Litigation Interest and Risk Assessment

Recently, Rishi Batra, Heather Heavin, Michaela Keet, and I presented a program on negotiation theory at the Southeast Conference on Conflict Management at Lipscomb University.

We focused primarily on litigation interest and risk assessment (LIRA).  This is the subject of a forthcoming ABA book that Michaela, Heather, and I are writing, based in large part on their work.  Our approach focuses on assessment of expected court outcomes and tangible and intangible costs of proceeding in litigation.  In particular, we encourage parties and professionals – including lawyers, mediators, and settlement conference judges – to carefully consider intangible costs, which often are overlooked, as described in this post.  Here’s the powerpoint of our presentation.

We asked members of the audience for their reactions and suggestions about helping parties make good litigation decisions.  One person suggested asking parties whether they want to resolve the case or the problem (that is reflected in the case).  Similarly, someone suggested asking if parties want to consider what they can learn from the conflict.  Another suggested asking parties why they want to stay in litigation – and what would motivate them to settle.

Practitioners also might note that going to trial is a gamble and ask parties how much they are willing to bet that they would win or lose at trial.  Another way to ask this question is to ask parties to imagine that they were not parties in the case and how much they would pay or accept to buy or sell the lawsuit, respectively.

One person asked if our LIRA system would be relevant for cases with large companies and David-and-Goliath cases.  The answer is yes.  Large companies have a lot to lose in litigation, including important intangible interests, so it’s worth carefully considering their interests and risks.

Weaker parties – especially “one-shotters” who may never have other lawsuits – have a strong interest in doing good LIRAs.  Research shows that in the vast majority of cases going to trial, one side gets a worse result than the other side’s last offer – and that doesn’t include the tangible and intangible costs of litigation.

Both Davids and Goliaths should consider why they haven’t settled their cases, such as unrealistic expectations about court outcomes or inadequate valuation of the costs of litigation.

One person noted that many people have a hard time conceptualizing risks mathematically.  It is possible to do LIRAs conceptually without detailed mathematical calculations and also with such calculations.

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