From Volume 86, Number 3 (March 2013)
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Most lawsuits settle, but some settle later than they should. Too many compromises occur only after protracted discovery and expensive motion practice. Sometimes the delay precludes settlement altogether. Why does this happen? Several possibilities—such as the alleged greed of lawyers paid on an hourly basis—have been suggested, but they are insufficient to explain why so many cases do not settle until the eve of trial. We offer a novel account of the phenomenon of settling on the courthouse steps that is based upon empirical research concerning judgment and choice. Several cognitive illusions—the framing effect, the confirmation bias, nonconsequentialist reasoning, and the sunk-cost fallacy—produce intuitions in lawyers that can induce them to postpone serious settlement negotiations or to reject settlement proposals that should be accepted. Lawyers’ tendency to rely excessively on intuition exacerbate the impact of those cognitive illusions. The experiments presented in this Article indicate that the vulnerability of experienced lawyers to these cognitive errors can prolong litigation.
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