Canadian Lawyer

18 F E B R U A R Y 2 0 1 8 w w w . C A N A D I A N L a w y e r m a g . c o m This simple example captures an important lesson from behavioural eco- nomics, popularized in the books Think- ing: Fast and Slow by Daniel Kahneman and Nudge: Improving Decisions About Health, Wealth, and Happiness by Richard Thaler. Kahneman and Thaler separately won the Nobel Prize for work in their respective fields. The Obama administra- tion successfully incorporated the concept of "nudges" into their policy work. Their theories can help lawyers in the practice of law and in the attraction and retention of clients. Kahneman separates our thought pro- cess into a simple dichotomy of fast, or "system 1," thinking, and slow, or "system 2," thinking. System 1 thinking explains why people feel losses twice as much as they feel comparable gains. Fast thinking comes into play when you stand up to object to a line of questioning without knowing why, when you sense a brief misses something or when you believe that there really is a tiger outlined in the grass just ahead. Regardless of your personal circumstanc- es, fast thinking comes in handy to avoid being eaten — figuratively or literally. Fast thinking includes intuition. Although thinking with your gut can be dismissed as superficial, Kahneman rec- ognizes that experts glancing at a situation can reach a correct conclusion simply based on continuous experience. Intuitive thinking guides the halo effect. Someone's reputation and ego could precede them or exceed them. This may give this person an aura of invincibility in that they have won so often they will likely win again. If you or a court provide that person the benefit of the doubt, a halo, so to speak, then you should dissuade your- self of this notion. Rest assured, the rest of the day has not yet been written. Anything can and will likely happen. Information immediately available primes system 1 thinking and feeds into the "anchoring" concept. Kahneman pro- vides the example of a panel of German judges asked to roll a weighted die that came up with three or nine. The judges were then asked to provide a ruling on a certain fact situation. Although it should not have mattered, judges rolling a nine more often gave higher sentences than the judges who rolled a three. System 2, or slow thinking, represents the traditional lawyer mind: collecting facts, analyzing those facts and provid- ing a researched opinion. Relative to fast thinking, slow thinking generally has to be dragged into the thought process if the mind feels that fast thinking "has got this covered." Slow thinking eats Doritos while watching TV. I prefer the term "critical thinking" as slow thinking suggests some- thing negative. @garywgoodwin L E G A L I N N O VAT I O N N O W O P I N I O N magine you outline to your client the possibilities of two court actions where he is the plaintiff in one case and the defendant in another. Legal fees are no longer a cost consideration. In the first case, you advise that he could settle and receive $70,000 or have a 90-per-cent chance of the court awarding him $80,000. In the second case, you advise that he could settle and pay $70,000 or have a 90-per-cent chance of the court deciding he should pay $80,000. If he was like most people, in the first case, he would settle for the $70,000. In the second case, he would likely go to court and risk paying $80,000. People prefer sure things when it comes to gains and take risks when it comes to avoiding losses. Lawyers explaining the consequences of a certain legal action should be prepared that a cli- ent may be prone to more risk taking to avoid a loss. Nudge your clients Behavioural economics has some important lessons that lawyers can put to practical use By Gary Goodwin I fast slow slow slow slow fast fast fast slow fast

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