Whether advising clients, looking at issues affecting my law firm, or confronting a choice in my personal life, I have come to realize one very important truth: making good decisions requires a process. People are prone to all sorts of outside factors and influences that can affect their decision-making, and most of those factors are either irrelevant or downright detrimental to the actual outcome. So in order to help boards, clients, and myself focus on what is important – and filter out what is just static – here are some guidelines to use when faced with a complicated decision.
Identify the Question
Good decision-making starts with properly phrasing the question or identifying the problem to be solved. A very common example is when a community association board is notified of an alleged nuisance violation. The question they ask is, “How do we stop this violation?” Perhaps they say, “What do we do to enforce our documents?”
As the attorney, it is my job to properly reframe the question to: “What is the first step in our enforcement process?” Later in the process, if the first step is unsuccessful, we will address the next steps (and it is probably useful to know at least some of the future possibilities when deciding this), but the decision being made right now is: What is our first step?
Identifying the question can be useful in many situations to focus the discussion. Perhaps you are addressing a new topic where the law is still evolving – marijuana smoke and airbnb are two very popular ones right now. You get a complaint from an owner who says, “The neighbor is renting his unit on airbnb and causing all sorts of problems.” The question here may not be “what is the first step in our enforcement process?” or even “how do we stop this?” Instead, the question here may be a broader one: “What is our position on airbnb in the first place? Do we regulate it? Track it? Prohibit it? Subject it to stricter nuisance scrutiny?”
The question here is not narrower than first thought – like the first example – but rather broader. It is a policy decision that will then allow you to address the specific concern at hand. Always consider what question you are answering and what question(s) you should be answering – regardless of what question is initially posed to you. (Appellate courts are a great example of this. Time after time you will see them identify the questions that the parties posed, and then state the rephrased question that they are actually answering).
Do Not Rely on Anecdotal Evidence
Anecdotal evidence is when someone tells you a story about how they did something and it worked out for them, and so you assume that it will work out that way for you too. It is an “anecdote” because it is just one item of data, and does not actually reflect any sort of probability of a specific outcome. Here is an example: Your brother calls you up and says, “I bought a lottery ticket this week and won a million dollars! You should buy a lottery ticket because the same result will happen to you!”
The flaw in that logic is obvious, right? Purchasing a lottery ticket gives you only a one-in-a-billion shot of actually winning the lottery. So just because it happened to him does not mean it is going to (or is even likely to) happen to you.
This same logic applies to more complex decisions as well. Imagine that you as a condominium board get notice of a violation, and you talk to your brother who is on the board of XYZ Condo down the street. He says, “Oh yeah. We had that exact same situation. I stuck a bunch of police caution tape over the violator’s door and our board secretary kidnapped his dog. Never heard from him again. You should try it.”
The actions here are ridiculous, but the point is the same: this is just one anecdote. There is no control group, no repeated testing, no evidence whatsoever that the actions taken are the best possible response (or even a good response) to this situation. Whatever that board did and the response they got was not representative of how most unit owners will respond to that action. Relying on this anecdote is flawed decision-making.
Beware Results-Based Analysis
This is a corollary to the comments on anecdotal evidence above. Often it is easy to look at a decision someone else made and say, hey, that worked, so we should make that same choice. There is a major problem with that line of thinking as well: bad decisions can still sometimes lead to good results.
My favorite example here is a baseball one. Here is the scenario: Bottom of the ninth. Tie game. The bases are loaded with two outs. The great Mike Trout (or your favorite really good hitter) is up to bat. He hits a long line drive into deep center field, where the opposing outfielder makes a great catch. His team goes on to lose in extra innings.
The next night the exact same scenario presents itself. The manager looks down his bench and says, “Mike, you failed in this situation last night. We have a left-handed backup guy from the minors. I am putting him in.” Up comes this hitter, who is immediately hit by the pitch, bringing home the winning run. Their team wins.
So obviously the manager made the better decision by pinch-hitting for Mike Trout with a backup player, right? After all, the team won when he did that, and lost when he let Trout hit.
Of course not. As this situation clearly demonstrates, evaluating a decision by its result does not always tell you about its wisdom. After all, removing Trout for a lesser hitter significantly reduced the likelihood that the team would win. When evaluating the manager’s decision, do not look solely at what happened afterward. Look at what was more (or less) likely to happen afterward. If placed in the same situation 100 times, Trout would succeed over 40 times (statistically), while the scrub would succeed more like 20 times. The manager’s decision reduced his team’s chances of winning, despite the fact that it produced good results in this one instance.
Determine the Possible Outcomes
Remember when life was uncomplicated? “Should I punch Jimmy in the face or not? If I do, I get in a fight and get grounded. If I don’t, we’re friends and I get ice cream.” There’s a decision that I, as your legal counsel, could make for you no problem. Don’t punch him and enjoy your ice cream. One billable hour please.
Well when you run a community association board, the decisions are slightly more complicated (though I still recommend that you not punch anyone in the face). Should we retain contractor A or B? Is it better to settle this case or litigate? Are we obligated to fix this leak? Do we have to take action on this hoarder matter? Can I tow for a parking violation?
