Paying for Useless Advice
The Freakonomics guys write this morning about an experiment in which participants paid for transparently useless advice.
(The participants were betting on the outcome of a fair coin flip and could pay for “advice” — obviously a guess — about it.)
Three questions: Why would people pay for “useless” advice? Does this happen in the law? How does it factor into Legal Project Management? (I’ll save the last question for the follow-up article.)
I put “useless” in quotes because that’s the Freakonomics adjective. For our purposes, assume the advice is either obvious or random. Economists would consider such advice useless. But is it really? And to whom?
Why Pay for “Useless” Advice?
The first comment in the Freakonomics article is from Cara, who writes incisively:
Maybe people aren’t really paying for the advice; they’re just paying for someone else to make the decision. Then, if the outcome is bad, they have someone to blame besides themselves.
That’s a common situation in the business world. Business “leaders” don’t want to take the fall,1 so they lay off the blame on someone disposable.
Another common business situation is that the leader fears she lacks credibility with the higher-ups, so she hires a consultant to “tell her what she already knows.” (One definition of a consultant is someone who borrows your watch to tell you the time — and then charges you for it.) The advisor and his “useless” (no apparent added economic value) advice actually plays an important business role here, especially in businesses that consider themselves “data-driven” or that don’t trust subordinates to truly run their aspects of the business. It’s an inefficient arrangement, but not so inefficient that it truly hurts profitability; the cost of the advice is usually minimal compared to the size of the project under consideration.
Not all consulting engagements — in my experience not even the majority — are designed to deliver such “useless” advice. Consulting, done well, can add exceptional value because you’re hiring an expert only for the time you need her.
“Useless” Advice and the Law
Consider the first situation above (Cara’s comment), but substitute lawyer for consultant. That’s a fairly common role for an attorney.
Ideally, of course, the attorney also serves to define the boundaries of what’s legal in that situation, and to spot hidden minefields. The advice only seems “useless” if no new minefields are uncovered. But if, say, one out of ten attorney consultations result in “hey, maybe you shouldn’t do it that way,” the advice isn’t useless at all. Even if the dice are loaded in favor of “no problem,” every once in a while they’ll land on “oops.”
Attorneys often feel they need to semi-invent problems to justify the consultation. (So do consultants.) From a business standpoint, I don’t think that’s true.
As a business leader, I’d run questions by our legal representative all the time, even when I was confident I knew the answer. A certain part of this was CYA, but most of it was real — “tell me if I have a blind spot here.” Just because most of the time I had properly checked my blind spot didn’t mean I didn’t need confirmation, and of course there were occasions where the attorney warned me of something intruding into my blind spot.