SettlementAnalytics has launched a first-of-its-kind automated litigation analysis platform, which applies mathematical game theory to predict the outcomes of legal conflict.

OptiSettle enables claimants and defendants to enter the costs of litigation and their beliefs about the possible outcomes of negotiation, settlement and trial, to calculate more realistic claim valuations, compute settlement probabilities, quantify implied trial risks and optimise settlement strategies.

OptiSettle’s trademarked LitigationSimulator means litigants can bench test their settlement decisions before going into live negotiations, with the system processing all of the possible outcomes and risks.

The platform, which has been five years in the making, means that for the first time litigants and counsel can price legal claims from an investment management perspective, quantify the risk of settlement offer rejection and reverse engineer the information implied in settlement decisions.

Robert Parnell, founder and chief executive of SettlementAnalytics said: “This is the first time that simulation and game theory have been combined to explore the financial variance of legal claims. We believe this is an important development in legal economic risk measurement.”

OptiSettle takes a bilateral approach to analysis by including an opponent’s possible responses to a decision. Parnell added: “You don’t unilaterally go to trial. To get to trial you have to go through a gate, which is bargaining. That bargaining acts as a filter and has information from which we can extract the nuts and bolts of the dispute. Before adjudication, a lawsuit is both a potential trial cash flow and a potential settlement cash flow.”

The OptiSettle platform is designed to work across all major legal jurisdictions, permitting a choice of different cost shifting rules. The model also anticipates a range of different cost structures including hourly, contingent and hybrid legal fees.

Jonathan Maas, who heads Huron Legal’s discovery and disclosure team, was previously part of EY’s forensic technology and discovery services team and before that head of litigation technology at DLA Piper, said: “There is a gap in the market for a sophisticated settlement assessment tool.  I have used basic systems in the past and the interesting thing about OptiSettle is that it appears to approach disputes as if they are investments, which is refreshing.

“A business’s commercial interest in a dispute is more along the lines of where their return on investment lies, where the cut-off point is when they are about to spend more than they are likely to get back.  Businesses can’t afford to become emotional about disputes because that’s when the expensive principles kick in.”