Statutes Are Just the Foundation: Psychology and Tactics in a Legal Dispute

Two companies, two disputes, and the same statutory provisions in both. Same judge, equally experienced lawyers, contractual positions like carbon copies. One client walks away with 78 percent of what they wanted. The other gets 12 percent and a feeling of having lost at something they never quite understood. Anyone who does civil litigation knows this scene. No statute book explains it.

After years in litigation practice I have grown used to an unpopular view: substantive law is a necessary condition, but not a sufficient one. If all you have is the statutes, you have the grammar. A good result for a client also requires speaking with that grammar, and that is mostly psychology, tactics and negotiation.

This piece is on the longer side and written as popular science. It brings together what Daniel Kahneman, Amos Tversky, Roger Fisher, William Ury, Robert Cialdini, Robert Mnookin and Chris Voss have written about negotiation and conflict. Don't expect magic tricks. These are ideas that have helped me in practice more often than yet another commentary on the Code of Civil Procedure.

¶ Behavioural economics in the courtroom

In 1974 Amos Tversky and Daniel Kahneman showed that human decision-making departs from the rational model in systematic ways (Judgment under Uncertainty: Heuristics and Biases, Science). Five years later they published prospect theory (Prospect Theory, Econometrica, 1979), which explains why people decide differently when facing a loss than when looking at a possible gain.

For a dispute, its most important element is loss aversion. A loss usually hurts roughly twice as much as an equal gain pleases. That is what Tversky and Kahneman estimated in 1992, and a meta-analysis of more than 600 estimates comes out close to it (Brown, Imai, Vieider & Camerer, 2024). How strong the effect is depends on the situation, though, and some researchers question how general it is (Gal & Rucker, 2018). Prospect theory adds that people faced with a loss are more willing to take risks.

This is how I apply it to litigation. The same claim for CZK 100,000 (about EUR 4,000) feels different to a defendant who may lose the money than to a claimant who may win it. The defendant is often more willing to go into costly proceedings even when the numbers advise against it, while the claimant tends to take the sure thing. Conventional legal analysis leaves this asymmetry out, and an experienced negotiator will use it.

Richard Thaler described the endowment effect: we demand more for something we own than we would pay to acquire it (Toward a Positive Theory of Consumer Choice, 1980). A claim the client already “owns” in their head is therefore harder to give up. Before filing, it is worth asking how much the client would pay to obtain that claim in the first place. It brings the valuation back down to earth.

Thaler and Cass Sunstein later described in Nudge (2008) how choice architecture shapes decisions. In a dispute, too, the way you present an offer to the other side can change their decision even when the substance stays the same.

¶ The anchor: who names the first number

The best-documented effect in this field is anchoring. Tversky and Kahneman described it back in 1974: once a number has been mentioned, it influences later estimates even when it has nothing to do with the matter.

Birte Englich and Thomas Mussweiler studied it in the courtroom. They gave judges with many years on the bench a fictitious criminal case file and varied only the sentence the prosecutor asked for. A higher demand led to a higher sentence (Sentencing under Uncertainty, 2001). In a follow-up study with Fritz Strack they went further (Playing Dice with Criminal Sentences, 2006). Experienced lawyers were swayed by the proposed sentence even when they knew it had been set at random, and even when they had rolled it with dice themselves. Neither experience nor expertise weakened the effect.

The research concerned criminal sentences. In civil disputes, however, I see anchors working the same way:

• the relief sought in the statement of claim,
• the first settlement offer, which sets the range for the rest of the talks,
• the range given in an expert report,
• even the line “in similar cases courts have awarded five million”.

So whoever puts the first number into play, with at least a minimal justification, has the advantage. Whoever starts low for fear of overreaching is sawing off the branch they sit on.

¶ The Harvard school: BATNA and principled negotiation

Roger Fisher and William Ury published Getting to Yes in 1981; later editions also list Bruce Patton as co-author. Their Harvard Negotiation Project produced principled negotiation, which rests on four pillars:

1. Separate the people from the problem. Attacking a position is not attacking a person.
2. Focus on interests, not positions. “I want two million” is a position; the interest may be keeping the company alive next year.
3. Invent options for mutual gain.
4. Insist on objective criteria: how things are done in the field rather than what someone wants.

The book's key concept is the BATNA (Best Alternative to a Negotiated Agreement). Negotiating power is determined by what happens if no deal is reached. A client with a strong alternative negotiates calmly. A client without one is a hostage.

