Now I'm working through the expected value calculations for different settlement scenarios. The baseline judgment value comes out to 1.7 million, and I'm comparing that against the trial outcome of 2.25 million, the current settlement offer of 1.5 million, and a counteroffer strategy that costs 40,000 to make—which would yield 1.24 million if accepted or lead to rejection with a 55% probability.

The expected value of the counteroffer works out to about 1.86 million, which is higher than accepting the current settlement. But I'm running a break-even analysis to see what acceptance probability would make the counteroffer worthwhile, and it turns out I'd need roughly 77% acceptance to match the settlement value—far above the 45% probability we're actually facing.

I'm also noticing that the tail risk of a 4.5 million judgment represents a significant portion of the expected judgment, and the trial costs of 550,000 plus the potential 4.5 million exposure make the settlement increasingly attractive compared to going to trial.

I should structure this analysis with tables to make the comparison clear and also explore what counter-offer level might make sense given the risk profile.