In-House Counsel

The Litigator's Lament

If you lose at trial, you're the only one to blame. Learn it, live it, love it.

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gavel-3575414_640Here are two things that happen all the time as an in-house litigator.

Expect them; ignore them; don’t get upset about them.

Thing No. 1

In-house litigator: “We can settle this case, or we can try it. I’ll estimate that we can settle the case for $1 million. If we try the case, we’ll lose $10 million at trial perhaps 40 percent of the time. The case thus has a statistical value of about $4 million. Settling for $1 million is the sensible option, and I recommend it.”

Business client: “Paying $1 million will hurt our profitability for the quarter. We won’t do that. Having a 40 percent chance of losing $10 million is also bad. I don’t want to do that either. What are my other choices?”

In-house litigator: “!!#!@&!”

Thing No. 2

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Trial’s approaching. It’s a high-stakes case. You could lose $100 million or more.  But there’s some reason why it would be dangerous to settle: The case involves a matter of principle; settling is likely to attract similar cases in the future; whatever.

In-house litigator: “I don’t recommend settling. For the reason I’ve just given, settling would be very dangerous. I thus recommend trying the case, even though there is of course some risk of losing $100 million. We might lose $100 million 30 percent of the time.”

Business client: “Well, you’re the expert on these matters, so I defer to you. We’ll try the case. But wouldn’t you feel better if we eliminated the risk by paying $20 million to settle? I kind of feel that way. But we’ll defer to you and try it.”

Every person in the law department who isn’t responsible for the case: “This one makes me nervous. I feel as though we should eliminate the risk and pay $20 million to settle. Maybe even $25 or $30 million. I really do. But, if you think we should gamble, I guess we’ll defer to you.”

Whoever the heck you report to in the law department: “Man, this one makes me nervous. We could lose $100 million; did you consider that? I guess you’re the expert on the case, but this one really makes me nervous. I’d fork over a few tens of millions to eliminate the risk. I really don’t like taking this risk. But we’ll defer to you.”

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Occasionally, the insurance carrier: “I’m nervous about this one. At trial, we could lose more than the plaintiff’s last settlement demand. That means that we could eliminate the risk for less than the cost of losing at trial. This is a very dangerous case. It makes me nervous. Keep us in the loop.”

What’s happening here?

It’s a game of CYA.

If you win at trial, everybody’s a hero! The others quickly forget that they wanted to settle — they never actually told you to settle; they were happy to defer to you — and everyone basks in glory.

But, if you lose at trial, you’re the only one to blame. Everybody else said this trial was risky. They kind of, sort of, maybe, wanted to settle. Nobody actually directed you to settle. Everybody just said that it was risky to try the case — which you, of course, knew and told them. When the risk materializes — you lose at trial — everyone else can say that they were nervous about the case, and that you alone are to blame.

Remember:

Victory has 100 fathers; failure is an orphan.

And:

This is absolutely routine. It will happen in every major case that goes to trial.  Don’t let it bother you; it’s part of the routine of being an in-house litigator.

Mark Herrmann spent 17 years as a partner at a leading international law firm and is now deputy general counsel at a large international company. He is the author of The Curmudgeon’s Guide to Practicing Law and Drug and Device Product Liability Litigation Strategy (affiliate links). You can reach him by email at inhouse@abovethelaw.com.

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