Decision making in mediation is a critical and overlooked skill that needs to be learned and developed.
The fundamental difference between trial and mediation involves the power of decision making. In trial, the ultimate decision is made by the judge and jury. In mediation, the ultimate decision is made by you and your client. This difference, although obvious when stated, has significant importance. If someone else is the decision maker (e.g. a judge or jury), your job is to influence the decision maker to accept your version of the case. If you and your client are the decision makers, you are the ones to be influenced by the other side and by the mediator.
Understanding the principles of decision making in mediation is therefore a useful bit of knowledge. Interestingly, decision making is generally not taught in law school (Exception: I teach Decision Making at Pepperdine Law). Therefore, most lawyers have not been exposed to formal education in the theory and practice of decision making and problem solving.
There are essentially two approaches to problem solving and decision making. The first approach relies on analysis and deliberation, the second on intuition. Intuitive decision making is pervasive, while deliberative decision making is rare, even for lawyers. Deliberative decision making requires considerable cognitive energy and is actually physically uncomfortable. Thus, we rely on intuitive decision making most of the time.
Deliberative decision making can be informed by intuition, as it corrects for the limitations and inherent biases of pure intuition. Intuition can also be informed by deliberative decision making, as is the case in expertise. Most lawyers in mediation rely on intuition informed by some level of deliberation. Experience in mediation has taught them patterns of settlement that they rely on in deciding how to conduct future negotiations.
Lawyers in mediation are not, as a group, very good decision makers. Randy Kiser’s groundbreaking study of over 15,000 New York and California cases demonstrated the problem. Kiser found that plaintiffs’ lawyers were wrong about 50% of the time when they rejected the last settlement offer and went to trial. On average, the decisional error was -$75,000. This was the average difference between the trial result and the last defense offer. The defense side generally made better decisions, being wrong about 30% of the time. However, the decisional error averaged a whopping -$1.2 million. Whether it’s the carrier or counsel making the call, there is clearly room for value-added decision making in the defense room.
The three most difficult barriers to good decision making in mediation involve uncertainty, ambiguity, and risk. Human brains just don’t deal with these information states very well.
Uncertainty requires us to predict alternative future outcomes. Ambiguity requires us to select from competing interpretations of the case. Risk requires us to choose between alternatives to avoid loss.
Good mediators have learned about decision making theory and practice, uncertainty, ambiguity, and risk. I often call my work as a mediator as that of a decision architect. In other words, I help people make good decisions and avoid bad decisions as much as I can. When you are considering a mediator, you may want to know how well-schooled the mediator is in decision theory and how he or she goes about problem-solving.
In Part II of this series of blogs, I will take up the mechanisms of human decision making in our brains. Stay tuned.