Sean McGahan suggests that cutting the CRAP can lead to courtroom success

It is a startling fact that in the UK, 98% of personal injury claims succeed. Yet I am happy to state that it does not take brains to defend a personal injury claim successfully. This is one of a number of surprising conclusions I have formed in the practice of litigation risk management.

Losing a claim is just another risk. How should you respond to this risk? The key to responding to any risk is to gain a sound understanding of it. Unfortunately, some of the responses from within the silos of health and safety, human resources and claims handling can lack a vital ingredient. They can fail to take account of how a response will play out where it actually matters, in a courtroom. Failure to understand the dynamics of a courtroom can lead to responses that not only damage an organisation's objectives, but also serve to reduce the chances of actually winning a trial. Compulsive risk assessment psychosis (CRAP) and compulsive risk averse policy (CRAP) are the worst offenders, and I will explain these later on.

What do you need to know about the dynamics of a trial to design a fitting response? Risk managers know that judges tend to be very risk averse, but few may understand why. If you do understand why, you can do something about it.

The best way to understand judicial risk aversion is to imagine you are going to open a zoo. What do you need to know about personal injury law? By studying legal precedents, which are written judgments of the courts, you can get an indication of when you might be held liable for personal injury. You need to know you will owe a duty of care to visitors and if you breach that duty, and this contributes to a visitor being injured, a court will order you to pay compensation to the injured person.

So let us apply this to our zoo. How much care does the law expect us to extend to visitors? To determine this, judges are meant to look at the magnitude of the risk. This principle is easily applied to our zoo. Hungry lions are likely to eat people; hungry penguins on the other hand eat fish. If a visitor is attacked by a hungry lion, death or serious injury follow. If a visitor is attacked by a penguin they are likely to suffer embarrassment. Therefore the law expects you to take more precautions with lions than penguins. If you think about it, this idea of the magnitude of the risk is very similar to the AIRMIC/IRM/ALARM risk management standard steps of establishing the ‘probability of an occurrence and possible consequences’.

Judges should also take into account the social value of the activity which gives rise to the risk. Again, when you think about it, this is similar to defining your context and setting your objectives in a risk management process.

Finally courts are meant to look at the costs of preventive measures. The concept sits well with cost benefit analysis.

If we apply these legal tests to our zoo, you might think a judge will recognise there is social value in children and adults learning to appreciate animals, so the closer people are to the sights and smells of animals the better. A judge should recognise that if the magnitude of the risk posed by an animal is tolerable, the social value of interaction overrides concerns about the magnitude of the risk.

A practical step to achieve this social value or objective would be to allow small tamarind monkeys to roam around free. Many zoos already do this. There is a risk they might occasionally bite a child who pulls their tail but a court should recognise that is a risk worth taking. There is even an upside to the risk. The child will learn an important lesson – never pull a monkey's tail.

But if we go through our risk management process and decide how we are going to manage the physical risks, can we be confident that a judge would agree that the risk was worth taking? Indeed not! One judge might agree, another might not.

Why it is different in court

In reality, the law may use language similar to the language of risk management, but that language is interpreted radically differently. This is because the overall legal process is not a good way of considering issues of risk. Judges make decisions on risk without using the methodologies universally recognisable to risk managers as being key elements of high level decision making on risk. The result can be that some judges set the standard of care very high indeed, almost to the point of zero risk. You can see this by looking at the analytical tools and the overall legal process.

The discipline of risk management utilises a whole range of analytical tools to make decisions about risk tolerance: brainstorming, SWAT analysis, HAZOP, CBA, and so on. A judge on the other hand only has the trial process itself as a means of analysis. That process was never designed to analyse risk.

For a start, quantitative analysis – the aspiration of any risk management process – is avoided. Guidelines, placing rough financial values on injuries, do exist, but judges do not set them against the costs of precautions and the benefit to society and individuals from certain activities. A court is thus left with no inherent means of assessing the costs of preventative measures in any meaningful way. Semantic tests, such as 'reasonableness' or 'practicability' are used instead, without any clear reference point. There is therefore wide scope for differences in interpretation between judges.

Some narrowing of the differences in opinion is achieved by the availability of written judgements of higher courts. Judges are meant to make decisions consistent with previous judgements. However, this still leaves a great deal of scope for subjective interpretation. This is the reason why an experienced lawyer's knowledge of a particular judge is often a better predictor of results than the legal tests.

An effective audit is really required to monitor judges' decisions for consistency. This is lacking in the judicial process. The only control is the appeal process available to the parties. This is an expensive process, not greatly used and is therefore of questionable value as a control measure.

The net result is that some judges adopt a basic approach to risk, which sits well with the rudimentary fact-finding capabilities of a trial. Was there a risk? And was there anything that could have been done about it? Faced with an accident resulting in injury there is a natural tendency to answer that some additional precaution should have been taken. The legal process therefore has an inherent bias in favour of setting a very high standard of care, which may actually be way above the optimum for any given activity. That is why 98% of personal injury actions succeed. What is lost in this approach is the fact that, while you can always take more care, you cannot always take more care and achieve objectives as well.

Given this tendency, poor risk management actually serves to reduce the prospects of defending a claim successfully. Compulsive risk assessment psychosis (CRAP), a phrase first coined by Emeritus Professor John Adams, is one example. An organisation pays lip service to risk management and conducts some risk analysis, identification, description and estimation, but the process of risk management is never completed because the organisation fails to evaluate the importance of running the risk, or to place values on the degradation of organisational objectives of control measures. Risk assessment is also applied to unsuitable issues. An organisation becomes flooded with documents identifying risks, often using exaggerated language. The result is that an organisation simply confirms to a judge that there was a risk, and the organisation looked as if it was ignoring it.

