Last time we began our discussion of the mistakes lawyers and their clients make in settling eminent domain cases with an overview of an article entitled: Let’s Not Make a Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations co-authored by Randall L. Kaiser et al.[1]
As you will recall, the Kaiser article examined a 2008 study exploring the question of how frequently parties to litigation commit “decision error” by rejecting a final settlement alternative and proceeding to trial. The study found—considering all categories of cases—that the error rate for landowners was 61%, compared with 24% for condemning authorities.[2] The study also considered the dollar magnitude of those errors. The data showed that while condemning authorities and their attorneys made fewer errors, the mean cost of their errors was significantly higher than the errors made by landowners and their counsel.
Today let’s take a closer look at this study from the perspective of eminent domain cases. Under the terminology of the study, and consistent with their functional roles, landowners will henceforth be referred to as “plaintiffs” and condemning authorities will be called “defendants.”
The comparison of ultimate awards in eminent domain cases to demands and offers in such cases is quite revealing. The mean award in eminent domain cases was exceedingly close to the plaintiff s’ mean demand—99.6%. The defendants and their lawyers were not as accurate. The mean award amounted to 146% of the mean offer put forth by the defendants.[3] As we would expect given the nature of eminent domain cases, the win rate for plaintiffs was 100%.[4]
Another interesting facet of the study was the frequency and cost of decision errors. For purposes of this study, the presence of a “decision error” and the determination of the party to whom it is attributable is determined by comparing the verdict (or arbitral award) with the plaintiff’s last demand and the condemning authority’s last offer:
A. Plaintiff”s Error: Verdict/Arbitral Award ≤ Defendant’s last offer
B. Defendant’s Error: Verdict/Arbitral Award ≥ Plaintiff’s last demand.
Using these criteria, plaintiffs committed decision errors in 41.7% of the cases; defendants 33.3%. So landowners and their counsel made errors more often than defendants by a rather substantial margin. However, defendants committed much more costly errors. In fact, the mean cost of defendants’ errors was more than seven times larger than the errors made by the landowners.[5]
Before proceeding further with our analysis of these data, we must consider one of the unique aspects of condemnation cases. Unlike other types of civil cases, the plaintiff always “wins.” The landowner is virtually always entitled to some money as “just compensation.” Despite the absence of this significant variable, we see that plaintiffs and defendants in condemnation cases still make a significant number of costly decision errors.
In the next article in this series, we will discuss the effect on settlement outcomes of: (1)whether a judge, jury or arbitrator makes the just compensation determination; and (2) variations in the qualifications of counsel for landowners and condemning authorities.
[1] Randall L. Kiser, Martin A. Asher, Blakeley B. McShane, Let’s Not Make a Deal: An Empirical Study of Decision Making in Unsuccessful Settlement Negotiations, Journal of Empirical Legal Studies, Volume 5, Issue 3, 551-591, September 2008.
[2] A plaintiff was deemed to have committed a decision error when the verdict was less than or equal to the defendant’s offer. Conversely, a defendant was deemed to have erred when the verdict was greater than or equal to the plaintiff’s last settlement demand.
[3] Kaiser, Table 6.
[4] Win rates in other categories varied wildly; from a low of 19.5% in medical malpractice cases to a high of 62.6% in contract cases. Kaiser, Table 6.
[5] Kaiser, Table 7. The mean cost of errors made by landowners was $72,100. The mean cost of errors made by condemning authorities was $523,600. markedly
