How Likely Am I to Win? Risk, Uncertainty & the Turkey Illusion

Richard Birke

Richard Birke

By Rich Birke

When parties are faced with an attractive settlement offer, they frequently wish to compare the offer to what they might get at trial, which is the product of the odds of winning times the value of the verdict or award.   Naturally, they ask their lawyer “how likely am I to win?”

What kind of answer is called for? Answers to questions like this come in two flavors.  Flavor one – you know the odds – is called decision-making under conditions of RISK.  Flavor two – you don’t know the odds – is called decision-making under conditions of UNCERTAINTY.  The two aren’t at all alike!  The first is more like a slot machine or a lottery.  The second is more like picking stocks, predicting earthquakes and making most business decisions.  Confusing the one for the other can be a disaster.

In his brilliant book Risk Savvy, How to Make Good Decisions, prolific author and scientist Gerd Gigerenzer describes the dangers of confusing one kind of decision with the other.  He says risks can be calculated when there is (1) low uncertainty – a predictable and stable situation (2) few alternatives – not too many factors to estimate (3) a high amount of data available to make these estimations.

However, since at least the 1700s, we’ve known that people prefer risky decisions to uncertain decisions – so much so that they will turn uncertain decisions into risky decisions in their minds, even when reality is different.  An example of this is the “turkey illusion.”

If you want to figure out what is likely to happen tomorrow, you can look at what’s happened in prior days.  If you are in the Gobi Desert and you want to know whether it will rain tomorrow, you can look at the prior day and the day before that, and that data will help you determine tomorrow’s weather.  This “rule of succession” means the past is predictive of the present.

But not for a turkey.  If every day the farmer feeds and pets the turkey, the turkey could calculate the odds starting with the fourth Friday in November and conclude “I’ve been fed and petted 159 days in a row – the odds of being fed and petted on the 160th day are 160/161 or 99+%.”  And that logic will hold true all the way to 364/365…and then Thanksgiving will come and the poor turkey will have logically concluded that morning that it has nothing to fear – because a savvy risk-taker would deem the odds of death as vanishingly small.

Gigerenzer attacks this topic from many vantage points. He analyzes leadership decisions and the work of CEOs (ch. 6), medical decisions and the ploys used by and on doctors (ch. 9), consumer decision-making and the effects of misleading ads (ch. 5) and more.  Each time, there are simple tips and rules of thumb to help navigate through these sometimes murky waters.

Can a lawyer predict with accuracy the outcome of a potential case? Let’s analyze that question further, together, in the days to come.  For now, I strongly recommend you go out, buy and read Risk Savvy.  It might just save your neck come Thanksgiving.

Risk Savvy: How to Make Good Decisions is available from Viking Press and was published in hardback in 2014.

Understanding the benefits of a private judge in California

Hon. Patrick J. Mahoney (Ret.)

Hon. Patrick J. Mahoney (Ret.)

Civil litigants, how would you like to have a process that allows the parties to determine the decision-maker, preserves all civil remedies and appellate rights and ensures effective case management and hearing and trial dates that proceed as scheduled? This process has all of the perceived benefits of arbitration while ensuring the result is subject to appellate review.

California has just such a procedure. The California Constitution, Article VI and the Code of Civil Procedure section 638(a) authorize the parties to stipulate to a private judge and to fashion the authority granted to the person selected. Stipulations vary in scope from a narrow discovery issue to all aspects of civil litigation including the right to act as the settlement judge as well as the trial judge. This affords the parties the opportunity to control the litigation process that does not exist in the court system, and ensures that the decision-maker has the time to consider the issues and to provide the parties with hearing and trial dates that proceed as scheduled.

Given these benefits, it is surprising that this process is neither widely known nor utilized except in family law cases involving substantial wealth. One reason is the right in most civil cases to have the case decided by a jury. Neither the California Constitution nor the Code of Civil Procedure address the jury trial right, and it is unlikely that the state courts are prepared to use their strapped resources to summon jurors for parties’ utilizing private judges.

Recently at JAMS, this issue was addressed by the parties stipulating to the use of jurors located by a jury consultant firm. The lawyers conducted voir dire and the jurors were paid for their services. The parties used the jurors to decide test cases to provide markers for settlement of a large class of cases. In the recent ABA Litigation magazine (Volume 41, No. 4, Summer 2015), there is a description of a private trial of a business case using jurors where the lawyers agreed that the verdict would be treated as an arbitration award.

Both of these approaches involved giving up substantive appellate rights. A viable alternative is for the parties to give up appellate rights only related to jury selection, while preserving all other substantive and procedural grounds for appeal. In reality, little is given up by waiving this right for it is extremely rare for a civil case to be reversed based on jury selection. As a consequence, in a case that warrants use of a private judge, the obvious benefits of a private judge trial out-weigh the right to challenge jury selection.

