Articles Posted in Thinking

As speakers at conferences, commentators quoted in articles, and respondents to surveys, law department lawyers convey their preferences. Those expressed preferences, however, may not translate into practice. Hypocrisy is too strong a term, but often there is a failure to walk the talk, a gap between espoused values and acted values.

Economists favor the term “revealed preference” (that is, preference revealed by behavior) as a more reliable expression of a belief (See my post of Feb. 7, 2006 on perceived behavior.) than expressed preferences, and they look for ways to spot what people actually do, as compared to what they say they do. For example, surveys would have us believe that in-house dissatisfaction with law firms is rampant. Revealed preferences, however, exist, such as data on consistent use over time of the same primary law firms, and belie those survey responses.

An excellent article, Dan P. Lovallo and Olivier Sibony, ‘”Distortions and deceptions in strategic decisions,” McKinsey Quarterly, 2006, No. 1 at 21, presents among its many ideas three that I want to mark (See my post of Jan. 17, 2006 for other points from this article.).

A general counsel might insist that all recommendations made by the department’s administrator or senior lawyers include alternatives, “next-best” ideas. As the authors write, “this approach is useful not only to calibrate the level of the manager’s risk aversion but also to spot opportunities that a manager might otherwise consider insufficiently safe to present to senior management.” Push supporters of an idea to challenge their own proposals, to act like their own Devil’s Advocate (See my post of Jan. 10, 2006 on this and other methods to stir up creativity.).

The authors also recommend that instead of having each lawyer present a favored option, the general counsel might ask each lawyer to advocate another’s favorite. If you have to explain your position to someone who will be your spokesperson, you organize your thoughts and hear your own arguments. Surrogate presenters help foster rational debate instead of a battle of egos; they help people be more objective about someone else’s idea.

The long and unusual site on leadership decision making, hosted by Prof. Hossein Arsham describes a tool to help make decisions: grid analysis. According to Arsham, it is most effective where you have a number of good alternatives and many factors to take into account when you evaluate those alternatives. I have used this technique to rank law firms who have responded to a competitive bid RFP.

First list your options and then the factors that are important for making the decision. Lay these out in a table, with options as row labels and factors as the column headings.

Next, rate the relative importance of the factors in your decision by assigning each a number. You use these numbers to weight your preferences by the importance of the factor. These values may be obvious – if they are not, use a technique such as Paired Comparison Analysis to estimate them (See my post of Aug. 28, 2006.).

An idiosyncratic site on leadership decision making, hosted by Prof. Hossein Arsham, explains how paired comparison analysis can help a law department manager work out the importance of a number of options relative to each other. It is particularly useful where you do not have objective data to base the comparison on. This analytic tool makes it easier to choose the most important problem to solve, or select the solution that will give you the greatest advantage. It helps you set priorities where there are conflicting demands on your resources.

First list your options. Then prepare a grid (a table) with each option as both a row and a column header. Use this grid to compare each option with each other option, one-by-one. For each comparison, decide which of the two options is most important, and then assign a score to show how much more important it is. Consolidate these comparisons so that each option is given a percentage importance.

Prof. Hossein Arsham’s website gives a useful summary of the oft-cited chapeaux, from De Bono Edward, Six Thinking Hats: An Essential Approach to Business Management, Little Brown & Co, 1985. The hats are a useful metaphor to push us to weight decisions from various perspectives. The conceit also helps unravel the confrontations that happen when people with different thinking styles discuss the same problem.

With minor edits by me, Arsham explains the hats as follows:

1. White Hat: Focus on the data available and learn from it. Look for gaps in your knowledge, and try to fill them or take account of them.

William Bertrand, the general counsel of MedImmune, recalled a comment: “Out of the 100 decisions you make each week, maybe 20 are important. The other 80 need to be made,” in GC Mid-Atlantic, May 2006 at 6. The remark set me thinking, in part because the highest compliment is that an in-house lawyer makes good decisions. Even so, decisions in law departments turn out to be a complicated topic that raises more questions than answers (See my post of April 17, 2006 about decision tools.).

