
regards personal assurances as being considerably less reliable than written contracts. Despite the enormity of the task, researchers have identified the key elements
of trust amenable to systematic, unilateral improvement by organizations attempting to develop a culture of trust. Management professor Robert Hurley, for instance,
describes seven situational factors that instill trust: security, number of similarities,
alignment of interests, benevolent concern, capability, predictability and integrity,
and level of communication.93 These seven factors are amplified below:
l
93
Security. The sense of personal security is proportional to the risk perceived.

High levels of risk engender higher levels of distrust. To increase the sense of
security, senior executives and attorneys have to moderate the risk of loss to an
individual and spend time instilling in team members a sense of objective
safeness and subjective confidence.
Similarities. Trust is dependent on shared values and common personal experiences, affiliations, habits, and tastes. Conversely, a lack of similarities heightens
suspicions and intensifies remoteness. Changing speech from the I habit to the
we paradigm and focusing on common goals increase the perception of
similarities and promote trust.94
Interests. Trust diminishes as individuals perceive their interests to be diverging from or directly conflicting with the organizations interests. Leaders tend
to assume that every team member has aligned interests and do not compensate for the complexity and multiplicity of individual interests. To develop a
culture of trust, leaders first need to understand others interests and then
explicitly articulate how those interests are reflected in the organizations
operations and goals.
Concern. Trust is eroded when leaders place a higher value on their own
objectives than the organizations welfare. Elevating the level of trust requires
actual sacrifice on the part of the leader decisions that improve the status of
team members while resulting in some loss to the leader to convince the
team members that their collective interests are paramount. In a law firm, trial
attorney Kurt Schlichter notes, you need to demonstrate that you put the
welfare of your subordinates first, and the only way to demonstrate it is by
doing it.95
Hurley, Robert F. (2006, September). The decision to trust. Harvard Business Review,
pp. 5562.
94
See Haslam, S. Alexander, et al. (2001) Social identity and the romance of leadership: The
importance of being seen to be doing it for us. Group Processes and Intergroup Relations, 4(3),
191205.
95
Schlichter, Kurt Andrew. (2009, March 30). Firm heads often confuse leadership with management. San Francisco Daily Journal, p. 5.
394
Capability. Individuals place trust in organizations that have proven to be

competent in developing and implementing sound practices and detecting and
correcting weak performances. Team members become distrustful when incompetent performances are tolerated for some team members and authority is
delegated to underperforming team members. Enforcing performance-based
standards, acknowledging performance deficiencies and assigning responsibilities based on actual capabilities heighten a sense of trust.
Predictability and Integrity. Integrity and predictability are inextricably linked;
people who act with integrity are perceived to act predictably as well. As
Professor Hurley explains, when a person fails to deliver, hes not just missing
a deadline; hes undermining his own trustworthiness.96 To maintain trust,
leaders must avoid being overly confident about what they can actually deliver,
keeping their promises in line with their performance. They also may benefit
from explicitly stating their values so that others see the link between a leaders
values and her actual behavior.
Communication. Candid and frequent communications underpin a sense of trust,
and inaccurate, insincere or misleading communications rapidly erode trust. In
high-conflict situations, organizations often hunker down and release information in the smallest possible increments; this self-protective reaction, unfortunately, eviscerates trust.
Instilling trust is a test of an organizations authenticity and its capacity to promote

constructive debate. When a few individuals dominate group discussions and the
exchange of ideas seems ponderous and stiff, the underlying cause often is a lack of
trust. Because people are acutely sensitive to insincerity and manipulation, an
organizations efforts to heighten a sense of trust must be deliberate, tangible and
durable, entailing some concrete sacrifices on the part of leaders and a degree of
transparency that initially places some leaders outside their comfort zone.
10.3.8 Reach a Consensus, Dont Build One

Consensus is a goal, state Russo and Schoemaker, not a process.97 The popular
notion of consensus-building actually hinders sound decision making, as it
encourages group conformity at each incremental level leading to a decision and
builds uncritical momentum to reach a final resolution upon which all agree. This
well-intentioned but frequently insidious process of buy-in prematurely commits
individual group members and coerces uniformity before frames and options are
thoroughly evaluated.
96
Hurley supra note 93 at 59.

Russo & Schoemaker supra note 59 at 184.
97
395
Expert decision makers solicit and encourage a robust exchange of disparate

views and a lively discussion of the values and objectives underpinning those views
before moving toward option selection. They do not seek consensus at the stages
prior to option selection, and they recognize that unanimity regarding the final
option selection is neither necessary nor achievable in all circumstances. The
effective decision does not, as so many texts on decision-making proclaim, flow
from a consensus on the facts, explains Peter Drucker. The understanding that
underlies the right decision grows out of the clash and conflict of divergent opinions
and out of the serious consideration of competing alternatives.98
To insure that multiple viewpoints are elicited and considered, and to defeat the
powerful forces of social conformity, effective leaders often ask members to state
their opinions before the group actually meets and then prepare a written summary
of those pre-meeting views for group discussion. Ideas that otherwise would not be
aired at a personal meeting may receive full attention when solicited and documented before the meeting. The leader also may set up sub-groups to evaluate the
same problem and then bring the groups together to share their opinions. This
prevents a single individual the most overconfident but not necessarily the most
astute from controlling discussions and suppressing opinions.99
10.3.9 Schedule a Last Clear Chance Meeting

To assure that all critical viewpoints have been discussed and considered before a
preliminary decision is finalized, Janis recommends a second chance meeting.
The team members should be asked to express as vividly as they can all their
residual doubts and to rethink the entire issue before making a definitive choice.100
If some group members are reticent to express dissident views in front of the
proponents of the preliminary choice, Janis suggests that their opinions be sought
in the form of written statements or, alternatively, some group members can meet
with them privately. Janis concerns are similar to those expressed by Alfred
P. Sloan, the former chairman of General Motors board of directors, after his
fellow committee members nodded affirmatively in response to his confirmation,
Gentlemen, I take it we are all in complete agreement on the decision here.
Seeing his colleagues assent, Sloan declared, I propose we postpone further
discussion of this matter until our next meeting to give ourselves time to develop
disagreement and perhaps gain some understanding of what the decision is all
about.101
98

Janis, Irving supra note 22 at 248. Russo & Schoemaker supra note 59 at 172.
100
101
Drucker, Peter. ( 2001). The essential Drucker (p. 254). New York: Harper Collins Publishers.
99
396
10.4
Chapter Capsule
Group polarization and groupthink are the two most common shortcomings of
group decision making. Group polarization describes the tendency of groups to take
more extreme and risky positions than the average of the individual positions
initially held by the group members. Jury verdicts, for example, exhibit group
polarization, verdicts ultimately being higher than that of the individual juror
judgments before deliberation. Groupthink occurs when decision makers unconsciously suppress dissenting viewpoints and reach a consensus without fully considering alternatives. Some of the circumstances conducive to groupthink are a
groups insulation from outside influences, lack of a tradition of impartial leadership, homogeneity of members background and ideology, high stress from external
threats, an apparent lack of feasible alternatives, and stereotyping of people outside
the group.
High reliability organizations (HROs) and expert teams overcome group polarization and groupthink and deliver outstanding results under extreme time pressures
and dangerous conditions. HROs are preoccupied with failure, reluctant to simplify
problems and highly sensitive to operational deficiencies. They regard seemingly
minor glitches as signals of potentially serious errors. Expert teams, whether sports
teams or combat units, consistently exhibit common objectives and values, minimize power differences and hierarchical decision making, closely align responsibilities with individual expertise, disseminate information necessary to accomplish
immediate tasks as well as all anticipated tasks, and re-evaluate their effectiveness
and provide feedback after every critical action.
To achieve exceptional decision-making performances, trial teams, litigation
departments, law firm management committees and other groups can utilize nine
specific methods: (1) solicit multiple opinions to generate better alternatives and
prevent individuals from being identified with a single view; (2) broaden the
range of people participating in the groups interactions to invite divergent
ideas; (3) distribute leadership responsibilities among multiple team members;
(4) designate team members to function as a devils advocate, rotating the position
to incorporate new evidence and fresh arguments; (5) hold multiple brainstorming
sessions with small groups and structured questions to prevent dominant speakers
from squashing the ideas of thoughtful but introverted individuals; (6) encourage
members to engage in robust debate without provoking personal conflict; (7) build
trust through communication, integrity, reliability, predictability, respect and competence; (8) delay reaching a consensus on intermediate issues and promote disparate views until an option must be finally selected; and (9) schedule a second
chance meeting to discuss any residual doubts and provide an opportunity to
reconsider a decision before it is implemented.
Chapter 11
Peer Review, Client Evaluations and Law

Firm Audits
Comparisons are odious.

John Fortescue, De Laudibus Legum Angliae, ch. 10 (1471)
Quality control in law firms usually means high quality, low control. Most
experienced attorneys produce outstanding work product as a result of their own
training, intellect and pride, and the law firm itself is the beneficiary, not the
progenitor, of the outstanding work product. This result follows from the rigors
of law school education, the screening function of the bar examination, the personal
characteristics of individuals drawn to the legal profession, the fiduciary and
personal nature of the attorney-client relationship and the degree of independence
traditionally afforded to legal professionals. It also results from attorneys fierce
resistance to institutional constraints on attorney discretion and law firms reluctance to question or interfere with an individual attorneys judgment and style,
especially when an attorneys conduct is mildly idiosyncratic but demonstrably
profitable.
To change the tradition of attorney autonomy and impose external systems to set,
monitor, rectify and improve the quality of legal services rendered by individual
attorneys would require a massive professional reorientation in support of heightened public accountability and professional responsibility. Law firms would have to
evoke nine attitudes presently absent in the traditional law firm model and antithetical to the prevailing no partner is in a position to judge another partner ethic: (1)
a consensus on what the legal profession is accountable for apart from avoiding
manifest legal malpractice; (2) a shared belief that the practice of law is amenable to
explicit attorney performance standards; (3) generally accepted, uniformly applied
models of superior client service or best practices; (4) common professional
values and aspirations to delineate acceptable professional conduct where quality
service standards have not yet been expressly defined; (5) a high level of confidence
in the fairness and ability of peers to evaluate an attorneys performance; (6) a
commitment to continuous, quantitative measurement of client satisfaction; (7) an
abandonment of the apprenticeship model of lawyer development which promotes
vigorous criticism of attorney work product and client relationship skills before an

397
398
11 Peer Review, Client Evaluations and Law Firm Audits
attorney becomes a partner and then relieves an attorney of scrutiny as a reward for
achieving partner status; (8) a willingness to disrupt the go along to get along
attitude that places more emphasis on partner congeniality than continuous quality
improvement; and (9) a recognition that lawyers can adopt and learn from quality
improvement systems and values developed by other professions, institutions, and
occupations.1 The magnitude of this attitudinal change demonstrates why proposals
to impose external performance review systems provoke fear and loathing in many
lawyers and firms and are rejected as impudent challenges to attorney individuality and the cottage industry structure of most large law firms.2
Although businesses implemented quality control and improvement programs in
the last half of the 20th century ISO certification, ASTM standards, zero defects,
Kaizen, Six Sigma law firms generally ignored the quality revolution.3 Firms
have sloughed off the customer revolution for years, writes Aric Press in The
American Lawyer, and who could blame them?4 This is why clients do not see
law firms certified as meeting the type of external standards by which their own
companies are evaluated, whether it be J.D. Power and Associates ranking of
customer satisfaction levels, Morningstars grading of financial performance and
management stewardship or U.S. News and World Reports ratings of institutions. Nor will clients find that their law firms are subjected to the type of peer
review systems utilized for decades by the medical, accounting and engineering
professions.5 To the extent law firm performance is objectively measured, the
yardstick is profits per partner, associate/partner ratios, and total headcount. This
is like evaluating patient medical care by abstracting physicians tax returns.
Partner is used for brevity and is intended to include all attorneys with an ownership interest in
a law firm, whether denominated as partners or shareholders.
2
Davis, Anthony E. (1994). The long term implications of the kaye, scholer case for law firm
management risk management comes of age. South Texas Law Review, 35, 677, 692, quoted in
Fortney, Susan, (1997), Are law firm partners islands unto themselves? An empirical study of law
firm peer review and culture. Georgetown Journal of Legal Ethics, 10, 271, 292.
3
Morgan Lewis is one of the few firms that uses Sigma Six software in some practice areas. See
Terry, Laurel S. (2008). The legal world is flat: Globalization and its effect on lawyers practicing
in non-global law firms. Northwestern Journal of International Law & Business, 28, 527.
4
Press, Aric. (2008, December). A long time coming. The American Lawyer.
5
The Martindale-Hubbell peer rating is not a traditional peer review system. Attorneys work
product and client surveys are not submitted by Martindale-Hubbell to reviewers. Its website states
that lawyers under review are sometimes asked to provide professional references to assist with
the process, a law firm generally is given the rating of its highest rated active partner, Peer
Review Ratings Toolkit subscribers also receive the opportunity to submit additional
ratings sources to augment those solicited by Martindale-Hubbell, Martindale Hubbell Peer
Review Ratings Specialists work closely with larger law firm clients to educate, engage and
assist their lawyers in the peer review process and the marketing opportunities surrounding the
Martindale-Hubbell Peer Review Ratings, and under no circumstances are any MartindaleHubbell Peer Review Ratings review materials released. Martindale.com, Martindale-Hubbell
Peer Review Ratings, retrieved at http://www.martindale.com/xp/legal/About_Martindale/
Products_and_Services/Peer_Review_Ratings/ratings.xml.
11.1 A Brief History of Quality Management in Law Firms
11.1
399
A Brief History of Quality Management in Law Firms
Early efforts in the 1980s by the American Law Institute and American Bar
Association to set practice standards and establish quality assurance and testing
methods were rejected by practitioners, who doubted that the quality-evaluation
techniques applied in other professions could be applied to them.6 Practitioners not
only questioned the premise that other attorneys could evaluate their work but also
were hostile to having competence measures imposed on them.7 Although practitioners accepted the concept of minimum standards of practice, below which
malpractice liability would be imposed, they rejected bar association and academic
institutions efforts to set any standards or goals above the minimum. They agreed
on a modicum of professional conduct, setting the standards at a level sufficient to
merit continued self-regulation, dampen public oversight and avoid extensive
governmental regulation.
Lawyers accurately perceived that most companies in high-demand, low-competition and wide profit margin industries do not sabotage their short-term profitability by voluntarily raising their own production quality standards. With gross law
firm revenue rising from $153 billion in 2000 to $222 billion in 2006, far outstripping domestic GDP increases during that period, no financial incentive existed
to increase attorney efficiency or work product quality.8 For large law firms, hourly
rates have risen 6%-7% annually between 2000 and 2007, more than double the rate
of inflation. Payments to law firms by large companies increased by 49% between
2002 and 2005; and while non-law firm costs increased by 20 percent over the past
10 years, large law firms prices jumped almost 75 percent in the same period.9
Sheer market demand for legal services thus excused law firms from the rigorous
self-evaluation and continuous innovation practiced by businesses in highly competitive industries.
Like businesses gauging the minimum effort required to keep a lucrative franchise, lawyers assessed the minimum level of control and performance necessary to
remain a highly profitable, self-disciplining professional organization. Focusing
on the floor of client service instead of the ceiling, practitioners preserved
their regulatory independence by disciplining attorneys for serious breaches of
professional ethics; and they generally avoided the development of publicly
visible metrics for comparing the average attorney with the exceptional attorney.
6
Regan, Francis, et al. Eds. (1999). The transformation of legal aid: Comparative and historical
studies (p. 242). New York: Oxford University Press.
7
Id.
8
United States Bureau of the Census. (2006). Service annual survey, Table 6.1, professional,
scientific, and technical services (except notaries and landscape architectural services) (NAICS
54)estimated revenue for taxable employer firms: 1999 through 2006.
9
Koppel, Nathan. (2007, August 22). Lawyers gear up grand new fees. The Wall Street Journal,
p. B1 (citing data from the law firm group of Citi Private Bank, a unit of Citigroup, Inc.). Curtis,
Diane. (2009, January). Will a bad economy force more changes in the profession? California Bar
Journal.
400
As the court observed in Cline v. Watkins,10 the bar supplies no means of assessing
the qualifications of its members. A member of the public seeking the services of a
lawyer thus has no real means of determining his capability. The present system of
regulating legal services through state bar disciplinary committees and civil malpractice lawsuits invariably enforces minimum performance standards while ignoring optimal standards. State bar controlled grievance boards, states law professor
Susan Martyn, purportedly invite client complaints, but have barely begun to
define performance standards. In fact, infighting within the bar itself concerning
the competence issue has often served to obscure the real issue: the definition of
competent legal service.11
Insisting that the practice of law is an art, not a science, practitioners have
avoided peer review of another attorneys work product and discouraged efforts
to compare the quality of legal services rendered and the costs charged by different
lawyers in the same firm or similar law firms. Every client assignment, for quality
and cost comparison purposes, was sui generis. A general reluctance to meddle in
another partners work and the intense pressure of everyday practice filing deadlines, billable hour requirements, multiple clients, numerous assignments, and
keeping current on changes in the law kept attorneys focused on their own
have to do items and deterred systematic evaluation of client satisfaction and
work product quality. As one attorney expressed his disdain for any form of
attorney oversight, Good attorneys have barely got time to properly care for
their own clients. . . . The idea of routinely double-checking a competent attorneys
work is stupid, cost prohibitive and only effective as an appearance activity.12
To the extent law firms consider or employ quality control mechanisms other
than annual compensation determinations and associate attorney reviews, they
emphasize three methods: peer review, client evaluations and law firm assessments
and audits. The history, structure, content, implementation and benefits of those
three methods are discussed below.
11.2
Peer Review in the Medical Field
Despite some attorneys view that peer review is unduly intrusive and unnecessarily
time-consuming, the medical field has found peer review to be highly effective in
measuring and achieving high quality outcomes. The legal profession, in fact, is
more than 90 years behind the medical profession in promoting quality control
10
66 Cal. App. 3d 174, 180, 135 Cal. Rptr. 838 (1977).

