Damages & Case Value
Defendant's Expected Cost
Estimate the defendant's total expected cost of litigation, including probability-adjusted damages and fee exposure, plus defense costs.
This is an estimate for settlement discussion purposes only. It is not legal advice and does not account for all possible factors.
How it works
This is the mirror image of the plaintiff's expected-value analysis: what does continuing to litigate actually cost the defendant, all-in?
The model has three parts. Exposure on the merits: the plaintiff's damages multiplied by the probability the plaintiff prevails. Fee-shifting exposure: in cases where a prevailing plaintiff recovers attorneys' fees — most employment statutes, many consumer statutes — the plaintiff's fees and costs multiplied by the probability of fee shifting. And the defendant's own certain costs: defense fees, litigation costs, and intangibles like management time, business disruption, and reputational exposure.
The sum is the number a settlement should be measured against. A defendant who compares a demand only to the damages exposure is ignoring most of the bill.
Worked example
Damages of $250,000 with a 40% chance of a plaintiff's verdict is $100,000 of expected exposure. The plaintiff's fees and costs are projected at $75,000 with the same 40% probability of shifting — another $30,000. Defense fees of $100,000, $25,000 in costs, and $10,000 of intangibles are spent win or lose. Total expected cost: $265,000 — for a case the defendant thinks it probably wins.
When to use it
Use it to set reserves, to brief decision-makers before a mediation, or in a caucus to show why “we'll probably win” and “we should try this case” are different conclusions. The fee-shifting line is especially clarifying in employment cases, where it often dwarfs the damages exposure.
Frequently asked questions
Why include defense fees if we expect to win?
Because in the American system each side generally pays its own lawyers regardless of outcome. Defense fees and costs are spent win or lose, which is why they appear at full value rather than probability-weighted.
What is fee shifting?
A statutory or contractual rule that makes the loser pay the winner's attorneys' fees. Many employment, civil rights, and consumer statutes let a prevailing plaintiff recover fees — which means a defendant's real exposure includes the plaintiff's legal bill, not just the damages.
What probability should I use for fee shifting?
If fees follow automatically when the plaintiff prevails, use the same percentage as the damages probability. Use a different number only where fee recovery is discretionary or independently uncertain.
How do I use this number in a negotiation?
Any settlement below the total expected cost is, based purely on numbers, a good outcome for the defendant — before even counting the value of certainty and closure. It reframes the demand from “that's more than they'd win” to “that's less than this will cost.” Although there are many factors beyond pure numbers to consider in deciding whether to settle, an informed litigant should at least know where the negotiation stands compared to a strict rational outcome.