“They couldn’t hit an elephant at this distance.”
-Famous last words of Brig. Gen. John Sedgwick, May 9, 1864
It was a bright, spring morning in early May 1864. The kind of morning that would typically bring gentle breezes and the mating calls of songbirds drifting up from the rolling hills of the Shenandoah Valley. But on this fateful day, the sounds echoing through the valley were those of scattered rifle shots and the rumble of mule-drawn caissons and cannons being brought to bear by the Confederate and Union armies, each against the other. The conflict brewing on this date, the Battle of Spotsylvania as it would become known, was among the first of the final major conflicts between armies commanded by Generals Grant and Lee, respectively. In the end, by the numbers of troops involved and casualties inflicted (32,000 total), the Battle of Spotsylvania would rank as the principal battle of the Overland Campaign and one of the most significant of the American Civil War. When the smoke cleared, after several days of bloody conflict, both sides declared victory. Each had some right to the claim. Grant did not drive Lee’s army from the battlefield (his objective) and Lee did not advance his army to Fredericksburg (his objective).
For someone writing an article that seeks to draw lessons in trial risk management from battlefield tactics, the Battle of Spotsylvania is a rich source of material. But I choose here to focus on a singular event that occurred around 9 am on May 9, 1864, the second full day of engagement between the two armies. Brigadier General John Sedgwick, commanding a division of Grant’s VI Corps, sat atop his horse, high on a ridge, nearly 1,000 yards away from the nearest Confederate batteries. His purpose was to direct the placement of cannons in preparation for battle. Several of his subordinates warned General Sedgwick that, as regal and impressive as he was atop the hill and mounted on a fine horse, he made an attractive target for enemy sharpshooters. They cautioned him to move away from the crest of the hill. Sedgwick, who had fought in many major battles up to that point (being wounded three times in the Battle of Antietam alone), was, if anything, a brave soldier. And, perhaps wanting to inspire confidence in his junior officers, he replied with words that have come to be his most enduring legacy, and which are quoted at the outset of this article. John Sedgwick is not remembered so much for his many heroic exploits but as the guy who fatally underestimated the capability of his opposition.
The British-made Whitworth scoped rifle that found its mark an inch below Sedgwick’s right eye had an effective range of up to 1,000 yards. It was a lucky, but not impossible, shot. Thus, we are left with a cautionary tale and a primer on risk evaluation and how underestimating risk can lead to catastrophic results.
There are volumes written on risk assessment and management. When it comes right down to it, though, the elements that comprise risk are few and fundamental. In fact, three basic elements of risk dominate the discussion.
Probability of a Negative Outcome
The most common factor associated with risk management is the probability of success or failure. Some risks have very simple probability calculations. The risks attendant to the game of Russian Roulette are in that category. Assuming one loads a single bullet into a six-chamber revolver, the odds of a positive outcome (click, not bang) are 5 in 6; negative outcome (bang) 1 in 6. But for other types of risk, probability can be much harder to determine. The risk of winning or losing at trial is in that category. Even in the simplest of cases, there are innumerable factors that figure into whether one wins or loses at trial. Perhaps the toughest of those factors to evaluate is the jury itself. I recently spoke to an attorney who said his team “mock tried” a case 10 times, each time taking feedback from the previous jury and rolling it into the next mock trial. Based on his results in the ultimate trial, it was time well spent. But even such extreme measures cannot provide the certainty of a win or rule out the possibility of a loss. And even when the probability of a win or loss can be calculated with some precision, acceptance or rejection of a particular risk should not be decided on that basis alone. There is a reason why Russian Roulette (though it offers an 83% chance of a favorable outcome) is not a popular party game. That “one time in six” is a doozy of a bad outcome. Which leads to the second important consideration in evaluating risk – the magnitude of a bad outcome.
