Conceptual constructs for mediation often use the best, worst, and most likely alternative to a negotiated agreement as considerations in achieving a settlement. But, what are the variables that help you determine the BATNA, WATNA, and MLATNA?
While every case will have different variables, and some will be more relevant than others, the principal variables could be selected from the following list (which is not exhaustive).
A.Strength of legal case
iv.Degree of connection to statutory, regulatory, or contractual obligations
B.Strength of technical case
i.Qualifications of your expert
ii.Relevant experience of your expert
iii.Reliability of expert data and report
iv.Time linkage to the events in question
C.Leverage of people involved
i.Relative experience of the litigators
ii.Historical relationship with the judge
iii.Quality of the mediator
iv.The persuasiveness of the expert in oral testimony
These don’t include factors such as the parties’ intransigence, the effect of venue, emotional or cultural levers. The factors are also not necessarily independent.
The detail you want to apply to the calculation is up to you, but in a probabilistic analysis, each variable (%L, %T, and %P) would have a percentage from 0 to 100% certainty or 0 to 1 for easier math. Also, each of Categories A, B, and C would be ranked in relative importance by percentage or 0 to 1 and would sum to 1 or 100%.
For example, suppose you believe that the result would rest mainly on the technical case, as in a battle of experts. In that case, Category B could be rated at, say, 70% (0.7), perhaps with the legal and people-oriented factors each equally ranked at 15%. If you believe your expert is no better than the other side’s expert in report quality, expertise, reliability, and timing from the event, you may give your expert’s report (in Category B) a 50/50 chance of being better than the other party’s expert - or a %T of 50% (0.5). If you believe that your legal case is far better in terms of precedent, application of statutes, etc., %P may be given a rating of 80%. If you believe that your relationship with the judge, quality of mediator, personal experience and expert’s oral testimony are exceptional, you may give Category C 90% (0.9). So, where does that leave you?
Mathematically, your chance of success would be the sum of the factored categories. If you are confident that the percentages you have assigned are a best-case scenario, the probability could be your BATNA. In this case, that would be:
PBATNA = A●%L + B●%T + C●%P
PBATNA = 0.15 x 0.8 + 0.7 x 0.5 + 0.15 x 0.9
PBATNA =0.6 or 60% chance of winning
If your case is worth $1,000,000, perhaps a BATNA of $600,000 (60% of $1,000,000) would be logical. That value would require adjustment for expenditures going forward and the likelihood of recovery of costs, but it is a starting point.
If you want to consider the WATNA, you could be more pessimistic about the %L, %T, and %P and arrive at a lesser figure (though the percentage still must sum to 100%). For example, if the proportions of A, B, and C are still 15/70/15 and %L, %T, and %P are 30/35/35, the resultant WATNA could be:
PWATNA = 0.15 x 0.3 + 0.7 x 0.35 + 0.15 x 0.35
PWATNA =0.3425 or 34.3% or $343,000
So, your settlement value is somewhere between the BATNA and WATNA or $343,000 to $770,000 adjusted for future costs.
The same analysis could be done if you are the paying party. The overlap, which may be known only to the mediator, assuming both parties share this analysis, would be the Zone of Possible Agreement or ZOPA. The mediator has to work to close that gap.
Arriving at the A, B, C, and %L, %T, %P factors will take sincere and dispassionate consideration. Moreover, the values are not fixed. They can migrate as you learn more about your opponent’s case. If you are handy with a spreadsheet, you can adjust the values on the fly as you work through your mediation.
Jerry is the Principal of Genge Construction Adjudications.