LSF Index Product Comparison
|LSF Probability||LSF Forecast||LSF Optimization|
|Analysis of the current implied LSF probability||✔||✔||✔|
|Interpretation of quantitative results||✔||✔||✔|
|LSF Risk Level||✔||✔||✔|
|Game Theory ZOPA||✔||✔||✔|
|LSF Categorical Prediction||✔||✔|
|Iso Probability Charts||✔||✔|
|Forward Projection of the LSF Index||✔||✔|
|LSF Cost-Uncertainty Indifference Analysis||✔|
|Settlement Offer Optimization||✔|
|Settlement Level Forecasting||✔|
Note: The content of LSF Service Levels and client reporting may vary and will depend on the exact nature of the legal dispute, the UTS Model Inputs provided by the client.
Sample LSF Risk Analytics
LSF Index and Risk Level
This analysis provides a current status calculation of the LSF Index and reporting on the LSF Risk Level. Index readings are assigned to one of five color-coded LSF Risk Levels, which provide a summary assessment of situational urgency with respect to any claim. In addition to providing an absolute barometer of settlement risk, the Index offers a means with which to rank order legal claims in terms of their exposure to a trial adjudication.
LSF Index Forecast
The LSF Index can be calculated on a forecast basis using on a projected cost schedule of continued litigation. The analysis illustrates how cost sinking alone will impact the probability of settlement. This analysis can be particularly insightful pre- and post-discovery and in general to help explain and examine what is sometimes referred to as the ‘deadline effect’ in settlement bargaining.
Game Theoretic ZOPA
The AI component of UTS Model draws upon a suite of game theoretic models of signaling and screening. In calculating the LSF Index for any dispute, this analytic framework provides an alternative – game theoretic – expression for the Zone of Possible Agreement (ZOPA). In this analysis, conventional and game theoretic ZOPAs are compared. The game theoretic ZOPA (‘Game ZOPA’) typically suggests a narrower and more realistic range for settlement bargaining. Whereas the limits of the conventional ZOPA are defined by a pair of worst-case trial expectations, the limits of Game- ZOPA are defined by a pair of optimum settlement offers.
Each phase of litigation brings anticipated costs, which will tend to erode the probability of settlement if they are incurred. Using LSF Index technologies we can calculate the extent of informational gains required of each cost phase of dispute in order to preserve the probability of settlement. In other words, if costs are to ‘earn their keep’, what would we need to learn? We call this Cost-Information Indifference analysis, and it can be thought of as the required informational return on investment in each phase of litigation. Typically, indifference requires an anticipated collapse of trial uncertainty and/or convergence of expectations, i.e. reduced optimism. This analysis can also be framed in terms of the preservation of claim value.
Settlement Probability Optimization
Here the Index is used to explore how the probability of settlement changes over the settlement bargaining zone and to identify a target settlement level, which is maximizing of the settlement probability. In the example illustrated, settlement is wealth maximizing. This will often be the case, but is not assumed in the analysis and is not a requirement.
Settlement Offer Response Dispersion
Advanced LSF analyses can explore, not just the likelihood of rejection, but the implied wealth dispersion associated with specific settlement offers or demands. This analysis exploits the mathematics of the asymmetric information models at the heart of the UTS Model. Having used UTS Model to calculate the LSF Index, we then apply simulation techniques to extract the range of potential wealth responses to settlement offers. The resulting dispersion represents the financial risk associated with an individual offer or demand.
Note: The content of LSF Risk Analytics may vary and will depend on the exact nature of the legal dispute, the UTS Model Inputs provided by the client.
The Litigation Settlement Failure Index (LSF Index) is the world’s first legal metric to serve as a quantitative early-warning indicator of trial-bound disputes.