What Jurors Think Of American Corporations ' and What You Can Do About It

These are challenging times for those of us who represent and defend corporations in litigation. The recent criminal convictions of Enron's Ken Lay and Jeffrey Skilling only confirm what we have known for quite some time ' jurors are skeptical of, and even hostile toward, corporations and corporate executives.

But in order to formulate an effective defense strategy, it is important to understand why jurors hold these attitudes. Dr. Ross Laguzza, a jury consultant with R&D Strategic Solutions, LLC, explains that jurors are rarely motivated by anger: 'In all the conversations I have had with real and surrogate jurors who are punitive, I would estimate that less than 10% were ever punishing out of anger.' Instead, he says, jurors are motivated by fear: 'Many people are afraid of an unsafe world and look to those who appear to be powerful to protect them from risk. Large corporations are perceived to have the resources necessary to accurately predict the future and stave off unwanted risks.' When jurors see a big company that has failed to protect others, or has used its immense power to harm others, fear drives their decision. As Laguzza explains: 'The important thing here is that it is not an intellectual analysis people do when they judge companies, it is an emotional one which is difficult to counter with cold facts and points of law. Understanding that safety concerns (even in non product cases) drive most jury verdicts is the key to discovering effective defense strategy.' Jurors also hold all big companies to high standards, and punish those that do not meet them. Even a company with a good public image may not be able to avoid punitive damages. 'Companies with strong positive images are often held to unrealistic standards of performance because jurors believe extraordinary performance is consistent with the company's stated values. Jurors often punish companies they think are good because they feel the company needs a reminder,' Laguzza explains.

Changing How to Advise

This does not mean that it is impossible to successfully defend a corporation in litigation. Indeed, there continue to be many notable defense verdicts. But, it does mean that counsel must make some changes in how these companies are advised and defended in litigation.

First, when giving pre-litigation advice, counsel should consider the legal problem; not just from a lawyer's perspective, but also from a juror's perspective. It is not sufficient merely to ask: 'If a lawsuit is filed, will my client have a valid defense to the plaintiff's claim?' Today, you should also ask: 'If a lawsuit is filed, will jurors believe that my client met their high standards? Will they believe that my client did everything it could to protect the plaintiff from harm? Or will the jury believe that my client abused its power?'

Often, there are simple steps that a company can take before a lawsuit is filed that have a profound effect on the outcome of subsequent litigation. But too often, the company fails to take these steps, because it has only considered what the law requires, and has not considered what the jurors expect. In advising a company before litigation is filed, counsel should anticipate that jurors will judge the company not based just upon what the law requires, but also on whether the company met its own standards and the unspoken standards set by the jurors.

Recently, I defended a case in which the plaintiff and defendant formed a strategic partnership. My client agreed to design and build certain components and equipment for the venture. When the plaintiff, a small start-up company, ran out of money and was unable to pay its bills, my client suspended work on the project. However, my client also took steps to ensure that it would be able to resume work if the plaintiff raised the necessary funds. It identified the key employees on the project, and while they received temporary assignments in other parts of the company, for more than 6 months they remained available to resume work on the plaintiff's project if the plaintiff raised the necessary funds. In other words, the company did something that it was not legally required to do. The wisdom of this became apparent when, several years later, the plaintiff sued for breach of contract and its lawyer argued to a jury that my client had 'abandoned' the plaintiff when it suspended work.

The opportunity to do something more than that which the law requires often arises in the context of potential litigation with employees. When a company shuts down a plant or office, it may pay little attention to the plight of its employees, based upon legal advice that these are employees 'at will.' These at will employees nonetheless may be able to allege a cause of action by claiming, for example, that the company made false statements to them about the future of the facility, or by claiming that their facility was targeted for shutdown because it employed older workers. At the trial of such a case, the jury will be interested, not just in the anti-discriminatory purpose for the shut down, but also in what the company did to protect its employees from the consequences of this decision. So, before the business decision is made to shut down the plant, counsel should ask the questions that the jurors will ask: 'How much notice did the company give the employees of the shutdown? Enough notice so that the employees could find other jobs? How much severance did the employees receive? Enough, in light of their many years of employment with the company?' Sometimes, simply by giving the employees a little more notice or a little more severance, you can dramatically improve your client's chances of prevailing in a lawsuit, if one is filed.