Martyn, Susan R. (19791980). Informed consent in the practice of law. George Washington
Law Review, 48, 307, 308.
12
Fortney, Susan. (1996). Are law firm partners islands unto themselves? An empirical study of
law firm peer review and culture. Georgetown Journal of Legal Ethics, 10, 271, 295, fn. 133.
11
11.2 Peer Review in the Medical Field
401
through confidential peer review. Other professions accounting and engineering,

for example also instituted peer review decades ago.
11.2.1 The Inception of Medical Peer Review

Beginning in 1916, the American College of Surgeons established medical practice
standards and methods for monitoring compliance with those standards. As an
integral part of setting and implementing professional standards for hospitals and
physicians and despite intense opposition from physicians the American
College of Surgeons instituted peer review in 1918. Leading the peer review
movement was Dr. Ernest Codman, a surgeon at the Massachusetts General Hospital and one of the founders (with Charles H. Mayo (Mayo Clinic) and George
W. Crile (Cleveland Clinic)) of the American College of Surgeons. Adopting
Dr. Codmans concept that medical practice can be improved by candid and
objective examination of clinical experience, the American College of Surgeons
inaugurated the morbidity and mortality conference, a regularly scheduled
meeting of physicians in which recent cases are discussed, errors are acknowledged,
systems and policies are evaluated and preventative measures are proposed.13
Dr. Codman advanced three tenets of what he called the end results system of
patient care outcome management: collection of data regarding patient outcomes,
standardization of professional standards, and peer review. Emphasizing quantitative, systematic measures of patient outcomes, Dr. Codman attempted to collect
data, learn from experience, shed light on systematic causes of bad results, and
improve care by prevention of error and standardization of hospital techniques.14
He classified and recorded his own errors into five categories: lack of knowledge,
poor judgment, inadequate care or equipment, lack of diagnostic skill, and calamites of surgery or those accidents and complications over which we have no
known control.15 Even as to the last category, uncontrollable events, Dr. Codman
said, these should be acknowledged to ourselves and to the public and study
directed to their prevention.16
Although Dr. Codman is now regarded as a visionary and an Ernest Amory
Codman Award is given annually by The Joint Commission on Accreditation of
Healthcare Organizations to recognize outstanding achievement in patient outcome
13
See Mallon, Bill. (2000). Ernest Amory Codman: The end result of a life in medicine. Philadelphia, Pennsylvania: W.B. Saunders Company.
14
Parsons, Donald W. (2000, November/December). Federal legislation efforts to improve patient
safety. Effective Clinical Practice, 6, 309312.
15
Neuhauser, D. (2002). Ernest Amory Codman M.D. Quality and Safety in Health Care, 11,
104105.
16
Id.
402
measurements, his ideas were considered heretical at the time.17 Agitated by Dr.
Codmans proposal to evaluate surgeon competence, his colleagues at the
Massachusetts General Hospital in Boston threw him out shortly after he published
the first monograph on morbidity and mortality conferences. He then started his
own hospital, known as the End Result Hospital, to implement his ideas regarding
error prevention, systematic recording of patient outcomes and complications and
standardization of procedures. True to his beliefs, he published the results of his
own patient care and sent the results to other hospitals, acknowledging 123 errors in
the treatment of 336 patients a 37% error rate. His criticism of his own surgical
mistakes was blunt and unsparing; when a patient died after he ligated his hepatic
duct, he wrote, I had made an error of skill of the most gross character and even
(during the operation) failed to recognize that I had made it.18
11.2.2 The Modern Medical Peer Review System

Throughout decades of experience with peer review, the medical profession has
attempted to resolve the chronic tension between the fear of incrimination and the
need for learning by shifting the focus in peer review from who did it? to what
happened?19 Consistent with the emphasis on causes and solutions rather than
individual culpability, residents and physicians are encouraged to identify root
problems and contributing factors; acknowledge errors; pinpoint what actions,
countermeasures, or conditions enabled a patient to survive close calls; propose
improvements, make a change, no matter how small, after each case;20 and track
the effect of different procedures and systems. They are discouraged from being
personally defensive, blaming adverse outcomes on bad luck and making excuses
like its the only time I made an error.21 The essential features of modern peer
review, therefore, are an objective and quantitative analysis of adverse patient
outcomes; an overall goal of creating a culture of patient safety; a candid recognition of errors without blame or derision; an identification of system failures and
human errors through root cause analysis; the formulation of strategies and procedures to prevent adverse outcomes; and statutory confidentiality for the records and
statements generated in peer review proceedings.22
17
Swensen, Stephen J., and Cortese, Denise A. (2008, January 1). Transparency and the end result
idea. Chest, 133(1), 233235.
18
Neuhauser supra note 15 at 104105.
19
Gosbee, John, et al. Patient safety case conference/modified M&M faculty development.
United States Department of Veterans Affairs. Available at http://www.va.gov/ncps/curriculum/
TeachingMethods/PtSafety_Case_Conference_Format/index.html
20
Id.
21
Id.
22
Kravet, Steven J., Howell, Eric, and Wright, Scott. (2006, November). Morbidity and mortality
conference, grand rounds, and the ACGMEs core competencies. Journal of General Internal
11.2 Peer Review in the Medical Field
403
Peer review is more than a desirable practice in hospitals; it is a requirement. The

Joint Commission on Accreditation of Healthcare Organizations (JCAHO) requires
hospitals to conduct peer review as a condition of accreditation. Since 1983 the
Accreditation Council for Graduate Medical Education (ACGME), moreover, has
required all health care organizations that have residency training programs to
conduct regular morbidity and mortality (M&M) conferences. At many teaching
hospitals, the M&M conferences are integrated into the six general competencies
identified by ACGME as essential to developing competent physicians: patient
care, medical knowledge, practice-based learning and improvement, interpersonal
and communication skills, professionalism and systems-based practice.23 If one
removed the words patient and medical from ACGMEs list of six core
competencies, the list replicates conceptually many of the fundamental lawyering
skills identified by the American Bar Associations MacCrate Commission: client
counseling; research, analysis and reasoning; factual investigation and problem
solving; oral and written communication; professionalism; and organization and
management of legal work.24
11.2.3 Confidentiality of Medical Peer Review

Peer review proceedings are confidential, protected from discovery by state and
federal law.25 The purpose of a peer review statute is to encourage full candor in
peer review proceedings, the court explained in Ex parte Krothapalli,26 and that
purpose is advanced only if all documents considered by the committee or board
during the peer review or credentialing process are protected. The public policy
conflict between peer review confidentiality and litigants right to discovery has
been resolved in favor of confidentiality: Should a conflict between access to such
evidence and peer review confidentiality arise, it was the legislatures judgment in
enacting the peer review privilege that the strong public policy favoring open peer
review would outweigh any incidental burden on discovery.27 The privilege,
however, generally is limited to records generated by the peer review committee,
Medicine, 21(11), 11921194. See New Jersey Law Revision Commission. (2005, September).
Final Report relating to medical peer review privilege (deciding not to recommend the enactment
of a statute protecting peer review materials).
23
Id.
24
Sullivan, William, et al. (2007). Educating lawyers: Preparation for the profession of law
(pp. 174, 189). San Francisco, California: Jossey-Bass.
25
See American Medical Association. (1988 & Supp. 1994). A compendium of state peer review
immunity laws. Chicago, Illinois: American Medical Association. Creech, Charles D. (1988). The
medical review committee privilege: A jurisdictional survey. North Carolina Law Review,
67, 179.
26
762 So. 2d 836, 839 (Ala. 2000).
27
Babcock v. Bridgeport Hospital, 742 A. 2d 322, 344 (Conn. 1999).
404
not patient records reviewed by the committee. As the court explained in Babcock v.
Bridgeport Hospital, the privilege applies to the peer review committees selfgenerated analysis, but not to the underlying facts that provide the basis for that
analysis when such facts have been collected by an independent source.28 Peer
review thus serves to identify and prevent adverse outcomes but not to conceal the
circumstances leading to an adverse outcome.
11.3
Peer Review in Law Firms
Peer review in the legal profession has a long history of formal promotion by
the organized bar and malpractice insurers and passive resistance from practitioners. The American Bar Association diplomatically acknowledges the legal
profession . . . has made a number of false starts in its effort to develop some form
of a model peer review system.29 The American Law Institute American Bar
Association (ALI-ABA) drafted a model peer review system in 1980, which was
generally ignored by practitioners. In 1985, ALI-ABA issued law practice quality
guidelines, again meeting polite comment and practical disregard by practitioners. Ten years after ALI-ABA drafted the initial model peer review system,
the American Bar Associations Standing Committee on Lawyers Professional
Liability declared partner peer review to be an idea whose time has come. At that
time, insurers like St. Paul International Insurance Co. Ltd. recommended that law
firms with five or more members should have a formal peer review program for
all member lawyers that is utilized on a regularly scheduled basis.30 Despite the
existence of a model peer review system and practice guidelines, and the endorsement of insurers, the concept of attorney peer review has floundered.
11.3.1 Priorities in Law Firm Peer Review

To the extent law firms have formed committees to oversee partners conduct, those
committees focus more on increasing profitability than improving client service. They are not peer review committees in the traditional sense but instead
serve to detect, prevent and remove obstructions to the firms income stream. In
law professor Susan Fortneys survey of major Texas law firms she found a general
resistance to peer review of client service and a specific reluctance to review a
28
Id.
American Bar Association Standing Committee on Lawyers Professional Liability Seminar
(1990, April 1920). Partner peer review: An idea whose time has come, cited in Ablan, Paul
M. (2002). Law firm loss prevention systems and procedures. St. Paul International Insurance Co.
Ltd.
30
Id.
29
11.3 Peer Review in Law Firms
405
partners performance unless it directly impacted the firms income. Her study,
partially funded by the Texas Bar Foundation, showed:
l
41% of the attorney respondents believed that attorneys cannot agree on

standards for evaluating legal competence.
44% of the attorneys believed that peer review will take too much time away
from billable practice.
Only 10% of all law firms responding to the survey employ formal procedures
for reviewing the work of principals, other than a review conducted in connection with compensation decisions, and, among the few firms that employ formal
peer review procedures, it is often done for marketing purposes, to impress
clients.
82% of firms review principals compliance with firm billing procedures, but
only 10% employ formal procedures for reviewing the work of principals.
80% of firms monitor compliance with policies for accepting contingent fee
cases, but only 34% designate a principal or committee to evaluate the manner
in which principals handle client matters.31
Professor Fortney summarizes the results of the survey: Responses indicate that
firms are more likely to monitor compliance with office procedures relating to firm
finances than procedures relating to client representation matters.32
Although attorneys resistance to peer review of client matters stems primarily
from a perceived threat to their autonomy and a general feeling that peer review
can create ill will and resentment among principals, many attorneys in Professor
Fortneys study also expressed a concern about the lack of confidentiality. About
one-third of the respondents thought their firms would be more likely to institute
peer review if peer review communications were protected from discovery. The
vast majority of respondents (86%) stated that peer review proceedings should be
protected from discovery by third parties.33
11.3.2 Confidentiality of Attorney Peer Review Proceedings

Many lawyers have labored under the misconception that advice obtained from
another attorney in the firm especially if the attorney is designated as ethics
counsel or general counsel or serves as a member of the firms quality control
or malpractice prevention committee is privileged. In reality, most courts have
refused to extend the attorney-client privilege to these intra-firm communications or
have ruled that, to the extent the privilege exists, it is outweighed by the fiduciary
duties between an attorney and a client. Beginning with In re Sunrise Securities
31
Fortney supra note 12 at 284292.

