| Scenario | Likely award | Win probability | Fees to date | Future fees | Months to trial | Risk aversion | Suggested target |
|---|---|---|---|---|---|---|---|
| Commercial invoice dispute | USD 80,000 | 65% | USD 8,000 | USD 18,000 | 6 | 55 | USD 44k–52k |
| Employment separation claim | USD 120,000 | 50% | USD 14,000 | USD 30,000 | 10 | 70 | USD 45k–60k |
| Vendor performance dispute | USD 200,000 | 40% | USD 20,000 | USD 55,000 | 12 | 60 | USD 65k–85k |
The calculator estimates a discounted expected outcome and then shapes a negotiation band using risk tolerance and non-cash values. It does not replace legal analysis, venue-specific remedies, or advice from counsel.
- Time discount: monthly rate r = annual_rate / 12; discount factor DF = 1 / (1+r)^(months_to_trial+months_to_collect).
- Appeal haircut: Award_adj = LikelyAward × (1 − AppealReversalRisk).
- Collectability: Award_col = Award_adj × Collectability.
- Litigation outlay: Costs = FeesToDate + FutureFees + Experts + (MonthlyCarry × MonthsToTrial).
- Expected values: EV_claimant = pWin × (Award_col × (1 − Tax)) × DF − Costs, EV_respondent = pWin × Award_col × DF + Costs.
- Negotiation band: risk aversion maps to a 5%–40% discount/premium around EV; confidentiality and relationship values add a bounded premium to settlement positions.
- ZOPA estimate: if you provide an estimated counterparty range, overlap is computed as the intersection of both bands.
- Enter your likely award and an honest win probability.
- Fill in fees, experts, and carrying cost to reflect real cash impact.
- Set months to trial and months to collect to capture timing risk.
- Adjust risk aversion to reflect governance, budget, and uncertainty tolerance.
- Add confidentiality and relationship values to represent non-cash priorities.
- Optional: enter a counterparty range to check likely overlap.
- Submit to see the recommended opening, target, and walk-away.
- Use CSV/PDF to share assumptions with reviewers and counsel.
Demands are messaging; settlements are discounted outcomes. A practical baseline starts with a realistic “likely award,” then adjusts for proof strength, collectability, and timing. When documentation is mixed, negotiated payments often land well below the claimed amount because parties price uncertainty, not ambition. Track what drives variance: documents, witnesses, and damages proof. Keep the claimed amount as a reference, but anchor decisions on the likely award and the cost of getting paid.
Small probability updates can dominate the range. On a 200,000 award, shifting win probability from 45% to 55% changes expected award by 20,000 before discounting. Use fresh evidence to revise probability first, then re-check opening and walk-away. This keeps negotiation moves for budgeting discipline internally tied to facts rather than momentum.
Delay reduces value even when the merits are strong. With an 8% annual discount, a 10-month path to payment can reduce value by roughly 6%. Longer waits magnify appeal and enforcement risk. If timing drives the gap, consider staged payments, security, or a fast-track mediation date to restore certainty.
Fees and experts act like a friction loss on any outcome. If projected future spend approaches one-third of the likely award, many teams prioritize resolution unless precedent or injunctive relief is essential. This calculator totals sunk and future costs for a complete picture, but you can run a second scenario excluding sunk fees for purely forward-looking decisions.
Confidentiality, non-disparagement, and relationship preservation can justify paying above a narrow expected value. Assign a realistic internal dollar value to quiet resolution or continued business, then reflect it in the non-cash fields. This makes targets auditable and helps teams trade money for terms with clarity.
Enter a counterparty range to test whether a zone of possible agreement exists. When overlap appears, plan concessions in steps from opening toward target, saving non-cash tradeoffs for late-stage closure. When overlap is absent, revisit assumptions, propose contingent terms, or reset objectives before escalating. If overlap is narrow, use bracketed offers or mediator proposals to test reality without conceding. The goal is disciplined movement, not drift.
No. It is a modeled boundary using your inputs. Treat it as a governance checkpoint that changes when evidence, costs, or timing changes.
For full-case reporting, include them. For forward-looking negotiation, run a scenario with fees-to-date set to zero to isolate incremental choices.
Use insurance coverage, asset checks, payment history, and enforcement complexity. Start conservative when information is limited, then tighten as facts improve.
Many teams use 6%–12% depending on cost of capital and urgency. Use a higher rate when volatility or enforcement uncertainty is significant.
Risk tolerance sets how much certainty you purchase. Higher aversion widens discounts or premiums around expected value to reflect preference for closure.
No. It is a structured decision aid. Validate remedies, fee shifting, taxes, and procedural timing with qualified counsel in your jurisdiction.