Copyright © 2013 John DeGroote Services, LLC
Negotiating Case Value:Decision Trees in Mediation
Jun 20, 2013
State Bar of Texas • Litigation and ADR Sections • Dallas, Texas
Copyright © 2013 John DeGroote Services, LLC 2
Today’s Roadmap
• Who
• What
• Why
• How
• …and More
Copyright © 2013 John DeGroote Services, LLC 3
If you and the other side value your case
differently, at least one of
you is wrong.
Make sureit isn’t you.
Copyright © 2013 John DeGroote Services, LLC 4
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
-
Copyright © 2013 John DeGroote Services, LLC
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
Copyright © 2013 John DeGroote Services, LLC 6
Why Do a Decision Tree?
•“Probable”?
•Another Perspective• Events
• Contingencies
• Probabilities
• Timelines
• Costs
• Investment Analysis
Copyright © 2013 John DeGroote Services, LLC
Copyright © 2013 John DeGroote Services, LLC
Copyright © 2013 John DeGroote Services, LLC
How Do You Create a Decision Tree?
9
1 2 3 4
ListLitigation
Events
ConsiderCosts or
Gains of Each
Discount Eachby ProbabilityIt Will Occur
Do theMath
Image from ResolutionTree.com
Copyright © 2013 John DeGroote Services, LLC
Another Example
10
Copyright © 2013 John DeGroote Services, LLC 11
…and Just One More
Image © Litigation Risk Analysis, Inc.
Copyright © 2013 John DeGroote Services, LLC
Responding to the Naysayers
12
• 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
Copyright © 2013 John DeGroote Services, LLC
But Before You Go . . ..
13
Copyright © 2013 John DeGroote Services, LLC
Copyright © 2013 John DeGroote Services, LLC
Copyright © 2013 John DeGroote Services, LLC 16