Legal Service Management and Game Theory

The decisions that have been made for the design of LegalScrum are not arbitrary and many are deeply elaborated. When one way or another has been chosen, it is because that choice benefits the work of the legal professional. For example, why differentiate between two types of service?

LegalScrum considers that the practice of law can be oriented towards two main types of service, to which it dedicates two models: continuous services, which are those that can be managed as a queue of tasks that are very similar to each other, and iterative services, which are those that require particular planning for each case. The former correspond to the work that we normally associate with an agency or notary’s office, while the latter correspond more to the activity of a law firm.

This design decision goes beyond the life cycle and falls squarely into an area of mathematics called “game theory”, which analyzes decision making and how to make optimal choices. To do this, game theory studies the scenarios we have to face and tries to find the rules that govern those confrontation scenarios.

Each of the scenarios in which people confront each other and must make decisions are called “games”, not because they are leisure games, but because it is a way of naming these conflicts. This is interesting because all the games we normally know by that name are confrontational scenarios, but not all mathematical “games” are leisure games. To understand how this applies to the world of law and why LegalScrum is the way it is, let’s look at how these ideas apply.

In game theory, games in which the players have all the information from the beginning are called “perfect information games”. An example of this is chess, in which all players can see each other’s pieces and the moves they make. When a player makes decisions, he knows what his opponents are doing.

“Imperfect information games” are those in which the players do not have all the information from the beginning of the game. For example, in poker, each player does not know what cards his opponents have. Under these conditions, when you bet you do so without knowing the strength of the other players and the risk is much higher.

The “perfect” or “imperfect” nature of the game makes the strategy completely different. In a “perfect” game it is possible to make decisions in advance, we can plan for the future because there are few surprises and estimates and budgets can be made. That is why when a tax consultant offers a tax preparation service he can offer a fixed fee and guarantee a result. It has all the facts to start with, knows the outcome the client expects and can estimate its costs with very little risk. The risk is almost non-existent.

But when a law firm has to deal with a criminal case it does not have all the information. When you start out, you only know the part that the client gives you, which, moreover, may not be true. You don’t know what the opposing party is going to say, you don’t know if the client has omitted or forgotten important details or is hiding compromising information. Under these conditions it is not possible to offer a locked-in fee, make plans or guarantee an outcome.

The “imperfect” nature of the civil litigation or criminal defense game makes it necessary to introduce a fact discovery strategy, which is not necessary in the ongoing management of continuos legal services. At most, a notary has to gather information, but there is no need for a discovery. A criminal lawyer, on the contrary, has to find out what has happened, even doubting what his client has told him, testing everything that may turn against him in the course of the trial.

A methodological framework, such as LegalScrum, that aims to provide a reliable environment for legal practice must contemplate both situations and provide solutions to users. That is why we differentiate between legal services (continuous model) and legal projects or cases (iterative cycle). In the continuous model there is no planning or fact-finding phase; a predefined process is simply applied, including templates and checklists accumulated with practice, to streamline the execution of the work as much as possible. The objective is to maximize profitability by resolving the maximum number of files in the shortest possible time, correctly and with the least possible consumption of resources.

In the iterative model, speed is not so important. It is not about solving the largest number of legal cases in the shortest possible time, but about giving the best legal advice to each one of them and, to do so, we must move forward and discover the truth. As in Texas Hold’Em, a version of poker in which in each round of betting a card is discovered and shared by all players, as the case progresses we must observe what is going on around us, analyze the information discovered, adapt and make decisions that improve the probability of success.

LegalScrum provides you with two models so that you can decide, based on the work you do and the information you have, which one is the most appropriate for your situation. In our experience, the continuous model is ideal for agencies for the reasons I just told you, while the iterative model is ideal for law firms because in each “round” or “iteration”, you discover facts and data that you should incorporate into your strategy. To do this, the iterative cycle adds processes, ceremonies and practices that are not present in the continuous cycle.

In other posts we will go deeper into these differences and we will see in more detail how to apply game theory in various areas of the legal professional’s work, such as negotiation or decision making with incomplete information, which is called “inference”.