Second, it is more important than ever that counsel evaluate his or her case early. We know that, among other things, early case assessment enables us to identify the cases that should be settled ' and to settle them before the client has invested a lot of time and money in defending the case. But early case assessment offers another important benefit. By evaluating a case early, counsel may be able to settle a case before the plaintiff's lawyer fully understands the settlement value of the case. In evaluating your case, you should consider not only the evidence that relates directly to the claims and defenses, but also evidence that, while marginally relevant, may have an explosive effect on the jury. If a document is discovered sitting in the case file like a ticking time bomb, the case can be settled before discovery even begins. A document may be found that is considered to be problematic, but counsel may be unsure how a jury will react to it. In this situation, counsel should conduct a jury study early in the case. Based on the results, counsel may decide to settle the case. Even if discovery is underway, the case may be settled on favorable terms. The plaintiff's lawyer may have seen the troublesome document, but also be unsure about how a jury will react to it. The longer the case is allowed to drag on, the more likely it is that the plaintiff's counsel will conduct his or her own jury study. Once he or she does so, it may become difficult or impossible to settle.

Third, counsel should expect that at least some of his or her corporate executives will be called by the plaintiff as adverse witnesses. Plain-tiff's lawyers know that jurors hold big companies to a high standard. As a result, these lawyers often try their cases by focusing on the conduct of the corporate defendant. The easiest way to do that is use a high-ranking corporate executive as a witness in the plaintiff's case. If the executive is within the court's subpoena power, plaintiff's counsel will call him or her as a live witness at trial. If he or she is not, counsel will videotape the deposition and play the videotape at trial. This means that every deposition of every corporate executive is important. Both the substance of the testimony and the demeanor of the witness can impact the case. In fact, the deposition provides the plaintiff's lawyer with an opportunity to observe the executive's demeanor. If the witness performs poorly, he or she will earn a spot immediately on the plaintiff's witness list.

Prepare Potential Witnesses

Unfortunately, most corporate executives make bad witnesses, for a number of reasons. The skills that enabled these executives to succeed in business often interfere with their ability to testify effectively. They tend to be assertive and decisive, qualities that in a courtroom may make them appear combative and arrogant. Corporate executives do not expect criticism. They are surprised when plaintiff's lawyers attack them on cross-examination, and often respond with anger. While they may be confident and articulate, these qualities will not necessarily make them good witnesses. As Laguza points out: 'Top executives often believe that they can talk their way out of anything. Show me a highly verbal executive and I will show you the fast lane to punitive damages.' Most corporate executives make decisions based on what is best for the company's bottom line, and are usually surrounded by others who share their values. They often do not understand that jurors may not care about the bottom line, and may decide the case on some other basis. In short, to the jury these witnesses may come off as mean, arrogant, and insensitive ' all qualities that jurors love to hate.

While counsel cannot change the personality of his or her company's executives, their demeanor can be changed. One way to affect demeanor is by making sure that every executive sits through a practice cross-examination before he or she testifies. Unless he or she has testified before, the executive has never been subjected to the intense scrutiny that will be experienced through cross-examination. If he or she experiences a hostile cross-examination for the first time at trial, he or she will be surprised and more likely to react with anger. Another way to improve a witness's demeanor is to show him or her the videotaped testimony. Most corporate executives do not perceive themselves as impatient, mean or arrogant. But they may understand that they project these qualities when they watch a videotape. If the witness's deposition was videotaped, show it. Or, when counsel conducts a mock cross-examination, videotape it and play it for the witness.