33
32
406
Litigation34 and continuing through Thelen Reid & Priest, LLP v. Francois Marland,35 the courts have held that neither the attorney-client privilege nor the work
product rule protects a law firm from producing records related to the clients
representation.
In Thelen Reid, the law firm asserted the attorney-client and work product
privileges and refused to produce emails and memoranda of internal communications between the firms attorneys and its general counsel. The disputed records
were made while the firm represented the subject client and included analyses of the
firms legal and ethical duties to the client in connection with a modification of the
original engagement letter. Acknowledging that his order would dissuade attorneys from referring ethical problems to their lawyers, thereby undermining conformity with ethical obligations, Judge Vaughn Walker nevertheless ordered the law
firm to produce any internal documents discussing the firms known errors and
conflicts and the clients potential claims against the firm.36 If Thelen Reid wanted
to invoke a valid claim of attorney-client privilege for internal communications,
Judge Walker explained, it should have terminated the client relationship with
Mr. Marland upon learning of his malpractice claim and retained an outside lawyer
to evaluate the firms duties.37
Lawyers reacted sharply to Judge Walkers decision in Thelen Reid. As two
former chairs of the Los Angeles County Bar Associations Professional Responsibility and Ethics Committee stated in the Los Angeles Lawyer, The judges order
is, without question, a harsh result.38 Other commentators depicted the ruling as
putting law firms in a very difficult practical position, and requiring them to
withdraw from the clients representation or risk losing the benefit of consulting
with the firms ethics or claims counsel when the advice will be of greatest
benefit.39 A leading attorney malpractice firm, Hinshaw & Culbertson, LLP,
describes the rulings as leaving some room for in-house claims of privilege, but
cautions that the extent of the remaining privilege may often prove to be less than
the law firm and its in-house counsel would anticipate.40 Attorneys, in other
words, should not assume that any communications regarding a client, produced
while the firm is representing the client, are privileged in a subsequent malpractice
action filed by the client.
34
130 F.R.D. 560 (E.D. Pa 1989).

207 WL 578989 (N.D. Cal. 2007).
36
Thelen Reid & Priest, LLP v. Francois Marland, 207 WL 578989, p. 8 (N.D.Cal. 2007).
37
Id.
38
Amberg, John W., and Rewinski, Jon L. (2008, March). MCLE Article: 2007 Ethics
Roundup. Los Angeles Lawyer, Vol. 31, No. 1.
39
Fucile, Mark J. (2007, November). Inside counsel: The attorney-client privilege within law
firms. For the Defense.
40
Hinshaw & Culbertson LLP. (2007, April 27). Northern California District Court addresses
privilege and work product issues relating to law firms in-house communications. Lawyers for the
Profession1 Alert, available at http://www.hinshawlaw.com/knowledge/alert_detail.aspx?id
1162&type5303.
35
407
The result in Thelen Reid is consistent with a long line of cases either denying a
law firms claim of attorney-client privilege or declaring that any claim of attorneyclient privilege is superseded, outweighed, or otherwise trumped by conflict of
interest rules or the firms fiduciary duties to the client. In VersusLaw, Inc. v. Stoel
Rives LLP,41 for instance, a former client sued the Stoel Rives law firm, and Stoel
Rives declined to produce memoranda between one of its attorneys and the firms
internal ethics and loss prevention counsel. The attorney had consulted with the
firms in-house counsel regarding her concern that the firm, during its representation of the former client, may have committed malpractice by failing to timely file a
counterclaim. Acknowledging the general proposition that law firms may assert an
attorney-client privilege for communications between an attorney and an internal
ethics or claims counsel, the court nevertheless ordered production of the memoranda and reasoned that the attorney-client privilege cannot be asserted against a
law firms then-current client. In rejecting Stoel Rives attorney-client privilege
claim, the court relied on other cases holding the privilege inapplicable when the
firms interests may conflict with the clients interests.42
11.3.3 Professional Ethics and Attorney-Client Privilege

Although many of the courts decisions rely on conflict of interest principles
in overruling law firms attorney-client privilege claims, their emphasis on conflict
of interest issues may be misplaced and their analysis may be misdirected.
41
VersusLaw, Inc. v. Stoel Rives LLP, 127 Wn. App. 309, 333334, 111 P. 3d 866 (2005).
See Koen Book Distrib. v. Powell, Trachtman, Logan, Carrie, Bowman & Lombardo PC, 212 F.
R.D. 283 (E.D. Pa. 2002) (attorney-client privilege inapplicable where attorneys within firm
discussed and investigated clients threatened malpractice action; firm should have withdrawn or
obtained clients consent to continued representation); In re Sunrise Sec. Litig., 139 F.R.D. 560
(E.D. Pa. 1989) (court not willing to hold that a law firm may never make privileged communications with in-house counsel but no privilege exists for communications that create a conflict
between the law firms fiduciary duties to itself and its duties to the client) and Bank Brussels
Lambert v. Credit Lyonnais (Suisse) SA, 220 F. Supp. 2d 283, (S.D.N.Y. 2002) (law firm cannot
claim attorney-client privilege against own client when firm conducts internal investigation of
possible malpractice liability). See also United States v. Rowe, 96 F.3d 1294 (9th Cir. 1996) (in
grand jury investigation, privilege exists for attorneys acting, effectively, as in-house counsel); Hertzog, Calamari & Gleason v. Prudential Ins. Co., 850 F. Supp. 255 (S.D.N.Y. 1994)
(because attorney-client privilege applies to communications between corporation and its attorneys, a comparable attorney-client privilege applies to a law partnership using one of its
attorneys as counsel of record); Nesse v. Shaw Pittman, 202 F.R.D. 344 (D.D.C. 2001) and 206
F.R.D. 325 (D.D.C. 2002) (records of internal investigation by firm counsel privileged); Lama
Holding Co. v. Shearman & Sterling, 1991, U.S. Dist. Lexis 7987 (S.D.N.Y. 1991) (claim of
attorney-client privilege validly asserted against production of client records including attorney
time sheets); Burns v. Hale & Dorr, LLP, No. 05-11113-NMG (D. Mass. May 14, 2007) (purposes
of attorney-client privilege not served by allowing fiduciary to withhold documents prepared in
anticipation of a possible lawsuit).
42
408
At least three authorities contend that law firms may assert an attorney-client
privilege for internal communications during the representation of a client: the
New York Bar Associations Committee on Professional Ethics, the authors of
the Restatement of the Law Governing Lawyers, and law professor Elizabeth
Chambliss, author of the Notre Dame Law Review article, The Scope of In-Firm
Privilege. These authorities argue that confidential, internal law firm investigations
are not only permissible but may be essential for firms to fulfill their ethical duties to
adopt measures giving reasonable assurance that all lawyers in the firm conform
to the Disciplinary Rules and that the conduct of non-lawyers employed by the firm
is compatible with the professional obligations of the lawyers in the firm.43
In Ethics Opinion 789, issued on October 26, 2005, the Committee on Professional Ethics of the New York Bar Association answered the ethics question,
When a law firm seeks advice from one or more of its own lawyers about the
firms legal and ethical obligations in connection with representing a client, without
first obtaining the clients consent, does the consultation create an impermissible
conflict between the interests of the law firm and those of the affected client?44 The
committee concluded that a law firm ethically may establish an attorney-client
relationship with its own attorneys to obtain legal advice on professional responsibility matters affecting an ongoing client representation:
In considering its obligations to its clients, a law firm may consult with one or more lawyers
in the Firm without thereby violating the Codes prohibition on the unauthorized representation of differing interests or the Codes prohibition on continuing employment if the
exercise of the lawyers professional judgment might be affected by personal interests. The
law firm does not ordinarily need to disclose to the clients the fact of such consultation, but
may need to disclose the conclusions reached, as when the firm concludes that it has a
conflict or that it has made a significant error or omission.45
The Committee specifically noted that consultation with an in-house attorney

facilitates rather than impedes an attorneys discharge of her ethical duties: The
law firm is not only entitled, but required, to consider the ethical implications of
what it does on a daily basis. That the law firm does so through consultation does
not change the interest being pursued.46
43
New York State Bar Association, Committee on Professional Ethics. (2005, October 26). Ethics
Opinion 789, p. 3. See Model Rule 5.1(c), stating that a lawyer is responsible for another lawyers
violation of the rules if he ratifies the conduct or is a partner or has comparable managerial
authority in the law firm in which the other lawyer practices, or has direct supervisory authority
over the other lawyer, and knows of the conduct at a time when its consequences can be avoided
or mitigated but fails to take reasonable remedial action. See also Fortney, Susan Saab. K.
(1995). Am I my partners keeper? Peer review in law firms. University of Colorado Law Review,
66, 329, 345: By instituting a peer review program, partners may also avoid violations of state
disciplinary rules that are based on Model Rules of Professional Conduct 5.1(a) . . .
44
New York State Bar Association, Committee on Professional Ethics. (2005, October 26). Ethics
Opinion 789, p. 1.
45
Id. at 8.
46
Id. at 5. See Richmond, Douglas R. (2007-2008). Law firm partners as their brothers keepers.
Kentucky Law Journal, 96, 231. Available at SSRN: http://ssrn.com/abstract1124127.
409
In August 2005, a few months after the New York Bar Association issued Ethics
Opinion 789, the Board of Governors of the Oregon State Bar approved Formal
Opinion No. 2005125, which squarely addressed the issue of whether an attorney
may withhold from a client documents related to the attorneys consultation with
his own counsel regarding potential malpractice liability. After reiterating the
general principle that a lawyer must deliver the entire file to the client upon
discharge, including all work product, the opinion approved an exception: A
lawyer might, for example, note in a file that the lawyer has consulted the lawyers
own counsel to explore the lawyers potential exposure to discipline or to explore
malpractice liability to the client. Documents reflecting matters of this type need
not be produced to the client.47 In reaching this conclusion, the opinion cites
Oregon RPC 1.6(b)(c), the counterpart of the Model Rules of Professional Conduct,
Rule 1.6(b)(5), stating that a lawyer may reveal to another lawyer confidential client
information to secure legal advice about the lawyers compliance with these
Rules.48
The opinions issued on behalf of the New York State Bar Association and the
Oregon State Bar are consistent with the position articulated in the Restatement
(Third) of the Law Governing Lawyers. The Restatement declares that a law firm
has a privilege and specifically permits an attorney to withhold from the client
documents regarding potential malpractice liability:
A lawyer may refuse to disclose to the client certain law-firm documents reasonably
intended only for internal review, such as a memorandum discussing which lawyers in
the firm should be assigned to a case, whether a lawyer must withdraw because of the
clients misconduct, or the firms possible malpractice liability to the client.
The Restatement also explains the rationale for this position: The need for lawyers
to be able to set down their thoughts privately in order to assure effective and
appropriate representation warrants keeping such documents secret from the client
involved.49
Consistent with the Restatements position, law professor Elizabeth Chambliss
argues for the recognition of attorney-client privilege in consultations with in-house
attorneys and contends that courts misunderstand the conflict of interest and
fiduciary duty issues. She states that the courts decisions conflate two separate
issues: the law firms fiduciary duty to the client and in-house counsels fiduciary
duty to the firm.50 If a law firm has a conflict of interest in seeking advice from
in-house counsel while representing a client, as asserted by the courts, that conflict,
47
Board of Governors of the Oregon State Bar. (2005, August). Client property: Photocopy charges
for client files, production or withholding of client files (Formal Opinion No. 2005125).
48
Id.
49
Restatement Third, The Law Governing Lawyers, Sect. 46(2), Comment c. See also, Sect. 73,
Comment c (law firm has a privilege, whether organized as a professional corporation, a partnership, a sole proprietorship or otherwise).
50
Chambliss, Elizabeth. (2005). The scope of in-firm privilege. Notre Dame Law Review, 80, 1721,
1723.
410
she contends, would exist whether the firm was represented by in-house counsel or
outside counsel. To the extent that the denial of privilege is based on the law firms
duty to the client, she argues, this denial logically should extend to any attempt by
the firm to prevent or assess client claims, including communication with outside
counsel.51 Under the reasoning adopted by the courts in Koen Book Distributors
and Bank Brussels Lambert, there is no in-firm privilege for communication about
a current client, even if the client is suing the firm. In fact, there is no privilege at all
for law firms that seek advice about an ongoing representation, whether from inside
or outside counsel.52 Those opinions, professor Chambliss believes, require a law
firm to withdraw from the clients representation if it seeks privileged advice, and if
withdrawal is impractical or impossible, the firm must forego privileged advice.
In addition to arguing that the courts opinions regarding attorney-client privilege are analytically incorrect, Professor Chambliss claims that the opinions are
wrong on policy grounds:
As a policy matter, I argue for broad protection of communication with law firm in-house
counsel, including communication about the representation of a current client of the
firm. Such protection would encourage firm members to seek early advice about their
duties to clients and to correct mistakes or lapses, if possible, to alleviate harm. Broad
protection of in-firm privilege also would encourage law firms to pursue internal investigations where questions of misconduct arise.53
The practical effects of denying an attorney-client privilege unless a law firm

retains outside counsel or withdraws from the representation, she contends, are
that attorneys will not obtain preventative advice when the problem is most
susceptible of mitigation and will simply avoid written or email communications
about the problem neither of which promotes the clients interests.
11.3.4 The Role of Confidentiality in Peer Review

Whether the court decisions denying an attorney-client privilege for in-house
communications are correctly or incorrectly decided, confidentiality is a prerequisite to effective peer review. Noting that peer review is necessarily hypercritical
to avoid institutional stagnation and to ensure improvement of the quality of
its services, law professor James Flanagan states that confidentiality during the
discovery portion of litigation therefore is essential to maintain the objectivity
necessary for the success of critical evaluations.54 Absent confidentiality, he
51
Id. Emphasis in original.

