Sunday, January 27, 2013

Picture it settled

Don Philbin, a Texas mediator, has developed some amazing software that allows parties and mediators to make the whole negotiation process more rational and predictable. The software is now available at http://ww1.pictureitsettled.com. I've heard Don talk about his techniques before, and have borrowed some of his ideas in a few mediations by making crude graphs embodying part of his methods. Basically what you do is ask the attorneys to rank the probabilities of various possible trial outcomes, from the chances of a defense verdict, to some intermediate levels of recovery, to a home run for the plaintiff. Then you can connect the dots by drawing two curves representing each party's best assessment of the likelihood of a range of possible trial outcomes. Typically, the defense curve bulges up on the left side of the scale, in the modest recovery range, while the plaintiff's curve bulges up on the right side, in the substantial recovery range.

The next part of Don's analysis starts with inputting the parties' opening settlement offers and demands and plots subsequent offers and demands on two converging lines. The results, which might look something like the picture below, tend to follow predictable patterns. I made this diagram by entering some made-up numbers into the software demo, trying to create one plausible settlement scenario. We've all seen negotiations like this, and now we can represent them graphically, in a very professional looking way.




What this does is take some of the mystery out of the negotiation process, and I think that's a good thing. Often parties are leery of entrusting the resolution of an important lawsuit to a process that can sometimes resemble a rug bazaar or a game show. It's hard for participants to believe in a process in which the outcome seems determined by which side has the best negotiating tactics. Tools like this software can remove some of that gamesmanship. Used properly, the outcome is determined, not by a mysterious game of poker, but by examining both parties' best assessments of the real value of a case. Each side can rely primarily on their own evaluation of costs and risks, and take opposing counsel's assessment for whatever they think it is worth. These graphs also tend to reveal that there is an element of posturing in both sides' predictions, and that the real value of a case is usually somewhere in between the value that each side represents to the other. What the software does is help guide the parties to an outcome that makes sense based on their real or imagined predictions of costs and risks, and then graphically displays those results to help people feel more comfortable with the process and make more informed decisions.

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