The Three Types of Risk in Trials
My recent TIPS have focused on negotiations being an exercise in risk management. In my last post, I offered an answer to my question: What Do We Mean By Risk?, pointing out risk is the product of probability and consequence. That is, the existence and degree of any “risk” is based on (i) the probability of a particular event occurring, and (ii) the consequence of any such occurrence. A real quandary with litigated disputes, however, is that each party faces three distinct types of risk should their dispute end up in a trial. Furthermore, the “probability” element of two of these - Systemic Risk and Advocacy Risk - is particularly difficult, if not impossible, to assess. Worse yet, their “consequences” can be severe and even catastrophic - ranging from a defense verdict and no recovery for a plaintiff to a staggering damages award against a defendant. The good news, however, is also twofold. First, while the Systemic and Advocacy Risks are hard to manage, both sides face them and so they essentially cancel each other out for purposes of settlement negotiations. Second, the probabilities and consequences in the third type of risk - Evidentiary Risk - are things we can assess. Positive negotiations focus on these evidentiary risks because they are unique to any given case, they are the legitimate basis of each dispute, and they are the only risks the parties can manage effectively through negotiation. Nonetheless, during every negotiation everyone should still appreciate how the Systemic and Advocacy Risks can upend everything should their negotiations fail and their dispute ends up in a trial. Those two, unpredictable categories of risk can still trigger results that defy any rational explanation based on the evidence that each side produced. To help people appreciate these distinct categories of risk, I provide a brief description of each below.
Systemic Risk. One could write a book on Systemic Risk, and it will likely be the subject of future posts I make on this site. For now, however, I will be brief. Systemic Risk runs from the simple fact our system of justice is a human system. As a result, it is subject to all our human fallabilities. We are not omniscient. We cannot always find an essential piece of evidence - not least because it may not exist in admissible form. Whether we are judges, lawyers, litigants, witnesses, experts, or jurors, we sometimes misstate, misperceive, misunderstand, misinterpret - or simply miss - things. In addition, while our method for adjudicating disputes - typically by a trial - presumes the factfinder - typically a jury - is purely objective in its decision-making, there is a substantial and growing body of studies that show we all have implicit biases that influence the decisions we make. As a result, even if we can weed out all explicit bias, which itself is questionable, any verdict could well be influenced by the implicit (and therefore undiscoverable) biases of the particular jurors deciding that particular case.
While there are numerous examples of the limitations and fallabilities within our judicial system, I will offer just one for now. That is Wilson v. Condon, 2016 ME 187. In the trial in that case, the presiding judge used a then-standard jury verdict form. That form included the following compound question that had long been the choice of the Maine Supreme Judicial Court: “Was [the defendant] negligent, and was his negligence a cause of injuries to [plaintiff] Jamie Wilson.” The jury ended up answering “yes” to this question, but it then entered a zero to the ensuing question: “What are Jaime Wilson’s total damages?” In other words, the jury apparently determined the defendant caused the plaintiff injury, but it then awarded her no damages for the injury it had just found.
On appeal, the Maine Supreme Judicial Court issued a somewhat tepid admission that it shared some responsibility for the jury’s possible confusion. While it upheld the jury’s apparent decision to award no damages for Ms. Wilson notwithstanding her actual injury, it also stated,
We affirmatively disavow our dicta in one case, Shaw v. Bolduc, 658 A.2d 229, 231 (Me. 1995), where we noted that a verdict form that separated the questions of negligence and proximate cause for each defendant represented "a practice that is neither necessary nor desirable." Separation of the questions of negligence and causation on verdict forms is not only permissible but, in many instances, may be necessary to avoid jury confusion and allow a more accurate and reviewable report of the jury's verdict.