Id. at 1721, 1724. Emphasis in original.
53
Id.
54
Flanagan, James F. (1982). Rejecting a general privilege for self-critical analyses. George
Washington Law Review, 51, 551, 562563.
52
411
explains, candor is lost, criticisms are bland and unhelpful, and the remedial effect
of peer review disappears.
For medical peer review, confidentiality is insured by statute, and in a variety of
other contexts legislatures and the courts recognize that confidentiality is a prerequisite to improvements in public welfare and safety. NASAs Aviation Safety
Reporting System (ASRS), for instance, is entirely confidential, and, according to
its director, Linda Connell, more than 474,000 confidential reports of potential
safety hazards have been submitted by pilots, air traffic controllers, and other airline
industry employees since it was established in 1976. Many of those reports have
had a direct impact on making the nations airways safer, she states, and in the
30 years of its existence, the ASRS has never breached the confidentiality of its
reporting system.55 Confidentiality also is afforded to peer review of accountants
in some states. The Texas legislature, for example, passed the Public Accountancy
Act of 1991, explicitly establishing a privilege for all communications generated in
connection with peer review.56
Numerous state bar organizations also protect the confidentiality of attorneys
who seek help in overcoming substance abuse problems while they continue to
represent clients in legal matters.57 The confidentiality protections afforded by the
Florida Lawyers Assistance (FLA) program are typical:
Paramount to FLA is the protection of confidentiality for those attorneys who contact FLA
for help. Confidentiality in voluntary cases is protected by a written contract with The
Florida Bar which guarantees the confidentiality of FLA records, as well as by Bar Rule 37.1(j), Chap. 397.482486, F.S., and other state and federal regulations. Judges, attorneys,
law students, and support personnel who seek the assistance of FLA need not worry that
FLA will report them to the Bar, the Board of Bar Examiners, or their employer. Information is shared with these entities only if the participating individual signs a waiver of
confidentiality.58
Lawyer assistance programs operate with similar assurances of confidentiality in

almost every state.
A preference for confidentiality is again evidenced by The American Bar
Association House of Delegates recommendation that, for attorneys who have
recently recovered from chemical dependency or mental illness and are conditionally admitted to the practice of law, the fact that an individual is conditionally
55
NASA. (2006, November 9). NASA aviation safety reporting system turns 30 (RELEASE: 06345). NASA Press Release Archives.
56
A report, statement, memorandum, transcript, finding, record, or working paper prepared and an
opinion formulated in connection with any positive enforcement, quality review, or peer review is
privileged and may not be subject to discovery, subpoena, or other means of legal compulsion for
release to any person except the board and is not admissible as evidence in any judicial or
administrative proceeding except for a board hearing. Texas Civil Statutes, Title 2. Art. 41a1.
Public Accountancy Act of 1991, Section 15B(c).
57
See Langford, Carol. (2005). Depression, substance abuse, and intellectual property lawyers. Kansas Law Review, 53, 875, 907.
58
Florida Lawyers Assistance, Inc. What is the Florida lawyers assistance program? Available at
http://www.fla-lap.org/.
412
admitted and the terms of the Conditional Admission Order shall be confidential. Acknowledging an inherent tension between the benefits of confidentiality
and the publics (including potential clients) interest in access to all material
information about the applicants fitness to practice, the American Bar Association
House of Delegates nevertheless concluded that confidentiality would promote
early disclosure and treatment.59
It is difficult to imagine that an attorneys substance abuse presents less of a risk
to a clients interests or a conflict of interest less consequential than an attorneys
consultation with an in-house attorney. If public policy now protects the confidentiality of an attorneys current or recent substance abuse and deems that confidentiality promotes early treatment and prevention, it seems incongruous to deny
confidentiality to the cold sober, cautious attorney seeking advice from in-house
counsel to prevent the emergence or escalation of a malpractice or ethics problem. In both instances, the public interest is served by prompt recognition of a
problem, timely efforts to treat it, and the skillful exercise of an experts judgment
and counseling.
11.3.5 The Structure of Law Firm Peer Review

The concept of peer review may be controversial, but the actual staffing, scheduling
and methods for peer review committees are relatively simple. As one of Dr. Ernest
Codmans colleagues noted in the early 1900s when he encountered opposition to
medical peer review, There is nothing difficult about the system except the human
nature part.60 Every organization, in fact, has a form of peer review; the difference
between high performance organizations and average organizations is that the high
performance organizations have replaced anecdotal peer review with systematic
peer review.
Peer review systems range from informal committee meetings with individual
attorneys to comprehensive surveys of an attorneys work habits, client communications, work product and billing procedures.61 In a large law firm, the peer
review committee may meet with the attorneys in specific practice groups and,
like physicians conducting a morbidity and mortality conference in a hospital, may
59
ABA House of Delegates. (2008, February). Proposed model rule on conditional admission to
practice law (08M112).
60
Reverby, S. (1981). Stealing the golden eggs: Ernest armory codman and the science and
management of medicine. Bulletin of the History of Medicine, 55, 156. Cited in Dans, Peter E.,
(1993, April). Clinical peer review: Burnishing a tarnished icon, Annals of Internal Medicine,
118(7), 566568.
61
See Martyn, Susan. (1989). Peer review and quality assurance for lawyers. University of Toledo
Law Review, 20, 295, 318322. See also Connecticut Rules of Professional Conduct, Comments to
Rule 1.1: If a system of peer review has been established, the lawyer should consider making use
of it in appropriate circumstances.
11.4 Client Evaluations
413
designate attorneys to describe and discuss recent adverse client outcomes and
remedial measures. Although a peer review committees style can be relaxed or
formal, conversational or directive, the essential requirements are: (1) committee
members who are not involved in the conduct being reviewed at the meeting and,
preferably, are not serving on committees with overlapping interests and biases,
e.g., compensation and management committees; (2) regularly scheduled meetings
at intervals necessary to complete review of all firm attorneys; (3) review of
individual attorneys and randomly selected client files at intervals not less than
annually (six month maximum for new firm attorneys); (4) explicit standards for
evaluating attorneys in core proficiencies, e.g., subject matter expertise, client
communication, client conflict evaluation, judgment, client satisfaction, fee estimates, time management and economic effectiveness, and compliance with firm
procedures; (5) comparison of an attorneys self-evaluation with the evaluation of
other attorneys in the firm familiar with the attorneys work and interactions; (6)
personal improvement goals, timelines and benchmarks for all evaluated attorneys;
(7) identification of recurring errors and systemic causes and implementation of
firm-wide efforts to reduce or eliminate them; and (8) firm-wide articulation of
best practices accompanied by illustrations of exceptional client service.
Depending on the size of the firm, the evaluative process preceding a peer review
committee meeting may be conducted by interviewing an attorneys colleagues and
associates or may include a formal, comprehensive survey of associates, partners and
clients. In any event, attorneys should anticipate that the inauguration of peer review
will initially distress the partners being reviewed and provoke criticism of the peer
review committee members conducting the peer review. Fred Corbus, a management
consultant who has spent more than 30,000 hours in medical practice management
and peer review design, shares his experience: Lets be honest the mere mention of
Peer Review instantly stirs up deeply embedded emotions: the fear of being confronted and the fear of being asked to do the confronting, the anxiety of causing a
strain on relationships and the fear of being part of a process that will result in people
disliking you.62 After the initial discomfort, however, he finds that developing a peer
review system is highly rewarding because it elevates practitioners performance and
enhances communication: if done correctly, it provides a safe, constructive way to
talk about the quality of almost any professional interaction.63
11.4
Client Evaluations
In addition to peer review systems, formal client evaluations can serve as valuable
tools for measuring, monitoring and improving attorneys decision-making capabilities. These evaluations are relatively inexpensive yet recurrently overlooked
62
Corbus, F. (2004, November). Professional interactions: implementing the internal peer

review. Maricopa County Medical Society Round-Up, 50(11), 1721.
63
Id.
414
tools to leverage attorney performance. Despite law firms ability to easily identify
their own clients and obtain critical performance feedback from them, law firms
infrequently avail themselves of this resource. In American Lawyers Law Firm
Leaders Survey 2008, only 2% of managing partners reported that they had met
with each of the firms 20 most important clients, as measured by total client
billings, during the last 12 months to discuss the clients satisfaction with your
firms performance.64 The vast majority of firms (87%) had sought evaluations
from one-half or fewer of their Top 20 clients, and 48% of firms acknowledged they
had met with five or fewer of their Top 20 clients to elicit the clients opinions about
the firms performance.
This inattention to client feedback reflects managing partners priorities and
preferences, not a general lack of time available for law firm management. Eightyseven percent of the managing partners responding to this American Lawyer survey
reported that more than half of their time was spent on law firm management. The
low priority placed on client feedback is not limited to law firms but extends to
corporate law departments as well. Consultant Marci Krufka notes that law departments in many companies rarely, if ever, seek feedback from their clients about
whether they are meeting client needs.65
A typical client evaluation covers a range of law firm performance factors
work product quality, timeliness, staff attitudes, attorney accessibility, billing
amounts and descriptions that are far beyond this books focus on decision
making. This section, therefore, is limited to identifying common problems with
the design, administration and interpretation of client evaluations and then presenting 16 sample questions to measure law firms decision-making performance.
11.4.1 Challenges of Evaluation Design and Analysis

To the extent firms seek evaluations, the evaluations may be misdirected, poorly
designed and ineffectively administered; the responses may be misinterpreted and
incorrectly analyzed; and the surveyed clients may be disappointed by the lack of
accountability and improvement after the evaluation.66 Some of these problems
stem from the threshold debate as to whether the firm itself or an outside consultant
should conduct the evaluation. Attorneys argue that outsiders do not understand
how law firms operate and thus cannot respond intelligently to client criticisms or
64
Heinz, Francesca. (2008, December). How full? The American Lawyer, p. 93.
Krufka, Marci M. (2005, June). Client surveys can demonstrate your law departments
value. Report to Legal Management.
66
For a broad study of organizational evaluation see Russ-Eft, Darlene, and Preskill, Hallie.
(2001). Evaluation in organizations: a systematic approach to enhancing learning, performance,
and change. New York: Basic Books.
65
415
recognize opportunities to market the firms capabilities.67 Many law firms thus
choose to conduct client evaluations as an in-house project. They may assign
responsibility for the evaluation to the firms marketing director, designate a single
attorney to prepare a written evaluation form and review the responses, or establish
a Client Audit Team, consisting of the firms managing partner, the billing lawyer
and a neutral partner, to interview clients.68
Outside consultants, though, caution against lawyers conducting their own client
evaluations because lawyers are not educated or trained in organizational evaluation. Although attorneys may feel confident about their communication skills, most
lack the discrete skills required to design and write effective evaluations. As
Professor James Doyle notes, Writing good questions is perhaps the most difficult
and complicated part of any survey project, yet it is also one of the most often
ignored.69 Consultant Marci Krufka proffers an additional reason for independent
evaluations, citing personality data about lawyers aversion to feedback: Most
lawyers have particularly low resilience the quality that determines how well one
responds to criticism and rejection. Therefore, it is not surprising that asking for
feedback is particularly difficult for lawyers.70
Whether led by attorneys or independent consultants, client evaluations often are
misdirected and improperly designed and administered. They frequently violate the
tenets of sound survey methodology in four respects: skewing the sample selection;
missing the purpose of the evaluation; biasing or jumbling the questions and
answers; and omitting a statistical analysis of the responses. The first problem
sample selection is invariably overlooked and easily corrected. Firms usually
sample their current clients, who, by definition, are sufficiently satisfied with the
firms performance to remain a client. Although existing clients may have helpful
insights regarding their preferences and degree of satisfaction, they are not a
representative sample of a firms clients because the firm deliberately excludes
the most dissatisfied clients the former clients from the survey. Not surprisingly,
law firms often report they are pleased with client survey results, just as an
amusement parks survey of patrons who buy annual passes might reveal that the
patrons are quite fond of the park.
To provide a random or representative sample and identify major failures in
client service, client evaluations must incorporate both existing and former clients. Although former clients may be reluctant to spend additional time on a soured
business relationship, they may be more receptive to independent consultants
67
See Flannery, William J. (1990, June 11). Opinion surveys can help firms keep clients
happy. Texas Lawyer.
68
Schneider, Harry H. (1987, August). The client audit: One approach to partner peer review. Lawyers Liability Review.
69
Doyle, James K. Handbook for IQP [Interactive Qualifying Project] Advisors and Students,
prepared for the Interdisciplinary and Global Studies Division, Worcester Polytechnic Institute,
Worcester, MA.
70
Krufka, Marci M. (2005, June). Client surveys can demonstrate your law departments
value. Report to Legal Management.
416
trained in client interview and evaluation methods than members of the law firm
dismissed or not retained on a new matter. Even if a law firm elects to conduct
evaluations internally, it should consider using outside consultants to communicate
with its former clients; independent evaluation fosters a sense of confidentiality and
defuses the defensiveness both attorneys and clients may exhibit in reviewing a
failed business relationship. Like other service providers, law firms may learn more
about their shortcomings from the people who are not buying their services than
from the people who already display a strong preference for them.
The second basic problem in evaluations missing the purpose occurs because
surveys are underutilized for performance evaluation purposes and overutilized for
marketing purposes. Often prepared by marketing directors of law firms, many
client evaluations probe for untapped legal markets instead of detached billing
partners. Clients, consequently, sense that the firm may be more interested in
knowing what other law firms the client retains and how they can capture a
competitors market than improving the firms performance. Typical survey questions How likely are you to refer others to the firm? may strike law firms as
good tools to measure client satisfaction and firm performance, but they backfire if
clients perceive the purpose of the evaluation to be the firms revenue enhancement
rather than its service improvement.
Evaluations also backfire when the clients expect a change or improvement in
the firms performance after completing the survey and discover, to their chagrin,
that the firm has no systems or procedures to correct the shortcomings identified in
the survey. One general counsel expressed his frustration by comparing the evaluations with being caught in the movie Groundhog Day the law firm kept asking
him what was wrong but nothing ever changed.71 This occurs because firms again
miss the purpose of the survey; the questions and responses are merely a means to
identify the sources of client dissatisfaction while the purpose is to change firm
systems and procedures and attorney attitudes and performance to achieve higher
levels of client satisfaction. Implementation clearly is the most difficult aspect of
the evaluation, and although many firms market the fact that they perform periodic
client evaluations, few describe how they changed after an evaluation.
The third deficiency in evaluations biasing and jumbling the survey questions
and answers often requires advice from independent consultants to correct
because the biases are deeply rooted in lawyers perceptions and training. As a
preliminary matter, surveys contain questions determined by attorneys to be relevant, but they do not necessarily reflect clients priorities and concerns. A typical
survey, for example, asks clients to rate the attorneys expertise, quality of the
work product, and knowledge of subject matter. These qualities are critical to
delivering high-quality legal services to a client and they measure how attorneys
measure themselves, but they are not distinguishing characteristics for clients. Existing clients presume these basic qualifications exist otherwise they
would not have retained the law firm in the first place and subsequently paid its
71
Borgal, Marcie L. The power of one. The Complete Lawyer, Vol. 1, No. 5.
417
hourly billing rates and if a client experienced manifest incompetence during the
representation it would have retained another law firm long before receiving the
evaluation form. Asking an existing client to evaluate the attorneys competence
level is as befuddling and ineffective as asking an airline passenger whether or to
what extent the passengers were satisfied with the performance of the engines
during the flight, the structural integrity of the wings, or the pilots command of
the plane throughout the flight. These issues may be the most important but they are
not particularly helpful in achieving or maintaining a competitive advantage. Clients expect a modicum of expertise, and attorneys distinguish themselves by the
creativity, timeliness and efficacy of their efforts above the competence threshold. In an increasingly competitive legal marketplace, firms whose key feature
of client service is we know the law risk displacement by firms that convincingly
demonstrate they know how to solve client problems economically, effectively and
promptly.
Biases in selecting the survey topics are exacerbated by problems with the
content of questions and the format of responses. One client evaluation form,
for instance, diverges from survey protocols by beginning with questions in the
form How satisfied were you that . . . . Leading questions like these clearly are
permitted in examining an adverse witness but generally are discouraged in survey
design. These questions are followed by a (1)(5) ranking system with (1) being
very satisfied and (5) being very unsatisfied. This conflicts with the survey
protocol that higher numbers in rating scales should be matched with positive
answers. The evaluation form also asked the client to identify which of the firms
legal services it uses and, separately, the legal services the client anticipated
needing in the future. Omitted was a question about what legal services the client
was using at other law firms or a general question about all of the law practice areas
for which the client presently retains counsel. If the firm had decided to use the form
for both evaluative and marketing purposes, information about the clients present
legal portfolio, including practice areas unserved by the firm, presumably would be
critical. Another survey comprehensively and precisely identifies law firm performance areas, e.g., work product and billing, but employs a rating scale where D is
defined as Failed to meet my standards in a material way and I am seeking other
counsel, and F is defined as Unacceptable and Without a significant and
sustained effort . . . to improve, I will discontinue using the firm. Under these
definitions, a client who is seeking other counsel selects a D grade, but the
client who only contemplates retaining other counsel chooses an F grade. The
point here is not to criticize every aspect of sample client surveys but rather to
indicate that survey design is an expertise, and it may be unrealistic to assume that
any service provider is sufficiently objective and skilled to design its own critique.
The fourth deficiency in client evaluations lack of sound statistical analysis
usually requires the retention of independent consultants. Evaluations present a host
of statistical issues foreign to many lawyers and marketing directors, and independent consultants are invaluable in assessing pretest methods, sampling errors and
response rates and testing the validity of survey results. Absent facility with
statistical analysis and software, law firms reliance on survey results may be
418
misplaced. Changes in a firms operations may not be warranted despite superficially disturbing responses, and complacency may be unjustified despite facially
satisfactory responses.
11.4.2 Sample Questions to Probe for Decision-Making Skills

