This article was originally posted on medium.com.
We need to talk about legal disputes — and introduce Eperoto
Let us first talk about a classic
In 1992, Mrs. Liebeck, a 72-year-old customer, bought a cup of coffee at the McDonald’s McDrive in Albuquerque. With the car still parked, she spilled the hot coffee over her legs as she tried to remove the styrofoam lid and suffered severe burns that required surgery. After first refusing to pay the costs for medical bills, and later a $225,000 recommendation from a mediator, the case was tried by an American jury. The outcome: McDonald’s was ordered to pay Mrs. Liebeck $2.7 million in punitive damages.
At the time, the Liebeck vs. McDonald’s case was portrayed as a horror story of an American jury trial, “Woman spills coffee and wins millions in court.” Later, the case resurfaced and was seen as a tale about justice done. During the trial, it was revealed that McDonald’s had received over 700 complaints in the last five years and served its coffee many degrees warmer than its competitors. Punitive damages of $2.7 million were assessed to equal two days worth of revenue from McDonald’s coffee sales, and afterwards McDonald’s lowered the temperature of its coffee.
The complexity of dispute resolution — almost infinite number of outcomes
Although the case of Liebeck vs. McDonald’s stands out, it is safe to say that litigation almost never presents a clear, straight path with a certain outcome. Individual events, such as a last-minute introduction of evidence or expert testimony, can tip the scales in one side’s favour. Even on the rare occasions when the outcome of a lawsuit is sure, other factors such as the financial situation of the opposing party, the time needed to adjudicate and enforce the successful lawsuit, and size of legal fees can create great uncertainty for the prevailing party.
Behavioural science shows that even trained lawyers have difficulty analysing a case without being influenced by client bias. Studies show that many lawyers overestimate the strength of their clients’ claims by around 15 percent. Other studies show that irrelevant factors are routinely considered in decision-making, and that settlements are often far from what the other party would actually have been willing to pay — resulting in an unequal distribution of risk.
In short: Law firms and in-house counsel have an immensely difficult task of analysing this uncertainty, and an even more difficult task of summarising and communicating to a stakeholder the potential risks and values associated with legal proceedings. Many times legal guidance fails to reach the granularity we see in other industries; it is not uncommon for lawyers to say that a multi-million dollar lawsuit is “likely” to have a “positive outcome” or that it carries “significant risk.” Such a statement from an energy consultant hired to estimate the costs and demand for solar energy would likely not impress a client. In other industries with multi-layered complexity, analyses often result in probabilities and values expressed in dollars and cents. So what can lawyers learn from other fields or industries that struggle with uncertainties?
One thing for certain, is that they rely on technology. Even the most experienced lawyers are not able to accurately summarise all possible outcomes in their heads. Ordinary construction litigation can have an unlimited number of possible outcomes and visualising and explaining legal complexity is not easy.
Eperoto: The new language for dispute resolution
Let us introduce ourselves. Eperoto was born from the experience from adjudicating cases in Swedish courts and the struggles and miscalculations seen in courtrooms. Our vision is to help legal professionals and parties manage uncertainty and assess the rational course of action in legal disputes.
Our solution to legal complexity is simple yet advanced: classical decision theory science. Our tool does the hard work of breaking down and analyzing the components of a dispute. Eperoto restructures a dispute into values and easy-to-understand decision trees to reveal the bottom line: the risks and rewards of litigation.
After two years of research and one year developing our software, we are right on path. Our software is used by top dispute resolution professionals to evaluate highly complex disputes in court and arbitration. The single most common reaction from our early adopters is that they can now “finally communicate and quantify the risks and rewards involved in a legal proceeding to the stakeholders”.
How our customers use our solution
For our early customers, the methodology we use is not a novelty. Many times we introduced features adapted from our customers’ previous experiences. What is new, however, is how we synthesised decades of research in the field of decision analysis to create a powerful yet easy-to-use software.
Can the users of our software be certain of the final outcome of a dispute? No. But their legal teams and stakeholders can now speak the same language. A language that is less uncertain and defined by specific figures rather than words. By finding the common language, we make our customers more effective by saving them time and money, and most importantly: The right decisions when it comes down to high value and time consuming disputes.
We have already built something we are very proud of. Our solution is now being used by progressive third-party funders like Kapatens, leading law firms like Mannheimer Swartling in Sweden, Arntzen De Besche in Norway and major technology companies. Together with our pilot customers and beta testers, we are refining the software by polishing it and adding more features. We are committed to our vision of improving the way legal decisions are made, and looking for more forward-thinking lawyers to work with. And we are not doing this alone, as we are now supported by institutional investors Icebreaker, Chalmers Ventures and some of the brightest minds in law, technology and design.
Our mission: Revolutionize dispute resolution!
We have a clear mission: to create a new common language for analyzing, evaluating and talking about legal disputes, and that language should be “Eperoto”!
You can learn more about us through our website or LinkedIn page. You can also contact us directly by mail or reach out to Olof Heggemann. We’d love to hear from you!
If you are a legal professional with interest in dispute resolution and technology, you should definitely keep an eye on our careers page. Or just go ahead and get in touch straight away!