Publications: Bringing Persuasive Techniques To Business Litigation

I often hear the complaint that business litigation is boring. But it doesn’t have to be. You can make business litigation interesting by bringing business ideas to business litigation. By applying persuasive technique, the same technique used in all those personal injury and tort trials, to business trials.

Businesses are about the most sophisticated players in the field of persuasion. They often have entire departments devoted to marketing. One of their primary goals is to develop a brand—an identity in the marketplace that is readily recognizable to the public. Some of these marketing and branding concepts become so synonymous with the product they are trying to sell that people use the brand name when speaking about the general product. Many people use the word Coke synonymous with Cola, just as we often ask someone to Xerox something rather than make a copy.

Marketing/branding techniques are also trial lawyers’ techniques. While many lawyers wince at the thought of a trial lawyer as a salesman, our stock and trade is the same: persuasion. Salesmen are trying to get the public to buy a product: trial lawyers are trying to get a judge or a jury to accept a point of view. This sets the stage for the use of persuasive techniques, many of which can be developed during the trial itself. As any good trial lawyer knows, you have to adjust to the terrain and the comments of opposing counsel.

For example, in one recent case, a shareholders’ dispute in which we represented the minority shareholders, a theme that was relatively apparent to us was breach of fiduciary duty. The majority shareholder owes one regardless of the breadth of his discretion, but denied one, and the concept of the fiduciary holds a special place in the law—one of trust and obligation. Thus another piece of our story line—a story of how the Company went from the Four Musketeers rally and cry of “all for one and one for all” to just “all for one." This theme focused the trial on the majority shareholder’s behavior and his greed.

During the opening argument, the majority shareholder’s lawyer dealt with a key exhibit by avoidance. He didn’t mention it. Now it is always good when your opponent puts his head in the sand and ignores a key fact that goes against him, but in listening to his opening statement the persuasive juices begin to flow. Our opening statement therefore embodied the concept “Houston, we have a problem." We explained that the exhibit was an admission of a significant problem and tied that problem to the changes in the proposed agreement with respect to the majority shareholder’s compensation rights. Language limiting the majority shareholder’s discretion to set his own compensation to pay “for work as an employee” came into the proposals after the exhibit raised the problem and reflected an intent to restrict the majority shareholder’s discretion.

It got even better when the opposing counsel in his final argument decided to address “Houston, we have a problem” by mocking the argument and trying to play down the exhibit he tried to ignore in his opening statement as something minor and trivial. Our closing therefore was modified to “Houston, we have a minor problem,” with significant impact.

Another gem came out of the opponent’s counsel’s argument that the language limiting the majority shareholder’s sole and absolute discretion to set compensation to setting compensation “for work as employees” was coincidental and did not demonstrate intent to limit his compensation rights. In anticipation of this argument, we had carefully gone through the agreement and found, in the paragraphs setting the majority shareholder’s compensation rights, that the limitation relating compensation to being for work as an employee was found three times in that very paragraph. Thus the claim of coincidence became “once is a coincidence, twice is a habit, and three times is a tradition. There is a tradition of limitation in this paragraph." During the trial, the majority shareholder testified that he had seen things happen repeatedly many times by coincidence and that he could not admit that three times in one paragraph was not a coincidence.

By the time closing arguments arrived, these themes had become prominent by our repetition and their avoidance. The plaintiffs had not once addressed the fiduciary duty aspect of the majority shareholder’s behavior. Their CFO had admitted that the majority shareholder treated himself differently from any other employee and any other shareholder. He had gone from “one for all and all for one” to just “all for one." And, yes, the other side “had a problem." In the end, a good case became a great case through use of persuasive business techniques.

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