To assess the quality of attorneys decision-making skills, client evaluations need to
incorporate specific questions emphasizing attorneys analytical abilities, foresight,
resiliency, adaptability, creativity, receptiveness and efficacy. Questions measuring
these characteristics, which can be modified for an agreement scale or a ratings
scale or worded as the law firm or the attorney(s), include:
l
l
l
l
l
l
Did the attorney anticipate the issues and problems that arose in your case?
Did the attorney have a realistic view of the merits of each partys position in this
case?
Did the attorney understand your business sufficiently to provide practical
solutions?
Did the attorney discuss ways of resolving issues in your case that you had not
already considered?
Was the attorney receptive to your thoughts and ideas?
Did the attorney provide adequate information and advice to enable you to
consider alternative ways of resolving your case?
Did the attorneys advice show an appropriate balance between the legal issues
and non-legal issues that arose in your case?
Was the attorney knowledgeable about all of the factors that ultimately determined the outcome of your case?
Did the attorneys litigation strategies reflect both the strengths and weaknesses
of your case?
Was the approach taken to resolve your case consistent with your specific needs
and objectives?
Did the attorney update you on important developments in the case?
Did the attorney understand and accurately evaluate the full range of risks in
your case?
Was the resolution of your case consistent with the expectations you developed
during the initial communications with our attorneys?
Was the quality of the attorneys advice and recommendations consistent with
the fees charged for the advice and recommendations?
Did the legal fees charged for this engagement reflect the value realized by you
in resolving this case?
In retrospect, do you think the attorney accurately predicted the results and costs
in your case?
These questions are illustrative inquiries to test decision-making competencies and

learn about client perceptions. The key difference between these survey questions
11.5 Assessments and Audits
419
and many typical survey questions is that they attempt to measure the attorneys
decision-making performance through the clients viewpoint, placing the highest
priority on value and service to the client.
11.5
Assessments and Audits
A third formal method of evaluating firm performance, in addition to peer review

and client evaluations, relies on formal assessments and audits of attorneys usually
prepared and scored by independent consultants. These assessments and audits
gauge an individuals decision-making skills and an organizations learning environment or culture of safety. Once completed, they usually result in a series of
scores against which one can compare the individual or organization with peers,
competitors and benchmark data.
For individuals seeking jobs with decision-making responsibilities, the most
widely used assessment tool is the Watson-Glaser Critical Thinking Appraisal. It
contains five subtests of skills related to analytical thinking: assessing the validity
of inferences, identifying assumptions, judging whether conclusions can be reasonably deduced from premises, determining what conclusions can be derived validly
from information, and evaluating the strength of arguments. Large companies like
Raymond James Financial have used the Watson-Glaser, and it is sometimes
administered along with the Rust Advanced Numerical Reasoning Appraisal,
another test of analytical skills that emphasizes numerical reasoning. Although
the Watson-Glaser assesses skills that are likely to be highly relevant for many
legal occupations (e.g., evaluating the strength of arguments, recognizing assumptions, weighing evidence to arrive at a conclusion), it is rarely used by law firms to
evaluate attorney applicants.72 Law firms apparently prefer to rely on traditional
indicia of attorney talent grade point averages, law review and law school
academic ranking instead of assessments employed by major corporations to
discern candidates problem-solving skills.
For organizations, professors David Garvin, Amy Edmondson and Francesca
Gino have developed an extensive Learning Organization Survey, available online, without charge.73 The survey attempts to measure whether an organization
fosters the creation, expansion and transfer of knowledge and thus qualifies as
a learning organization. The survey measures three essential components of a
learning organization: a supportive learning environment, concrete learning
processes and practices, and leadership behavior that provides reinforcement.74
Representative survey statements, the possible responses to which range from
72
Mark Rose, Director of Research, Pearson (email to author, February 5, 2009).

https://surveys.hbs.edu/perseus/se.ashx?s381B5FE533C282FF.
74
Garvin, David A., Edmondson, Amy C., and Gino, Francesca. (2008, March). Is yours a learning
organization? Harvard Business Review, pp. 109, 110.
73
420
highly inaccurate to highly accurate are: people are open to alternative ways of
getting work done, this unit quickly and accurately conveys new knowledge to
key decision makers, there is simply no time for reflection and we frequently
identify and discuss underlying assumptions that might affect key decisions. The
survey scores and comparisons are shown immediately after the survey is completed, and although the survey is not targeted to legal professionals, it presents
insightful information regarding a law firms capacity for attorney development
through continuous learning. Like the Watson-Glaser, this assessment tool does not
appear to be used by many law firms.
Another method to test attitudes, values and operations within an organization is
presented by professors Karl Weick and Kathleen Sutcliffe in their book, Managing
the Unexpected. Reflecting their intensive study of high reliability organizations
like aircraft carriers, nuclear power plants, and firefighting crews, Weick and
Sutcliffe gauge whether an organization anticipates, detects, handles and learns
from challenges in fast-paced, complex operations with an enormous risk of loss in
the event of failure. Illustrative statements in their audit, using an agreement scale
to test overall reliability, are:
l
l
l
l
There are incentives in the work environment to hide mistakes.

If something out of the ordinary happens, people know who has the expertise to
respond.
We have access to resources if unexpected surprises crop up.
Managers constantly monitor workloads and are able to obtain additional
resources if the workload starts to become excessive.
This organization is actively concerned with developing peoples skills and
knowledge.75
Although many attorneys do not relate their litigation practices to high reliability
organizations, they are, in fact, safety professionals entrusted to protect clients
under inherently dangerous conditions. Hence, they may benefit from completing
the audits and evaluating their responses with the scoring guides in Managing the
Unexpected.
The decision-making skills and practices of law firm associate attorneys also can
be evaluated with an on-line audit designed by DecisionSet1. The audit, which
presents 148 statements with scaled agree-disagree or never-seldom choices, integrates organizational behavior concepts and assessments used in diverse occupations ranging from Navy aircraft carrier pilots to emergency room physicians. A
sample of 14 statements from the audit and a rough scoring method are presented
below. The person completing the audit is instructed to choose the option that most
closely matches your opinion.
75
Weick, Karl, and Sutcliffe, Kathleen. (2001). Managing the unexpected (pp. 95, 106, 108, 110).
San Francisco, California: Jossey-Bass.
11.5 Assessments and Audits
421
For the first part of the audit, the possible responses are Never, Seldom,
Sometimes, Often, and Always, and seven illustrative statements are:
1. I am reluctant to ask questions because partners may perceive them as reflecting
a lack of competence.
2. I have seen situations where we filter or disregard information that later affects
a clients settlement prospects or the trial outcome.
3. Attorneys in this firm who consistently voice contrary views are perceived as
having negative attitudes.
4. I have had reservations about assignments or strategies that I did not express at
the earliest opportunity.
5. Important facts about our clients cases are missed or overlooked because we
dont ask the right questions.
6. I have sensed client dissatisfaction with some of our work but did not bring it up
with the other attorneys involved with the case.
7. I receive key information when it is too late for the information to be useful.
The values assigned to each response are shown in parentheses: Never (1); Seldom
(2); Sometimes (3); Often (4); and Always (5). Estimating very roughly, and
without the benefit of basic statistical tests and responses to the other 141 audit
questions, an average score between 3.04 and 5 signals a relatively high level of risk
to clients; an average score between 2.32 and 3.03 indicates a moderate risk; and an
average score below 2.32 suggests a low or minimal risk.
The second part of the audit employs a disagree-agree scale (Disagree,
Disagree Slightly, Neutral, Agree Slightly, and Agree Strongly) and a
different evaluation system. Representative statements appear below:
1. This firm has clear and consistent procedures to follow if an attorney makes a
significant mistake in representing a client.
2. I trust other attorneys in this firm to fairly evaluate my legal skills and my
contribution to the firm.
3. This firm has systems for measuring and improving attorneys problem-solving
and decision-making skills.
4. I have learned innovative and creative problem-solving skills from working with
other attorneys in this firm.
5. I can easily obtain advice regarding ethics issues by consulting with an expert in
this firm.
6. If a major personal emergency prevented a colleague from working tomorrow,
the other attorneys in this firm would know what client matters and deadlines
were pending and how to handle them.
7. Attorneys in this firm are as candid about discussing their failures and shortcomings as they are about discussing their successes.
The values assigned to each response are: Disagree (1); Disagree Slightly (2);
Neutral (3); Agree Slightly (4); and Agree Strongly (5). Qualified by the fact that
the sample size, the population size and the number of respondents who selected a
particular answer are unknown and the questions represent fewer than 5% of all the
422
audit questions, an average score below 1.97 tentatively signifies a potentially high
risk to clients; an average score between 1.97 and 2.68 indicates a moderate risk;
and an average score above 2.68 suggests a low or minimal risk.
Whether firms employ assessments or audits developed by Karl Weick or other
individuals familiar with organizational behavior, these tools can illuminate shortcomings in client service, attorney development and law firm communication. These assessments and audits are critical as competition among law firms
intensifies and firms distinguish themselves through superior management and
leadership. Although law firms never really had to worry about management
skills and many dont have the management talent to run the large convoluted
organization, according to business professor James Bailey, increased competition
is rapidly winnowing out firms that fail to systematically evaluate and upgrade their
operations.76 Managing partners at law firms resemble CEOs of conventional
corporations, asserts Santiago Iniguez, a business school dean, and they need to
practice similar managerial skills.77 By implementing systematic, periodic assessments and audits, law firm managing partners take a large step toward aligning their
management practices with those of the corporations they represent.
11.6
Chapter Capsule
Formal quality control measures in law firms usually assume three forms: peer
review, client evaluations, and attorney and law firm assessments and audits. Peer
review was first adopted by the medical field about 90 years ago and subsequently
has been employed in other professions like accounting and engineering. Despite
encouragement from the American Bar Association and professional liability
carriers, law firms have been slow to adopt peer review. To the extent law firms
implement peer review procedures, research indicates that these procedures emphasize compliance with firm billing requirements more than evaluation of client
representation. Attorneys reluctance to utilize peer review systems stems, in part,
from the absence of statutory confidentiality protections such as those afforded to
health care professionals and the consequent concern that information generated in
the course of peer review could be used against a law firm in a clients malpractice
suit.
Although not a substitute for peer review, client evaluations are valuable tools
for measuring, monitoring and improving attorneys decision-making capabilities. Typical problems with client evaluations are the omission of former clients,
who may have the most useful information for assessing attorney performance and
insuring the retention of current clients; the tendency to rely on law firm partners
76
Dizik, Alina. (2009, May 20). Law firms embrace business school 101. The Wall Street Journal,
p. B5.
77
Id.
11.6 Chapter Capsule
423
and personnel to design and administer the evaluation despite a possible lack of
education, training and experience in survey design and analysis; clients reluctance
to reveal certain concerns directly to firm principals and responsible partners when
law firms conduct the evaluations themselves instead of retaining third party
consultants; unmet client expectations that problems they identify will be resolved
when in reality they are merely recorded; and the measurement of attorney performance by attorneys standards and expectations rather than the clients objectives.
A third formal method of evaluating firm performance, in addition to peer review
and client surveys, relies on formal assessments and audits of attorneys usually
prepared and scored by independent consultants. These assessments and audits
gauge an individuals decision-making skills and an organizations learning environment or culture of safety. In assessing prospective employees analytical
thinking, many businesses use the Watson-Glaser Critical Thinking Appraisal, and
in evaluating their own organizations, businesses may take advantage of tools like
the Learning Organization Survey prepared by professors David Garvin, Amy
Edmondson and Francesca Gino and assessments based on professor Karl Weicks
and Kathleen Sutcliffes extensive study of high reliability organizations. None of
these assessment tools, however, appears to be used extensively by law firms.
Chapter 12
Conclusion
How long shall we blunder along without the aid of unpartisan and authoritative scientific
assistance in the administration of justice, no one knows; but all fair persons not conventionalized by provincial legal habits of mind ought, I should think, unite to effect some
change.
Judge Learned Hand, Parke, Davis & Co. v. H. K. Mulford Co. (1911)
This book began by posing four questions central to attorney-litigant decision

making:
l
Do attorneys and their clients make financially sound decisions about pre-trial
settlement offers in civil litigation cases?
What psychological and institutional factors affect decision making in civil
litigation cases?
What are the legal malpractice and ethical implications of making ineffective
decisions about the settlement or trial of civil cases?
How can attorneys and clients improve their decision-making skills in all phases
of civil litigation?
To the extent space permits, this book has addressed these questions by surveying
prior research and presenting new data regarding attorney-litigant decision making,
identifying psychological biases, heuristics, defenses and illusions that impede
sound judgment, describing how law schools, law firms and the civil justice system
may foster sub-optimal decision making, delineating the circumstances in which
poor judgment may render an attorney liable for legal malpractice or disciplinary
action and presenting more than 65 ideas, methods and systems for improving
personal, group and law firm decision making.1
The four questions that preface this book reflect a broader inquiry: for what
outcomes in litigation are attorneys and law firms responsible? The answer is
elusive because clients ultimately decide whether to accept a pretrial settlement
proposal or proceed to trial, and a judge, jury or arbitrator determines the outcome if
1
See Chapters 9, 10, and 11.

