As a result of these difficult times, executives are relying on general counsel to act, more than ever, as Legal Risk Managers. At the earliest stages of litigation general counsel are now asked to determine case value and identify risk(s), so the corporation will be: 1) in a better position to limit unnecessary costs associated with hiring outside counsel; 2) able to mitigate negative public perception; 3) identify the case's monetary value; 4) limit costs associated with unnecessary discovery; 5) determine whether to settle; and 6) identify the key issues to develop a strategy for litigation.

To assist general counsel in performing this role many companies turn to jury research consultants. These highly trained professionals apply the rigors of social science to assist general counsel in identifying, evaluating and analyzing the risks associated with lawsuits. Corporations have found that teaming up their general counsel with trial consultants, provides general counsel with scientific data that enables them to better assume the role of legal risk manager. Armed with the research and data, general counsel are better situated to recommend how to manage the legal risks and avoid unnecessary costs to the corporation.

History
The need for highly skilled general counsel is crucial to the success of a corporation. In today's highly litigious environment, companies are primarily concerned with how general counsel manage the risk of litigation and handle increased exposure to the company. To better understand why general counsel have been granted the role of risk manager, a brief overview follows.

Corporate general counsel have served different functions throughout history. In the 1920s and 1930s, general counsel were involved in making critical business decisions with the management of the company. However, with the emergence of business schools from the 1940s to the mid 1970s, the role of corporate general counsel began to change. Business decisions were taken away from lawyers and handed over to business school graduates. From the 1970s to the late 1990s, the role of general counsel was primarily as a legal advisor, due to an unparalleled growth of regulatory agencies and corporate regulations. From the late 1990s to the present, public's negative perception of corporations has contributed to increased litigation, thereby propelling general counsel into the role of Legal Risk Manager.

I. Why Risk Management?
The public perception of corporations is at one of the lowest levels and jury verdicts are at the highest they have been in history. This is illustrated by the following research results that Bowne DecisionQuest and the MCCA (Minority Corporate Counsel Association) conducted on jurors' attitudes of corporations:

• More than 75 percent of white males, typically corporate America's most supportive demographic, report that they do not trust corporations and often cite news of recent events as their reason.
• Juries are increasing overall cash awards due to a belief that plaintiffs' attorneys are taking larger percentages of the cash verdicts.
• 76 percent are angry with corporate America for various reasons.
• 63 percent have developed a lesser opinion of corporations during the past year.
• In cases where a large corporation is a defendant, 71 percent of jurors believe managers and senior executives are more prone to lie on the witness stand than lower-level employees and expert witnesses.
• 78 percent believe many companies destroy documents hoping to avoid taking responsibility for things that they have done.

Therefore, management cannot afford to expose themselves, their companies or shareholders to risks associated with major litigation. The consequences of not managing a company's risk with diligence and quality research can lead to unpredictable results.

On its face, the role of having general counsel manage risk may seem like a job better left to business people. In fact, business people frequently assess risk, usually when a particular division of a company develops a new product, acquires intellectual property, or enters a new venture. However, the risk assessment made by business people is typically isolated from the risk assessment made by general counsel.

General counsel have an overall perspective. Rather than viewing risk in the terms of how a particular deal will affect a department's legal exposure, general counsel view risks cumulatively. General counsel's access to a broad spectrum of information places them in a better position then a corporate manager to analyze a particular legal issue facing a corporation. An example of this can be illustrated by looking at a particular manager of the ‘new drug' division of a major pharmaceutical company. The manager is lobbying for ‘Company X' to defend a product liability lawsuit. She believes that not defending the lawsuit would set her division back years and cost the company millions for redevelopment.

The company's general counsel was asked for his advice and concerned about ancillary-risk, hired a jury research consultant to assist in identifying potential risk. The research results clearly demonstrated that a high percentage of the population agreed that if the company defends this litigation, their perception of the company and its existing portfolio of drugs would dramatically suffer. As the example demonstrates, while the manager's assessment was valid, her analysis was in isolation from the information that would have allowed her to identify other potential risks to the corporation. The general counsel with the access to critical information is in a better position to manage the risk for the company.

II. What is Risk Management?
Risk Management is a process consisting of well-defined steps, which when taken in sequence, can be used to analyze exposure and determine how to best handle such exposure. The benefits of risk management include: 1) identifying risks and avoiding surprises; 2) developing a strategic plan for better cost control; 3) enhancing shareholder value by minimizing losses and maximizing opportunities; 4) informing the CEO and the board of the exposure to risk; and 5) resolving lawsuits in a systematic, well-informed and cost-effective method. General counsel's role as legal risk manager should encompass a wide array of responsibilities including:

• identifying and analyzing risk;
• counseling senior management and the board;
• controlling costs.

III. Using Research to Identify the Risk:
The most important step that a risk manager must take is the first step – identifying the risk. It would seem that identifying the risk would be an easy task. However, layers of risk exist underneath the claimed damages amount (or predicted amount) that may never be fully understood absent proper testing.

Identifying these layers requires calculated focus, since risk comes in many forms. For example, legal risk, public perception risk and business risk are layers of risk that cannot be accurately identified without proper testing. Legal risk is the identified financial risk that may result from the uncertainty of litigation, including: regulatory sanctions; shareholder lawsuits; and damages awarded by a jury. Public perception risk is the financial risk to a company's image due to the uncertainty of litigation, which includes: customer mistrust in a corporation's products or services; customer dissatisfaction with the company's management; and/or loss of stock value due to negative corporate image. Business risk is the financial risk to the company's products and/or services that may result from the uncertainty of litigation, including the potential loss of sales or intellectual property.

