Pragmatic Uses for Decision Trees in Settlement Discussions

Copyright © 2014 John DeGroote Services, LLC

Pragmatic Uses for DecisionTrees in Settlement Discussions

Jan 17, 2014

Texas Bar CLE • 12th Annual Alternative Dispute Resolution • Dallas, Texas

Copyright © 2014 John DeGroote Services, LLC 2

Today’s Roadmap

• Who

• What

• Why

• How

• …and More


If you and the other side value your case

differently, at least one of

you is wrong.

Make sureit isn’t you.


Who Makes Settlement Errors?

• One Study Concluded

• 61% of Plaintiffs Failed to Beat Last Offer

• Defendants Failed 24% of the Time

• Plaintiffs’ Mean Error Was $43,000

• Defendants’ Was $1,140,000

Journal of Empirical Legal Studies 09/2008

-

The New York Times 08/2008

-

http://www.blakemcshane.com/Papers/jels_settlement.pdf


http://www.nytimes.com/2008/08/08/business/08law.html?_r=0





What Is a Decision Tree?

5

An illustration that shows the various possible outcomes

in a lawsuit and helps the parties

evaluate the costs, risks and benefits of each outcome.

““

- Daniel Klein

http://www.settlementperspectives.com/2009/01/decision-tree-analysis-in-litigation-the-basics/


““

Why Do a Decision Tree?

Gut instinct, sloppy guesswork and grey hair no longer seem to be enough in complex, high

stakes mediation.

— Geoff Sharp, New Zealand Commercial Mediator and Barrister


Why Do a Decision Tree?

•“Probable”?

•Another Perspective• Events

• Contingencies

• Probabilities

• Timelines

• Costs

• Investment Analysis

http://www.settlementperspectives.com/2009/01/why-should-you-try-a-decision-tree-in-your-next-dispute/


http://www.settlementperspectives.com/2010/03/what-will-she-tell-her-husband/



How Do You Create a Decision Tree?

10

1 2 3 4

ListLitigation

Events

ConsiderCosts or

Gains of Each

Discount Eachby ProbabilityIt Will Occur

Do theMath

Image from ResolutionTree.com

https://www.resolutiontree.com/

http://www.settlementperspectives.com/2011/11/decision_tree_step_by_step/

http://www.resolutiontree.com/


Another Example

11


…and Just One More

Image © Litigation Risk Analysis, Inc.

http://www.settlementperspectives.com/2009/07/advanced-decision-tree-analysis-in-litigation-an-interview-with-marc-victor-part-i/

http://www.litigationrisk.com/


Responding to the Naysayers

13

• They Objectify Litigation

• Not Everyone Is Rational

• The Parties Won’t Agree on a Number

• The Results Are Unreliable

• They Are Only for Commercial Cases

• Nobody Else Does Them

http://www.settlementperspectives.com/2010/04/avoiding-the-limitations-of-decision-trees-a-few-tips-from-mediators-who-use-them/


But Before You Go . . ..

14


John DeGrootePresident, John DeGroote Services, LLC

John DeGroote is a former global company general counsel now serving as a mediator, arbitrator and court-appointed trustee in significant disputes. He believes that hands-on leadership, early matter assessment, and aggressive project management drive results.Serves as the Liquidating Trustee to the BearingPoint, Inc. Liquidating Trust through John DeGroote Services, LLC.

Served from 2000 through 2008 as the Chief Litigation Counsel to KPMG Consulting/BearingPoint; eventually led a team of over 40 in-house lawyers around the globe as the Company's Chief Legal Officer from 2008 through late 2009, when he became the Company's President.

Previously practiced with the law firms of McKool Smith, P.C. and Jackson Walker, L.L.P., with a focus on complex technology, commercial, and intellectual property litigation matters against and for various Fortune 500 companies.

Currently serves as settlement counsel to select clients involved in significant disputes.

Received his mediation training from Pepperdine University's Straus Institute for Dispute Resolution in 2005. Has participated in over 200 mediations in approximately 20 states as a client executive, as outside or in-house counsel, and as a party.

Serves as a co-founder to online decision tree tool ResolutionTree.com and comments on litigation management, settlement techniques and negotiation strategies at settlementperspectives.com.

• J.D., Duke University School of Law, 1990

15

• B.A., Mississippi State University, 1986

https://www.resolutiontree.com/

http://www.settlementperspectives.com/


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Pragmatic Uses for Decision Trees in Settlement Discussions

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