Is Your Current Outside Counsel as Creative as a 5th Grader?
Whether it’s rock-paper-scissors, eenie-meenie-minie-moe, or simply flipping a coin, when we were kids we found ways to break impasses and get back to playing the game.
Now, as highly trained lawyers, it’s helpful to remember 5 simple ways, from game theory and kids, to align interests and move forward. Contact us for help on how to align interests and achieve cost effective, efficient solutions for your business.
Contact one of our business real estate, oil and gas/energy, estate planning and probate, tax, labor and employment or litigation lawyers in Corpus Christi or Austin for help on how to align interests and achieve cost effective, efficient solutions for your business.
Who broke the window (The Prisoner’s Dilemma).
In the classic game theory question involving two prisoners and the police, the question posed is whether it is better to cooperate with the police and receive a certain but lower sentence or refuse to cooperate and receive no sentence at all provided the other prisoner refuses to cooperate. This situation plays out in every piece of multi-defendant litigation and always to the benefit of the plaintiff. Each defendant tries to cut his own deal, blaming the other defendant, and simply adding check writers to the plaintiff’s case. If the prisoners communicate they can avoid this outcome and if they can contractually agree they can eliminate the plaintiff’s advantage. For example, all defendants can agree to hire one defense firm to defend the case and each agrees to bear a negotiated percentage of the defense and indemnity. If the negotiation is too hard or the variability of outcomes too great, then agree to an abbreviated arbitration among defendants to allocate responsibility for defense and indemnity and limit the range of results with high/ low agreements so the incentive to dump on the other defendant is minimized. If defendants communicate they win, if they don’t, the police (or the plaintiffs) win, every time.
I cut you choose.
Where there is a resource to which each party claims an equal right, how can you divide it fairly. In the case of the last piece of birthday cake, it’s simple, first kid with the knife cuts, second kid chooses. Every incentive is directed to making the pieces as equal as possible. It also works in business when allocating the value of a business, the value of inventory, an exclusive sales region or even deciding which business unit is acquired or sold. Finally, there’s nothing that says you can’t cut more than once giving the non-cutting kid the chance to cut again or decide to take as designated.
Let someone else decide the close call.
In every pick-up baseball game, there is always a close call, “he’s out, he’s safe, he’s out.” Before everyone takes their ball and goes home, the best tie breaker can be that older kid watching the game. Ask him. Instead of relying on a five page dispute resolution provision, name one guy, near the project to decide simple questions of fact so work can continue. For example, in a construction case he can decide if the requested work is within scope or requires a change order, then the parties can get back to construction. It is far better to address it right then than at the end of 3 years of litigation.
The free rider problem.
Do you have someone who isn’t pulling their weight? Also known as the free rider problem or more commonly why you always run out of beer when it’s BYOB, we see this in multiparty litigation all the time. One party’s lawyer never makes the conference calls, he’s the last to the deposition, he never prepares, he never goes first, he uses everyone else’s experts, and then he asks his questions and disappears: great for his client, bad for everyone else. The solution is found in communication between clients at the beginning. Spend the time and money on the defense conference or strategy session where you assign tasks or agree to an allocation of expenses.
Batting practice (The Stag Hunt).
Also known as the stag hunt. In this classic round-up dilemma, most have to drive the stag, one gets to shoot him. If the drive doesn’t happen, you can’t shoot him. For kids, it’s about batting practice. Someone has to pitch, someone gets to bat and someone has to shag the balls, but everyone wants to bat. You solve the problem by taking turns (when there are multiple opportunities) or by agreeing to divide both the costs of the pursuit and the anticipated spoils contractually. Plaintiffs’ attorneys and oil men have raised this to an art form. They consolidate, share risk, and present a unified front. Behind the scenes there is a web of referral agreements and risk sharing propositions that insure everyone’s interests are aligned and all benefit from the collective success.
Contact one of our business, real estate, oil, gas & energy, estate planning and probate, tax, labor and employment or litigation lawyers in Corpus Christi or Austin for help on how to align interests and achieve cost effective, efficient solutions for your business.
