Analytical Methods for Lawyers

380 Pages·2015·6.46 MB·English

by  Martin Engel

Ludwig-Maximilians-Universität München
Analytical Methods for Lawyers
WS 2014/15
Prof. Dr. Horst Eidenmüller, LL.M. (Cantab.)
LMU München and Oxford University
www.horst-eidenmueller.de
www.law.ox.ac.uk/profile/horst.eidenmueller
These slides are incomplete without the accompanying oral presentation.
Slides and presentation are protected by copyright.
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Course content and methodological approach
Course objectives
Traditional
legal skills…
• How your clients think, calculate,
decide, and interact with each
• Gather facts
other
• Interpret legal texts • How you can incentivize others
• Apply legal rules to • How businesses are financed and
established facts how to assess financial
information
• How to analyze the economic
…are important,
impact of legal rules
but do not suffice
• How to interpret and use data in
for legal practice
litigation and for law reform
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Analytical methods for lawyers…
…cover important skills lawyers need in their everyday practice
listening skills
communication
skills
presentation skills
psychological skills
substantive law
legal skills
procedural law
analytical skills
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Course outline
• Decision theory and game theory (Units 1-2)
– How to assess the merits of a lawsuit and develop a settlement strategy
• Contracting (Unit 3)
– How to design incentive-compatible contracts
• Accounting and Finance (Units 4-6)
– How to analyze the financial statements of a company (Unit 4)
– How to evaluate a business (opportunity) (Units 5 and 6)
• Microeconomics (Units 7-8)
– How markets function properly or fail and when government intervention
might be justified
• Economic analysis of law (Units 9-12)
– How to assess the effects and the efficiency of legal rules: contracts, torts,
dispute resolution
• Statistics (Units 13-14)
– How to collect, organize, and interpret data
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Comprehensive literature
• Books
– Howell E. Jackson et al., Analytical Methods for Lawyers
(2nd ed. 2011) (primary textbook)
– Reuben Advani, The Wall Street MBA (2nd ed. 2012)
– Ward Farnsworth, The Legal Analyst (2007)
– Richard A. Ippolito, Economics for Lawyers (2nd ed. 2010)
– Emanuel V. Towfigh/Niels Petersen (eds.): Ökonomische Methoden im Recht
(2010)
• Further literature
– Further topic-related literature is provided throughout the course on a
weekly basis
– You can download a zip file with all the literature from my homepage at
www.horst-eidenmueller.de
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Methodology
• Prior knowledge
– No prior quantitative knowledge or training is expected
– However, a high school level of mathematics is required
• In-class lectures
– Interactive lectures based on slides which are posted online at www.horst-
eidenmueller.de and the course website before class
– Use of different media, e.g. video clips and calculation programs
– Classroom activities and experiments
• Preparation and wrap-up
– Reading assignments
– Review of slides and notes taken
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Literature on decision theory
• Book excerpts
– Howell E. Jackson et al., Analytical Methods for Lawyers
pp. 1-31 (2nd ed. 2011)
– Robert H. Mnookin, Scott R. Peppet & Andrew S. Tulumello,
Beyond Winning pp. 97-126, 156-172 (2000)
• Journal articles
– Matthias Morawietz, Risk Analysis in Law – Added Value for Smart Clients,
3 BLOOMBERG CORP. L. J. 659-669 (2008)
– Horst Eidenmüller, Prozeßrisikoanalyse,
113 ZZP 5-23 (2000) (German language)
– Horst Eidenmüller, Prozessrisikoanalyse in der Praxis,
10 ZKM 115-116 (2007) (German language)
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Unit 1: Decision Theory
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Overview
1) Subject matter and objectives of decision theory
2) Fundamental concepts
– Expected value
– Cumulative probabilities
– Decision trees
– Risk aversion
3) Litigation risk analysis
4) Sensitivity analysis
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Subject matter and objectives of decision theory
Decision theory and litigation: What is it about?
• Decision theory is the study of principles for making optimal
decisions – involving decisions under conditions of uncertainty
• In litigation, it helps evaluate litigation prospects as compared
to settling a case
– The litigation alternative almost always poses complex legal and factual risks
– Litigation risks have to be thoroughly evaluated in advance
– Decision theory facilitates a rational comparison between
» agreement options ( settlement) and
» alternatives to agreement ( litigation)
→ Decision theory helps to quantify the value of options and thereby
challenges or gives tangible reasons for the often used “decision instinct”
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