The ICBM Methodology

The ICBM (Iterative Convergent Bounding Method) is a breakthrough methodology for making settlement decisions. It overcomes the problems with the conventional use of decision trees in litigation in a very novel way, thereby providing an unprecedented level of precision and power for making settlement decisions and other key financial and strategic decisions in litigation.

Problems with Existing Methodologies

Because litigation can take so many twists and tums, it is virtually impossible to construct a decision tree that reflects all the events that can occur in litigation and affect the outcome, especially early-on in a case. As a result, overly simplified decision trees are typically used. These decision trees produce very imprecise and unreliable expected values of litigating against which to compare a settlement offer. They also understate the risk involved in litigating a case and can lure a litigant into rejecting a favorable settlement.

A Completely New Approach

The ICBM addresses these problems by taking a completely new approach to using decision trees in litigation. Recognizing the impossibility of constructing a sufficiently detailed decision tree that is meaningful, the ICBM uses a sequence of contrived best and worst case litigation scenarios which almost certainly bracket the favorability of the actual litigation scenario that will eventually unfold if the case does not settle. With each subsequent iteration in the sequence, the best and worst case litigation scenarios become progressively less optimistic and pessimistic, respectively. But even in the last iteration, the best case is still very optimistic and the worst case still very pessimistic. Thus, the corresponding best and worst case expected values become tighter bounds on the most likely financial outcome of litigating a case to a final judgment as they converge with each subsequent iteration. Because of their best and worst case construction, the decision trees are very simple, requiring just a few estimates.

An Approach that is Precise and Easy to Use

A litigant compares a settlement offer or other litigation avoidance measure to these expected values. A settlement offer that is better than a best case expected value of litigating should be accepted and one that is worse than a worst case expected value should be rejected. The earlier the iteration that provides an answer (where the settlement offer does not lie between the best and worst case expected values), the more confident the litigant can be with the decision.

To see a more detailed description of the methodology and the spreadsheet, including how to use them to assess the risk in litigating a case, click on A Summary Description. A full description of the ICBM methodology and ICBM SPREADSHEET, including several case studies illustrating their use, is in the book, Winning the Litigation Money War.