You will note that each one of these questions is phrased in a binary fashion. Either do something or not. Either do one thing or the other. So (ignoring the possibility of rephrasing the question, like we talked about above) there are two possibilities. The difference between the “punch Jimmy” question and this one is, there may not be a right and wrong answer here. Many of these end up being judgment calls. So to avoid the blunder of Mike Trout’s manager, let’s set about making a good judgment call on these.
We will start with the classic legal and litigation question: Should we settle this case or go to trial? If you settle, the possible outcomes are pretty well fixed. You get (or give) the amount of money or other relief you have agreed to as negotiated with the other side. It probably is not as good as what you were expecting when this case began, but it is a few things. It is certain (or at least highly likely). It is final. And it is a pretty good or okay (though probably not perfect or ideal) result. Let’s put a number to it: You sued for $25,000.00 that is a combination of assessments, fines, repair costs, interest, and legal fees. You are settling today for $16,000.00 right now. That is the result.
So what is the possible result if you go to trial? There are two main ones: $25,000.00 or $0. Trial ordinarily results in the judge or jury picking a winner and a loser. So the two most likely results of trial are all or nothing. In essence, then, you are choosing between $16,000.00 in hand, or a coin flip chance at $25,000.00.
Predict the Probability of Each Possible Outcome
But wait a minute! A trial (or at least every trial) is not a coin flip! There are factors (just like Mike Trout’s on-base percentage) that can help you predict how likely or unlikely a particular result is. Instead of a coin flip, your attorney evaluates the case and says you have an 80% chance of winning at trial. Suddenly you are talking about a pretty high likelihood of increasing your recovery by over half. Perhaps that is a good decision, whereas taking the strict coin flip would not have been.
This step in the decision-making is especially important where there are several possible outcomes. Take the hoarder. The choices are: (a) enter the unit and fix it all up, or (b) let it sit and hope someone else handles it.
The likely result of (a) is that you protect the common elements, you bill it back to the unit, and your condominium is made whole. But there is a chance (say 20% in this hypothetical) that the owner sues you for destruction of some of his property. There is a chance (20%) that the owner gets foreclosed and is insolvent, so you end up eating the costs. There is a chance (5%) that you discover the unit actually has to be condemned. So if you stack those, there is a 45% chance that at least something unfavorable happens when you choose option (a).
The likely result of (b) is that it continues to get worse and you eventually have to clean up an even bigger mess; perhaps other affected owners sue you, or a portion of the common elements is destroyed. But there is a chance (say 10% in this hypothetical) that the owner has a family member who shows up and helps them clean the place up. There is a chance (10%) that the county code enforcement fixes it for you. There is a chance (10%) that the bank forecloses and does your work for you. There is a chance (5%) that an investor buys the unit and fixes it up. And there is a chance (5%) that the situation actually just isn’t that bad and nothing unpleasant ever happens.
Now you say, hey, I did the math. There’s nearly a 50-50 shot that if I act, or do something, it ends badly for me. Whereas if I do nothing, and save my money, there is almost a 50-50 chance that it ends well for me. Plus I save money! I have done my diligence and evaluated the possible outcomes; maybe it is a good decision to just let it be.
Rate the Desirability of Each Likely Outcome
Picking up where we just left off, you know that you have not truly gone through a good decision-making process. You know there is one more thing to consider here. Not all good (or bad) results are created equal! Having a minor nuisance suit filed against you or eating the costs of a one-time cleanup and remediation is not equal to having an entire section of the condominium need to be replaced at your own cost due to delay.
The leak example is a good one here. You get a call about a pipe that has leaked pretty significantly. There are possible impacts on other units and the common elements. The source unit owner is out of town. And there is evidence that this leak occurred over time due to a maintenance failure by the source unit owner.
Do you have to fix this leak? Maybe! But it might be the unit owner’s responsibility, so perhaps you can just send him a letter and let him know that he needs to fix it. We go through our percentages, like in the scenario above, and determine that it is a close call, so we can probably just let it be. Does anyone see the problem with that?
Correct. One of the likely outcomes of that strategy is an absolute disaster. The owner comes back into town a month later and refuses to fix it. Maybe he sees the problem, realizes he is already underwater on the mortgage, and just flat out walks away from the unit altogether. Now you have to fix the exponentially worse problem, rather than just the simple leak you knew about last month. Whereas even the negative outcomes of acting, such as eating the cost of the leak fix, are tolerable. So it is not just a question of how likely a good or bad thing is to happen. It is now a question of the likelihood and severity of those possible outcomes.
Putting it All Together
If you didn’t know, now you know: being a community association board member is hard work, and it is complex. Every decision has layers to it that must be considered and balanced. The purpose of this post is to provide some strategies and guidelines for how to address those various concerns. So many times when I work with boards they have matters thrown at them, and the discussion ranges around, covering these various topics but never really prioritizing or ordering them. Instead, there is a long discussion, many of the most important points are forgotten, some anecdotal evidence or non-representative results are tossed out, and a hasty decision gets made. Even worse, someone decides to “go with their gut.”
Instead of looking at instances or thinking about instincts, the next time you have a tough call to make, use a well-reasoned approach and evaluate the matter analytically:
Identify the question.
Determine the possible outcomes.
Predict the possibility of each possible outcome.
Rate the desirability of each likely outcome.
Then balance those factors and do what is in the best interest of your association.
And never pinch-hit for Mike Trout.