Decision tree analysis is a valuable tool for evaluating settlement options in mediation. It’s a tactic we employ with even the most mundane decisions. For instance, as we consider crossing a busy street, we’re unconsciously weighing the “reward” of being across the street — along with our probability of safe passage — against the risk involved.

Similarly, effective litigators assign probabilities for success, and their clients’ potential for recovery (or, alternately avoidance / minimization of recovery), versus the consequences of losing before they take action.

I regularly use decision analysis in mediations to help parties evaluate litigation alternatives as a means of reality testing. Decision trees can be complex — incorporating any number of events which may, or may not, transpire during litigation — or they can be as simple as factoring the probability of winning or losing at trial.

Your Analysis is Only As Good As Your Data

Although there’s always imprecision in projecting probabilities for events in the litigation process, our own experience (and often the experience of others) enables us to make predictions with some degree of confidence.

I recently mediated a case in which the Plaintiff sued for $1 million for breach of the contract. The Plaintiff contended that his chances of winning the entire amount at trial were about 50/50. The Defendant disagreed. He argued that the Plaintiff had a 30% chance of prevailing at trial. I suggested we apply the contrasting projections to a compromise — assigning a 40% probability of success to the Plaintiff; which gave case a hypothetical value of $400,000. Although the case didn’t settle for that amount, the amount provided a baseline point of reference for evaluating both sides’ demands and offers.

Now let’s apply that logic to a personal injury case: If a Plaintiff thinks he can has a 70% chance of trying, and winning, (for the sake of readability) $100 — and that his request for summary judgment has an 80% chance of being denied — his decision tree would look like this:

The expected value of the case can be calculated by multiplying $100 x 70% ($70) — then multiplying that amount by 80% (the probability that summary judgment would be denied) or $56.

Decision analysis is not the valuation Be All and End All. For starters, the numbers you’re using in the process typically come from “educated guesswork”.

Moreover, the process doesn’t account for risk aversion or intangible factors such as fear and anger — or cost of litigation — which should be a separate part of your analysis. Nevertheless, a decision tree can still be an excellent tool for valuing litigation alternatives, factoring risks at the various points in the litigation process, and determining how those risks should impact one’s evaluation of a case.

Finally, it can also be used to explain the risk/reward analysis to your clients as they seek to make wise decisions.

 

I’ve been doing appellate mediation since the program began, and I’ve been genuinely surprised by the success rate. At the program’s inception, I anticipated a significantly lower success rate than I’ve had with non-appellate mediations — but it’s about 70%, which isn’t much lower than my rate for other matters.

While my approach to conducting mediations is largely the same, regardless of whether a case is on appeal or not, there are subtle differences in the process.

Opening statements: Not necessary.

On appellate mediations, I generally dispense with opening statements. After all, the issues are already framed, the parties know the case inside and out, and feelings and personalities have become hardened. Which is why I also believe that the less contact parties have with each other the better.

Focusing on the bigger picture

I focus on resolving the whole case, not just the issue on appeal. In a typical instance, the issue on appeal is whether summary judgment was appropriate. Rather than focus on that issue, I deal with issues of the whole case. Not that I ignore the issue on appeal, but I have found that most parties still want to resolve a whole case — not just the issue on appeal.

The downside to appeals

With appellate mediations, I invariably address the inherent negatives to appeals, which typically take 12-14 months, incurring expenses all along the way — from the costs of the record and briefs to additional attorneys’ fees. I also point-out that roughly 75% of all cases appealed are affirmed by our appellate courts.

I honestly believe there’s a time in every case when it’s ripe for mediation. Unfortunately, some cases just aren’t ready until after a judge or jury has ruled. Which is why I remind parties that mediation is their last & best chance to settle their cases — and that the time for posturing is over.

My favorite part about appellate mediation?

Alabama Appellate Mediation Rules provide that a mediation is over when the mediator says it’s over [Rule 4(d)]. This gives me more power to keep parties working toward resolutions than I usually have in non-appellate mediations [See Rule 13 Alabama Civil Court Mediation Rules].

Reality check

A ruling from the trial court, or the jury verdict, is an excellent reality test for mediating parties. There’s no more speculating about how a case may be perceived or received in a court of law — and I’m always quick to remind appellants that their case will be retried before the same judge who handled the prior trial or dispositive motion. By the time a case gets to me for appellate mediation, the playing field has invariably shifted in favor of one party. Needless to say, this is another helpful reality check.

The mediator’s role

My role as mediator in appellate mediations tends to more evaluative — whereas I typically serve in a more facilitative role in non-appellate mediations. I also find that many of the Cognitive Bias barriers to success in traditional mediations (which, you may remember, I reviewed in a previous post) are no longer impediments to resolution.

All of which is why it’s been my experience that appellate mediations very often provide fertile ground for successful resolution.

(This post was adapted from a presentation I made at a training session for appellate mediations in Montgomery.)