Counsel should not assume that a CEO will be able to deflect the cross examination by answering 'I don't know.' Plaintiff's lawyers often call CEOs as adverse witnesses precisely because they know that these witnesses are likely to answer many questions in this way. Jurors expect CEOs and other corporate witnesses to know everything, and resent those who claim not to know the answers. As Dr. Laguzza remarks: 'I like to say that an executive gets two to three 'don't know' answers per testimony. After that, he [or she] is likely to fall off the credibility cliff. While it may be true that the CEO really can't know everything that goes on in the company, jurors still believe that they should.' Once the executive's name shows up on a witness list, he or she must be prepared carefully and thoroughly, even if the potential witness has little personal knowledge about the events leading to the lawsuit.

Finally, corporate executives should be encouraged to ignore the advice that every lawyer gives his or her witness: 'Don't volunteer.' As lawyers, we routinely warn every witness that if he or she volunteers information, it will only prolong the questioning and increase the risk that opposing counsel will discover a fact that can be used to undermine the company's case. But jurors expect more than this from top executives. So, rather than telling corporate executives 'Don't volunteer,' I tell them to 'Be helpful.' Corporate executives are intelligent people. If they are properly and thoroughly prepared, the risk of disaster from a little volunteering is minimal. On the other hand, if an executive refuses to volunteer information, there is a very significant risk that the jurors will believe he or she is hiding something. So, I tell my witnesses, if the lawyer asks an awkward or confusing question, answer the question that he or she was trying to ask. If the lawyer asks a leading question, don't just answer a question 'yes' or 'no.' Answer 'yes' or 'no' and provide a brief explanation. I do not encourage these witnesses to ramble aimlessly or to make damaging admissions. But I do encourage them to act like someone who wants to give the jury all of the information that it needs to make its decision.

Conclusion

Corporate executives face a fairly large hurdle in juror mistrust, especially given the widely reported activity of some of their peers. So if an executive can come across while testifying as forthcoming, honest and even helpful, maybe that mistrust can be overcome. There's no guarantee of course, but counsel should at least give executives the chance to help their case.

These are challenging times for those of us who represent and defend corporations in litigation. The recent criminal convictions of Enron's Ken Lay and Jeffrey Skilling only confirm what we have known for quite some time ' jurors are skeptical of, and even hostile toward, corporations and corporate executives.

But in order to formulate an effective defense strategy, it is important to understand why jurors hold these attitudes. Dr. Ross Laguzza, a jury consultant with R&D Strategic Solutions, LLC, explains that jurors are rarely motivated by anger: 'In all the conversations I have had with real and surrogate jurors who are punitive, I would estimate that less than 10% were ever punishing out of anger.' Instead, he says, jurors are motivated by fear: 'Many people are afraid of an unsafe world and look to those who appear to be powerful to protect them from risk. Large corporations are perceived to have the resources necessary to accurately predict the future and stave off unwanted risks.' When jurors see a big company that has failed to protect others, or has used its immense power to harm others, fear drives their decision. As Laguzza explains: 'The important thing here is that it is not an intellectual analysis people do when they judge companies, it is an emotional one which is difficult to counter with cold facts and points of law. Understanding that safety concerns (even in non product cases) drive most jury verdicts is the key to discovering effective defense strategy.' Jurors also hold all big companies to high standards, and punish those that do not meet them. Even a company with a good public image may not be able to avoid punitive damages. 'Companies with strong positive images are often held to unrealistic standards of performance because jurors believe extraordinary performance is consistent with the company's stated values. Jurors often punish companies they think are good because they feel the company needs a reminder,' Laguzza explains.

Changing How to Advise

This does not mean that it is impossible to successfully defend a corporation in litigation. Indeed, there continue to be many notable defense verdicts. But, it does mean that counsel must make some changes in how these companies are advised and defended in litigation.

