Litigation Risk Assessment: A Tool to Enhance Negotiation

This paper begins with a discussion of how "good" and "bad" predictions about litigation risk can affect a negotiation process. It explores how thorough predictions are often missing in the way that lawyers and clients prepare for, and navigate through, their negotiations. Drawing on a recent study of lawyers and law students, this paper summarizes a simple framework for conducting a thorough risk assessment, and then examines the way that it can be used to support the pursuit of settlement. Two conclusions emerge from the study, and in particular from the observation of how law students negotiated a hypothetical civil litigation file.

A risk analysis can ground the negotiator and client with a well-prepared reference point (or BATNA, discussed further below) and help identify the bargaining zone, adding strength to decision-making. Further, it can reduce adversarial posturing and even build trust and transparency in negotiation, assisting in the construction of a problemsolving process. This paper seeks to contribute to the development of best practices around the use of risk analysis, and the quest for more responsive and earlier settlement outcomes for clients.