How to win a “bet-the-company” lawsuit Featured

8:01pm EDT December 31, 2011
How to win a “bet-the-company” lawsuit

Smart Business spoke to Harvey Friedman, a partner at Greenberg Glusker Fields Claman & Machtinger LLP, about making sure your company has the right litigation strategy when it’s all on the line.

A number of years ago, I represented an insurance company which sued a law firm for breach of fiduciary duty. The case was tried by a jury. The defendant was represented by a well-known, highly regarded law firm. I thought that the defendant’s lawyers did a professional, competent job at trial. After a short deliberation, the jury came in with a multi-million dollar verdict in favor of my client — despite the fact that it was an insurance company.

I had the opportunity to interview the jurors after the trial. I learned that the jurors had a difficult time relating to the defendant’s lawyers. Some of the jurors’ statements have greatly influenced the way I have tried bet-the-company cases since then. Those statements include: make the facts easy to understand, tell a story, talk to (not down to) jurors, avoid sarcasm or being overly aggressive, use non-legal terms (greedy instead of egregious, rip-off rather than unconscionable, stole instead of converted, doesn’t make common sense instead of illogical, fair instead of equitable), and establish the theme that what your client seeks is fair, right and makes common sense.

In addition to how to communicate to a jury, the following is a list of tools a defendant should employ to enhance its chances of winning a bet-the-company case.

Choose the best forum

  • First, avoid arbitration if possible. For many reasons, arbitrators often split the baby. Additionally, there are no meaningful rules of evidence, which allows either side to submit evidence whether it’s relevant or not, and there is no meaningful right to appeal if you are unsatisfied with the arbitrator’s decision.
  • Second, if you are a defendant, you should attempt to have the case litigated in federal court, not state court. A unanimous verdict is required in federal court, whereas many state courts, including those in California, require only 9 of 12 juror votes for a verdict. Jurors are generally more conservative in awarding damages in federal court and it is easier to obtain summary judgment, a determination made by the court without a full trial. Lastly, the interest payable on a judgment is much higher in state court (10 percent per year) than in federal court (approximately .13 percent per year).

Be the plaintiff. Even if you are the party against whom a claim has been asserted, make a peremptory strike; become the plaintiff by being the first party to file the lawsuit. Many jurors believe a plaintiff would not have filed suit unless the plaintiff had suffered damages. Filing suit first may enable you to choose federal court, instead of state court as the forum. Moreover, if the case needs to be filed in state court, you may be able to select the state if you file suit first. In addition, a plaintiff speaks first and last, both in presenting evidence and in the summation. This can be a significant advantage.

How to handle the lawsuit

  • If you contact most of the known experts on a particular issue, and thereafter choose one, the experts not chosen may disqualify themselves if asked by the other side to provide expert services. As a result, contact witnesses immediately, particularly expert witnesses.
  • Attack punitive damages at every stage in the litigation. You don’t want a jury to decide the issue. Many judges don’t like punitive damages and will grant a motion to strike them from the case.
  • The defendant usually has the right to take the plaintiff’s deposition first.  It is important for a defendant to take the plaintiff’s deposition and pin him down before he knows the particulars of the defendant’s defenses.
  • It is important to make a summary judgment motion because, even if it is denied, it is an excellent discovery tool. A defendant can learn about the evidence and witnesses the plaintiff intends to use at trial from the opposing papers the plaintiff files.

Hire a good jury consultant. Experienced jury trial lawyers believe that 75 percent of the outcome of a jury trial case depends on jury selection and opening statement. Although an experienced trial lawyer can do a good job in picking a jury without the aid of a jury consultant, the use of one can improve the possibilities of a “good” outcome to an “exceptional” outcome.

In addition, two important aspects of a persuasive opening statement are themes a lawyer is going to develop during the trial and “buzzwords” — words that a jury may relate to. A good jury consultant can help develop themes and formulate buzzwords.

Hire the best lawyer. There is a tremendous difference between a bench trial and a jury trial.  There are many lawyers who do an excellent job trying cases to a judge but do not do well trying cases to a jury. Lawyers who do well trying cases to a jury have exceptional people skills.

The usual procedure is to make a decision on the basis of references and an interview with the lawyer. The references often come from friends or clients of the lawyer and can be unreliable. At the interview, the lawyer typically will toot his horn and tell you about the successes he has had — which are often exaggerated.

The best way to choose between lawyers you are considering is to have your general counsel make contact with judges — sitting and retired — to discuss the trial attorneys you have identified and with lawyers who have opposed the trial attorney you are considering. Judges and opposing counsel have no axe to grind and will provide opinions which are unbiased and more reliable than a lawyer who has tooted his own horn.

It is almost certain that a bet-the-company lawsuit will be tried by a jury. For the best possible outcome, you need to choose a lawyer who knows how to relate to the jurors and can persuade them that your cause is fair, right and makes common sense.

Harvey Friedman is a trial lawyer at Greenberg Glusker Fields Claman & Machtinger LLP. He has tried more than 100 cases to conclusion, and for many years has been recognized by Best Lawyers in America in the Bet the Company and Commercial Litigation categories. Reach him at HFriedman@greenbergglusker.com.