  In a legal dispute, parties engage in a series of negotiations so as to
arrive at a reasonable settlement. The parties need to present a fair and
reasonable bargain in order to induce the WTA, willingness to accept of the
plaintiff and the WTP, willingness to pay of the defendant. Cooperation can
only be attained when the WTA of the plaintiff is less than or equal to the WTP
of the defendant. From an economic perspective, the legal process can
considered as market place of buying and selling claims. High transaction costs
decrease the reasonable bargain, thereby making cooperation more appealing to
the defendant. On the other hand, low or zero transaction costs means the
reasonable bargain is only dependent on the expected gain from winning at trial
and the settlement benefit thereby making cooperation more appealing to the
plaintiff. Hence, we need to find a way of adjusting the number of settlements
with the number of trials in order to maximize the social utility value. This
paper uses Cobb-Douglas optimization to formulate an optimal transaction cost
algorithm considering the confinement of a generalized legal framework.
