I finally got round to reading this report from John Maule on the Legal Services Board research pages. It sells itself a little short with the title: Helping Legal Services Consumers Make Better Decisions: Methods to Identify and Respond to Legal Problems, because it also looks at professional decision making and strategic decision making. There’s an interesting section on what might make law firms bad at strategic and management decision making. In sum, it’s a review of behavioural economic and decision-making literature that Prof Maule sees as relevant to legal services. A rather challenging brief, but very well done to my eyes: there’s lots of interest in the report. It brings together in one place a lot of (perhaps) increasingly familiar behavioural economics stuff, and starts the job of thinking about the implications of (for example) prospect theory in the context of legal services delivery, marketing and management. It’s a great resource for anyone interested in the area, and got me thinking about the implications.
As one example, how do and should lawyers define and manage the expectations of their clients? And how should they manage settlement decisions? The behavioural economics literature suggests that clients (indeed lawyers too) may be heavily influenced by frames, heuristics, biases and the like which will nudge (pardon the knowing pun) clients in a particular direction which may, or may not, be in their interests or in accordance with their ‘real’ preferences.
Sophisticated practitioners may already be thinking about how they deliver their advice or set up their systems to manage settlement (to give on more unpleasant example, the recent scandal about banks using fake letterheads to ratchet up pressure to settle debts is, in one sense, a little behavioural experiment playing on emotional resonance and other saliences). I had a very strong sense, when I did research on costs several years ago, that clients understood and lawyers described settlements in subtle but importantly different ways depending on the type of costs agreement they had. Some of these differences looked engineered, perhaps unconsciously, by the lawyers. Whether they were doing this conscious of the behavioural levers they were pulling or not, I do not know.
The behavioural understandings can add an extra complication to the idea of informed consent: if a case is presented as correcting a loss, or securing a gain is likely – under the theories outlined in the report – to lead to clients having quite different risk appetite. What kind of risk appetite should lawyers be engendering in lay clients? There is not an obvious answer. Lawyers who are able to match their strategies to outcomes and measure the impact of different approaches may be able to answer the question, but I suspect they are rare beasts.