Legal IT 5.0: Managing and Resolving Legal Disputes With Online, Game-Theoretic Systems

Moving on to the 10:45am session this morning in Montreal, at the LegalIT 5.0 Conference, James F. Ring from Fair Outcomes tackled the topic of managing and resolving legal disputes online.

James introduced the problem with some thought provoking facts:

  • only 5% of cases make it to trial
  • the vast majority of cases settle within 30 days of the first day of trial, and
  • 80% of cases that do settle do not settle until the day before the trialuntil they are in a “30 days before the first day of the trial” window.

One explanation for the long pre-trial delays and high rate of case settling just before trial consists in viewing the litigation process as an information exchange process, up to and leading to trial, where information on liability and damages has been fully exchanged.

James presented some insights on the litigation process flowing from game theory. The vast majority of cases settle when the parties get to a point where it is in their best interest to settle and when they perceive that the opposing party is in the same position. Before that point, there is “a lot of posturing”. James defined game theory as follows:

Game theory is the science of strategy and independent interdependent decision making using principles of logic and mathematics.

Game theory applied to legal dispute resolution stems from the belief that once conflict is understood to be rational, credible ways can be found to reduce and resolve them. James offered a succinct conceptual and historical perspective on topic, and presented some of these “credible ways”:

  • I cut, you choose: one party proposes a division, the other party chooses
  • Ultimatum Game: one party unilaterally proposes a deal, one time only, and the other party is free to accept or reject it. If the ultimatum is rejected, there is no deal and no possibility of further negotiation
  • Focal Coordination Game: each party proposes a deal through a third party. The parties involved in the negotiation are not in touch with each other, only the third party receives both proposals. If both proposals match, a deal is made, otherwise there is no deal

James then “showcased” some Fair Outcomes Inc. online dispute resolutions systems, including the Fair Buy-Sell Agreements and the Fair Division System (see also the YouTube video on topic).

Note: corrections were made at the request of the conference speaker.

(cross-posted on CCCT-CCTJ)

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