Class Action Countermeasures : Class Action Lawyers & Attorneys : McGuireWoods Law Firm : Complex Litigation, Mass Torts

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A number of legal blogs have already noted a study published last month on attorneys’ ability to predict the outcomes of their cases. Titled “Insight or Wishful: Lawyers’ Ability to Predict Case Outcomes," it found that lawyers systematically overestimate their chances of success in litigation.

The design of the study was elegant. The authors (from Charles Sturt University, University of Gothenburg, John Jay College of Criminal Justice, and the University of California) asked 481 lawyers to predict the success of a matter they were currently working on. (The lawyers gave the matters code names to preserve client confidentiality.) Then, the authors waited. After the matters had been concluded, they went back and asked the lawyers how the cases had gone. Comparing the outcomes to the predictions yielded the result that has prompted all the discussion. In general, the lawyers predicted between 64% and 70% confidence in succeeding at their clients’ goals, but they actually succeeded only about 54% of the time.

This result should not be surprising, even to most attorneys. The profession attracts overconfident personalities. (I don’t know about you, but it seemed at least 75% of my law school class entered expecting to graduate in the top 10%.) Several of the specific findings are particularly interesting. Namely:

• More experienced attorneys are not immune from the effect. In fact, experienced attorneys were as likely to be overconfident as they were to estimate their success correctly.
• Attorneys got overconfident as they got closer to trial. This result makes sense. Leaving aside any investment (financial or emotional) the attorney has made in the case as it progresses, most lawyers refine their case to its most persuasive as they approach trial.  When you're that intent on selling your story, you run the risk of buying into it yourself.
• Looking at reasons why they might not succeed did not affect attorneys' overconfidence. What’s really surprising in this result was that attorneys rarely considered either their client’s culpability or their own comparative abilities as possible reasons they might not succeed.

What does all this have to do with class action strategy? For defendants, it may counsel launching strong challenges against the case earlier rather than later. The logic behind that recommendation: class-action plaintiffs’ lawyers are not immune from these effects. In fact, since they tend to be entrepreneurs who have to sell their partners and clients on a legal theory, they may be even more conditioned to overestimate their chances of success. (Lawyers in the mold of Bill Lerach may be particularly prone to this problem.) As a result, these lawyers are less likely to respond to reasonable settlement offers, or to discovery that reveals flaws in their cases. That means that the feedback they are most likely to respond to will come directly from the court. In other words, strong, early merits challenges are not just a defendant’s best chance to win on the merits, but also to settle on fair terms.