425
426
12 Conclusion
the client forgoes a negotiated resolution. For both settled and adjudicated cases, a
clients decision or a third partys judgment seems to eclipse the attorneys
role. This inability to squarely affix responsibility on attorneys has facilitated a
philosophical resignation to unsatisfactory settlements and unfavorable verdicts
and a tendency for attorneys to distance themselves from the actual consequences
of improvident settlements and trials. Like bridge toll takers, many attorneys have
become familiar barriers to access who warrant neither the safety nor the suitability
of the route.
This sense of detachment, in turn, fosters a civil justice system devoid of reliable
data regarding the financial benefits and costs of litigation. In most cases tried to
verdict, it is impossible to answer readily the threshold question of whether the
financial result was better than the settlement amount proposed by an adversary or
suggested by a mediator. Nor are data available to determine whether an attorney or
a law firm is above or below average performance in prevailing on motions,
winning cases at trial, incurring court-ordered sanctions, prolonging case resolutions, obtaining attorney fee awards proportionate to the actual fees incurred,
settling cases for amounts bearing some resemblance to the clients damages,
meeting client expectations or accurately forecasting case outcomes. The nation,
consequently, cannot determine whether its conflict resolution system delivers
sound financial results or intangible societal benefits and whether its attorneys
function as problem solvers or surcharges on conflict resolution.
Law firms, for their part, have placed themselves in the anomalous position of
marketing superior quality legal services without demonstrating how their quality is
defined, measured, compared or disclosed. To the extent law firms agree upon
methods of measuring performance, those methods often promote internal financial
objectives rather than external client expectations. The tendency to focus on
internal objectives usually signals a business in a post-mature phase, gross revenue
having peaked, the capacity to raise prices having weakened, new technologies
having displaced old business models and competitors in other businesses and
regions having diverted revenue streams. In a world where businesses achieve a
competitive advantage in four fundamental ways creating utility as defined by the
customer, charging a price that represents value to the customer rather than cost to
the supplier, adapting to the customers economic reality, and delivering true value
to the customer rather than a generic service many law firms may prove to be
singularly maladaptive in the next decade.2 By divorcing themselves from responsibility for costs and outcomes, attorneys risk disengagement from their clients.
The issue of attorney responsibility for outcomes is pivotal because, in the
absence of responsibility for costs and consequences, no compelling reason or
financial incentive exists to record, monitor or improve attorney decision-making
performance. Accountability is the keystone of performance, and the tendency to
offload responsibility for litigation outcomes onto clients minimizes attorneys
Drucker, Peter. (1985). Innovation and entrepreneurship (pp. 243252). New York: HarperBusiness.
12 Conclusion
427
legal and ethical responsibilities and thwarts their professional development. As

explained in the previous chapters, attorneys must advise clients regarding the
likely outcome of their cases, attempt to effectuate a negotiated resolution of
their cases, proffer advice on legal and non-legal issues, and be proactive in
understanding and alerting clients to all facts and factors essential for them to
make informed decisions. Although the client is responsible for making major
substantive decisions, the attorney bears responsibility for the investigation,
research, analysis and advice that precede those decisions. The quality of the
attorneys work product, analytical abilities and communication skills thus controls, in large part, the quality of a clients decision.
Recognizing the critical role attorneys play in advising clients and facilitating
conflict resolution, some bar associations have adopted aspirational statements on
professionalism. These statements express an aspiration to expeditious and economical achievement of all client objectives and declare the way in which our
clients resolve their disputes defines part of the character of our society. Specific
aspirations for informed client decision making include:
l
l
l
l
l
l
Counsel clients about all forms of dispute resolution.

Counsel clients about the value of cooperation as a means towards the productive resolution of disputes.
Communicate promptly and clearly with clients.
Avoid non-essential litigation and non-essential pleading in litigation.
Explore the possibilities of settlement of all litigated matters.
Advise clients about the obligations of civility, courtesy, fairness, cooperation
and other proper behavior expected of those who use our system of justice.3
Although characterized as aspirational, these actions should be regarded as

minimum responsibilities for ethical, effective and efficient attorney-litigant decision making.
Attorneys intent on improving their decision-making performance and hence
their client service will look beyond minimum requirements and focus on ideal
professional service. Attempting to achieve the highest standards of client service
shifts attorneys attention from acceptable practices to best practices and ultimately
provides a distinct competitive advantage in marketing and retaining clients. Most
importantly, it re-unites attorneys with the idealism, commitment to service and
sense of consequence that initially attracted them to the law.
In setting high standards and attempting to implement best practices, attorneys
may borrow concepts and adopt practices from the medical professions five-year
project to define professionalism. The Charter on Medical Professionalism
3
See Ideals and Goals of Professionalism, adopted by the Board of Governors of The Florida Bar
on May 16, 1990, and The Lawyers Creed and Aspirational Statement on Professionalism,
adopted by the Commission on Professionalism in 1990 and incorporated into the Rules and
Regulations for the Organization and Government of the State Bar of Georgia. See also Section 2,
Responsibilities to the Client, and Section 13, Settlement and Alternative Dispute Resolution,
of the Santa Clara County Bar Association Code of Professionalism, revised October 25, 2007.
428
12 Conclusion
establishes three controlling principles and ten commitments to restate the professional responsibility of service to others.4 Translated into the terminology of the
legal profession, the three principles and their definitions are:
l
Primacy of Client Welfare (dedication to serving the clients interests despite

market forces, administrative exigencies, and societal pressures).
Client Autonomy (honesty with clients, respect for clients right to make independent decisions consistent with ethical practices and appropriate demands,
and empowerment of clients to enable them to make informed decisions).
Social Justice (elimination of all forms of discrimination, whether based on race,
gender, socioeconomic status, or any other social category, and promotion of
fairness and justice in the delivery of and distribution of legal services).
These principles, in turn, are implemented through commitments to professional

competence, honesty, confidentiality, appropriate client relations, continuous
improvement, access to a uniform and adequate standard of care, just distribution
of finite resources, scientific knowledge, conflict of interest management, and
professional responsibilities.
The principles and commitments of medical professionalism, as expressed in the
Charter, embody many time-honored standards and ideals of legal professionalism. Both professions confront the challenge of defining professional responsibilities for alleviating harm already inflicted, sometimes irreversibly, on the
principal. The harm may bear no relation to the principals behavior or may be a
direct consequence of the principals carelessness or choices. Both the physician
and the attorney could easily absolve themselves of responsibility for the impending outcome, yet neither professional resigns herself to defeat before exhausting all
of her professional skills. They do not blame the patient or client for his predicament but work skillfully within the confines of the extant conditions, neither
downplaying their responsibilities nor excusing their mistakes when confronted
with seemingly intractable problems.
Like the medical profession, the legal profession entrusts its practitioners with
wide latitude in judgment and broad discretion in client relationships. The principles and commitments of professionalism are an attempt to insure that judgment
and discretion are properly exercised, consistently reviewed and continually
refined. To ensure a high quality of professional judgment and promote relationships based on mutual respect, individual responsibility and appropriate accountability, the principles and commitments emphasize lifelong learning, continuous
improvement, reduction of errors and optimization of outcomes; require the development of uniform and adequate standards of care and guidelines for cost-effective
service; and promote research to create new data and knowledge about performance
4
Medical Professionalism Project. (2002, February 5). Medical professionalism in the new millennium: A physician charter. Annals of Internal Medicine, 136(3), 243246. The Medical Professionalism Project is a joint project of the American College of Physicians-American Society of
Internal Medicine, American Board of Internal Medicine, and European Federation of Internal
Medicine.
12 Conclusion
429
based on scientific evidence and practitioner experience. They further encourage

active participation in establishing educational requirements for current and new
members; mandate discipline and remediation for members who fail to meet
professional standards; and urge internal assessment and external scrutiny of
professional performance to ensure members are competent.5 To protect individuals dignity and welfare, the principles and commitments declare that professionals must completely and honestly inform them about probable outcomes and
alternatives; empower them to intelligently choose among alternative courses of
action; protect them from members of the profession who may misuse their position
to obtain personal financial gain or some other private purpose; disclose all conflicts
of interest that could compromise professional responsibilities; and earn their trust
and confidence by protecting their confidentiality and avoiding the provision of
unnecessary services.6
For lawyers, professionalism serves as both the impetus and the guide to
measure, record, analyze and enhance the quality of attorney-litigant decision
making. It requires a collaborative effort by attorneys, law firms and the courts to
determine appropriate objectives for all participants in the civil justice system,
reach a consensus on how to evaluate progress toward those objectives, collect and
disseminate data to accomplish those objectives and properly adjust outcome data
to account for anomalies in risks, costs, timing and other distinct case characteristics. This collaborative effort is the first step in generating reliable data for case
evaluation, presenting clients with metrics for assessing attorney performance and
providing incentives for attorneys to deliver superior client service. As Dr. AnneMarie Audet observes in the medical context:
If quality is to be rewarded, it will have to be measured; and the data will need to be more
accessible than they are now. Physicians should take the lead in making care more
transparent. This will mean balancing issues of ethics, fairness, accountability and confidentiality. Physicians can engender increased trust between the public and the profession by
allowing greater openness about the quality of care they provide.7
Attorneys commitments to clients are no less enduring than physicians commitments to patients, and in many instances legal practice affords greater potential for
promoting clients interests than medical practice permits for preserving patients
health. This opportunity for quality measurement and improvement in legal services simultaneously presents a towering responsibility and a deep source of
professional gratification.
5
Id. See Smith, Richard. Medical professionalism: Out with the old and in with the new. JRSM
[Journal of the Royal Society of Medicine], 99(2), 4850.
6
Medical Professionalism Project supra note 4.
7
Audet, Anne-Marie, et al. (2005). Measure, learn and improve: Physicians involvement in
quality improvement. Health Affairs, 24(3), 852.
Appendix: Primary California Dataset Variables
The definitions, classifications, sources and coding of the variables in the primary
California dataset are described below.
A.1
Awards
The award recorded in each case is the net financial award made by the judge, jury,
or arbitrator. If attorneys fees and/or costs were awarded separately to a party, they
were added to the amount of the award or subtracted from the award (depending on
which party was awarded the fees and/or costs) to determine the net financial award.
Gross awards were recalculated as necessary to adjust for comparative negligence
allocations, high-low agreements, workers compensation intervenor claims and
similar legally mandated offsets or adjustments. In cases where the defendant
prevailed and fees or costs are awarded to the defendant, the net result is recorded.
A defense verdict with an award of $10,000 in attorney fees, for example, is
recorded as a $10,000 award.
Awards generally do not reflect the results of subsequent motions, appeals or
post-verdict haircuts. In some types of cases, post-trial haircuts are common and
substantial. See Hyman, David A., et al. (2007). Do Defendants Pay What Juries
Award? Post-Verdict Haircuts in Texas Medical Malpractice Cases, 19882003.
Journal of Empirical Legal Studies, Vol. 4, No. 1, pp. 368.
A.2
Settlement Demands and Offers
The amount of a partys demand or offer is based on the last settlement demand or
offer made before the jury renders a verdict, the judge issues a decision, or the
arbitrator serves an award. Defendant offers are coded as $0 when the Verdict
431
432
Search California report states none reported, none, or waiver of costs. Cases
in which the settlement negotiations section of the Verdict Search report was
omitted or incomplete were excluded from the study.
Cases in which equitable relief was awarded or the precise amount of a demand,
offer or award could not be ascertained (e.g., $100,000 offer with an indication
of $125,000, mid $800,000, or $50,000 plus reasonable attorneys fees) were
excluded.
A.3
Case Type
The cases are tort, contract, and real property disputes and are classified by the type
or nature of the legal claim asserted: contract, employment, fraud, intentional tort
(non-fraud), medical malpractice, personal injury, premises liability, eminent
domain, product liability, negligence (non-personal injury), and other. Some cases
are classified as mixed cases, e.g., contract/fraud, while other cases, e.g., employment, are coded as a single type although the plaintiff may have alleged multiple
theories of recovery.
The nominal positions of the parties in an eminent domain action (public entity
as plaintiff and owner as defendant) are reversed in the datasets to achieve consistency with their functional roles (owner, the nominal defendant, functions as a
plaintiff in seeking compensation from a public entity) and eminent domain trial
procedure (defendant owner assumes role of plaintiff in presenting its evidence first
and commencing and concluding the argument). See California Code of Civil
Procedure, Section 1260.210(a).
Cross-complaints are treated as separate cases where the parties settlement
positions and the award amounts can be allocated between the complaint and the
cross-complaint. Where multiple plaintiffs or defendants have severable settlement
positions or case outcomes, those cases also are coded as separate cases or excluded
due to insufficient allocation information. Although the book generally refers to a
plaintiffs demand or a defendants offer, these terms are for convenience and
include cases in which multiple plaintiffs or defendants submitted an aggregate
settlement proposal in a single case.
A.4
Parties
Nine party types are coded: corporation, business (unincorporated business or

possibly incorporated entity not specifically identified in the case facts as a corporation), insurer, male individual, female individual, female/male individuals, public
entity, trust, or other party type.
A.6 Nature of Damages
A.5
433
Attorneys
Plaintiff and defendant attorneys are identified and coded by gender; firm size
(whether among the 50 largest law firms in California based on information in
The Daily Journal, California Lawyer, Martindale-Hubbell or Daily Journal Directory of Attorneys); years of experience after admission to the State Bar of California;
academic rank of law school from which he/she graduated (whether a graduate of
the nations 20 best law schools as ranked annually by U.S. News and World Report
and diversity ranking of the law school from which he/she graduated (whether a
graduate of the 20 law schools with the highest diversity index, as ranked annually
by U.S. News and World Report).
Verdict Search California reports only the name, firm, and location of the
attorneys in each case. Data regarding other attorney characteristics, e.g., years of
experience, law school and law firm size, was obtained from membership records
on the State Bar of Californias public website, Martindale.com, the MartindaleHubbell Law Directory, The Daily Journals California Directory of Attorneys, and
the websites of the subject law firms. Where gender could not be ascertained readily
from the attorneys first name or the first name is common for both males and
females, coding was based on the probability that the first name was male or female,
as determined by various programs like Baby Name Guesser, formerly Geoffs
Gender Guesser. If an attorneys first name did not yield information regarding the
attorneys likely gender, the attorneys middle name was input.
In cases where more than two attorneys represented one party, only the first two
reported attorneys were coded, except where multiple law firms represent a single
party. In those multiple law firm conditions, the first attorney listed in the first two
law firms was coded, to incorporate data from at least two different law firms
representing that party. In public entity cases, however, the perfunctory listing of
the County Counsel in the first position is ignored and the next two listed attorneys
from the County Counsels office are coded.
Some attorneys appear in more than one case in the database, although this is an
infrequent occurrence. Random sampling indicates that repeat attorneys represent 2%3% of the total attorneys in the primary dataset. Thus, the total number of
individual attorneys in the primary dataset is slightly less than 6,945.
A.6
Nature of Damages
Damages are classified as Past damages (injuries, damages and pain and suffering
already incurred or sustained); Future damages (prospective losses not yet paid or
incurred); and punitive damages (damages sought to punish or make an example of
a defendant upon a showing of malice, oppression or fraud). (See California Civil
Code Section 3294). The coding of damages is based on the type of damages
alleged by the plaintiff, not the actual award.
434
A.7
Nature of Alleged Wrong
The underlying wrong alleged by the plaintiff is classified as an omission, commission, or both. A personal injury caused by an automobile drivers inattention, for
example, is coded as an omission, while a personal injury resulting from an assault
is classified as a commission. The classification of the underlying wrong is based on
plaintiffs allegations.
A.8
Forum
The forum type is determined by the type of adjudicator and is coded as a judge,
jury or arbitrator.
A.9
Section 998 Offers of Compromise
The service of a settlement demand or offer under California Code of Civil

