SettlementAnalytics™ Launches Global Litigation and
Settlement Analytics Business
SettlementAnalytics Pioneers the Application of Game Theory and Monte Carlo Simulation to Legal Claim Valuation, Settlement Decision-Making and Litigation Risk Management. Firm to Launch Litigation and Settlement Analytics Software Application in January 2015.
HONG KONG, December 9, 2014 – SettlementAnalytics™ has today announced the launch of its litigation and claim settlement analytics services.
SettlementAnalytics is a quantitative economic research and advisory firm, focused on litigation valuation, settlement optimization and claims risk management. Core advisory and software services draw on the firm’s proprietary quantitative models of litigation and settlement, which bring together ideas from game theory, information economics, financial analysis and Monte Carlo simulation.
Problems and Solutions
The firm’s approach is based on the idea that claim valuation and settlement optimization must properly reckon with the bilateral character of the dispute, the uncertainty of trial outcome and the fundamentally contingent nature of legal claims. Conventional approaches to lawsuit pricing, legal spend and settlement decisions are vulnerable to error because they can fail to adequately take account of this complexity.
“The scale of this problem is enormous,” said Robert Parnell, founder and CEO of SettlementAnalytics. “For example, empirical research consistently indicates that plaintiffs are making settlement errors in approximately 60% of legal disputes while defendants make errors in about 25%. And the size of these errors should be of concern to any litigant.
“The broader problem is that legal-economic issues are mathematically complex, and as a result decision-making can be highly suboptimal when this complexity is overlooked. Qualitative approaches or historical data mining can sometimes help, but they can also paint an incomplete and unreliable picture. Our own approach focuses on the pure economic rationality of litigation and settlement decisions and we think this provides litigants with an important check and balance against heuristic and/or data biases.”
SettlementAnalytics seeks to reduce errors in claim valuation and settlement decision-making through the application of its quantitative models and software applications. Said Parnell, “While no single quantitative model is a panacea, we believe our approach represents a significant step towards a more scientific and rational analysis of contingent liabilities such as lawsuits and disputed insurance claims.”
SettlementAnalytics is also pleased to announce that its litigation and settlement optimization software, OptiSettle™, will be released in January. OptiSettle represents a comprehensive litigation pricing and claim risk management framework.
“OptiSettle incorporates our proprietary model development in these areas and seamlessly integrates best-in-class ideas from legal and financial economics in one analytic concept,” said Parnell. “This is a pioneering initiative in the application of game theory and Monte-Carlo simulation to litigation and settlement decision-making.”
A key feature of OptiSettle’s analytic framework is that it enables litigants to examine the value of claims across the dyad of both trial and settlement. This distinguishes its analytic approach from the simple trial expectations and decision tree model. According to Parnell, “Analytically it’s important to get beyond a pure trial expectations framework – if only because 95% of all legal disputes are resolved before a court adjudication. OptiSettle delivers this broader analytic perspective.”
OptiSettle also brings a level of quantitative rigor to the process of claim valuation and settlement decision-making. Whereas the conventional process of translating trial expectations into settlement decisions is largely qualitative and intuitive, OptiSettle enables corporate litigants to establish a more systematic, quantitative, documented and auditable approach. “As legal claims become a bigger part of the enterprise value calculus, OptiSettle can help by providing a more rational and defensible basis for claim disclosures and settlement pricing.”
Legal Technology Trend
SettlementAnalytics is part of an emerging trend towards the application of technology to litigation and the firm anticipates robust growth. In Mr. Parnell’s opinion, “This trend is still very much in its infancy, and as legal costs continue to spiral upward, quantitative approaches to making litigation decisions will become increasingly compelling.
“But beyond the trend towards legal tech, we believe there is a more fundamental paradigm shift afoot. From one characterized by a legal mandate and a cost-center orientation to one characterized by an investment mandate and a risk-adjusted return orientation. From trial-centric, trial-maximizing to claim-centric, claim-maximizing.
“The technology now exists to apply the same asset, risk and portfolio management practices to legal claim portfolios that previously have been reserved for more conventional corporate assets such as pension funds, real estate and treasury balances. In other words, not merely to look at legal claims as a portfolio, but to examine all litigation decisions through the lens of investment management.
“This will be an interesting time for the management of litigation, and we are excited to be a part of this evolving landscape.”
SettlementAnalytics is an economic research, consulting and software development firm focused on litigation valuation, settlement bargaining optimization and claim risk measurement. The firm is dedicated to advancing the application of scientific and quantitative methods to all aspects of litigation and claim settlement. SettlementAnalytics is the litigation economic research and advisory division of Macro Research Associates Limited, a Hong Kong economic consulting company. More information about SettlementAnalytics can be found at SettlementAnalytics.com.
For more information please contact:
Robert J. Parnell, CFA
Founder and CEO
Tel: +852 3589 3377
Macro Research Associates Limited
1301 Bank of America Tower
12 Harcourt Road, Suite 1479
Central, Hong Kong