If there were a blue book value for cases, it is likely that parties could reach a zone of probable agreement in mediations. One of the impediments that can cause impasse in mediation is the very real differences in assessment that parties have made before they arrive. The question really is why do parties misjudge the value of cases — and we know they do. Randall Kiser has undertaken several important studies of lawyer judgment in his books Beyond Right and Wrong (Springer Verlag 2010), and How Leading Lawyers Think (Springer Verlag 2011), and “Let’s Not Make a Deal: An Emprical Study of Decision Making in Unsuccessful Settlement Negotiations” with Martin A. Asher and Blakely McShane 5 Journal of Empirical Studies, Vol.3, 551-591 (2008).
We know that 60 percent of plaintiffs’ counsel and more than 24 percent of defense counsel turn down settlements only to find at trial that settlement was a better deal. On average over a very wide range of cases, plaintiffs received nearly $50,000 less at trial — not accounting for all the costs and fees it took to get there. And, although defendants made settlement errors in fewer cases, the costs were nearly 20 times greater when they did err. Obviously the cost of misjudgment is substantial. Why are these mistakes made. The answer is cognitive bias and in this case, I have coined the phrase “Clientthink.” This is a variant of Irving Janis’ Groupthink, the problem that creates a kind of tunnel vision in which only light can be seen and information that might be readily visible is blocked by positive thinking. This occurs because both lawyer and client start with a very specific perspective and digest incoming information with their blinders on. A mediator can help by providing a way to take a different view, to assess facts differently and to undertake a case premortem that may lead to a more realistic assessment of the value of the case.
For a more detailed discussion, check out publications on this website.