You believe that one of your suppliers has violated its contract, so you file suit asking for $10 million in damages. If you win the lawsuit, you estimate the awarded damages at $10 million. You think that you have a 60 percent chance of winning the lawsuit. You must pay your attorney $2 million to try the case. The managers of the supplier estimate that you have a 40 percent chance of winning damages of $3 million. They must pay their attorney $1 million to go to trial.

a. Will you and your supplier settle the suit? Why or why not?

b. You instruct your attorney to file a flurry of motions that force the supplier’s attorney to work more hours, and you raise the damages you claim to $15 million. You still think you will actually win $10 million, you estimate the probability that you will win to be 60 percent, and your attorney still charges you $2 million. The supplier’s managers now believe that if they lose, they will pay you $6 million in damages and that you have a 40 percent chance of winning. They now must pay their attorney

$3 million to go to trial. Should the lawsuit be settled? Why or why not?