Exploring How Bias Can Shape Decision-Making
In the complex world of corporate transactions and commercial disputes, negotiation is a valuable skill for in-house counsel. Whether resolving contract issues, managing risk, or navigating settlement discussions, the ability to negotiate effectively can have a profound impact on corporate strategic direction and results. Even the most experienced negotiators and corporate counsel are not immune to the subtle effects of cognitive bias. In negotiation and mediation, these mental shortcuts can influence how facts are interpreted, how risks are assessed, and how strategy is formed.
Bias often operates quickly and quietly. A team preparing for mediation might rely too heavily on prior experiences, or overvalue facts that confirm their initial view of the case. These tendencies are not a reflection of inattention or poor judgment. They are part of how the human brain manages complexity.
Recognizing bias is the first step toward improving the quality of negotiation and risk assessment. Subtle cognitive biases can shape decision-making and influence outcomes in ways that are not always apparent.
What Cognitive Bias Looks Like in Negotiation
Negotiation blind spots are the unseen influence that affect how parties perceive, process, and respond to information. Stemming from those blind spots, cognitive biases are predictable patterns of thinking that can lead to systematic deviations from rational judgment and hinder objective analysis.
For corporate counsel, recognizing biases and then addressing them can lead to favorable results that safeguard organizational interests. In negotiation, several types of bias are common:
- Confirmation bias: The tendency to interpret information that confirms pre-existing beliefs while disregarding contradictory evidence, leading to overconfidence in one’s position and missed opportunities for compromise.
- Availability bias: Relying on information that is memorable or recent, rather than considering the full spectrum of relevant data. This can skew assessments and strategies.
- Loss aversion: The instinct to avoid losses rather than pursue equivalent gains, which can lead to overly cautious tactics. The pain of losing is psychologically twice as powerful as the pleasure of gaining.
- Status quo bias: Defaulting to inaction or familiar positions rather than adapting to new, possibly beneficial information.
- Egocentric bias: Overestimating the accuracy of one’s own assessment while undervaluing opposing perspectives.
Each of these can subtly shape how counsel approaches negotiation — particularly when evaluating risk, settlement value, litigation exposure, commercial contract terms, or internal business disputes.
The Impact on Corporate Counsel in Negotiation
Defense counsel and plaintiff’s counsel can each assess the same case through very different lenses. If both sides rely on selective facts that confirm their expectations or shape their narratives, it can be difficult to reach a reasonable resolution in the negotiation process.
Blind spots can manifest in a variety of ways, from underestimating the opposing party’s leverage to overlooking creative settlement options. Cognitive bias can distort sound analysis, especially when decision-makers work under pressure or within tightly aligned teams. For corporate counsel, who often manage both internal stakeholders and outside counsel, understanding how these forces influence negotiation is essential to achieving balanced, fact-based outcomes.
Mediation
As a structured process that brings parties together with a neutral third party, mediation facilitates dialogue and explores options for resolutions. Experienced litigators, like those on the team at Galloway Johnson Tompkins Burr & Smith, identify and mitigate cognitive biases, to represent our clients’ best interests during mediation to move beyond entrenched stances and towards solutions.
Mediation can provide:
- Fresh perspective: Objective viewpoints that challenge assumptions and encourage critical analysis
- Structured process: Focus on interests rather than positions while reducing the influence of bias
- Creative solutions: Exploration of options that may not emerge in traditional negotiation settings.
- Efficient resolution: Fostering collaboration that can expediate settlement and reduce litigation costs.
Practical Strategies to Recognize and Counteract Bias
Bias cannot be eliminated, but it can be managed. In-house and corporate counsel can implement several practical strategies to minimize its influence in negotiations and mediation:
- Encourage critical thinking: Cultivate a culture of questioning and analysis within legal teams that challenges assumptions and authentically explores alternative perspectives.
- Leverage outside expertise: Engage outside counsel or certified mediators to inject fresh insights while facilitating complex negotiations.
- Diversify teams: Include different backgrounds and disciplines to broaden the range of viewpoints and reduce groupthink.
- Prepare Thoroughly: Compile comprehensive data and consider multiple scenarios before negotiation.
- Reflect and debrief: After negotiation, review outcomes and decision-making processes to identify areas for improvement.
These techniques promote deliberate thinking in every stage of negotiation, from internal discussions to external dispute resolution.
The Counsel’s Role in Setting the Tone
Corporate counsel play a unique role in mitigating bias because they often serve as both strategist and gatekeeper. Their influence extends beyond one negotiation session to the company’s broader approach to risk management. Setting a tone of open-minded analysis, encouraging fact-driven evaluation, and engaging outside counsel early in the process can all help counter the natural pull of bias.
For outside counsel, this also means moving beyond the purely adversarial mindset. Effective legal partners bring technical skill and the ability to challenge assumptions, test reasoning, and present risk in objective terms that support the client’s business goals.
Conclusion
Cognitive biases are an inherent part of the human decision-making process, but that does not mean they can dictate outcomes in the corporate sector. Recognizing bias and their influence allows in-house counsel to make better-informed decisions and to guide their teams toward results rooted in fact rather than perception, ultimately delivering greater value to their organization.
The attorneys at Galloway Johnson Tompkins Burr & Smith regularly assist clients in navigating complex negotiations and mediations where strategic awareness and objectivity are critical.
With team members who understand the nuances of cognitive bias and its impact, Galloway remains committed to objective analysis and creative problem-solving that supports corporate counsel in complex negotiations.
By combining analytical discipline with practical experience, counsel can identify risks early, evaluate them clearly, and negotiate with clarity and confidence.
Disclaimer: This material is provided for informational purposes only. It is not intended to constitute legal advice, nor does it create a client-lawyer relationship between Galloway and any recipient. Recipients should consult with counsel before taking any actions based on the information contained within this material. This material may be considered attorney advertising in some jurisdictions.