Procedure Section 998 (a 998 offer) is coded as a plaintiff 998, defendant 998,
or plaintiff/defendant 998. This statutory offer of compromise procedure is
similar to Rule 68, Federal Rules of Civil Procedure, although Rule 68 is limited
to offers made by defendants. A party who does not accept an adverse partys 998
offer and fails to obtain a better result at trial may be liable for the adverse parts
court costs, expert witness fees and, in personal injury cases, interest from the date
of the 998 offer.
Because a partys demand or offer reflects the last demand or offer made before a
verdict or decision is rendered or an award is served, the amount of a parties 998
offer may be different from the demand or offer entered in the datasets. A 998 offer
must be served at least 10 days before trial, and in many cases demands and offers
are changed after the period for service of a 998 offer has expired.
A.10
Insurance
The existence of an insurer is coded in the database. Attorneys appear to underreport insurance, as many Verdict Search case reports omit the Insurer(s) section
but indicate elsewhere that insurance existed. In the settlement demand part of the
report, for instance, an attorney may report a policy limits demand but fail to
report a carrier in the Insurer section of the report. In cases where insurance is
indicated but not expressly reported in the Insurer section, the existence of an
insurer was coded.
A.12 Pre-Trial Dispute Resolution Procedures
A.11
435
Offer/Demand Ratio
The offer/demand ratio is derived by dividing the amount of the defendants offer
by the amount of the plaintiffs demand.
A.12
Pre-Trial Dispute Resolution Procedures
If a party reports participation in a pre-trial alternative dispute resolution, the

procedure is coded as non-binding arbitration or mediation. Parties participation
in alternative dispute resolution procedures probably is underreported.
Index
A
ABA Formal Opinion 06-438, 216, 273
Accreditation Council for Graduate
Medical Education (ACGME), 402, 403
Actor variable, 27, 5254, 7686
ADR. See Alternative dispute resolution
(ADR)
Agent-principal conflicts, 174
Aggregate settlement, 216, 250, 272274,
279, 432
Alexander, Janet Cooper, 190, 191
Alternative dispute resolution (ADR), 12,
159, 176, 192194, 233, 234, 339, 361,
427, 435
Alzheimers disease, 263
American Bar Association (ABA), 4, 11, 13,
30, 65, 147, 150, 156160, 166168, 170,
171, 173, 181, 183, 184, 186, 189, 200,
201, 215, 216, 250, 264, 265, 268, 273,
275, 277, 279, 297, 313, 336, 339, 344,
347, 386, 399, 403, 404, 411, 412, 422
American Bar Foundation, 79, 182
American Law Institute, 399, 404
Amygdala, 306
Analytics, 14, 90, 110, 135, 169, 360,
368, 389
Anchoring, 70, 75, 90, 108, 109, 111,
115120, 139
Anello, Michael, 169
Anger, 94, 179, 346348
Appellate court review, 156
Argyris, Chris, 285, 286, 293
Arkes, Hal R., 136, 298, 304, 328, 360
Asher, Martin A., 6, 27, 28, 53, 86,

111, 115
Attention Deficit Trait (ADT), 344
Attorney disciplinary actions, 301
Attorney-mediators, 33, 4852, 86
Attribution bias, 9297, 119, 289, 316
Attribution error, 9097, 102, 108, 139,
316317
Audet, Anne Marie, 429
Availability heuristics, 120, 129133, 140
Ayres, Ian, 14, 162, 304, 324, 336
B
Baker, Tom, 190
Balabanian, David, 327, 328
Baron, Jonathan, 65, 69, 72, 82, 133, 136,
139
Base rate, 74, 125, 129, 191, 333335, 366
Bassok, Miriam, 68
BATNA, 109, 338339, 360
Bazerman, Max, 93, 95, 98, 102104, 133,
137139, 340, 341, 357, 360, 361, 389
Beckmann, Jens, 297
Begley, Sharon, 101, 128, 297
Behavioral economics, 26, 44, 61, 64, 65,
72, 89, 90, 108, 111114
Belief system defenses, 289, 293295, 351
Berkowitz, Bruce, 349
Berlin, Isaiah, 328
Bibas, Stephanos, 118, 119, 124, 135
Binding phase, 322, 323, 327, 330
Birke, Richard, 102, 103, 124, 127, 130, 340
437
438
Blaming, 93, 285287, 291, 295, 307, 310,

312, 402
Blumer, Catherine, 136
Bonabeau, Eric, 303, 306, 330, 331
Brainstorming sessions, 389, 390, 396
Brazil, Wayne D., 317, 360
Brehmer, Berndt, 335
Brest, Paul, 131, 159, 160
Brett, Jeanne, 192, 202, 361
C
Cahill, Mia, 19, 193, 202
Cain, Maureen, 312, 354
Calibration, 14, 22, 56, 57, 74, 108, 298,
299, 334, 364, 371
California Code of Civil Procedure Section
1141.21, 61
Cambridge Psychological Society, 99
Camerer, Colin F., 112, 123, 299, 302, 304,
305
Cantor, Norman, 144
Cardozo, Benjamin, 152, 153
Carnegie Foundation, 144, 145, 147,
155158
Caruso, Eugene M., 96, 127, 128
Case method, 21, 143, 144, 146, 150158
Chambliss, Elizabeth, 408410
Charter on Medical Professionalism, 427
Checking phase, 362, 363
Cheifetz, David, 154, 155
Chesler, Evan, 164, 165
Choosing phase, 348, 349
Christian, Douglas, 217, 218
Chugh, Dolly, 98, 389
Cialdini, Robert B., 98, 351, 352
Civil Discovery Act of 1957, 48
Civil Discovery Act of 1986, 48
Clermont, Kevin M., 17, 18
Client evaluations, 284, 397423
Client surveys, 283, 398, 414, 415, 417, 423
Coase, Ronald, 108, 122
Code of Civil Procedure Section 998, 58,
434
Codman, Ernest Armory, 401, 402, 412
Cognitive conservatism, 289, 351, 352
Cognitive dissonance, 90, 104
Colvin, Geoff, 78
Index
Confirmation bias, 120, 125129, 132, 140,

175, 182, 295
Conflict of interest, 167, 174, 204, 215218,
247, 254, 265, 319, 321, 407, 409, 412,
428
Context variable, 27, 5271, 76, 86
Contingency fee, 23, 55, 56, 80, 210, 247
Cooney, Mark, 205, 207, 242
Coyne, Kevin P., 390
Coyne, William F., 312, 313, 322, 326, 337
CPR Institute, 160161
Creativity, 148, 160, 161, 166, 317, 318,
325, 343, 344, 371, 387, 390, 417, 418
Csikszentmihalyi, Mihaly, 325
Currall, Steven C., 345347
Curry, Richard, 313
D
Daicoff, Susan, 182, 184, 185
Darling, Scott, 172
Daum, Meghan, 129, 130
Davenport, Thomas, 14
Dawes, Robyn M., 69, 116, 118, 119, 121,
132, 133, 170, 304, 311, 333
DecisionQuest, 294, 329, 330
DecisionSet, 27, 420
Declarative knowledge, 297, 298
Depression, 143, 183185, 187, 188, 263,
343, 411
Devils advocate, 389, 396
Dijksterhuis, Ap, 305
Diminished capacity, 67, 250, 262266,
279
Diminishing marginal returns, 138, 139,
174, 355
Disciplined physicians, 300
Discounting of future costs, 90, 133136
Divergent thinking, 325, 326
Diversity, 52, 55, 85, 317, 318, 387, 433
Doherty, Joseph, 82
Domnarski, William, 178
Donoghue, David, 16
Doz, Yves, 388
Drucker, Peter, 68, 139, 156, 169, 311, 312,
323325, 353, 363, 388, 395, 426
Duty of competence, 218, 258, 265268
Duty of truthfulness, 276, 277
Index
Duty to effectuate settlement, 233

Duty to expedite litigation, 232
Duty to supervise, 269
E
Early neutral evaluation (ENE), 193, 316,
317
Eaton, Thomas, 19
Edmondson, Amy C., 419, 423
Edwards, Harry T., 162, 163, 169, 171, 180,
269
Egocentric bias, 104, 126
Eisenberg, Theodore, 12, 19, 35, 67, 155,
156, 358
Eisenhardt, Kathleen, 391
Ekman, Paul, 307
Email, 345347, 365, 370, 406, 410, 419
Endowment effect, 90, 120123, 140
English Rule, 61, 62
Enhanced loss aversion, 72
Epley, Nicholas, 96, 127, 128
Ericsson, K. Anders, 5, 284, 299, 300, 302,
363, 364, 384
Erlandson, Eddie, 285, 286
Escalation of commitment, 354
Estoppel, 238240
Ethical Guidelines for Settlement
Negotiations, 181, 216
Ethics Opinion 789, 408
Evans, Keith, 324
Exercise of professional judgment, 208, 228
Expected utility, 109, 111, 113
Expert teams, 5, 368, 383385, 396
F
Factor, Max, 347
Farnsworth, Ward, 287
Fatigue, 320, 344345, 378
Faust, David, 298, 304
Feedback, 74, 172, 285, 286, 288, 299, 307,
347, 363365, 383, 392, 396, 414, 415
Felstiner, William, 93, 94, 142, 173, 175,
176, 180, 194, 291, 310, 312
Feynman, Richard, 125
Fifty percent implication, 25, 3132, 55
Finding phase, 310
Finkelstein, Sydney, 309, 374, 375
439
Fischhoff, Baruch, 125

Fisher, Roger, 142, 321, 322, 338
Flaherty, John, 142, 338
Flanagan, James, 410
Fogel, Jeremy, 78
Forecasting, 5, 20, 22, 110, 141, 142, 173,
189, 194, 195, 289, 291, 307, 328, 332,
335, 350, 359, 387, 426
Formal Opinion No. 2005-125, 409
Fortney, Susan, 167, 168, 344, 345, 398,
400, 404, 405, 408
Forum, 52, 54, 6365, 71, 86, 194, 234,
356357, 434
Fox, Craig R., 103, 124, 127, 340
Framing, 26, 46, 49, 75, 90, 108, 109,
111115, 122, 139, 140, 142, 149, 310
Freund, James, 160
Friedman, Raymond, 345347
Fuller, Lon, 151
Fundamental attribution error, 9197, 102
Future damages, 52, 6569, 433
G
Gaba, David, 381, 382
Galanter, Marc, 12, 1821, 24, 50, 75, 76,
166, 177, 186, 188191, 193, 202
Game theory, 6, 109, 335, 336
Garvin, David, 419, 423
Geiger, Jeffrey, 211
Gender, 5254, 76, 8184, 86, 301, 307,
317, 428, 433
Gigerenzer, Gerd, 89, 303
Gilovich, Thomas, 14, 22, 56, 124, 133, 145,
146, 296, 304
Gilson, Ronald J., 173, 174
Gino, Francesca, 419, 423
Gladwell, Malcolm, 89, 305, 306, 326, 327
Glendon, Mary Ann, 166, 177
Goldberg, Lewis, 299
Goleman, Daniel, 98, 100, 102
Green, Kesten, 335, 336
Griesa, Thomas, 151, 152
Griffth, Sean J., 190
Grisham, John, 29
Gross, Samuel, 2527, 31, 34, 37, 38, 55, 57,
111, 113, 114, 119, 138, 155, 287
Group polarization, 367, 371375, 396
440
Groupthink, 109, 326, 367, 370375, 389,

396
Guthrie, Chris, 50, 70, 75, 102, 104, 117,
118, 306, 334
Gutke, Jurgen, 297
H
Hagafors, Roger, 335
Hallowell, Edward M., 168, 344
Halpern, Charles, 188
Hand, Learned, 350, 369, 425
Hans, Valerie, 1820, 23, 154
Hastie, Reid, 69, 116, 118, 119, 121, 132,
133, 170, 311, 333
Hatamyar, Patricia, 251, 252
Henderson William D., 166, 177, 186, 345
Hensler, Deborah, 176, 193, 194, 361
Hermann, Philip, 20, 21
Hersch, Joni, 19, 67
Heuristics, 14, 22, 56, 75, 89, 90, 109, 111,
120, 124, 125, 129133, 139, 140, 284,
298, 303, 304, 333, 425
Hewlett, Sylvia Ann, 168, 344
High reliability organizations (HROs), 352,
368, 377383, 396, 420, 423
Hindsight bias, 17, 89, 120, 131133, 140,
207, 315
Hoang, Ha, 137
Hoffer, Eric, 127
Holmes, Oliver Wendell, 3, 314
Hostility, 184, 194, 264, 265, 347
Hourly billing system, 319
Hurley, Robert, 393, 394
Hurricane Katrina, 130
Index
Insurance, 15, 20, 21, 25, 48, 53, 54, 56,

71, 7376, 86, 92, 93, 118, 129, 134, 187,
190, 193, 201, 205, 214, 223, 225, 267,
268, 277, 278, 321, 334, 404, 434
Intertemporal choices, 134, 135
Intuition, 3, 14, 31, 82, 98, 102, 111, 113,
128, 296, 303308, 314, 331, 333,
334, 362
Investigative negotiation, 93, 340, 357
Isen, Alice, 343
Issacharoff, Samuel, 156
J
Jacobs, Dennis, 162
Janis, Irving, 182, 326, 334, 370, 371,
373375, 389, 395
JDS Uniphase, 107, 108, 191, 325
Johnson, Eric, 299, 302, 304, 305
Johnson, Frank, 343
Joint Commission on Accreditation of
Healthcare Organizations (JCAHO),
401, 403
Jones, Morgan, 368, 389
Journal of Empirical Legal Studies, 6, 19,
27, 28, 50, 53, 67, 86, 156, 188,
301, 431
Journal of Legal Education, 84, 146, 183,
185
Judge-jury agreement, 15, 1718, 20
Judgmental immunity, 207209, 222, 228,
238, 241242, 248
Judicial error, 227231
K
I
IDEO, 387
Iijima, Ann L., 183
Inadequate advice, 206209, 227, 237,
258
Inadequate settlement, 213, 219
Incrementalism, 349
Independent professional judgment, 257,
267
Informed consent, 205, 211, 215, 228, 252,
260262, 270, 272, 273, 400
Inglis, Laura, 62
Kahneman, Daniel, 14, 22, 56, 66, 69, 73,

75, 89, 108, 111, 112, 116, 120126,
131, 133, 135, 284, 298, 324, 349, 350
Kalven, Harry, 17, 18
Katz, Steve, 331
Kennedy, Kevin, 108, 325
Kiser, Randall, 27, 53, 111, 115
Klein, Benjamin, 25, 31
Kleindorfer, Paul R., 72, 309, 315, 369,
372, 373
Klein, Gary, 170, 349, 376
Knetsch, Jack L., 121123
Index
Korobkin, Russell B., 50, 82, 94, 96,

