Crowell & Moring's Kenneth Dintzer shares how in-house counsel can uniquely, and in real time, apply risk calculation to trial decisions.
The longer a trial goes on, the more fluid the risk becomes—and the more valuable an engaged, analytical in-house partner is to the trial team.
In house counsel plays a crucial role tracking and reducing litigation risk at trial. When outside counsel is arguing motions and examining witnesses, corporate legal teams must measure, in real time, how the party's litigation risk is evolving.
Counsel may then apply this risk analysis to trial decisions (including the decision to seek settlement), and help the trial team reduce risk from witness conduct outside the courtroom.
All counsel must continuously assess litigation risk. Parties face litigation risk from the moment one party threatens to sue another until the case is finally resolved. Parties can calculate risk as a percentage chance of winning or losing and then convert this percentage to a dollar value. Thus, a $1 million claim with a 50% chance of success is worth $500,000.
It's impossible to measure perfectly, but experienced litigators should be able to assign a good estimate based on known information. And, of course, the risk calculation should change as the case progresses. If a defendant loses a motion to dismiss that it expected to win, for example, the defendant's risk of loss probably rises.
This risk number drives many decisions: settlement numbers, of course, but also whether to call a risky witness (no if you're ahead, yes if you're behind), or when to change strategies. The side that can better calculate litigation risk has a vast advantage throughout the case.
Longer trials present different risks and pressures. High-stakes, multiweek trials present different kinds of risks than shorter, lower-dollar disputes. An exhibit or answer that may have seemed benign in prep suddenly may feel like a turning point in court.
This uncertainty is compounded for lengthy trials because the more people who are involved, the more things can go wrong—or right.
Every witness brings risk, even the experts. In one of my cases, where the stakes were large and the trial lengthy, a vital expert for our side refused to answer a question put to him on cross-examination, repeatedly ducking the question and undermining his credibility.
The irony was that a direct, honest answer might have been a bit embarrassing, but it posed only a minor risk to our success. But by destroying his own credibility, the risk to our case grew enormously.
In-house counsel offers a critical perspective. As a litigation team prepares for trial, members routinely commit to their theories and assume a good outcome. This is largely positive—committed litigators can better convey their honest beliefs to the fact finder.
But experienced litigators know not to let their commitment to the case interfere with a clear-eyed analysis of the litigation risk. In-house attorneys can help ensure the litigation risk analysis isn't upended by irrational exuberance.
They offer a unique view of how the story is coming across, which is especially valuable if trial counsel is buried in granular detail.
In-house counsel also possess internal knowledge that opposing counsel doesn't—such as business context, organizational priorities, and institutional history—that can sharpen analysis, giving one side an advantage in measuring risk.
Risk isn't static, and neither is value. Trial is usually when litigation risk is most fluid. Every witness, every evidentiary ruling, and every shift in tone or jury reaction can affect the odds in one direction or the other.
In-house counsel are in the perfect position to flag these inflection points. They can help recalculate exposure and determine whether and when a settlement offer is in the client's best interest.
Before one of my early trials, I offered the plaintiff $300,000 to settle the claims. The plaintiff rejected our early offer out of hand, so we went to the opening statements. Because the stakes were so small, neither side had performed much discovery, which meant the trial would have all sorts of surprises.
On the trial's second day, the plaintiff's primary witness cratered during cross-examination. At the next break, and working with agency counsel—the government's version of in-house counsel—I offered $100,000 and it was quickly accepted.
This meant we didn't have to continue presenting our case—which, based on my assessment of our witnesses, would have been risky. Winning is great, but buying plaintiffs' claims (or the defendant's defense) at a deeply discounted price because of shifts at trial is almost as good.
Not all the risk comes from inside the courtroom. Except in rare cases to protect sensitive business information, in house counsel is always permitted in the courtroom.
Under Federal Rule of Evidence 615, however, the court may prevent listed witnesses from watching the trial before they testify. Violations of Rule 615 may discredit a witness. Indeed, the court may decide that the soon-to-be-called witness, improperly informed of the courtroom proceedings, may not be called at all.
Corporate counsel, who often is most familiar with the current and former employees scheduled to testify, must ensure that an early-arriving witness doesn't wander in the courtroom to watch. But the exclusion rule doesn't end at the courtroom door – the rule applies to out-of-court communications as well.
Thus, a witness who has testified can't talk about their testimony with another who is on deck. And they always want to talk—during breaks, over texts, at the hotel bar.
This is a risk that in-house counsel is uniquely positioned to handle by explaining the rules and with post-testimony follow-ups to ensure witnesses understand that they can't talk with each other.
Trial is dynamic, and your risk strategy should be, too, until a case is settled or cert is denied. In-house counsel should treat every day in court as a new data point. Trial isn't just a legal proceeding; it's a live negotiation of value and risk, happening minute by minute.
For in-house counsel, staying engaged isn't just helpful—it's essential.
This article does not necessarily reflect the opinion of Bloomberg Industry Group, Inc., the publisher of Bloomberg Law, Bloomberg Tax, and Bloomberg Government, or its owners.
Paulette Rodríguez López contributed to this article.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
