TUTORIAL
SIX
DECISION
TREES FOR LAWYERS
By
Michael D. Freeborn
Thus far, the only decision we've considered is the decision whether
to litigate or settle. It is, of course, a very important decision to
make. As Kenny Rogers says, "You got to know when to hold 'em, ...
and when to fold 'em..."
But decision analysis techniques are also useful for many of the
intermediate decisions made during the course of litigation. For
example, in Tutorial 6 we now consider the decision whether to spend
time on a particular strategy, and how much money should be devoted to it.
Assume that the company has now come to believe a plausible argument can be
made that all negligence allegations of Count II are barred by the Statute of
Limitations (which is shorter than the statute applicable to the contract
claim in Count I). But it will be necessary to spend some $50,000 in
additional legal fees, researching and drafting a motion to dismiss and briefs
on this subject. The company thinks there's a 50% chance of succeeding,
in which event only Count I would remain in the case.
How much should the company be willing to spend on the research and
drafting?
Now
we have two rectangles on our Influence Diagram, one for the
Litigate/Settle decision and the other for the decision whether to Argue
Limitations.
Here
is what our Decision Tree looks like.
When
we run the software, we find that we reduce our expected cost of
litigating, by deciding to spend the additional money on the strategy
of arguing the statute of limitations. This is true even though winning
on the limitations strategy does not dispose of the entire case. (Could
you have objectively demonstrated this result without the use of
decision analysis techniques?)
