This article follows one published here recently ("Mediate To Overcome Cognitive Biases," Law Tribune, March 25, 2013) drawing on the insights of psychologist Daniel Kahneman from his seminal work, Thinking, Fast and Slow. I described cognitive barriers identified by Kahneman that distort decision-making in conflict situations, adversely affecting both an attorney’s and a client’s judgments in litigating and resolving disputes. In his book, Kahneman summarizes his four decades of research in behavioral psychology, demonstrating how we our processes of cognition can lead to mistakes in reasoning.

Kahneman’s research complements another branch of behavioral psychology about predictions and forecasting. As with cognitive biases, the application to legal disputes of the findings of research on the accuracy of predictions can inform approaches to conflict resolution.

This research, being conducted at the University of Pennsylvania and the University of California-Berkeley, among other places, shows that reputed "experts" or "pundits" whose predictions and forecasts form the basis of policy and strategic decisions are, quite simply, wrong about as often as they are right. There is no material statistical support for the accuracy of expert forecasts. The following quote from a terrific article by Dan Gardner and Philip Tetlock, entitled "Overcoming Our Aversion To Acknowledging Our Ignorance," gives a trenchant summary: "Despite massive amounts of money, effort, and ingenuity, our ability to predict human affairs is impressive only in its mediocrity. With metronomic regularity, what is expected does not come to pass, while what isn’t, does."

This article, summarizing 20 years of research, is well worth the time to read in full. It includes a great story about at World War II statistician (and future Nobel laureate) who discovered and reported that the weather forecasts being used by the Army were useless. He was told: "The Commanding General is well aware that the forecasts are no good. However, he needs them for planning purposes." We probably all know "generals" like that—not ourselves, of course.

Despite being found wearing no clothes, the experts who are the subject of the forecasting research continue to make predictions and forecasts, without improving their track record. In their defense, they essentially have no choice, because admitting to the inescapable unreliability of their forecasts jeopardizes their very livelihood.

For lawyers, whose livelihoods depend on successful representation of clients, evaluative predictions can still predominate in settlement negotiations. Very much like the "experts," lawyers also keep placing too much reliance on predictions.

Fortunately, attorneys and their clients need not remain stuck in that mode. Recognizing our biases and the limits of our predictive abilities, which I encourage all parties to do in mediations, can bring about significant improvements for client representation and satisfaction.

The answer lies in an enduring concept, known to any student of negotiation, that relates back to Roger Fisher’s and Bill Ury’s groundbreaking book, Getting to Yes. That is, center settlement negotiations on identifiable interests rather than predictive evaluations of positions. While relative strength of legal arguments carry weight in valuation and settlement negotiations, lawyers and clients rarely can reach agreement, or are willing to concede, how their legal positions will play out in litigation.

Working with interests, on the other hand, concentrates the parties on what they know and what they need, not on what might happen, and avoids both the inability to come to terms on rigid legal positions and demonstrably unreliable predictions. Returning to the research of Gardner and Tetlock, the participants in a negotiation need not be concerned with the problem that "what is expected does not come to pass, while what isn’t, does." They work with ideas and opportunities for resolution within their certain knowledge and over which they have control.

Interests are those elements of value that a party identifies as his/her needs in resolving the dispute—what is really important and what matters most. The goal of the negotiation is to reach an outcome that most closely matches those needs.

Interests are particularly important, and more readily identified, when the negotiation is about something other than or in addition to money. In those cases, the parties can make trades by providing value to the other side, while receiving equal, or even greater, value in return.

What about negotiations in which only money—reaching a mutually agreeable number—is the object? Don’t those kinds of negotiations have to rely on weighing positions and predictions? Yes, to a greater extent, but by no means entirely. The interests related to a plaintiff accepting certain number, or by a defendant paying a certain amount, can take the place of, or at least overlay, their positions. The identification and incorporation of those collateral interests into a mediation often provides a bridge over the monetary gap that would otherwise defeat the settlement.

Reliance on interests also markedly improves the likelihood that parties to a dispute will find a way to work through a difficult impasse that so often arises in negotiations. And this is when the mediator, who keeps the attention on interests, can be so instrumental to a successful resolution. Impasse on evaluation of the legal merits or prediction of the outcome can cause parties to dig in all the more to protect those positions. Instead, exploring the full range of options and opportunity to satisfy interests when negotiations are at risk of breaking down is a key element of a well-conducted mediation.

Consider the substantial advances that can be made in dispute resolution processes if we acknowledge and integrate the research of Kahneman, Gardner, Tetlock on cognition and behavior. We can move away from over-reliance on prediction and evaluation, because we know that these all too rarely provide a useful guide for what will actually happen if a case proceeds to adjudication. We maintain the focus on what the disputants need from the resolution, and the mediation more fully accounts for those needs in overcoming any impasse.

Clients ultimately will be better served if their counsel spend at least as much time and energy figuring out how to satisfy the interests of the other side, and invoking those to bargain for the interests of their own. Leave reinforcing the client’s claim or defense more for trial, where a judge or jury will provide the only obtainable certainty—of course subject to the renewed cycle of unknowns on appeal.

As I advocated in applying Kahneman’s work to mediation, this is a reason for opting for a process with a neutral who is adept at keeping the parties working on interests and who will continue to remind them, in what can be a highly charged environment, of the potential mistakes being made, and opportunities missed, by sticking to claims of superior legal positions. From my experience, attorneys accustomed to an evaluative mediation process can begin a mediation with some uneasiness about this approach, which is understandable for those steeped in the evaluative mode. But, more often than not, they recognize the opportunities as the mediation proceeds, particularly when negotiations get tough and we can talk more fully in terms of what solution best serves the interests of all, as opposed to who has to give in and by how much. Interests, not fickle evaluative predictions, can carry the day.•