The Twenty Percent Rule

By John L. Watkins

Sometimes, clients that I represent or parties in mediation will ask me why they should consider compromising a claim. They may express supreme confidence in the case, stating that "there is no way we can lose," and expressing extreme reluctance to take anything less than one hundred percent of what they want.

People with this attitude need to be introduced to and to understand the "twenty percent rule." The "twenty percent rule" is not an original idea of mine; it was mentioned in a discussion I had a couple of years ago with a very experienced and somewhat crusty old litigator. The rule does, however, encompass thoughts I have had for many years. The twenty percent rule just puts these thoughts and concepts in a much more compact and easily understood package.

The twenty percent rule is this: No matter how good you think your case is, no matter how good your lawyer is, and no matter how obvious you think the result should be, there is always a twenty percent chance you will lose in litigation.

Why is the twenty percent rule true? Because unforeseeable things happen in litigation. Star witnesses blow up in depositions or on the witness stand, even if they are well prepared. There may be a document or email out there that you (and your lawyer) did not know about when the case was filed.

But, most importantly, cases are resolved by judges and juries. Judges and juries are human beings, and, given that fact, may not see things your way. Judges and juries may seize upon facts and issues that you know are irrelevant to the dispute, but which become highly relevant, because they get to decide the case, not you.

Judges and juries may simply like the other side better than you. Maybe your confidence will be perceived as arrogance. Maybe the other side has an explanation that resonates. If you do not think these factors are important, you should know that, in large cases, parties hire psychologists and sociologists as jury consultants. Jury consultants can provide tremendous insight into how jurors from the area will look at a case, and their research often reveals surprises.

Judges can also be a factor. In a couple of recent important cases, I have actually seen judges simply ignore key legal issues that were potentially dispositive, and that were thoroughly briefed and presented to them. Why? I do not know, but can only assume that addressing the issues would have made it more difficult for them to reach the result they had decided to reach. Intellectually defensible? Of course not, but this stuff happens in the real world.

I am not suggesting that the civil litigation system is irrational. I am not suggesting that you should evaluate a case with the assumption that an irrational result will be reached. Most of the time, the system works and reaches a rational result. Usually, the party wins that should win. But the twenty percent rule does come into effect. And if you are considering a settlement, you should keep the twenty percent rule in mind in your analysis.

What does this mean for mediation? Well, first, it means that mediation is a process parties should definitely consider, because it gives them the ultimate control over the outcome. A mediator cannot make a party settle if the party does not want to settle. Second, it means that parties should have a little flexibility in mediation and with regard to settling. The system is not perfect, and will not always reach the result you believe it should. The old saw that "a bird in the hand is worth two in the bush" may be something you should consider.

For more information and thoughts on mediation, please read the rest of the blog, and visit www.watkinsmediation.com, or the mediation pages at www.ctflegal.com.