Using Risk Analysis as a Mediation Tool
Slavitt, Evan, Dispute Resolution Journal
This article is about using risk analysis to help analyze cases in mediation. The author provides a simple, step-by-step introduction to this sophisticated tool so that even the most math-phobic practitioner can follow it. It covers the fundamentals of probability, assigning values to judgments, dependent and independent events, the use of decision trees, sensitivity analysis, and how to use these concepts in the legal and mediation context.
Successful mediation presents two related challenges: conveying the complexities of a case to the mediator 1 so he can engage opposing counsel and the parties in productive dialogue. The most common way of conveying the complexities of a case to the mediator is verbal advocacy. In essence, each side argues its case to the mediator and the adversary, hoping to convey the most strength while conceding the least weakness. There will always be a place for such advocacy in mediation. However, it has several weaknesses. First, advocacy is entirely qualitative.2 As a result, it is hard to compare one side's advocacy with another's. Thus, the adjectives used in advocacy have no common meaning. For example, if one side says it has a strong case, how strong is "strong"? And how much stronger is "very strong"? In addition, the discursive technique does not tend to lead the parties to separately evaluate different aspects of a conflict and then come together to reach some common ground. Finally, it is hard to determine how changes in an evaluation of one aspect change the evaluation of the case as a whole.
One underused technique that can ameliorate these weaknesses is risk analysis (also called probability analysis). Risk analysis involves making judgments in quantitative terms, thereby allowing for more precise and productive discourse.
Part I of this article provides a basic introduction (written for the most math-phobic attorney) to the elements of risk analysis. Part II demonstrates how to use risk analysis to evaluate cases. Part III discusses a refinement called "sensitivity analysis." Part IV covers risk analysis in the settlement context and Part V demonstrates this process in the context of mediation.
Part I. The Elements of Risk Analysis
Probability is essential to making decisions under uncertainty. It is something that people do intuitively every day. When we look out the window and decide whether to carry an umbrella, we are calculating probability-how likely it is to rain and how likely we are to be outside when it does.
Almost every aspect of law requires some decision making under uncertainty. Clearly, uncertainty is present in every litigation, but it also appears in business negotiations, real estate disputes, and every circumstance in which lawyers make a judgment. The use of probability only formalizes what is already implicit in the process.
"Probability" is the likelihood of a particular statement of fact being true. Thus, the statement "It will rain this afternoon" has a particular probability of being true. Probability can also be applied to events that have occurred in the past, but only if the truth or falsity of such event is unknown to the person making the evaluation. Naturally, every statement about the past is either true or false, since the past is known.3
This means that the concept of probability is only meaningful for statements that can be said to be objectively true or false. It makes no sense to talk about the probability that a picture is artistic, or that book is exciting, or that a bride is beautiful. Similarly, it is not meaningful to talk about the probability that a person will be treated fairly or justly. These are subjective statements that cannot be said to be objectively true or false.
It is important that the statement of fact under analysis not contain implied judgments. Implied judgments are frequently found in the use of adjectives and adverbs. For example, the statement "The client will receive a large recovery" contains a judgment of what is large and what is not. …