What is the expected value of a lawsuit?

It is the probable verdict multiplied by the probability of winning, minus the cost of getting there. A 1,000,000 verdict with a 60 percent chance of winning has a gross expected value of 600,000; subtracting 150,000 in remaining fees and costs leaves a net expected value of 450,000 for the plaintiff.

What is a BATNA and why does it matter?

BATNA is the Best Alternative To a Negotiated Agreement, the value each side gets by walking away and litigating. A plaintiff will not rationally settle below their expected value net of risk, and a defendant will not pay more than their expected exposure, so BATNAs frame the settlement zone.

What is the zone of possible agreement?

It is the overlap between the most a defendant will rationally pay and the least a plaintiff will rationally accept. When the plaintiff's floor sits below the defendant's ceiling, a deal exists in that gap; when it does not, the case may need to proceed or expectations must shift.

How should I pick the win probability?

Base it on the strength of liability and damages evidence, jurisdiction tendencies, and counsel's honest assessment, not optimism. Running the tool at a few probabilities, for example 40, 55, and 70 percent, shows how sensitive the settlement range is to that single assumption.

Does this account for the time value and stress of trial?

Not directly. The figures are pre-discount economic expectations. Rational parties usually settle for somewhat less than the raw expected value to avoid delay, risk, and the cost and stress of trial, so treat the computed range as a starting frame and discount for those factors.

What is the Mediation Settlement Range Tool?

Multiplies the probability of prevailing at trial by net recovery after fees and costs to find the expected value of litigation, then compares it to each side's BATNA to define a rational settlement zone. For mediators and litigators anchoring negotiations. Runs in your browser. It runs free in your browser on Gera Tools, with nothing uploaded.

Mediation Settlement Range Tool

Name: Mediation Settlement Range Tool
Creator: Gera Tools
License: https://creativecommons.org/licenses/by/4.0/

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Effective mediation starts from numbers, not positions. This tool computes the expected value of going to trial for each side and uses each party’s walk-away alternative to frame a rational settlement range, giving the mediator a defensible anchor for the conversation.

How it works

The core is a one-node decision tree. The plaintiff’s net expected value and the defendant’s expected exposure bound the negotiation:

gross EV          = verdict × win probability
plaintiff floor   = gross EV − plaintiff remaining costs
defendant ceiling = gross EV + defendant remaining costs
ZOPA exists when plaintiff floor < defendant ceiling

The plaintiff nets out their own costs, so they accept less than the gross expected value; the defendant adds the costs they avoid by settling, so they pay more. The overlap between those two is the zone of possible agreement.

Worked example

A commercial dispute with a $1,000,000 potential verdict:

Win probability for plaintiff: 55%
Remaining litigation costs (each side): $150,000
Plaintiff’s gross expected value: 1,000,000 × 0.55 = $550,000
Plaintiff’s rational floor: 550,000 − 150,000 = $400,000
Defendant’s rational ceiling: 550,000 + 150,000 = $700,000
Zone of possible agreement: $400,000 to $700,000

The $300,000 ZOPA is wide, which usually makes settlement achievable. A mediator can anchor the conversation at the midpoint ($550,000) and explain the math to both sides rather than relying on positional bargaining alone.

Reading a narrow or negative ZOPA

Not every case has a settlement zone. If the plaintiff’s floor exceeds the defendant’s ceiling — for example because the plaintiff overestimates win probability or the defendant underestimates verdict exposure — the ZOPA is negative and the case may proceed to trial unless expectations shift.

Running the tool at two or three win probabilities (for example 40%, 55%, 70%) is especially effective in mediation because it shows how sensitive the numbers are to a contested assumption. Parties often have very different probability estimates; mapping both estimates onto the expected value shows where the gap lives and can move both sides toward more realistic assessments.

Important limitations

This model is a first-order economic frame. It does not capture:

Time value — a trial two years away is worth less than a settlement today, which rational plaintiffs should discount further
Risk aversion — most individuals settle for less than their economic expected value to avoid the downside risk, which is perfectly rational
Non-economic factors — reputation, confidentiality, stress, and management time do not appear in the numbers but frequently determine where a deal lands
Damages uncertainty — the “likely verdict” is itself a range, and the expected value of a range is lower than the expected value of its midpoint due to variance

Use the output as a starting anchor and a conversation tool, not as a mechanical formula for an exact settlement number. The tool does not constitute legal advice.