First, when giving pre-litigation advice, counsel should consider the legal problem; not just from a lawyer's perspective, but also from a juror's perspective. It is not sufficient merely to ask: 'If a lawsuit is filed, will my client have a valid defense to the plaintiff's claim?' Today, you should also ask: 'If a lawsuit is filed, will jurors believe that my client met their high standards? Will they believe that my client did everything it could to protect the plaintiff from harm? Or will the jury believe that my client abused its power?'

Often, there are simple steps that a company can take before a lawsuit is filed that have a profound effect on the outcome of subsequent litigation. But too often, the company fails to take these steps, because it has only considered what the law requires, and has not considered what the jurors expect. In advising a company before litigation is filed, counsel should anticipate that jurors will judge the company not based just upon what the law requires, but also on whether the company met its own standards and the unspoken standards set by the jurors.

Recently, I defended a case in which the plaintiff and defendant formed a strategic partnership. My client agreed to design and build certain components and equipment for the venture. When the plaintiff, a small start-up company, ran out of money and was unable to pay its bills, my client suspended work on the project. However, my client also took steps to ensure that it would be able to resume work if the plaintiff raised the necessary funds. It identified the key employees on the project, and while they received temporary assignments in other parts of the company, for more than 6 months they remained available to resume work on the plaintiff's project if the plaintiff raised the necessary funds. In other words, the company did something that it was not legally required to do. The wisdom of this became apparent when, several years later, the plaintiff sued for breach of contract and its lawyer argued to a jury that my client had 'abandoned' the plaintiff when it suspended work.

The opportunity to do something more than that which the law requires often arises in the context of potential litigation with employees. When a company shuts down a plant or office, it may pay little attention to the plight of its employees, based upon legal advice that these are employees 'at will.' These at will employees nonetheless may be able to allege a cause of action by claiming, for example, that the company made false statements to them about the future of the facility, or by claiming that their facility was targeted for shutdown because it employed older workers. At the trial of such a case, the jury will be interested, not just in the anti-discriminatory purpose for the shut down, but also in what the company did to protect its employees from the consequences of this decision. So, before the business decision is made to shut down the plant, counsel should ask the questions that the jurors will ask: 'How much notice did the company give the employees of the shutdown? Enough notice so that the employees could find other jobs? How much severance did the employees receive? Enough, in light of their many years of employment with the company?' Sometimes, simply by giving the employees a little more notice or a little more severance, you can dramatically improve your client's chances of prevailing in a lawsuit, if one is filed.

Second, it is more important than ever that counsel evaluate his or her case early. We know that, among other things, early case assessment enables us to identify the cases that should be settled ' and to settle them before the client has invested a lot of time and money in defending the case. But early case assessment offers another important benefit. By evaluating a case early, counsel may be able to settle a case before the plaintiff's lawyer fully understands the settlement value of the case. In evaluating your case, you should consider not only the evidence that relates directly to the claims and defenses, but also evidence that, while marginally relevant, may have an explosive effect on the jury. If a document is discovered sitting in the case file like a ticking time bomb, the case can be settled before discovery even begins. A document may be found that is considered to be problematic, but counsel may be unsure how a jury will react to it. In this situation, counsel should conduct a jury study early in the case. Based on the results, counsel may decide to settle the case. Even if discovery is underway, the case may be settled on favorable terms. The plaintiff's lawyer may have seen the troublesome document, but also be unsure about how a jury will react to it. The longer the case is allowed to drag on, the more likely it is that the plaintiff's counsel will conduct his or her own jury study. Once he or she does so, it may become difficult or impossible to settle.

Third, counsel should expect that at least some of his or her corporate executives will be called by the plaintiff as adverse witnesses. Plain-tiff's lawyers know that jurors hold big companies to a high standard. As a result, these lawyers often try their cases by focusing on the conduct of the corporate defendant. The easiest way to do that is use a high-ranking corporate executive as a witness in the plaintiff's case. If the executive is within the court's subpoena power, plaintiff's counsel will call him or her as a live witness at trial. If he or she is not, counsel will videotape the deposition and play the videotape at trial. This means that every deposition of every corporate executive is important. Both the substance of the testimony and the demeanor of the witness can impact the case. In fact, the deposition provides the plaintiff's lawyer with an opportunity to observe the executive's demeanor. If the witness performs poorly, he or she will earn a spot immediately on the plaintiff's witness list.