General counsel can rarely uncover these layers of risk without proper research specific to the facts of the particular lawsuit. For example, the risk of negative public perception arising from a company's decision to litigate or settle a case could result in major losses in sales. Likewise, decisions about the disposition of a particular case run the risk of spawning additional lawsuits. If general counsel do not properly uncover and identify these risks, the consequences could be catastrophic for the company.

Jury research consultants are invaluable in assisting general counsel with identifying these risks. By performing research on representative populations, trial consultants can help a corporation uncover the true nature of the risk associated with a particular lawsuit. Research results assist general counsel in identifying risks that might otherwise be undetected. Failure to identify such risks can be extremely costly. Only after utilizing research to identify the risk, can a general counsel properly analyze the risk.

IV. Using Research to Analyze the Risk
By performing strategy development and testing research or what is more commonly known as "focus group" research, the guessing game of risk analysis is eliminated. Research provides general counsel with a detailed report setting forth the identified risks, as well as providing a breakdown of demographic and/or socioeconomic trends. The job of analyzing the risk is then turned over to the general counsel, who armed with this research, now has a reliable basis upon which to evaluate the identified risks of litigation.

When analyzing the risk, general counsel should not focus solely on whether they received a favorable verdict at research, or how a certain portion of the population felt about the company. Rather, the focus should be on the cumulative effect that the identified risk may have for the company. With a broad perspective of the risk and the company's objectives at mind, general counsel will be able to better determine whether the company should defend litigation.

V. Applying Risk Management
Identifying the specific risks associated with taking a case to trial only begins when one assesses the likelihood of prevailing with a jury. Once the general counsel has assessed the probability of prevailing at trial, it then becomes incumbent upon her to add to this calculus other factors such as the costs of trying the case to a jury, as well as the larger social costs related to how this case may affect the company's perception in the community.

The application of the risk analysis together with the costs associated of managing the risk will allow the general counsel to make an informed decision on how to proceed with the lawsuit. For instance, after conducting jury research, the results may include the following:

• 71% of the jurors believed that the corporation was negligent in producing automobiles.
• The surrogate jury awards ranged from $20 million to $50 million.
• Jurors believed that the 'X' Corporation would not be admitting liability by settling the case instead of defending it in litigation.
• Jurors suggested that they would feel comfortable buying an automobile from 'X' Corporation if 'X' Corporation succeeded in defending the litigation, but not if it settled the case or lost at trial.

General counsel must compare potential legal costs, $20 to $50 million, plus projected attorney fees, with the risk of negative public perception and business risks of litigation, (potential loss of sales). The analytical process may vary by type of case and among general counsel; however, the one thing that is for sure is that with the use of additional analytical tools, companies can feel comfortable that their general counsel have systematic mechanisms to measure risk.

Whatever the decision, to litigate or settle, general counsel can be confident that they have accounted for the identified risk and applied that risk to the legal, business and public perception costs. If the case proceeds to trial, consultants can and should be used to aid the trial team in constructing case themes, preparing witnesses, assisting in jury selection, and creating strategic graphic development.

VI. Counseling Senior Management and the Board
The jury research consultant is an integral part of any comprehensive management process. The trial consultant assists the general counsel in explaining the results of the methodology employed and the research results. Thereafter, having performed a risk analysis exercise, the general counsel is better equipped to discuss the risks with the senior management. The general counsel's risk management recommendation should account for the company's business objectives and suggest ways of eliminating future risk.

VII. Conclusion
The reality of business is that companies get sued. Corporations are turning to general counsel for guidance on how to manage the myriad of risks associated with lawsuits. In order to succeed in risk management, general counsel must have a broad understanding of the risks tangential to litigation and implement a systematic approach which utilizes valid research to manage the risk. The jury research consultant can assist the general counsel by providing analytical tools that can be used to identify, analyze and mitigate risk.

In the event a company decides to proceed with litigation it will be ahead of the game for several reasons. First, the results from research can be used to identify the issues that are most important to the jury. Second, once the case has been tested on a venue-specific pool of surrogate jurors, the trial consultant will work with outside counsel to develop recommendations and trial strategy. Next, research can inform the development of informational and persuasive graphics for presentation at trial. The research results can be used to assist in jury selection and witness preparation. Finally, the corporation can share its new found knowledge, trial strategies and graphics with other counsel who are trying similar cases.

written by Ron Kurzman Litigation Consultant / Partner
	Click for a full biography Ron Kurzman, Esq., is a Member of Magna Legal Services, LLC. He is an expert in assisting counsel in developing trial strategy for large, complex matters, based on behavioral research and jury analysis. As a litigation and trial consultant his activities include the development of trial strategy and tactics, jury selection and voir dire, implementing shadow juries, witness communication training, ordering of evidence, opening /closing statements, development of themes and arguments, demonstrative evidence preparation, and teaching persuasion techniques. He works with members of the trial team to develop themes and case strategies that will be persuasive to juries, judges and arbitration panels. Mr. Kurzman has worked on cases ranging from toxic tort and product liability to intellectual property and contract disputes. He has successfully worked with some of the top law firms in the nation such as; Sheppard, Mullin, Richter & Hampton LLP, Pryor Cashman Sherman & Flynn LLP, DLA Piper Rudnick Gray Cary, Troutman Sanders LLP, Patterson Belknap Webb & Tyler LLP and Kelley Drye & Warren LLP. Mr. Kurzman has been associated with many highly publicized trials, most recently: US v. Richard Scrushy, Final Analysis v. General Dynamics and various national asbestos and brand name drug cases. Mr. Kurzman has a Jurist Doctorate from Nova Southeastern University School of Law and received a Bachelor of Arts in Political Science from Florida State University. He is a member of the New York Bar Association, New York Trial Lawyers Association and the American Bar Association. Mr. Kurzman continues to be committed to volunteer work through his association with the New York Lawyers for the Public Interest.