By Dr. Ken Broda Bahm:
If we don’t normally think of “happiness” when we think of mediation, it may be because a good settlement is generally not something that makes all the parties happy. Instead, it is more often something that makes the parties equally unhappy. At the same time the notion of happiness, or at least relative satisfaction, has an important role to play in determining when cases settle. In the previous three posts in this series, I’ve written about the psychological obstacles to settlement, the dangers of brinksmanship, and the role that mediators can play. For this final post, I want to end on a positive note by looking at a few of the ways happiness can impact the process.
Settlement is above all a negotiation. But apart from the grim calculation of economic value at the end of a legal dispute, there are also the less tangible measures of satisfaction: Do the parties feel validated, respected, and vindicated? Are they happy? The term itself may seem a little fluffy, I admit. But proving that there is nothing that determined academics can’t turn into a discipline, the study of happiness — the field known as “hedonics” — is receiving increasing attention. And it is a field that is worth thinking about for litigators who focus on ending their cases well, most often in the form of a mediated solution that the parties can live with. This post takes a look at some of the research on happiness that bears most heavily on civil settlement, pairing that with ideas on some ways litigators can increase their clients’ satisfaction with the result.
Calculation of happiness, of course, is an individual act that comes from knowing your client and their concerns. At the same time, there are some psychological forces involved that shouldn’t be lost in a focus on economic valuation alone. I recommend three considerations for thinking about happiness and your case settlement.
1. Consider the Possibility that Litigation is a “Focusing Illusion”
Lets start with a quick look at the way we think about happiness itself. Our satisfaction, of course, can be experienced in the present, remembered in the past, or forecast in the future. As you might expect, we aren’t quite zen, and our experience in the moment doesn’t drive us as much as our recollections about the past or, particularly for decision making, our forecasts for the future. One breakthrough article (Schkade & Kahneman, 1998) in the field of hedonics asked the question, “Does living in California make people happy?” The answer is, “not nearly as much as we might think it does.” When people consider the impact of one factor on their overall happiness, they are prone to greatly exaggerate the influence of that factor, and overlook many other factors that might play a greater role. Professor Daniel Kahneman calls this a “focusing illusion,” and it might inform the calculations that parties make in the long walk up to civil trial. As they think about the effect that a verdict, for good or for ill, might have on their happiness, they are apt to exaggerate. As the authors note, “Nothing in life is quite as important as you think it is while you are thinking about it.” And if thoughts of litigation outcomes function as focusing illusions, then maybe that explains why the parties come to have such different views on the importance and value of their claims, views that diverge over time instead of coming closer together. In short, psychology is pushing the parties toward different and potentially irreconcilable views of the case.
So one obvious recommendation that I’ve made before is this: Provide clients with a reality check. Instead of leaving the parties, and counsel as well, with their own estimations of case merit, value, and probability, get past the illusions by providing one or more early sounding boards in the form of focus groups and mock trials.
2. Consider An Apology to Promote Settlement
We’ve written previously that apologies can help cases to settle. Supplementing the increasing experience of defendants in settings like medical malpractice, experimental research confirms that apologies increase the acceptability of settlement offers by improving the credibility and the favorability of the party making the offer (Robbenolt, 2003). The finding is that complete apologies – those that convey remorse, responsibility, repair and reform – (Boully, 2007), tend to work while partial apologies – e.g., “I’m sorry you feel that way…” – will fail or even make things worse. This suggests that the reason that an apology works is that it brings greater satisfaction. Because it contains an acknowledgement of wrongdoing, it validates the harmed party’s perceptions. Because it communicates a commitment to fix the problem and prevent it in the future, and provides a sense of vindication, it adds to the level of happiness that would have been provided by a monetary settlement alone.
3. Consider the Effect of Time
Time is usually blamed for adding to the misery of litigation. As the wait for justice moves from months to years, the delay has a cost that is financial as well as psychological. For both sides, it can also raise the stakes in a way that makes settlement less likely since the parties are now looking for a result that makes it all worth it. There may, however, be a silver lining to delay in some cases. Research looking at the role of happiness in a litigation settlement context points in what might be an unexpected direction. Bronsteen, Buccafusco & Masur (2008) apply the research on “hedonic adaptation,” or loosely translated as our ability to “get over it” over time. Injured parties, they argue, will initially predict greatly diminished happiness as a result of the injury, but over time they will adapt to the change and their overall happiness comes back into balance. That finding may seem counterintuitive, but the article cites research showing that even fairly extreme events that are positive (winning the lottery) or negative (becoming disabled) have little long-term effect on our subjective happiness, due to our ability to adapt. That means that a plaintiff is likely to set the bar very high initially for what would make them whole, and then gradually lower that bar as it becomes clear that that the loss is not as grave as they once forecast it to be. “Adaptation will drive down the settlement prices for many personal injury plaintiffs,” the authors argue, “enlarging the available window for negotiation between plaintiffs and defendants and increasing the rate of settlement.” Before defendants embrace delay as a strategy – any more than they already have – there are other views (e.g., Huang, 2008) suggesting that it is not as simple as delay equaling a lower settlement. In many cases, adaptation is slow or incomplete, and we might expect that a continuing battle in the litigation arena might nurture or enhance the perceived wrongs.
Ultimately, the message from the apology research and the adaptation research is that both timing and tone should be taken into account in resolving legal disputes. Instead of seeing settlement as just a business negotiation designed to maximize value, it helps to also see it as a “speech act” in its own right, or as a message that carries a separate meaning independent of the money being offered or accepted. Instead of seeing settlement as just a question of when the other side will come to the table, it is also a question of when your client is psychologically ready for realistic closure.
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Posts in the Settlement Series:
- Break Through the Barriers: Part One
- Don’t Play Chicken With Your Case: Part Two
- Know When to Give Your Mediator a Voice: Part Three
- Don’t Forget About Happiness: Part Four (This Post)
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Other Posts on Psychology During Conflict:
- Make Better Decisions By Fighting Within Your Trial Team
- Try the Consequences, Not Just the Claims
- A Mixture of Justice and Revenge: Target Juror Psychology in Awarding Damages
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Boully, K.R. (2007). “Mea Culpa” in the Courtroom: Apology as a Trial Strategy. The Jury Expert, Volume 19, Issue 4. American Society of Trial Consultants.
Bronsteen, J., Buccafusco, C., & Masur J. (March, 2008). Hedonic Adaptation and the Settlement of Civil Lawsuits. John M. Olin Law & Economics Working Paper No. 391 (2d Series)
Huang, P. (2008). Emotional Adaptation and Lawsuit Settlements. Columbia Law Review, Vol. 108, December.
Schkade, D. A.; Kahneman, D. (1998). “Does living in California make people happy? A focusing illusion in judgments of life satisfaction”. Psychological Science 9 (5): 340-346
Robbennolt, J.K. (2003). Apologies and legal settlement: An empirical examination. Michigan Law Review, 102 (3).
Photo Credit: Remeshng, Flickr Creative Commons