Decision Trees Essay Example

For suspects, litigants, lawyers, and defendants, decision making is a weighty matter in any legal process. In short, decision making is the stuff of the law. Making a decision requires the existence of information. This concept implies that people need to be informed before they can make a choice (Hawkins, 1986). A consideration of the implications of any decision made is a vital consideration before making a choice (Zhukovsky, Gallagher, & Baker, 2018). One of the tools that guide legal practitioners in decision making is the decision tree. For the case provided in this scenario, I would use a decision tree to advice the client before taking any legal action.

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The client, in this case, is faced with a choice that needs to be made. The major considerations here would be compensation and recovery. The insurance company has its priority as ensuring a good image and reputation for it. With this in mind, they are opposed to any legal process especially that which will take time, taint its reputation and that which may have negative financial implication on the company. I have developed the decision tree below to help advice the client on the best choice to be made.

From the above decision tree, the client will have the full benefit of $100,000 if he/she opts to settle the case with the insurance company without undergoing any legal process. However, this provision requires that he/she signs out from any claim of further compensation in case of damages in the future. On the other hand, the legal process is rather appealing. If he opts for a legal trial, the gross outcome will be that he/she gets a profit of $70. This is after all financial implications that will be incurred for the legal trial ($10,000). In such a case, the right decision should be made to avoid regret in the future. I would advise the client to undergo the legal process to settle the case.

After the trial, the damages to be paid would be $70 as already mentioned. Furthermore, this caters for the risk involved as it considers the chances if he lost the case. Under this settlement, the process will be legal and no chances of fraud are likely to arise in the future. On the other hand, the probability of winning the case is 90%. This fact means there is only a 10% chance that he will not be compensated. Even after the 90% possibility that he/she wins the case in court, the chances of a better reward are higher than even the promised amount by the insurance company. This is because there is an 80% possibility that he/she gets a compensation of $400,000. In a nutshell, the consideration here is whether one, he is willing to risk his/her health which is likely to be in danger for the next couple of years and secondly, if he/she is ready to get a lower compensation after a legal process that may take time.

If my client is risk averse, my recommendation would change. In this case, the lower risk would be agreeing to the settlement with the insurance company. The guarantee here is that the company is obliged by a legal framework to compensate the client. Bad faith law would apply in case the company either Denys or delays in payment of the settlement. ("Bad Faith Insurance Law - HG.org," n.d.). However, in as much as I would recommend that he/she takes on the lower risk, I would advise against signing out for any future damages. The chance for a permanent damage should be a point of concern to the client. The damages offer by the company may be appealing but the future security should be put into consideration. In this case, I would advise him/her to take the offer by the insurance company but agree that future damages to his/her body should be compensated too. In this provision, the risk would be at its lowest.

In the second situation, the zero-sum game implies that one loss while the other one gains. In this consideration, each party will seek to have judgment in their favor (Hawkins, 1986). Any financial gain for one party implies an equal loss for the other party. In as much as this model is mathematical, it can also apply in legal cases for decision making. In this case, the insurance company is left to decide if the offer would $50,000, $100,000 or $150,000. In deciding which offer to take, I would certainly go for the $100,000 offer. The company, if it prefers that it will settle the case in a court of law; it will incur $10,000 more. Additionally, the probability that the company loses is 90%. Furthermore, there is an 80% probability that the company will be responsible for paying $400,000. In this scenario, the company should also opt to settle the conflict with the payment of $150,000. This settlement applies the concept of zero-sum theory as the client will maximally gain while the company incurs the loss on the other hand. The following decision tree applies to the company.

From the above decision tree, the company will incur almost the same cost if they opt for a legal proceeding. In this case, the company would rather give in and settle the conflict with a compensation of $100,000. This will be less time-consuming.

Many other factors ought to be considered in legal settlements where damages ought to be paid. The factors help in making the right decision for the clients and all parties involved. One of the factors to consider is the length of the settlement process. What this implies is that the longer the legal process, the higher the cost of settlement (Hawkins, 1986). Secondly, the cost of the lawyer should also be put under consideration (Feinman, 2005). The lawyer hired when suing an insurance company is experienced and hence the cost of hiring is relatively high. The cost could be higher to an extent that the damages paid are unreasonable (Zerbe, 2017). The above two considerations should always come into play before committing or settling for any payment of choice.

Conclusion

In conclusion, decision making can be aided by the use of tools such as the zero-sum game and the decision tree model. In the above two models, the major factor under consideration is that the client who is the victim of an accident is well compensated and the settlement caters for any damage from the accident. Lawyers should be keen to weigh all choices in order to give the best advice.

References

Bad Faith Insurance Law - HG.org. (n.d.). Retrieved from https://www.hg.org/bad-faith-insurance-law.html

Factors to Consider When Making Judgments About Controversial Issues. (n.d.). Ethical Decision Making in School Administration: Leadership as Moral Architecture, 103-118. doi:10.4135/9781452274843.n6

Feinman, J. M. (2005). Incentives for Litigation or Settlement in Large Tort Cases: Responding to Insurance Company Intransigence. Roger Williams University Law Review, 13(1). Retrieved from: http://docs.rwu.edu/rwu_LR/vol13/iss1/7

Hawkins, K. (1986). On Legal Decision-Making. Washington and Lee Law Review, 43(4). Retrieved from https://scholarlycommons.law.wlu.edu/wlulr/vol43/iss4/2

Zerbe, R. O. (2017). Cost-Benefit Analysis in Legal Decision-Making. Oxford Handbooks Online. doi:10.1093/oxfordhb/9780199684267.013.027

Zhukovsky, D. S., Gallagher, C. M., & Baker, F. (2018). Ethical and Legal Decision-Making. Oxford Medicine Online. doi:10.1093/med/9780190633066.003.0026