Prepare Potential Witnesses

Unfortunately, most corporate executives make bad witnesses, for a number of reasons. The skills that enabled these executives to succeed in business often interfere with their ability to testify effectively. They tend to be assertive and decisive, qualities that in a courtroom may make them appear combative and arrogant. Corporate executives do not expect criticism. They are surprised when plaintiff's lawyers attack them on cross-examination, and often respond with anger. While they may be confident and articulate, these qualities will not necessarily make them good witnesses. As Laguza points out: 'Top executives often believe that they can talk their way out of anything. Show me a highly verbal executive and I will show you the fast lane to punitive damages.' Most corporate executives make decisions based on what is best for the company's bottom line, and are usually surrounded by others who share their values. They often do not understand that jurors may not care about the bottom line, and may decide the case on some other basis. In short, to the jury these witnesses may come off as mean, arrogant, and insensitive ' all qualities that jurors love to hate.

While counsel cannot change the personality of his or her company's executives, their demeanor can be changed. One way to affect demeanor is by making sure that every executive sits through a practice cross-examination before he or she testifies. Unless he or she has testified before, the executive has never been subjected to the intense scrutiny that will be experienced through cross-examination. If he or she experiences a hostile cross-examination for the first time at trial, he or she will be surprised and more likely to react with anger. Another way to improve a witness's demeanor is to show him or her the videotaped testimony. Most corporate executives do not perceive themselves as impatient, mean or arrogant. But they may understand that they project these qualities when they watch a videotape. If the witness's deposition was videotaped, show it. Or, when counsel conducts a mock cross-examination, videotape it and play it for the witness.

Counsel should not assume that a CEO will be able to deflect the cross examination by answering 'I don't know.' Plaintiff's lawyers often call CEOs as adverse witnesses precisely because they know that these witnesses are likely to answer many questions in this way. Jurors expect CEOs and other corporate witnesses to know everything, and resent those who claim not to know the answers. As Dr. Laguzza remarks: 'I like to say that an executive gets two to three 'don't know' answers per testimony. After that, he [or she] is likely to fall off the credibility cliff. While it may be true that the CEO really can't know everything that goes on in the company, jurors still believe that they should.' Once the executive's name shows up on a witness list, he or she must be prepared carefully and thoroughly, even if the potential witness has little personal knowledge about the events leading to the lawsuit.

Finally, corporate executives should be encouraged to ignore the advice that every lawyer gives his or her witness: 'Don't volunteer.' As lawyers, we routinely warn every witness that if he or she volunteers information, it will only prolong the questioning and increase the risk that opposing counsel will discover a fact that can be used to undermine the company's case. But jurors expect more than this from top executives. So, rather than telling corporate executives 'Don't volunteer,' I tell them to 'Be helpful.' Corporate executives are intelligent people. If they are properly and thoroughly prepared, the risk of disaster from a little volunteering is minimal. On the other hand, if an executive refuses to volunteer information, there is a very significant risk that the jurors will believe he or she is hiding something. So, I tell my witnesses, if the lawyer asks an awkward or confusing question, answer the question that he or she was trying to ask. If the lawyer asks a leading question, don't just answer a question 'yes' or 'no.' Answer 'yes' or 'no' and provide a brief explanation. I do not encourage these witnesses to ramble aimlessly or to make damaging admissions. But I do encourage them to act like someone who wants to give the jury all of the information that it needs to make its decision.

Conclusion

Corporate executives face a fairly large hurdle in juror mistrust, especially given the widely reported activity of some of their peers. So if an executive can come across while testifying as forthcoming, honest and even helpful, maybe that mistrust can be overcome. There's no guarantee of course, but counsel should at least give executives the chance to help their case.