Wilson v. Condon, 2016 ME 187, ¶ 10. In other words, the Law Court admitted it was wrong in its long-standing assertion that the jury verdict form should address the elements of “negligence” and “causation” in a single, compound question. This error deserves much more attention, because (i) judges have routinely sustained objections to compound questions on the basis they are confusing and yet (ii) the Maine Supreme Judicial Court had, up until this Wilson case, decreed it was not just OK, but actually preferable, for Maine courts to use this particular compound question on a jury verdict form. In other words, this was a mistake no one should have made, and yet the very top judges in the state did just that. In this post, however, I just want to help people understand these Systemic Risks exist - and with this one example I have made that point. In this instance, the consequence of this risk for the plaintiff was not good. Notwithstanding the Court’s admission of error, that came too late for Jamie Wilson. Because she could not prove to the Court the jury was in fact confused by this compound question - which, as a practical matter, no one could do - the verdict against her stood.*
Advocacy Risk. This second risk stems from the fact trial lawyers - whether they represent plaintiffs or defendants - are committed advocates. They put in a huge amount of effort, experience, and skill into preparing and presenting their clients’ cases at trial. They do not go to trial with any interest in coming in second place. They are there to win - even if that “win” just means securing a verdict that was less than a plaintiff’s last demand or more than a defendant’s last offer. To do this they not only rely on the evidence they can present, but also on their skills at trial and their powers of persuasion. They are constantly looking for any nuance in any witness testimony or demeanor, or in any document or other type of evidence, that they can use to persuade the jurors their client is the one who deserves their vote. That is their job, and it is their commitment. No one would want anything less from their lawyer. Sometimes what they say or do clicks with jurors, and sometimes it does not. When it does, however, these advocates can and do impact jurors and the verdicts they issue. Every now and then, through a moment of brilliance, an advocate pulls a proverbial rabbit out of a hat - producing a verdict and judgment neither side ever expected. The risk each advocate brings to trial is therefore very real, but it is also very difficult, if not impossible, to assess.
Evidentiary Risk. So far I have painted a picture of courtroom chaos. If you stopped reading here, you might think I am arguing all verdicts are the product of whim, fancy and failure. Happily, however, that is by no means the case. There are many times when juries hear and see the evidence, they deliberate with great care, and they reach a verdict that is to all appearances quite reasonable - even if one side or the other is left disappointed. That is, there are trials where the factfinder does in fact perform as expected. In these instances, the defining element in their decision is the evidence each side presents in support of their claims or defenses. In some instances, jurors may be persuaded by the evidence one side presented on one issue, and yet equally swayed by the evidence the other side presented on a different issue. Sometimes they may find certain evidence is not persuasive at all. They make those judgments based on the quality of the evidence each side presents. More specifically, they determined the facts - the what-actually-happened, as I like to call it - based on which evidence they found most credible, coherent, and compelling. This is the Evidentiary Risk each side faces when they head into a trial. The jury decides the case on what each lawyer could do for their client - that is what best evidence they could present in support of their clients’ claims or defenses - and there is no tangible distortion of that decision from the various Systemic and Advocacy Risks that nonetheless still exist.
When this happens, no one should have any reason to be surprised - as long as each side was able to investigate their respective cases fully through discovery. Modern rules of discovery have given parties the opportunity to remove any evidentiary surprise, and as a result they have also given everyone the opportunity to evaluate and appreciate the evidence before it ever goes to a jury. Unlike Systemic Risk and the Advocacy Risk, each side can assess their respective Evidentiary Risk. Specifically, they can evaluate the various probabilities and consequences that may run from that evidence. Evidentiary Risk, therefore, is the one type of risk all parties can rationally negotiate.
Conclusion. Mediators who promote positive negotiations, by guiding discourse around the best evidence each attorney can present at trial, are focusing squarely on the Evidentiary Risk each side will face in any trial. They help the parties build their own reasoned appreciation of that evidence, and they encourage a reasonable resolution based on that evidence. No one should walk away from negotiations, however, believing those Evidentiary Risks are the only risks they will face at trial. The Systemic and Advocacy Risks are very real, and they can have disastrous consequences for one side or the other. If anything, those risks should give everyone reason to stick with their negotiations, no matter how challenging those negotiations may be.
* The Wislon case impacted a plaintiff. Someday I may write about a different case that went before Maine’s Supreme Judicial Court in which a similar error impacted a defendant - just to emphasise this kind of Systemic Risk can and does impact parties on either side of a dispute.