Magnitude of a Bad Outcome
Some losses are tougher to bear than others. If you’re spending a weekend in Vegas, standing over a $20 hand of blackjack and split a pair of eights to double your bet to $40, you’re not likely to be in quaking fear that the house has a slight advantage and will probably take your money. The loss, if it comes, is bearable. As soon as risk becomes unbearable, the equation changes. As we noted above with Russian Roulette, even really good odds are unacceptable if a bad outcome is onerous. In negotiating the settlement of lawsuits, parties often speak of the probability of a win or a loss, but the better question might be what is the impact of a win or a loss? For a plaintiff who has been offered nothing, the risk of a loss is nothing (except for the cost of playing the game, and we’ll talk about that later). For a plaintiff who has received a good-but-not-great offer, there are four possibilities at trial – getting less than offered, getting the same as offered, getting a little more than offered, or getting a lot more than offered. Reverse these concepts, and you have the risk factors of defendants who have received a good-but-not-great demand. So, the risk factors for both sides when negotiating lawsuits go up when offers and demands get closer. If the case is one of small consequence (the highest and lowest possible outcomes are acceptable losses for either side), then the parties may be more inclined to act like our blackjack player and finish out the hand at trial.
There is a third aspect of risk management that comes to play in the settling of lawsuits, which we have alluded to above, and that is the cost of playing the game and how that cuts into the value of a win or amplifies the magnitude of a loss.
The Cost of Pursuing the Risk
Those of us who have represented parties in litigation have heard words from a client to this effect, “I don’t care what it costs to go to trial. It’s the principle of the thing that matters.” If the purpose of our court system is to deliver justice, and the opposing party will not accept a “just” settlement, then why not try the case? If success is highly probable, and the magnitude of the loss (i.e., doing worse than the offer/demand of the other side) is not unbearable, then why not try the case indeed? For litigants, particularly in complicated cases with much to be done in preparation for trial (experts, depositions, motions, mock trials, etc.), the answer may lie in the cost of a good outcome. It was none other than the philosopher Voltaire who said, “I was ruined but twice. Once when I lost a lawsuit; once when I won one.” The cost of victory can render that victory pyrrhic if the manager of risk has not factored cost into the mix. Fortunately, cost, of all the factors we have discussed, is probably the most predictable. A seasoned trial lawyer can give the client a pretty tight range of likely costs to be incurred in the pursuit of justice. As they consider settlement offers or demands, they can thus do an apples-to-apples comparison of the net at trial to the net of a settlement.
Other Aspects of Risk
Beyond the three basic factors discussed above – probability, magnitude, and cost – there are many other intangible factors that influence risk and aversion to risk. One harsh reality is that some parties are in a better position to bear bad outcomes than others. For a multi-billion-dollar company, the risk aversion of a seven-figure verdict may be the same risk our Vegas tourist playing the $20 hand of blackjack feels doubling down to $40. Some litigants just can’t afford to take risks that others might consider trifling. Risk aversion is a very personal thing when it comes right down to it. And attorneys can find themselves at odds with a client whose risk aversion is out of step with their own.
General Sedgwick’s Legacy
Even with good odds in his favor — great odds actually — the magnitude of the outcome for General Sedgwick should probably have caused him to act with more caution. But there is another way to look at the general’s decision to remain open and exposed on that hilltop as he directed his troops in battle. While the loss to him personally was of the highest possible magnitude, Sedgwick had to know that his loss, or the loss of any single commander of troops in the field that day, would not be decisive to the outcome. Nor was it. No historian credits the lucky Confederate sniper whose bullet found its mark in Sedgwick’s cheek with turning the tide of the battle, and certainly not the war. So, if the “trial” that Sedgwick was assessing for purposes of risk was not his own personal safety, but the greater good of the war effort, and the preservation of our Union, then his decision to lead from the front, with all risks attendant, maybe wasn’t as thoughtlessly reckless as history remembers it to be.
For those of us who evaluate risk at trial, may we always be mindful of the greater purpose, which is to counsel our clients about the many factors of risk, to let them decide which battles to fight, and to lead them into the fray without fear for ourselves when the battle is on.
