How to Use a Decision Tree in Mediation
A decision tree is a quick and graphic way to help clients in mediation analyze the potential costs and benefits of their choices when they’re focused only on the best possible outcome. Parties in the middle of impasse are probably being too optimistic. They’re stuck because, for months, they’ve had an idea in their heads that they’re going to sue for, say, $500,000, and that’s all they think of.
They rarely consider the potential costs involved or the possibility that they may lose, even though their attorneys explain these facts of life to them over and over. They feel like they’re walking away as losers if they settle for anything much less than their attorney originally suggested they may recover.
To bring the parties back down to earth, present one or both parties with a decision tree, cost analysis, and/or the expected monetary value (EMV) of the possible outcomes. Perform a decision tree analysis with each party in separate caucus.
At this stage of the mediation, your job is to bring both parties’ high-flying expectations of success back down to earth by revealing the realistic merits of each party’s position. If you do this in joint session, you defeat the purpose with both parties because they simply hear what supports their view one more time.
To create a decision tree, team up with each party in separate caucus and perform the following steps:
Brainstorm to identify all possible outcomes.
Include good outcomes and bad, those that result from litigation and those that don’t. Typical outcomes from litigation include winning a summary judgment motion, prevailing on any other pretrial proceeding, or winning through discovery (for instance, finding the smoking gun) and obtaining a jury verdict.
Of course, winning isn’t always the final outcome. If enough money is at stake and the parties can afford to continue fighting, the appeals process can drag on for months or even years.
Because the remedies available in court are limited, brainstorming outcomes that aren’t available to the parties through litigation and trial are particularly useful chips to put on the bargaining table. Consider the status quo and any outcomes that may result from mediation.
Determine the potential cost or benefit of each outcome.
For example, if the case goes to trial, how much money can the plaintiff expect to walk away with if she wins? How many months or years will it take? How much can she expect to pay in attorney’s fees, and what chances does she have to recover those fees?
For each option, jot down the likelihood that it’ll occur based on your experience.
You may not know the chance of each outcome occurring, but you may know that the client has a 50/50 chance of winning a judgment or a 50 percent chance of recovering attorney fees. The results at trial are so uncertain that it’s best to never estimate more than a 70 percent chance of winning.
Draw your decision tree.
Start with a You Are Here box, with one line radiating out of it for each possible outcome. For each outcome, list the potential costs, benefits, and other pros and cons. The figure shows a sample decision tree used in a mediation between parents suing a school district about their disabled child’s Individual Education Plan (IEP).
In the case illustrated here, the parents realized for the first time during mediation that winning wasn’t something they wanted. Their child would be reevaluated and his IEP revised once a year. The parents didn’t like any of the district’s previous IEPs, and winning the litigation wouldn’t assure them that the district’s annual reevaluations would be a significant improvement over previous ones.
The specter of yearly reevaluations with educational requirements the parents believed would be detrimental to their child was a major potential consequence of winning.
They also recognized that their continued fight with the school district was upsetting their 10-year-old son, who had to be evaluated and reevaluated, not only for the yearly IEP but also for court proceedings. When we built a timeline into the decision tree, the value of settling now became much more attractive than pursuing victory in the distant future.
Finally, the district’s offer to underwrite a portion of the son’s education in a private school wasn’t a possibility under formal district rules, nor was it a possible litigation outcome, but it was an option in settlement.
The settlement only required that the parents absolve the school district of its obligation to educate their son for as many years as the district was responsible for his education, which they were more than happy to do.
Walking the parties through this decision tree settled the case after a previous mediation had failed to do so. The previous mediator failed at impasse without constructing a decision tree. The parties could have settled this matter much earlier and saved considerably on attorney fees had the first mediator used a decision tree.