Decision analysis is a highly effective tool for understanding and explaining litigation prospects and risks. The inherently uncertain nature of litigation is what makes decision analysis so effective - after all, making smart decisions in the face of uncertainty is the core purpose of decision analysis.
When applying decision analysis in practice, the key uncertainties of a given case need to be identified, analyzed and arranged together to produce a clear overall view on prospects.
The process of identifying uncertainties is relatively straightforward where there is a small number of potential outcomes. In these situations, legal teams working on a case will be well equipped to identify each uncertain outcome in precise terms.
Example 1: In a litigation for breach of contract, a key uncertainty will be whether or not the court finds that the defendant committed an actionable breach. Identifying this uncertainty is straightforward because there are only two potential outcomes. Either (1) the court will find a breach, or (2) the court will find no breach.
But other uncertainties are more difficult to identify because they involve ranges of many potential outcomes.
Example 2: If the court finds a breach was committed, a further key uncertainty will be what damages the plaintiff is awarded. Identifying this uncertainty is not straightforward because there is a range of many potential damages awards the court might determine.
The traditional approach for dealing with ranged uncertainties in decision analysis is to identify a small number of indicative outcomes from the range of all potential outcomes. This typically involves identifying "high", "medium" and "low" (or "best"/"base"/"worst") indicative outcomes from the range, and then analyzing overall prospects by reference to those indicative outcomes.
While the high/medium/low approach has been widely used in decision analysis, it isn't without drawbacks:
Litigaze's patent-pending scenario analysis feature is designed to solve all the problems of the high/medium/low approach, while providing decision-makers even more useful insights on complex litigation uncertainties.
To see how dramatic an improvement scenario analysis is, compare the following two visual plans which represent exactly the same hypothetical breach of contract litigation.
Using scenario analysis in Litigaze takes a few simple steps:
First, you'll need to add some variables to your plan. These could be financial variables (like a damages award), chance variables (like the chance of establishing breach of contract), or both.
Next, you'll need to add scenarios to your variables to represent different viewpoints on those variables.
Once you've added scenarios to your variables, they'll appear in the scenarios menu, which you can access from the sidebar (TIP: click "M" on your keyboard to toggle the sidebar menu).
In the scenarios menu, you can easily switch variables between different scenarios with a simple click. To change all variables at once, click the scenarios headings.
To see how changing scenarios affects your plan evaluation, simply switch scenarios after running an evaluation.