Summary of the Three-Step Process
Instructions for Initiating a Use or Running a Free Test of the System
If an Invitation has not already been issued with respect to the claim in question, then you can initiate a use of the System and cause such an Invitation to be issued by clicking on the appropriate link set forth below. The process of issuing an Invitation can be completed in less than five minutes. Once the Invitation has been issued, the First Party's work is done.
(1) If you claim that the other side should pay you money, then you should click "Issue an Invitation AS a Party Claiming Money."
(2) If the other side claims or is expected to claim that you should pay them money, then you should click "Issue an Invitation TO a Party Claiming Money."You can run a free and confidential test of the System by clicking "Issue an Invitation" either AS, or TO, a party claiming money and then following the instructions to "run a free test."
Answers to Frequently Asked Questions About the Three-Step Process
1. Why is X kept confidential?
This allows the First Party to propose a fair and reasonable amount of money without any concern that the proposed amount will be used as a starting point for demands for further concessions. The confidentiality of X serves the interests of each party, because it enhances the ability of the First Party to make a reasonable proposal.
2. Does initiating a use of the System make the First Party look weak?
No. The First Party is effectively making a take-it-or-leave-it proposal, and doing so in a highly credible manner.
3. What are the terms of the settlement proposed by the First Party?
The Settlement Terms are defined by the First Party at the outset of the process and are described in a Term Sheet that is generated by the System, based upon the data that the First Party enters at that time. The System provides the Second Party with a copy of that Term Sheet (which does not disclose the value of X) at the time that the Invitation is issued. Visitors to this website can generate sample term sheets by clicking "Issue an Invitation" and following the instructions to run a free test.
4. Can a party use the System as a First Party at any time?
Yes, but only if neither party has previously done so with respect to the claim in question. The prospect of a subsequent use of the System would degrade the incentives of the parties to make reasonable proposals.
5. Why is the Second Party allowed to act in secrecy?
This deprives the Second Party of an excuse for failing to use the System to make a reasonable proposal: The Second Party can't claim that its use of the System might make it look weak. In addition, this prevents the Second Party from attempting to use the System as a platform for posturing or sending self-serving signals to the other side: If the Second Party proposes an amount of money that is more favorable to it than X, or does not use the System, the System will not convey or disclose that information to the First Party.
6. Why does the Second Party get to settle for X if X is more favorable to the Second Party than Y?
This deprives the Second Party of a second excuse for failing to use the System to make a reasonable proposal: The Second Party can't claim any basis for concern about losing some portion of the surplus if it proposes a value for Y that is less favorable to it than X.
7. Why does the Second Party get to revise Y if X is less favorable to the Second Party than Y?
This deprives the Second Party of the third and final excuse that might be claimed for failing to respond with a reasonable proposal: The Second Party can't claim that it would have submitted a different value for Y had it known that X was less favorable to it than Y.
8. Does the Second Party have to pay any fees or charges to use the System?
No. The Second Party's use of the System is entirely free of charge.
9. What are the circumstances under which the System will offer a party a Certificate?
If the matter does not settle for X through the use of the System prior to the deadline, then the System will at that time offer the First Party a Certificate confirming the value specified for X, attesting to the opportunity and assurances provided by the System to the Second Party, and attesting to the fact that – as of the deadline – the Second Party had not entered data resulting in a settlement for X (without revealing anything else about any use or non-use of the System by the Second Party).
In addition, if – but only if – the Second Party enters data into the System prior to the deadline specifying a value for Y that does not result in a settlement for X, then the System will at that time offer the Second Party a Certificate confirming the value specified for Y and attesting to the fact that this did not produce a settlement because Y was more favorable to the Second Party than X (without revealing X).
10. What is the value of a Certificate?
A Certificate allows a party that has proposed a reasonable settlement to demonstrate that the other party had effectively walked away from that settlement. This, in turn, allows a party that has proposed a reasonable settlement to justify devoting its resources to pursuing something other than a voluntary agreement with the other side (such as litigation).
In addition, in cases where a person that used or that was invited to use the System had a duty to other parties to arrive at a reasonable settlement if given an opportunity to do so (such as where that person was acting as an attorney or agent for someone else), such a person's failure to use the System to propose a reasonable settlement may cause evidence supporting a finding that he or she had breached that duty – in the form of a Certificate – to be delivered into the hands of an adversary.
Strategic Aspects of the System
The structure of the System is such that, for purposes of pursuing and protecting one's self-interest, the most sensible strategy for each party consists of using the System to propose a reasonable settlement (i.e., a settlement that an independent and experienced attorney would consider appropriate in view of the risks and costs faced by each side).
As an initial matter, the Second Party cannot determine whether the First Party has proposed an outcome that the Second Party would view as more than reasonable unless the Second Party uses the System to propose one or more values prior to the deadline. The System's confidential features deprive the Second Party of any incentive or excuse for failing to make that determination.
In addition, the System's confidential features – in combination with the provisions for the issuance of Certificates – allow the First Party to use the System to:
(1) place itself in a position in which it has a demonstrably strong incentive to make a reasonable settlement proposal at the outset of the process (and no comparable incentive, and a strong disincentive, for failing to do so), thereby bestowing credibility upon its proposal; and
(2) place the Second Party in a position wherein the Second Party has a strong incentive to carefully reflect on the merits and value of the claim and to propose a reasonable value prior to the deadline (and no incentive, and a strong disincentive, for failing to do so prior to that time).
Regardless of whether you are the First Party or the Second Party, you will not suffer any prejudice to your interests unless (i) the other party has used the System to make a reasonable proposal, and (ii) you have, yourself, failed to do likewise. Unlike traditional dispute-resolution methods, an expectation or belief that your adversary will not make a reasonable proposal simply provides you with an added incentive, rather than a disincentive, for using the System to make and establish the fact that you had made a reasonable proposal.
Proposing a reasonable outcome is the most sensible strategy for each party, because a party that does so will always advance its own interests and obtain a Certificate of significant value, regardless of whether or not the other party recognizes this fact and does the same (and, if you are a First Party, regardless of whether the Second Party uses the System at all).
(1) If you claim that someone should pay you money, then you can use the System by clicking "Issue an Invitation AS a Party Claiming Money."
(2) If someone claims or is expected to claim that you should pay them money, then you can use the System by clicking "Issue an Invitation TO a Party Claiming Money."