“You’ve been thinking about it all wrong!” At least, that’s what psychology tells us.
Humans have inherent flaws when it comes to decision making. The flaws are so prevalent that psychologists have coined the term, “cognitive bias,” to describe all of the predispositions that affect our thinking, decisions, and behaviors. The bright side is that, even though we can’t always rely on ourselves to be open-minded and impartial, we can lean on data and technology to offset our biases. Law firms, in particular, can rely on business intelligence and analytics for better decision making from both attorneys and executives.
First Impression Bias
People have a tendency to jump to conclusions based on the information they learn early on, a “first impression bias,” and they fail to give enough weight to the information that comes later. In the law firm setting, some may conclude from an influx of billable matters that things are going well financially. Hopefully, they aren’t mistaken, but other law firm metrics, such as aged accounts receivable fees or fees written off, could mean that revenue is less than expected. Business intelligence solutions help law firms eliminate first impression bias by allowing attorneys and executives to see the big picture, positive and negative, before jumping to conclusions.
The “overconfidence bias” is an affliction that leads us to believe our contributions are more important than they actually are. When attorneys are affected by this bias, their performance may plateau or even decline because they are blind to certain facts surrounding their efforts. Luckily, law firms can keep their attorneys grounded by implementing a business intelligence platform and by providing adequate business intelligence training to their staff. With access to a wealth of personal performance metrics, such as fees billed in a specific timeframe, as well as the ability to compare the performance metrics of colleagues, attorneys can access information that provides a realistic frame of reference for their performance that will keep them motivated.
Ever underestimate the time it took to finish a task? Blame the “planning fallacy,” which leads us to think in terms of best-case scenarios and makes us vulnerable to unanticipated delays. In the legal industry, accurate planning is crucial for meeting deadlines and managing client expectations. Business intelligence and analytics tools provide attorneys with the ability to plan client engagements down to the phase/task level, resulting in more profitable outcomes. Matter planning tools can also create plans based on past engagements, helping attorneys to learn from their history of prior outcomes.
The “progress bias” states that people often give too much weight to their positive actions while downplaying negative ones. An example, an attorney is experiencing this bias when he or she feels accomplished after working many billable hours, but afterward thinks little of the failure to meet other expectations, such as logging hours in a timely manner or keeping within a client’s budget. Business intelligence tools help snap attorneys out of their progress bias by exposing their areas of weakness. The attorney can then quantify the negative impact of their less-than-desirable actions and course-correct accordingly.
It’s only human to interpret new information in a way that confirms our existing beliefs. While attorneys can spin just about any fact to their benefit, it’s hard to argue against law firm metrics and performance data. Similarly, if your firm is hesitant to implement a business intelligence solution, or you feel things are fine and you don’t need the hard data, it may be time to consider whether your confirmation bias is at play. Contact Iridium Technology for more information on business intelligence and analytics technology. Call us at (610) 981-2199 to crack your firm’s cognitive biases today!