If you believe your case would benefit by using a private judge to manage and decide the case, do not be put off by your opponent’s insistence on a jury trial. There is more than one way to secure the benefits of a private judge and the insight provided by a jury verdict.

There’s Always Time for a Second Opinion

The litigation process is full of variables and, no matter how strong a party’s case might be, going to trial is rarely a sure thing. There is also a tendency for counsel and clients to be overconfident in their assessments of their position. Thanks to the evolution of ADR, however, parties have many options available to them to secure an unbiased, neutral evaluation or second opinion about the strengths and weaknesses of a particular case and trial strategy.

There are a full range of circumstances in which a second opinion from an experienced lawyer or former judge might be useful:

Pre-filing assessment: Deciding whether or not to file a case, and what claims to make, is a difficult decision. Input from a veteran law and motion judge, who has likely seen thousands of motions to dismiss, could effectively eliminate the risk of wasting time and money on unproductive pleading wars. An experienced neutral can also provide valuable information for a cost-benefit analyses of going to trial.

Case valuation in advance of settlement discussions or mediation: Second opinions from an experienced neutral about how to value a case for settlement purposes could be especially important for clients and counsel. Sometimes clients and lawyers need a second opinion to feel the confidence necessary to make difficult decisions and an objective assessment of the whole situation can be particularly valuable.

Mock hearings: Lawyers generally reserve mock trials for big cases that will be presented to a jury. However, it can be very valuable to secure a neutral evaluation of any aspect of a case to be presented to a judge or during administrative hearings. A second opinion based on a mock proceeding, for example, could be very useful in advance of a motion to dismiss, for summary judgment, class certification or even on especially significant motions in limine. On a more recently developing front, IP lawyers might find neutral second opinions especially useful when preparing to appear before a panel of administrative law judges in an inter-parties dispute in a Patent Trial and Appeal Board proceeding.

Preparing for an appellate briefing: Lawyers grappling with challenging appeals also can benefit substantially from second opinions about the content and style of their briefs, the manner in which they make oral arguments, and, most significantly, the strengths and weaknesses of their substantive positions. Retired appellate judges can alert counsel to key issues and vulnerabilities and can give lawyers opportunities to practice fielding difficult questions or dealing with difficult judicial personalities – thus both improving their performance and reducing the anxiety they experience when the real show begins.

As ADR becomes a more prominent feature of our legal system, it is important that counsel and clients understand the full range of options available to them. This is particularly true for neutral evaluation or second opinions, which provide valuable insights into the strengths and weaknesses of a case, helping to mitigate uncertainty while saving time and money.

Why are Attorneys Afraid of Conflict in Mediation?

Jeffrey Grubman, Esq.

Jeffrey Grubman, Esq.

By Jeffrey Grubman, Esq.

The mediation process has evolved significantly over the past few decades.  Mediation was initially viewed skeptically by trial attorneys who viewed themselves as warriors who preferred to try cases rather than settle them.  Those same trial lawyers believed that if settlement was appropriate, they certainly did not require the assistance of a third party to effect the settlement.  They would pick up the phone and call their opposing counsel and either work things out on their own or try the case.

As courts around the country become overburdened, mediation became a popular forum to resolve disputes.  Many courts throughout the country require cases to be mediated before the case can go to trial.  Consequently, attorneys have been forced to participate in mediation.  Because trial attorneys were not accustomed to the mediation process, the process initially looked somewhat like a court hearing or a trial.  For example, in the early days of mediation, opening statements in mediation looked and sounded very much like an opening statement at trial.  Trial lawyers in the early days of mediation, and some trial lawyers still today, had a difficult time finding the balance between advocating their client’s position while proceeding in a conciliatory manner with settlement being the goal of the mediation.

Largely due to attorneys’ discomfort with finding that balance, it became commonplace in many parts of the country for attorneys not to make opening statements in mediation. A well prepared and delivered opening statement goes a long way towards achieving a favorable settlement for one’s client.

The custom of not make opening statements in certain parts of the country and in certain substantive case types has now led to not even having a joint session during some mediations.  Except in the rare situation where there is the potential for violence, this is a mistake.  The parties and their counsel should at least be willing to sit in the same room with one another for some period of time while the mediator explains the process and lays the groundwork for a productive day.

When there is a joint session, many attorneys instruct their clients not to say anything during that session.  These attorneys apparently believe either that their clients will say things that could hurt the client’s case or the client or the adversary will say things that could upset the other person and thereby make it harder to settle the case.  The confidentiality that blankets the entire mediation process should ameliorate an attorney’s concern about his or her client saying something that court hurt the case.  The fact that a litigant may say something that will upset the other party is not enough of a reason not to allow parties to speak.  First, the fact that the parties are engaged in litigation is evidence enough that the parties are not happy with one another.  Nobody should be surprised or devastated when one of the parties says something the other party does not like.

For more on Mr. Grubman’s discussion on being afraid of conflict in Mediation, please read the full article from by clicking here.