Basic Fee Shifting Litigation Model
Cumulative =
Recovery % is the share of the winner’s own costs the loser must pay. 0% = each pays own; 100% = loser pays all.
Plaintiff
EVP =
Defendant
EVD =
Zone of Possible Settlement (ZOPS)
Plaintiff EV (minimum to accept):
Defendant EV (maximum to pay):
(equals cumulative costs)
With shared expectations and risk neutrality: EVP + EVD = −2C ⇒ ZOPS = (−EVD) − EVP = 2C, independent of probabilities and recovery %.