Let's Not Make a Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations

Abstract

This study quantitatively evaluates the incidence and magnitude of errors made by attorneys and their clients in unsuccessful settlement negotiations. The primary study analyzes 2,054 contested litigation cases in which the plaintiffs and defendants conducted settlement negotiations, decided to reject the adverse party's settlement proposal, and proceeded to arbitration or trial. The parties' settlement positions are compared with the ultimate award or verdict, revealing a high incidence of decision‐making error by both plaintiffs and defendants. This study updates and enhances three prior studies of attorney/litigant decision making, increasing the number of cases in the primary data sets more than threefold, adding 72 explanatory variables from 19 classes, applying a multivariate analysis, presenting an historical review of error rates during the 1964–2004 period, and comparing the primary study error rates with error rates in cases where the parties are represented by attorney‐mediators. Notwithstanding these enhancements, the incidence and relative cost of the decision‐making errors in this study are generally consistent with the three prior empirical studies, demonstrating the robustness of the earlier works by Samuel Gross and Kent Syverud, and Jeffrey Rachlinski. The multivariate analysis, moreover, shows that the incidence of decision‐making error is more significantly affected by “context” variables (e.g., case type and forum) than by “actor” variables (e.g., attorney gender and experience level).

Predicting Civil Jury Verdicts: How Attorneys Use (and Misuse) a Second Opinion

“…VerdictSearch summaries describe the parties, the major issues at trial, the plaintiff's injuries, and the damages awarded. Multiple researchers have confirmed the reasonable accuracy of VerdictSearch reports (for a review, see Kiser et al. 2008:556).…”

“…Confronted with the difficulty of estimating jury verdicts, attorneys often make costly mistakes (Gross & Syverud 1992; Kiser et al. 2008; Rachlinski 1996; see review by Kiser 2010).…”

“…2008; Rachlinski 1996; see review by Kiser 2010). Kiser et al. (2008) compared settlement offers attorneys rejected to the verdicts the same attorneys achieved at trial.…”

The Impact of Tort Reforms on the Sanctioning of Physicians by State Licensing Boards

“…Under such conditions, defendants might choose not to settle. Some of the suits, however, would have merit and the plaintiffs would proceed and prevail in trials (Kiser et al. 2008).…”

Hidden Costs? Malpractice Allegations and Defensive Medicine Among Cardiac Surgeons

“…Such costs may, for example, include the non-financial costs of stress and the cognitive load of defending litigation (Morrissey et al, 2008), the lost time and associated direct financial costs from lost patient revenue or failure to develop a practice, and other reputational costs. Additionally, these hidden costs could be heightened by common errors that take place in unsuccessful settlement negotiations (Kiser et al 2008). They may also include lost time and the associated direct financial costs from lost patient revenue or failure to develop a practice.…”