The Shadow Cursor: Optimism Bias

by The Shadow

Psychological studies suggest the existence of a human characteristic known as “optimism bias.”

“Optimism bias” has been defined as the tendency for people to be over-optimistic about outcomes of planned actions. This includes over-estimating the likelihood of positive events occurring and under-estimating the likelihood of occurrence of negative events. In other words, humans tend to plan their lives with the expectation that their toast will always land butter-side-up. Let’s consider some examples of optimism bias:

Decades ago, most humans expected that their collective effect on nature could never influence the global climate in extreme ways. So, they became reliant on carbon-emitting fossil fuels as a source of energy. Several years ago most American investors expected their stock portfolios to keep rising in value. So many bet their ability to retire on the long-term sustainability of the bull market.

Today, some 40 million Californians living near a massive fault line apparently expect that their state will not suffer an earthquake similar to that which recently decimated Haiti. Some nine million New Yorkers expect that the Five Boroughs will not suffer the same fate that befell the lost city of Atlantis – even though melting ice caps and glaciers are raising ocean levels at alarming rates. And today, most U.S. lawyers expect that the our legal system will remain a bulwark against injustice.

Like investors, Californians, and New Yorkers, U.S. lawyers might want to rethink whether they, too, suffer from optimism bias about our legal system. An example of something that might prompt such reflection by lawyers is recently enacted legislation spurred by the tort reform movement. In 2005 the Georgia legislature passed amendments to the Civil Practice Act to implement a modified “loser-pays” system. One of these amendments was made to O.C.G.A. § 9-11-68 to implement what is known as an “Offer of Settlement.” As modified, O.C.G.A. § 9-11-68 now creates a scheme by which a Georgia litigant who refuses to accept a settlement offer from his opponent may be required to pay his opponent’s attorney’s fees – even though the litigant wins the law suit. The requirement to pay attorney’s fees arises where the final amount of the judgment is less than 75 percent of the amount of the settlement offer. O.C.G.A. § 9-11-68(b).

A recent case involving the new O.C.G.A. § 9-11-68 should put into perspective whether our legal system remains a bulwark against injustice. While a metro Atlanta police detective was waiting for her traffic light to change, a drunk driver collided with her unmarked car. After attempting to escape, the drunk struck another vehicle, disabling his car. Police later determined that the drunk driver had nearly a .169 percent BAC, or over twice the legal limit.

Having sustained significant injuries, the detective sued the drunk driver for compensation. During the litigation, defense attorneys for the drunk driver made a formal offer of settlement to the officer under O.C.G.A. § 9-11-68. As a result of the offer of settlement, a jury had to return a verdict of no less than a $75,000 to allow the police detective to avoid having to pay the drunk driver’s attorney’s fees. The police detective plaintiff rejected the offer.

Amazingly, the jury returned a verdict for $74,000 – just $1,000 less than the threshold to avoid an attorney’s fees obligation. After entry of the verdict, the drunk driver’s attorneys moved (verbally) to require the detective to pay the attorney’s fees of the drunk driver. It was only after skillful negotiations by the detective’s attorney that the drunk driver’s attorneys agreed to abandon their claim. But had they persisted, they may very well have been able to require their client to be reimbursed for his defense costs.

When it permits a police detective to be victimized not once, but twice, by the callous indifference of a drunk driver – first on the street, and then in the courtroom – our legal system can no longer be described as a bulwark of justice. It appears that Californians’ views of the San Andreas Fault, New Yorkers’ views of the ocean levels, investors’ views of the stock market, and lawyers’ views of the vitality of our legal system all seem to suffer from similar levels of optimism bias.

The question that the Shadow cannot answer is, which group will be the first to identify its optimism bias? Demanding the repeal of unjust legislation like O.C.G.A. § 9-11-68’s Offer of Settlement would be a sign that we, as lawyers, have identified ours.