103106, 116, 117, 122124, 130, 132,
336
Kosonen, Mikko, 388
Krehel, Greg, 389, 390
Krieger, Linda, 159, 160
Krieger, Stefan, 146, 147
Kritzer, Herbert M., 75, 80
Kronman, Anthony, 143, 144, 168, 260
Krufka, Marci M., 414, 415
Kunreuther, Howard C., 309, 315, 345, 369,
372, 373
L
Labroo, Aparna, 343
Laibson, David, 135
Langdell, Christopher Columbus, 143, 144
Langevoort, Donald, 160, 165
Law firm assessments, 400, 422
Law firm audits, 283, 284, 400, 422
LAWPRO. See Lawyers Professional
Indemnity Company (LAWPRO)
Law School Admission Test (LSAT), 148
Lawyers Professional Indemnity Company
(LAWPRO), 201
Learning Organization Survey, 419, 423
Lee, Cynthia Ming-Mei, 170
Legal malpractice actions, 2, 203, 204, 236,
238, 239, 243, 249251
Legal malpractice liability, 199249
Legal services industry, 11, 12, 14, 27
Legal specialization, 327
Lehman, D.R., 145, 146
LeHocky, Mark, 316
Lempert, R.O., 145, 146
Lerman, Lisa, 250, 255257, 259, 270
Lerner, Jennifer, 347, 348
Leubsdorf, J., 205
Levmore, Saul, 154
Lewandowsky, Stephan, 128
Lippe, Paul, 164
Liptak, Adam, 155, 162, 166
Litigant-jury agreement, 20
Llewellyn, Karl, 171
Loewenstein, George, 337, 348
Loftus, Elizabeth, 22, 56
Lord, P., 205, 246
441
Loss aversion, 64, 66, 72, 121123, 342

Love, Lela, 11
LSAT. See Law School Admission Test
Luce, Carolyn Buck, 109, 168, 344
Ludeman, Kate, 285, 286
M
MacCrate Report, 147, 158160
MacKillop, Kara, 201, 300
Malhotra, Deepak, 93, 340, 357
Mallen, Ronald, 79, 80, 177, 178, 204
Malpractice liability, 199249, 399, 407,
409
March, James, 109, 124, 326, 327
Martyn, Susan, 262, 400, 412
Math-law divide, 154
McCabe, Kevin, 62
McElhaney, Jim, 170, 171
McShane, Blakeley B., 6, 27, 28, 53, 86,
111, 115
Medical malpractice, 5557, 61, 110, 201,
204, 209, 301, 431, 432
Medina, John, 187
Meehl, Paul, 108, 109, 303, 304
Menand, Louis, 333, 336
Menkel-Meadow, Carrie, 153, 360
Mental discounting, 134, 135
Mental impairment, 182188
Merry, Martin, 387
Methodological reasoning, 143, 145148,
154, 172, 195, 296
Mindfulness, 352, 379, 380
Mnookin, Robert, 173, 174, 358
Model Rules of Professional Conduct, 4,
205, 215, 217, 218, 224, 234, 249, 250,
253, 258, 260, 263266, 268, 269, 271,
274276, 278, 279, 313, 334, 408, 409
Moore, Don, 337
Moral reasoning skills, 145
Morbidity and mortality conferences, 48,
401403, 412
Motive mongering, 93, 316
MRI, 135
Multivariate analysis, 27, 53, 55, 58, 85
Munneke, Gary, 173, 205, 217, 249
Myers, David, 82, 102, 111, 112, 125, 151,
314, 333
442
N
Nalebuff, Barry, 324, 336
Neale, Margaret, 110, 341, 342
Negative transfer, 68, 73
Neisser, Ulric, 100
Nisbett, R.E., 145, 146
Nixon, Peabody, 6, 7
Noonan, John, 151153
Nowak, Martin, 62
O
Obsessive compulsive disorder, 143, 184,
187, 195
Offer/demand quotient, 70
Omission/commission bias, 72, 73
Optimistic overconfidence, 56, 120,
124126, 140, 182, 350
Orr, Dan, 118
Outside view, 350
Overconfidence, 22, 37, 44, 56, 80, 82, 90,
120, 124126, 140, 182, 298, 299,
349350, 375, 378
Overextremity bias, 22, 56
P
Page, Scott, 318, 387
Papadakis, Maxine, 300, 301
Past damages, 6569, 433
Path dependence of beliefs, 352
Pattern matching, 306, 326327
Patton, Bruce, 142
Pearce, Craig, 388
Peer review, 5, 18, 283, 301, 397423
Personal defenses, 283, 284
Peterson, Randall, 392
Pezdek, Kathy, 101
Pfeffer, Jeffrey, 14, 15
Plous, Scott, 83, 95, 98, 99, 116118, 125,
132, 136, 138, 313, 324, 386
Popkin, Samuel, 89
Positive affect, 343
Posner, Richard, 342
Predictive validity, 22, 56
Predictor variables, 5285
Prefrontal cortex, 130, 132, 135, 306,
314, 330
Priest, George, 25, 26, 31, 32, 34, 55, 109
Index
Primacy effects, 119, 311

Probabilistic reasoning, 141, 147, 154, 303,
349
Probability judgments, 13, 14, 124,
154, 364
Problem-solving skills, 5, 7, 143, 146, 150,
159161, 173, 195, 285, 297, 298, 419,
421
Procedural knowledge, 297, 298
Prospect theory, 109, 111, 112, 122, 123
Punitive damages, 19, 52, 6669, 73,
232, 433
R
Rachlinski, Jeffrey, 2527, 34, 49, 50, 61,
70, 75, 76, 98, 102104, 110, 113115,
117, 118, 126, 149, 306, 334
Rader, Randall, 189, 190
RAND, 34
Rand, David, 62
Randomness, 306, 314316
Ratification, 240
Reactive devaluation, 90, 91, 104108,
110, 119
Reason, James, 180, 378
Recalibration, 133, 290, 293, 295,
299, 363
Reference point, 69, 75, 122, 191
Representativeness heuristic, 129, 130, 314
Restatement (Third) of the Law Governing
Lawyers, 254, 258, 259, 408, 409
Reversal rate, 102, 358
Rhode, Deborah, 167, 177, 254, 272,
276278
Risk aversion, 4446, 57, 64, 75, 112115,
174
Risk taking, 26, 27, 33, 4446, 49, 57,
5962, 64, 75, 76, 82, 83, 111, 112,
114, 115, 125, 149, 155, 174, 241, 341,
350, 381
Ritov, Ilana, 72
Robbennolt, Jennifer, 18, 19, 125
Robinson, William, 274
Role-playing, 335, 336
Rosenthal, Douglas, 13, 21, 167, 215,
217, 256
Ross, Lee, 94, 105107, 173
Index
Ross, William, 167

Royer, Isabelle, 136
Russo, J. Edward, 92, 132, 142, 296,
304, 305, 309, 330, 362, 385, 386,
394, 395
S
Safety culture, 378
Saffo, Paul, 332
Sankary, Myer, 362
Sarat, Austin, 93, 142, 173, 175, 176, 180,
194, 291, 310312
Schenider, Stephen, 333
Schneider, Sandra, 80, 226, 299, 343, 388
Schoemaker, Paul, 92, 132, 142, 143, 296,
304, 305, 309, 315, 330, 362, 369, 372,
373, 385, 386, 394, 395
Schultz, Marjorie, 148
Seabury, Seth, 34, 191, 192
Securities fraud class action, 2, 107, 108,
190, 191, 325
Selective memory, 91, 99102, 305
Selective perception, 90, 97102, 108,
139, 182
Self-assessment, 111, 284, 285, 294, 364
Self-awareness, 285
Self-esteem, 75, 90, 91, 95, 286, 363, 373
Self-serving attribution biases, 289
Self-serving biases, 75, 91, 102104, 108,
110, 118, 139, 140, 235, 295, 311, 331,
350, 363
Seligman, Martin, 186, 187
Sells, Benjamin, 169, 172, 184
Settlement counsel, 312, 321322
Settlement counseling, 199248
Seymour, Whitney North, 174
Shanteau, James, 80, 110, 299, 303, 343,
387
Shell, Richard, 345
Shepherd, Jay, 166
Shestowsky, Donna, 192, 202, 361
Simmons, Kevin, 251, 252
Simon, Herbert, 108
Simons, Tony, 392
Simon, William, 175, 259
Slovic, Paul, 108, 111, 125, 284, 298
Sluga, Gena, 217, 218
443
Smith, J., 79, 80, 179, 204

Smith, Vernon, 108
Solving phase, 330337
Sonnenfeld, Jeffrey, 286, 375, 391
Spiegel, Mark, 205, 228, 261, 262
Standard of care, 199, 203, 205, 211, 215,
217, 219, 220, 227, 246, 249, 250, 259,
334, 428
State bar disciplinary actions, 249
State Bar of California, 36, 251, 265,
362, 433
Status quo bias, 90, 120124, 140
Statute of limitations defense, 213
Staw, Barry, 137, 138, 348
Steele, Patricia, 16
Sternlight, Jean R., 125
Stracher, Cameron, 154, 156, 157
Stuckey, Roy, 157, 182, 183
Stupid juror defense, 293, 294
Substance abuse, 143, 184, 187, 195, 251,
264, 301, 411, 412
Sunk cost bias, 74, 90, 120, 136140,
351, 355
Sunk costs, 90, 354355
Sunstein, Cass, 67, 72, 110, 122, 287,
372, 373
Surowiecki, James, 328, 391, 392
Sutcliffe, Kathleen, 313, 325, 336, 339, 352,
365, 378, 380, 381, 420
Sutton, Robert, 14, 318
Sympathetic detachment, 174, 181, 182
Syverud, Kent, 2527, 31, 34, 37, 38, 55, 57,
110, 111, 113, 114, 138, 287
T
Taleb, Nicholas, 306, 314316, 352
Task conflict, 392
Testing phase, 338
Tetlock, Philip, 110, 288291, 293, 304,
334, 336, 351
Thaler, Richard H., 69, 120123, 134,
135
The Restatement (Third) of the Law
Governing Lawyers, 254, 258, 259,
408, 409
Thin-slicing, 89, 110, 305, 306
Thomas, M., 134, 205, 206
444
Trust, 3, 213, 224, 225, 229, 230, 251,

252, 267, 278, 297, 303, 331, 346, 369,
384, 385, 392394, 396, 421, 429, 432
Turow, Scott, 167, 319
Tversky, Amos (Eds.), 66, 69, 73, 75, 89,
108, 109, 111, 112, 116, 121123, 125,
126, 131, 135, 284, 298, 324, 350
U
Ulen, Thomas S., 103105, 110, 116, 130,
132, 336
Ultimatum game, 341
University of Chicago Jury Project, 18
Unsettled area of the law, 228, 242
Ury, William, 142, 338
USS Vincennes, 376, 377
Index
W
Wagenaar, Willem, 22, 56
Ward, Andrew, 286, 287,
375
Watson-Glaser Critical Thinking
Appraisal, 419, 423
Weber, Klaus, 336
Weick, Karl, 80, 97, 313, 325, 326,
339, 352, 354, 364, 365, 378381,
420, 422
Williams, Edward Bennett, 54
Williams, Gerald, 21
Winston & Strawn, 6
Wissler, Roselle, 18, 23, 73, 192
Wistrich, Andrew J., 70, 102104, 117, 118,
126, 306
V
VerdictSearch California, 3335, 39, 40, 49,
51, 65, 432, 433
VerdictSearch New York, 33, 34
Vidmar, Neil, 1720, 23, 154, 201, 300
Viscusi, W. Kip, 19, 67
Z
Zaslow, Jeffrey, 97
Zeisel, Hans, 17
Zhong, Chenbo James, 317, 387
Ziskin, Jay, 298, 304

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Beyond Right and Wrong

Beyond Right and Wrong

ISBN: 978-3-642-03813-6 e-ISBN: 978-3-642-03814-3

Prior Research on Attorney-Litigant Decision Making . . . . . . . . . . . . . . .

A Current Assessment of Attorney-Litigant Decision Making

3.2 New Data . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Psychological Attributes of Decision Errors . . . . . . . . . . . . . . . . . . . . . . . . . . . 89

4.3 Reactions to Threatened Changes in Position and Status . . . . . . . . . .

Institutional Impediments to Effective Legal Decision Making . . . . .

Legal Malpractice Liability For Settlement Counseling

Attorneys Mistakes Prevented Client from

Ethical Implications of Attorney-Client Counseling

7.2 The Duty to Communicate all Material Facts and Events

Obstacles to Becoming an Expert Decision Maker . . . . . . . . . . . . . . . . . . .

Personal Expertise in Legal Decision Making . . . . . . . . . . . . . . . . . . . . . . . .

9.2 Phase Two: Binding . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .

Group Expertise In Legal Decision Making . . . . . . . . . . . . . . . . . . . . . . . . . .

Peer Review, Client Evaluations and Law Firm Audits . . . . . . . . . . . . .

(2007, December 3). The Wall Street Journal, p. A8.

R. Kiser, Beyond Right and Wrong,

An effective decisions capacity to circumvent a financial disaster, in litigation

1.1 Purposes and Premises of this Book

Purposes and Premises of this Book

conduct a devastating cross-examination at trial. Because a settlement is the most

Organization and Philosophy of this Book

1.2 Organization and Philosophy of this Book

pre-trial settlement decisions made by attorneys and clients in California and

practical, good judgment, or simply wisdom. Second, although this book

What Attorneys Think About Other Attorneys

1.3 What Attorneys Think About Other Attorneys Decision-Making Skills

Prior Research on Attorney-Litigant Decision

Nothing is more dangerous to a new truth than an old error.

The Paradox of Copious Lawyers and Scant Data

R. Kiser, Beyond Right and Wrong,

2 Prior Research on Attorney-Litigant Decision Making

2.1 The Paradox of Copious Lawyers and Scant Data

2 Prior Research on Attorney-Litigant Decision Making

firms thoroughbreds. Law firm clients, consequently, have become accustomed to

Empirical Legal Research on Judge, Jury and Attorney

Although many aspects of legal practice remain in a pre-reformation mode their

2 Prior Research on Attorney-Litigant Decision Making

2 Prior Research on Attorney-Litigant Decision Making

Judges Assessments of Juries

2 Prior Research on Attorney-Litigant Decision Making

appropriate standards to the case.34 The curious conclusion is that, although

Attorney-Jury and Attorney-Attorney Agreement

Shifting from the study of judge-jury agreement to attorney-jury and litigant-jury

Attorney-Litigant Negotiation Positions, Assessments

Vidmar and Hans supra note 25 at 151.

In the second experiment, conducted by Douglas Rosenthal, the settlement

Disparities In Same Case Evaluations and Outcomes

Following Hermann and Rosenthals studies in the 1960s, empirical research

2 Prior Research on Attorney-Litigant Decision Making

Comparisons of Predictions and Outcomes

high probabilities).43 When she specifically analyzed the predictions of lawyers

Damages Award Predictions

2 Prior Research on Attorney-Litigant Decision Making

Overview of Judge, Jury and Attorney Decision Making

2.2.10 Attorney-Litigant Decision Making in Actual Cases

negotiations. These studies assess whether, in deciding to try cases instead of

2 Prior Research on Attorney-Litigant Decision Making

Presaging a broader application of behavioral economics theories (discussed in

Gross & Syverud (1991) supra note 50 at 385.

2.3 Chapter Capsule