Intuition in Mediation and Settlement Decision Making

intuition in mediation and settlement decision makingUnderstanding the role of intuition in mediation and settlement decision making is important if you want to maximize settlement outcomes for your client. If you use your intuition correctly, you can gain a competitive advantage in the negotiation. If you misuse your intuition, you are likely to make costly decisional errors.

Consider this story:

A young partner and a senior associate have been tasked by a senior partner with working up a case for mediation. They have carefully followed my ten steps model for preparing for the negotiation. They have even developed decision trees and concession plans. Using their intuition and knowledge of the opposing counsel, they have modeled out the most likely negotiating scenarios.  They have tested their intuition with this modeling and feel confident the case will settle in a range acceptable to the client. The senior partner shows up with them at the mediation. Instead of following their plan, the senior partner shoots from the hip. Wanting to be seen as a tough lawyer, he obstinately holds at a multi-million dollar position. He refuses to make a lower offer unless the other side makes what would be a ridiculous move. He confidently tells his colleagues not to worry, he has been doing this for 40 years. His gut tells him to hang tight until the other side caves in. Not surprisingly, the mediation reaches impasse quickly. The opportunity for settlement passes and hundreds of thousands of dollars are wasted until the next opportunity. The case settles 16 months later at exactly where the younger lawyers predicted it would land.

Intuition was invaluable in the preparation process; it was destructive in the negotiation. What happened?

First, we need a good definition of intuition. I would define intuition as “knowing without knowing that you know.” Intuitive thinking is part of our System 1 processing. It is a fast, automatic, and pre-conscious. Intuition arises from encapsulated knowledge, associative memories, and a fast and autonomous chaining or linking of cognitive schemas. Encapsulated knowledge is knowledge that we have gained from experience that requires no reflection to draw upon. Encapsulated knowledge can be expert knowledge. Encapsulated knowledge is retrievable when some environmental cue triggers an association. You quickly and unconsciously perceive a pattern you have seen before.

When you are in mediation and experience the thought, “Oh, I’ve seen this before,” you are experiencing a cascade of associative memories and pattern recognition triggered by a counter-offer. Knowledge and memory are coupled with cognitive schemas. A schema is a frame of reference we have developed for dealing with repetitive and common environmental cues. Over a lifetime, we accumulate tens of thousands of schemas, all of which are triggered and run without our conscious involvement.

Intuition, as a System 1 process, is tied to emotions. We have aphorisms to describe our “intuitive feelings visit your url.” “This doesn’t feel right.” I have a gut feeling.” “My gut tells me…” and so forth are expressions of intuitive and emotional responses to something in the environment. This skill has obvious advantages in warning us of potential danger. We can also have positive intuitive emotions, which might be expressed as “I’m feeling lucky,” or “I have a good feeling about this.”

We cannot control intuition and we cannot really mold it. It is not algorithmic thinking or reflective thinking, which are the hallmarks of System 2 processing. However, intuition can point us to solutions solvable with System 2.

Here are some simple rules to follow to improve your use of intuition:

  1. Use intuition to gain insights and ideas, then test the results against reality.
  2. Never make an important decision based on intuition alone. The higher stakes of the decision, the less intuition should be in play.
  3. Beware of substituting intuition for critical thinking. Because intuition is fast and effortless, we are tempted to replace hard thinking with what feels right. Most of the time, mental laziness leads to big mistakes.
  4. Do not rely on intuitive expertise. I don’t care how many times I have flown my airplane; I still rely on a linear checklist for conducting each phase of flight. Decision errors occur most frequently when we try to shoot from the hip in decision making. We are especially prone to these errors when we believe we are subject matter experts. The research shows that an expert opinion without critical thinking to support it is no better than an uninformed lay opinion.
  5. Be sufficiently humble and self-aware to recognize that your inherent cognitive biases will likely distort your decision making if you rely on intuition without reasoned thinking.
  6. Beware of guesstimating at probabilities, especially around the likelihood of success at trial. Intuition is not a replacement for analytical forecasting and a decision tree analysis of trial outcomes.
  7. Prepare, prepare, prepare. The more prepared you are at mediation, the less likely you will be tempted to use intuition as a substitute for critical thinking..

Intuition is a powerful part of our decision making systems when its limits are respected. Use intuition correctly and expect consistently better outcomes in your settlement negotiations.