TUTORIAL
THREE
DECISION
TREES FOR LAWYERS
By
Michael D. Freeborn
For
Tutorial 3, let's not just add attorney fees into the mix -- let's also make the likelihood of winning a more complex
question. Assume all the same facts as before, but when the company asks
about the likelihood of winning, instead of saying 50-50 the trial lawyer merely
says, "It depends." Great. Thanks.
You say, "It depends on what?"
Well, the lawyer says, in order to win, the plaintiff will have to produce a signed copy of
the contract, and we think there's only about a 60% chance he'll be able to.
Also, even if there is a signed contract, the plaintiff will have to prove
the signer had authority to sign it, and we think there's only about a 70%
chance the he will be able to do that.
Litigate or settle?
The decision tree at the right shows how we can analyze these additional
issues.
This time the expected cost of litigating -- $570,000 -- is slightly less than
settling, even though we incur $150,000 in legal fees. So litigation is
a good decision again.
Ready for Tutorial 4 ?
Or would you like to go back to the Introduction,
Tutorial 1, or Tutorial
2?
Copyright © 2001 Michael D. Freeborn. All rights reserved.