What is a decision? Every cognitive act is a decision. Which task to start with on the to-do list; whether to answer the call or let it go to voice mail; what word to write – all are lawyers’ decisions.

How many decisions does each lawyer in a department make in a day? The tally must be in the thousands, but the number depends on how finely you define “decision.”

Observations. This blog has hundreds of observations – “This law department does or did something.” The department observed could be one-of-a-kind, or it could be among the lemmings.

Trends. Multiple observations of a similar activity leads to talk of a trend. The word trend leaves the impression of a prediction: more and more law departments track time, so the incidence of adoption will climb in the future. Just because some activity “is growing in frequency” is, strictly speaking, merely to note what has been happening; but if noting that increase implies that the activity will continue, then the observer has concluded that there is a trend.

A trend-based prediction drops us immediately into the fallacy of induction, which is the tendency to generalize from past to future without an adequate theoretical basis. What we especially need to avoid are naïve extrapolations from existing trends. Most people overlook that a bad trend often contains within itself the seeds of reversal. For example, more law departments may have experimented with cubicles for lawyers (aha, a trend!) but the consequences to morale and productivity may halt the spread of that practice.

The emerging field of neuro-economics, not more than ten years old, studies the activity of neurons in the brain, polygraph-like sensors, and eye movements to understand better how humans think. For example, according to the NY Times, April 20, 2006 at C3 researchers have determined that “when people think about costs, they use different brain modules [than when they are in a “positive arousal state”] and become more anxious.” They become cautious, and become “especially afraid of ambiguous risks with unknown odds.” Other researchers have found that our brains assess risk and return separately, rather than making a single calculation of what economists call expected utility.

Far down the road, neuro-economics research will help lawyers fathom better how they exercise judgment and what context does to their powers of objectivity and calculation. Some lawyers will be neurologically more adept at making some kinds of decisions. Training will be more specific as it will be able to target more precisely areas of cognitive strength or weakness in lawyers.

Isaiah Berlin, historian of ideas, distinguished hedgehogs – people who know one big thing – from foxes – who know many little things. Hedgehogs fit what they learn into a world view. Foxes improvise explanations case by case. A column by John Kay, in the Fin. Times, June 20, 2006 at 15 describes research by the American psychologist Philip Tetlock, who uses this metaphor from the animal world, into how well people reason (See my post of Nov.28, 2005 on Benjamin Bloom’s taxonomy of cognition.).

General counsel and other senior lawyers in law departments should ponder the differences. “Foxes are better at prediction than hedgehogs because they derive information from many sources, adjust their views in line with events and see a range of perspectives on each situation. Hedgehogs have one clear view, seek evidence that confirms that view and have ready explanations for apparent failures of foresight” (See my post of April 17, 2006 on our tendency to seek confirming evidence.).

To push a vision is to be a hedgehog; to have flexible analytic skills needed for good legal judgment is to be a fox. An effective law department needs a management team that brings together both animals.

Studies have shown that most people would flip a switch to divert a train if that would kill one person but save five; yet, those same people, if they had to physically push one person off a bridge to save five people, refuse. According to the Wilson Quarterly, Spring 2006 at 90, to consider whether to kill someone with your own hands triggers neural activity in the emotion-processing regions of the brain, such as the medial prefrontal cortex, the striatum, and the amygdala (See my post of Feb. 12, 2006 on the amygdala’s powers.).

The decision to kill someone remotely, with the flip of a switch, excites activity elsewhere in the brain, “in the anterior and dorsolateral areas of the prefrontal cortex, home of more-rational thought processes.” The theory proposes that different parts of the brain serve different functions and evolved at different times in the history of humans. Each function had survival value under different circumstances.

If this understanding of the brain is correct, it explains why the decision to fire an employee that you know, or to cease using a trusted partner at a firm tears us up far more than the impersonal decision to close a remote office full of anonymous staff or to converge away a firm that you know only as a name.