The availabity and self-confident biases afflict law department decision-makers

When people in law departments try to solve a management problem, they can succumb to the seductions of the “availability bias.” We grab first for the data that is most easily at hand.

For example, if the problem is that you think you are paying law firms too much, the easily available information is hourly rates of individual lawyers at firms. General counsel and others seize eagerly on that information in part because it is immediately found. It takes more effort to calculate effective rates for firms (See my post of Dec. 5, 2005: blended billing rates with 7 references.) and even more to weight those effective weights by the amount your department uses the firm.

Related to this bias – another form of mental laziness – is the “self-confidence bias,” which distorts decisions because it pushes us to believe prematurely that we have found a solution. “Let’s ask for discounts,” someone pipes up, and everyone gladly abandons the search for different, better solutions.

As laid out in MIT Sloan Mgt. Rev., Vol. 50, Winter 2009 at 46, collective intelligence methods provide techniques to mitigate both biases – quick availability and quick solution – such as to reach out to more people who can challenge both tendencies.

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