Fifty-Fifty Odds

If you work as a senior manager long enough, you’re sure to end up involved in a lawsuit.

I’ve seen several over the course of my career.  These suits have ranged from product liability, to breach of contract, to wrongful termination, to patent infringement, to EEOC violations.

Do businesses make mistakes?  Absolutely.  Every time there was a lawsuit involving my business, I would review the evidence and try to determine if we were in the wrong.  If so, our plan was to settle the complaint as quickly and as fairly as possible.

But reaching that conclusion – that the company was guilty of something – didn’t happen very often.  What was more common was to see the other side’s case as little more than an attempt to gouge money out of a deep-pocketed corporation.

It’s a perspective thing

Not all of those cases were greedy attempts at forcing the company into a settlement over nothing, but a few clearly were.  In most of those, a modest settlement offer or an indication that we were ready to take the case to trial (or both), was enough to get them off the radar screen.

In other cases, there were substantial differences of opinion about what a contract said, what rules and regulations required, or over what was an acceptable way to conduct our business.  Sometimes these looked like “gouge attempts” in the early going.  These cases were much more likely to go all the way to trial.

I remember one case in particular, this one brought by a developer over product that had failed during an extreme weather event.  Our warranty made it clear – in our opinion – that given the weather conditions and the way the product had been installed, there was no coverage.  The developer saw things differently.

As the case developed, we made some progress educating the plaintive about the product’s design parameters and the limitations of the warranty.  I improved my perspective on how our product’s failure might look to a jury (not good was the answer.)  We would win the war of evidence, he would win the war of sympathy.  I hoped the developer would drop the suit, but it didn’t happen.

This was one of the first times I recall asking my attorney what our odds would be of winning at trial.  After sounding very positive about our chances in the early going, “Fifty-fifty” was his response.  It was an answer I’d hear a lot over the course of my career.

We settled the case a few days later in the low six figures – a tenth of what the plaintive had initially demanded and less than it would have cost to take the case to trial.  But it was still painful enough to get me thinking about the best way to handle these types of cases going forward.

The odds are never in your favor

The funny thing about the “fifty-fifty” answer was that it wasn’t the first time in that case I’d asked the question.  Early in the process, my attorney had placed our odds of winning much higher.  As documents were exchanged, depositions taken, and the opposition’s case became clearer, his confidence began to wane.  On the eve of the trial, he decided our chances were no better than the flip of a coin.

This is a pattern I’ve seen repeated numerous times.

In the early going, your attorney shares your perspective.  They sympathize with your moral outrage.  They see only your documentation, and hear only your arguments.  Although you might expect a seasoned lawyer to expect “another shoe to drop,” in my experience that normally doesn’t happened.  Instead, my attorneys have always rated my chances of winning (if not an outright dismissal) at this stage very highly.

Some might say it is in their interest to drag things out, but based on personal experience I don’t think that is what’s happening.  Instead, the attorney is sucked into the defendant’s view of the situation.  Okay, maybe they express a bit more confidence than they feel, fearing that if they’re honest they’ll be replaced.

As the trial date draws near, for whatever reason, they all seem to hedge.

Perhaps this is due to more/better research into the law surrounding the specifics of the situation.  Maybe it comes from a better understanding of the other side’s case.  It could even be the result of knowing the court where the case will be heard.  It might simply be caused by an evaluation of how sympathetic you will appear to the jury (always low for big companies).  For whatever reason, the odds always seem to fall as the main event is about to begin.

An example

In a breach of contract case, one where the revelation of potential fraudulent behaviors by the plaintiff during the course of negotiations resulted in no deal ever being struck (that was my perspective, our opponent believed there was a contract in place), we started out with complete certainty that the case would be won.

In fact, the entire process (stemming from a termination) that resulted in the lawsuit had been stepped through with substantial legal advice being received at each stage.  I felt we’d done everything “by the book.”  As the trial approached, however, I heard the familiar “fifty-fifty” estimate.

At that point I decided it might be better to settle.

Unfortunately, the plaintive wasn’t interested in any kind of compromise, only in total capitulation to every demand.  That was equivalent to losing the case (there were several potential outcomes between the win-lose extremes in this particular dispute).  I refused to consider a settlement of this type, and instead pressed on to trial figuring that one of the intermediate outcomes was most likely.

As it turned out, we lost the case.  The plaintiff received his total capitulation, and I ended up with a big legal bill, to boot.

What to do?  What to do?

When faced by with a business lawsuit, here are a few rules of thumb you can employ to work your way through the process.

  1. Don’t bother asking your attorney your odds of winning – you’re likely to know the opposing party’s case better than the lawyer does.  Instead, get clarifications on the points of law, and make your own evaluation.
  2. If your attorney offers you odds in the early stages, you can rest assured those odds will fall as a trial approaches.
  3. If you aren’t almost certain of winning the case in the early going, push for an early settlement.  It might not feel just, but it could save lots of time and money.
  4. If you’re emotionally involved (for instance, if the complaint is directed at you), get someone else to make the call on whether to litigate or settle.
  5. If you work for a big company, you will always lose when it comes to jury sympathy.  You’d better have an overwhelmingly strong case if you plan to take the case all the way to jury trial.  Feeling sorry for the plaintive neutralizes a lot of factual evidence.
  6. Complexity works to your disadvantage.  If your arguments are highly technical, and it will be difficult for a jury of average people to grasp them, the jury members are much more likely to go with their heart (in favor of the plaintiff) than their head (in your favor.)

Conclusion

When you’re faced with a lawsuit, try to separate yourself from the emotions involved, and understand the case from the plaintiff’s point of view.  Develop your own opinion of the chances of prevailing in a jury trial.  Unless you are overwhelmingly certain of victory, consider settling – it saves time, money, and energy.

And remember, from the courts you will definitely get a judgment, but you won’t necessarily get justice.  32.3

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Novels:  LEVERAGE, INCENTIVIZE, DELIVERABLES, HEIR APPARENT, and PURSUING OTHER OPPORTUNITIES.

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To the right is the cover for INCENTIVIZE.  This novel is about a U.S. based mining company, and criminal activity that the protagonist (a woman by the name of Julia McCoy) uncovers at the firm's Ethiopian subsidiary.  Her discover sets in motion a series of events that include, kidnapping, murder, and terrorism in the Horn of Africa.

My novels are based on extensions of my 27 years of personal experience as a senior manager in public corporations.  Most were inspired by real events.