One answer was suggested by Charles T. Munger in his address to the Harvard Law School class of 1948, as follows: To a lawyer, everything looks like a problem to be approached in a legal way and with legal tools.
Munger calls this, “Man-with-a-hammer-tendency”, from the proverb, “To the man with only a hammer, every problem tends to look pretty much like a nail”.
In the legal profession, this has got a lot worse since Munger’s address in 1948. Today, lawyers are often specialised in a narrow field of law and each specialist sees problems through the prism of his own specialty.
Munger’s prescription for “Man-with-a-hammer-tendency” is the development by professionals of a multi-disciplinary approach.
Lawyers need to become fluent in the fundamental principles and big ideas of a number of disciplines and bring this knowledge to bear on a problem. Disciplines like mathematics, economics, psychology, finance and accounting are relevant. A lawyer fluent in the big ideas from these disciplines and narrow legal knowledge is better than a lawyer with only narrow legal knowledge.
A lawyer with financial knowledge can properly describe a formula for the price of a commodity in a supply contract, thereby avoiding disputes.
A lawyer with a knowledge of the causes of psychological misjudgements can guard against these tendencies in negotiations and use them to his own advantage.
A lawyer with an understanding of the mathematics of probability and the economic concept of cost: benefit analysis will be of assistance to a client who is deciding whether or not to pursue litigation.
Legal education however is typically narrow and legal vocational training, narrower still. This means that lawyers usually have to educate themselves in these other disciplines. Lawyers are not incentivised to divert professional time to learning new disciplines. They are usually paid to apply narrow legal knowledge regardless of the outcome.
Munger also mentions a tendency of professionals to drift towards a belief that what is good for them is good for their client and society as a whole. Thus justifying racking up billable hours and spawning specialist legal fields rather than helping clients solve problems with the most appropriate tools. Lawyers are often most comfortable with technical answers in a commercial vacuum, whilst the client needs a workable solution.
Lawyer William F. Coyne, Jr. says in The Case For Settlement Counsel there are “significant incentives for lawyers not to embrace early settlement … These incentives include the need to market services, the desire not to appear weak, the obligation to represent the client zealously, the thirst for justice, but perhaps not least, the desire to maximise income”.
Charles Munger tells us about the common tendency of salesmen to churn transactions in acting in accordance with their incentives:
“All commissioned salesmen have a tendency to serve the transaction instead of the truth. …I put consultants in the same category, sometimes even lawyers – sometimes especially lawyers.
Many years ago, a Pasadena friend of mine made fishing tackle. I looked at this fishing tackle – it was green and purple and blue – I don’t think I’d ever seen anything like them. I asked him “God! Do fish bite these lures?” He said to me, “Charlie, I don’t sell to fish.”