Robert Mnookin, Scott Peppet and Andrew Tulumello carried these ideas over into lawyering in Beyond Winning (2000). In their view a lawyer has to manage three tensions: between creating value and distributing it, between empathy and assertiveness, and between the interests of the client and those of the lawyer acting as the client's agent. An experienced lawyer notices these tensions and works with them deliberately. A beginner often sees only a fight over who gets the bigger share.

¶ Cialdini: persuasion in litigation

In Influence (1984) Robert Cialdini distilled social psychology research into six principles of persuasion. They are reciprocity, commitment and consistency, social proof, authority, liking and scarcity. In Pre-Suasion (2016) he added a seventh, unity. In litigation I come across three of them most often.

Reciprocity. A small concession creates pressure for a concession from the other side. Experienced negotiators learn to offer something that costs them little and get something substantial in return. If you are not ready for it, you can easily end up reciprocating where you had no need to.

Commitment and consistency. Once the other side has put something in writing, say in pre-action correspondence, it finds it hard to back away. That is why the positions it takes in writing early on matter so much. They decide how much room for agreement will be left later.

Authority. An expert report persuades through its content and through the name of its author. Whoever has the more respected expert gives the court a stronger anchor.

¶ Chris Voss and tactical empathy

Chris Voss was the FBI's lead international kidnapping negotiator. He and Tahl Raz set out the techniques of crisis negotiation in Never Split the Difference (2016). The title tells you what he thinks of meeting halfway. Four techniques are especially useful to a lawyer:

• Mirroring: you repeat the last one to three words the other person said, with a questioning intonation. It sounds trivial, but the other side usually starts elaborating and says more than it meant to.
• Labelling an emotion: “It seems you're worried whether this agreement will hold.” According to Voss, an emotion that has been named loses strength.
• Questions that invite a “no”. Instead of “Do you agree?” you ask “Would it be a bad idea if we…?” People feel safer saying no.
• Calibrated questions starting with “how” or “what”, which draw the other side into finding a solution: “How can we make this work for you as well?”

None of this works without practice. Clumsy mirroring comes across as manipulative, and a botched label as cheap psychology. Once you master them, though, you get better information from the other side, and in a civil dispute that is worth more than most rhetorical tricks.

¶ When ego outvotes strategy

Lee Ross of Stanford described reactive devaluation: we rate the same proposal lower when it comes from an opponent than when it comes from a neutral party (Reactive Devaluation in Negotiation and Conflict Resolution, 1995). I draw two practical conclusions from this.

1. In my view, one reason mediation works is that it dampens this effect. A proposal the other side brushes aside when it comes from your lawyer may be accepted once a mediator rephrases it.
2. Sometimes you cannot table your proposal yourself. Let it emerge from the joint discussion, or leave the other side room to work the solution out and regard it as its own idea. The content of the proposal stays truthful and complete; all that changes is who says it out loud.

The second enemy of a sensible dispute is the sunk cost fallacy. Hal Arkes and Catherine Blumer showed that money, time and effort already spent push people to continue what they have started, even when the numbers say they should stop (The Psychology of Sunk Cost, 1985). I have seen it many times in long disputes. A client with three million crowns in costs turns down a settlement that would bring back two million, because “they have put too much into it already”. Logically nonsense, psychologically a very real trap.

In Negotiating Rationally (1992) Max Bazerman and Margaret Neale mapped similar biases specifically for negotiation, from escalation of commitment and overconfidence to the myth of the fixed pie. That matches my experience: the parties usually have enough information, and where they go wrong is in what they do with it.

¶ Key concepts at a glance

¶ When to negotiate and where the limits lie

In Bargaining with the Devil (2010) Robert Mnookin tackles a question every lawyer faces: when to negotiate and when to fight. He suggests working through five questions. What are the interests of both sides? What alternatives to a deal does each side have? Is there an agreement that would serve both better than those alternatives? What will negotiating cost? And is it realistic that the deal will be carried out? Only then does he turn to morality, meaning whether the deal is legitimate and what it does to third parties.

In practice we often stop at the costs. In doing so we overlook that we have misjudged the alternatives, or that nobody is going to honour the deal.

The line between tactics and manipulation is not sharp. A few yardsticks do apply:

• Truthfulness. You need not say everything you know, but you must not state falsehoods. The American Model Rules of Professional Conduct (Rule 4.1) forbid a lawyer to knowingly make a false statement of material fact to a third person. According to the comment on the rule, estimates of price or of the settlement a party would accept are ordinarily not treated as such facts.
• Informed consent. You may present a choice to the other side so that it sees the consequences. You may not exploit its emotional state or your informational advantage to obtain consent it would not give after informed consideration.
• Whom the lawyer serves. Under Section 16 of the Czech Legal Profession Act (Act No. 85/1996 Coll.), a lawyer must protect and advance the rights and legitimate interests of the client, not of the other side. The same section, however, requires the lawyer to act honestly and conscientiously, so loyalty to the client is not a free hand.

To my mind, Roger Fisher captured the ethics of negotiation best with his distinction between positional and principled negotiation. A hard positional bargainer sees the other side as an adversary; a principled negotiator sees a fellow problem-solver. Both can win a particular dispute. The second also keeps their reputation and relationships.

¶ Conclusion: statutes as grammar

Back to the two companies from the beginning. The gap between 78 and 12 percent usually comes down to who knew their BATNA, who put the first number on the table in time, who did not fall for reactive devaluation or sunk costs, and who stayed on the right side of the ethical line while doing so.

Statutes are the grammar, and without them you cannot form a meaningful sentence. The language of a dispute, however, is made of tactics and psychology, and you will not learn it from commentaries. You learn it by working with people and from your own mistakes, provided you admit them.

This piece is followed by articles on how the judge decides and what the other participants in a dispute are thinking, what to do with an opponent who is immune to rational argument, when the legal route is the wrong one and why disputes are lost by playing the wrong game. For practical follow-ups, see what litigation and business negotiation have in common, not every battle is worth fighting, when to go to court and when to mediate and what you can ask for in a civil lawsuit.

¶ Recommended reading

• Arkes, H. R., & Blumer, C. (1985). The Psychology of Sunk Cost. Organizational Behavior and Human Decision Processes, 35(1), 124–140.
• Bazerman, M. H., & Neale, M. A. (1992). Negotiating Rationally. Free Press.
• Brown, A. L., Imai, T., Vieider, F. M., & Camerer, C. F. (2024). Meta-analysis of Empirical Estimates of Loss Aversion. Journal of Economic Literature, 62(2), 485–516.
• Cialdini, R. B. (1984). Influence: How and Why People Agree to Things. William Morrow. Revised edition: Influence: The Psychology of Persuasion. Collins Business, 2006.
• Cialdini, R. B. (2016). Pre-Suasion: A Revolutionary Way to Influence and Persuade. Simon & Schuster.
• Englich, B., & Mussweiler, T. (2001). Sentencing under Uncertainty: Anchoring Effects in the Courtroom. Journal of Applied Social Psychology, 31(7), 1535–1551.
• Englich, B., Mussweiler, T., & Strack, F. (2006). Playing Dice with Criminal Sentences: The Influence of Irrelevant Anchors on Experts' Judicial Decision Making. Personality and Social Psychology Bulletin, 32(2), 188–200.
• Fisher, R., & Ury, W. (1981). Getting to Yes: Negotiating Agreement Without Giving In. Houghton Mifflin. From the 2nd edition (1991) with B. Patton; 3rd edition Penguin, 2011.
• Gal, D., & Rucker, D. D. (2018). The Loss of Loss Aversion: Will It Loom Larger Than Its Gain? Journal of Consumer Psychology, 28(3), 497–516.
• Kahneman, D., & Tversky, A. (1979). Prospect Theory: An Analysis of Decision under Risk. Econometrica, 47(2), 263–291.
• Mnookin, R. H. (2010). Bargaining with the Devil: When to Negotiate, When to Fight. Simon & Schuster.
• Mnookin, R. H., Peppet, S. R., & Tulumello, A. S. (2000). Beyond Winning: Negotiating to Create Value in Deals and Disputes. Belknap Press of Harvard University Press.
• Ross, L. (1995). Reactive Devaluation in Negotiation and Conflict Resolution. In K. Arrow, R. Mnookin, L. Ross, A. Tversky, & R. Wilson (Eds.), Barriers to Conflict Resolution (pp. 26–42). W. W. Norton.
• Thaler, R. H. (1980). Toward a Positive Theory of Consumer Choice. Journal of Economic Behavior & Organization, 1(1), 39–60.
• Thaler, R. H., & Sunstein, C. R. (2008). Nudge: Improving Decisions About Health, Wealth, and Happiness. Yale University Press.
• Tversky, A., & Kahneman, D. (1974). Judgment under Uncertainty: Heuristics and Biases. Science, 185(4157), 1124–1131.
• Tversky, A., & Kahneman, D. (1992). Advances in Prospect Theory: Cumulative Representation of Uncertainty. Journal of Risk and Uncertainty, 5(4), 297–323.
• Voss, C., & Raz, T. (2016). Never Split the Difference: Negotiating As If Your Life Depended On It. Harper Business.