When boards are in a 'bet the company' trial: there are two keys to success that every director should know.

• Author: Bennett, James P.
• Position: LIABILITY AND LITIGATION

YOUR COMPANY is a defendant in a lawsuit involving billions of dollars in alleged damages. Trial is fast approaching. General counsel, senior management, and the board are facing momentous decisions. The company is preparing for trial while at the same time making contingency plans for dealing with the potentially devastating consequences of a plaintiffs' verdict. The company's numerous constituencies--shareholders, employees, lenders, bankers--want to know the plan.

Board members looking to arrive at a meaningful assessment of the prospects of prevailing in a "bet the company" trial need to have two questions answered. First, what is your company's trial story? Second, how is your company going to prevail in the "credibility battle" to which every trial inevitably reduces? A trial story that explains all the key evidence, and winning the credibility battle, are the two keys to success in any trial. This is true even where the damages sought are in the billions of dollars. The simple truth is that in a "bet the company" case, the stakes might be higher, but the basic principles of trial remain the same.

What is our trial story?

What exactly is a trial story? Simply, a unifying narrative of the case that puts forward the essential bases upon which you should win. The story must also anticipate your opponents' strongest points and place them in appropriate context.

In a "bet the company" case, outside counsel will likely have spent years poring over mountains of emails and trying to master myriad industry and technical issues. But no matter the "complexity" of the issues to be tried, no matter the enormity of the stakes, trial counsel's job in a "complex" case is the same as it is in any other--to reduce the case to a simple and compelling story.

The story that will persuade the jury in most cases will encompass all of the "big picture" facts, which should dispose a fair-minded juror to your cause. It must also encapsulate all of the key evidence. If your story is not consistent with all of the key evidence, both "good" and "bad," the jury will likely reject it. In evaluating the odds of prevailing at trial, therefore, your company's trial story must be subject to severe critical scrutiny. It must be tested for every weakness, long before the trial is scheduled to begin.

The class action securities case against JDS Uniphase (JDSU) that was tried last year is a good illustration. By any measure it was the largest securities case ever to...