Another example is compulsive risk aversion policy. This second type of CRAP is even worse than the first. Practices and procedures are created without a proper understanding of courts. The intention is to reflect the standard of care expected by judges. Policies and procedures become risk averse and conflict with operations. An organisation ends up with polices and procedures that simply do not fit it. Its own documents then become an external criterion upon which findings of liability of are made, because individuals and operational units depart from them in order to achieve objectives. If the intention is to win court cases the real effect will be the opposite.

CRAP risk management may prevent accidents, at the cost of objectives, but it certainly will not win court cases. If you go to court armed with CRAP risk management, you may find a judge decides that you should have taken even more care, so to win the next time you add more CRAP to your organisation, which in turn a judge decides is insufficient, and so on and so on, until you end up with an organisation short on achieving objectives, a loser in court, but absolutely jammed packed full of CRAP. So my message is to cut out the CRAP.

You simply cannot assume that a judge will view risk in the same manner as your organisation. Yet in many trials the defendants are unable to call effective evidence on the issue of risk. This is either because they lack a cohesive policy on risk in the first place, or simply have failed to ask the question of how the organisation is going to communicate their policy at a trial, and whether the language used is palatable to a court or will be interpreted as having a different meaning than intended.

Not straightforward

Communicating in court is not a straightforward process for organisations. The system by which evidence is introduced to judges in a trial grew up before there were large corporate organisations. Trials are designed to allow individual personalities a voice. Witnesses are called by lawyers to give evidence in a witness box. Lawyers cannot give evidence and so cannot be your voice at a trial. They can certainly amplify what witnesses say but, without the voice of the witness in the first place, they can do very little. In personal injury litigation you are sued by an individual who will sit in the witness box and can actually speak passionately to a judge. He or she can recall evidence from memory, or simply make evidence up. The plaintiff therefore starts with a huge advantage of having a single brain and thus a single voice and personality.

For an organisation to compete, it too must appear to have a single brain, a single voice and a personality. It needs to have a unified and cohesive approach to risk. That is why I said at the start you do not need brains to defend personal injury actions; you need a brain. The adoption of enterprise wide risk management actually creates this brain.

If there is clarity over what the objectives of an organisation are and clear assessment, analysis, evaluation, reporting and treatment of risk, based upon quantitative analysis, then, provided this voice can be presented in court, a judge actually lacks any inherent basis on which to reject the risk tolerance set. It would of course be open to the plaintiff to call evidence to attack the risk tolerance, but if the process is robust there may be little to attack.

Let me illustrate what I mean by going back to the zoo. Imagine we had just added a playground at a cost of £100,000. In 2017 a child falls 2.5 metres and breaks a leg. The zoo is sued and is told that the child's legal team has an expert who will say that a 1996 report showed that a 45% reduction in children attending emergency departments after playground accidents could be achieved if the maximum fall height of 2.5 metres was lowered to 1.5 metres. The zoo is asked by its legal team why it chose a height of 2.5 metres instead of 1.5 metres. The people who are heading up our organisation in 2017, 10 years from now, look puzzled and end up saying they do not know. The only document they can turn up is a risk assessment that rates the likelihood of injury over two years as 2 on an ascending scale of 1 to 5 and the severity of injury as 3 on the same scale. A supervisor has completed the accident report form. He writes down exactly the mother's allegation that the equipment is too high and, as fact, the child slipped as a result of a slippery substance on the equipment. No investigation is carried out until a claim is made six months later.

So the zoo finds itself with no evidence to explain its seemingly dangerous decision in 2007, and furthermore has recorded the incident in in a way that corroborates the plaintiff's allegations.

But imagine if, when we decided to build the playground, our analysis showed we were likely to be sued for about £100,000 some time over the next 10 years. Rather than simply do nothing we decided to plan for the eventuality. We introduced litigation risk management into our processes. We implemented a recognised risk management process and designed our policies and procedures to use language that is court friendly. We also designed our accident procedures so that they not only fulfil a health and safety function, but also a claims defence function. We redesigned our documentation and put in place a protocol and escalation procedure for accidents that may go to litigation.

As a result in 2017, the zoo can dust off a complete risk policy and its application to the project. It turns out the objective was to reduce the risk of children being killed on the roads outside the zoo and to create a safer environment for adventurous play than in other parts of the zoo. The project manager had not only read the 1996 report, but had read other reports as well about the need for playgrounds to teach children about risk in a controlled environment. Our documents record that two local children had been killed playing near the zoo by cars over a 10 year period, and there had been a number of near misses resulting from children climbing in other parts of the zoo. We could not achieve our objective without creating a challenging environment for children. We could not do it with near zero risk. Now we can give evidence of our approach to risk, which the trial would otherwise lack. If the zoo also considers who will appear as a witness, it can have a compelling voice to explain why a lower height would have actually increased the overall risk to children. It is now much harder for the other side to win.

If you have not thought about litigation risk management before, you should now. If you start thinking about how to win a court case only when a claim is made, you are too late. As Abraham Lincoln said: “If you fail to plan, you plan to fail.”

Sean McGahan is head of litigation risk management at McKinty & Wright solicitors, Tel: 02890412820, E-mail: