Using Critical Thinking to Analyze Facts

Case reports in law school textbooks include canned facts or those summarized in court opinions. The Socratic teaching method based on case reports does not reveal the skills necessary for factual analysis or even suggest how to do it. The cases that law students study for class do nothing to teach how to get the facts or, especially, how to analyze them. Even clinical courses premised on experiential learning-by-doing typically skip how to examine and think about the facts of a case.

So let us examine how it is that lawyers undertake analyzing “the facts” and making sense of them.

To prepare a case for trial, we first must eat the frog. From the start, we must do the hard work of open-minded, thorough factual analysis—or else risk the error of seizing upon themes and narratives that seem appealing and then selecting facts to support them. Before we can construct a narrative for the case, we must understand all of the facts, including the unfavorable ones. We must look for the explanation that is consistent with and fits all the facts, regardless whether that explanation is the one as told by the client, set forth by the pleadings, or reported by witnesses. It is far better first to see what story the facts tell, rather than immediately to embrace a theme or explanation, which leads to selecting only those facts that fit it and disregarding those that do not.

Facts are actions, events, or statements—occurrences or circumstances that actually exist—not opinions, assumptions, inferences, interpretations, explanations, arguments, or mere ideas. Properly organized and analyzed, the facts should tell a story, and that story is sometimes at odds with what is presented by the client or indicated in the pleadings. Failure to see the story and the relationships revealed by the facts leads to apophenia—the process of mistakenly perceiving meaningful patterns from random data or of projecting patterns onto a random collection of facts. Apophenia results from the substitution of labels and categories for thought. A lawyer who manipulates selective facts to fit assumptions and premises is developing a defective trial story.

In The Black Swan: The Impact of the Highly Improbable, Nassim Nicholas Taleb identifies the traps of various other analytical fallacies—confirmation bias (our tendency to disregard harmful facts), epistemic arrogance (overestimating our knowledge and underestimating our ignorance), the narrative fallacy (our weakness for compelling stories), the silent evidence fallacy (our failure to account for what we do not see), the ludic fallacy (our willingness to oversimply and to take models too seriously), and the hindsight bias (our tendency to believe that an event was probable or foreseeable). Watch out for them.

Here are specific tools to organize and assess facts. Many can and should be used in every case.

Charting. Charts distill complex facts into written summaries. Charts should not be used just to tell a story in opening statement and in closing argument; charts should be used to understand facts; to see what causal relationships emerge from the facts; and as an aide to further analysis, by revealing, for example, what is missing. Among the numerous types of charts, four are most useful—timelines, charts of proof, T-charts, and charts showing damages or the absence of damages.

Timelines can reflect simple plotting of events against a chronology of dates, or they can display much more. One of the best uses a thick horizontal arrow consisting of space within its walls for the pertinent dates to be displayed. Above the arrow, place one type of information, such as the actions of the client or of the adversary; and below the arrow, place other information, such as responses or reactions, failures to act, damages, or actions of third parties.

As understanding of the case matures, refine the timeline. Then, more than just a chronology, it can be used to illustrate potential relationships, especially cause and effect, or to provide insight as to when harm or injury occurred, the start of a notice or option period, the effect of a statute of limitations, or the trigger for insurance coverage.

A chart of proof identifies what must be proved or disproved for each claim or defense, and the evidence—both writings and witnesses—to be used to do so. It is an effective way to ensure that there are no holes in the planned trial proof. Whether created for plaintiff or defendant, the chart should list the elements of each claim or defense. Under each element, identify the proof, starting with any applicable judicial notice, writings and other materials, lay witnesses, and expert testimony. If an expert has not yet been engaged, place the word “Expert” on the chart with a list underneath it of potential opinions. This work in progress is then developed as more facts are learned, more documents are received, and depositions are taken.

T-charts are simple, versatile, two-column summaries with many uses. For example, a T-chart can address an issue or question, like Did Smith know of the defect? The left column can be titled “Yes,” the right column titled “No,” and the appropriate evidence summarized beneath each. T-charts help to organize such facts as which decisions or actions were taken. Alternatively, the left column can contain the list of decisions or actions, with the counterpart “Yes” and “No” entries listed on the right. In a trade secret case, a T-chart can organize and display (on the left side) where the components of a trade secret have been disclosed in the public domain (on the right side).

Damages charts are common in both injury and commercial cases. The proper way to use Federal Rule of Evidence 1006 summaries requires some explanation. See Faruki, The Preparation and Trial of Intellectual Property and Other Complex Cases, 34 U. Dayton L. Rev. 125, 137–39 (2009), for how to create them and how to use them in composite exhibits.

Chronology. Winston Churchill wrote that chronology is the key to narrative. Chronology is also a key to litigation analysis. In complex cases, constructing several chronologies is frequently essential. Use them to reconstruct and display the story of what happened, to tell when actors entered and exited, to identify critical events, and to help understand cause and effect. When confronting a mass of litigation information and materials, separate timelines may help put into concise form the core realities as to particular issues—contract formation or repudiation, actual or constructive notice, accrual of a cause of action for statute of limitations purposes, injury-causing acts, the last chance to avoid harm.

There is a practical reason to use multiple chronologies. It is much easier to construct a chronology of facts pertinent to a particular issue than to construct a massive chronology that attempts to capture the entire case. Such comprehensive timelines typically become so lengthy and detailed as to be unwieldy.

Consistency. Factual consistency is a measure of coherence, plausibility, and persuasive power. Find the explanation that aligns with the facts. That explanation must be consistent with the documents and with the testimony of at least the client and the third-party witnesses. Carefully examine the sequence of events and the documents. Does the explanation fit?

In litigation, consistency can also be revealing of character and can be a determinant of witness credibility. Juries tend to believe that actions and behavior shed light on a party’s character. Facts that show that the character of the adversary is flawed make it less likely that the jury will favor that party.

As credibility is always an issue, it is useful to create lists of credibility-enhancing facts and credibility-damaging facts. Those lists are particularly useful in polishing the story to be told, in witness preparation, and in preparation of cross examination.

Cognition. Who knew what and when? Cognition—the act or process of knowing—includes both awareness and judgment. Your factual analysis should include determining what important facts were learned by which significant witnesses or players and when. Awareness, or lack of awareness, affects intent and actions.

Control. Asking who had control can be a key to understanding the human or corporate behavior, as well as to concepts of causation and responsibility. Who had control over people, actions, and events? Who had the greater control? Who had the greatest control?

Sometimes control flows from, or is expressed in, ideas. Some business courses of conduct are generated and governed by ideas for action. Factual analysis should identify both the ideas and the people exercising control over or within the respective parties. In the business world, as in the military, goals are set, strategies are developed to reach those goals, and plans are developed to execute those strategies. So learn the goals, identify the strategies conceived to achieve those goals, and investigate the plans developed to execute those strategies.

Control takes many forms. Sources of control include money; contractual rights, duties, and obligations; talent and intellectual capital; market position; and hierarchical authority.

Causation. Litigants and lawyers get cause and consequence mixed up. Many expert witnesses do too. Do not mistake an effect for a cause or a symptom for the problem. Newton’s thinking may help—What was the action? What was the reaction?—but, alone, even it is insufficient.

Complex business cases frequently deal with causation chains. Business cases are not about just liability and damages; they are about liability, causation, and damages. Actions and harm can have many causes—the litigants; third parties, such as suppliers, customers, and competitors; government; even nature and weather.

Harm can also be self-inflicted. Factual analysis must separate out harm caused by others than the defendants, as well as harm that did not result from wrongful conduct. That analysis will be the raw material for important expert testimony.

Case reports are filled with examples of loose writing about proximate cause, sometimes also called direct cause, efficient cause, or producing cause. Many statutes and causes of action use various other causation descriptors—predominant cause, root cause, substantial cause, by-reason-of cause, producing cause, cause in fact, and loss causation versus transaction causation. Between the “but-for” cause (without which the event could not have occurred) and the “immediate cause” (the last event in a chain of events, though not necessarily the proximate cause) lie many formulations of causation.

If applicable, case law doctrines of contributing cause, concurrent cause, and intervening, supervening, or superseding causation also require close factual analysis. The mere existence of all of those phrases indicates that, in complex cases, there may be multiple applicable causation factors, not just one.

Causation is not merely the question of which alligator was closest to the canoe. A confusing Latin expression illustrates much of what happens in complex business litigation. The expression is causa causae est causa causati—“the cause of a cause is the cause of the thing caused.” It stands for the principle that the cause of the cause should also be considered as the cause of the effect. The harms for which plaintiffs in business litigation seek redress are often the subject of a fierce contest over causation. The factual analysis thus must identify and explore the facts showing causation.

Chains of causation. The analysis of a chain of causation is analogous to matryoshkas—Russian nesting dolls. Actions of course have consequences, but in our complex society and economy, causation often operates as a chain. Jurors can grasp a chain of causation if it is laid out for them, and the effort to do so can be well worth it. Consider, for example, when a “failure chain” can be constructed from the facts, showing those links that reflect causes not produced by the defendants. Such analysis can be complicated, as when there were different causes for different types of harm or damages, or when a multiple-causation set of facts competes with a blind-chain-of-causation set of facts. One determinant of proximate cause can then be stated as a necessary but insufficient link in the chain, with expert testimony necessary to prove the explanation.

Another Nassim Nicholas Taleb book, Antifragile: Things That Gain from Disorder (Random House 2012), calls the phenomenon “the illusion of local causal chains—that is, confusing catalysts for causes and assuming that one can know which catalyst will produce which effect.” Id. at 132. He also coins the useful term “causal opacity” to describe when “it is hard to see the arrow from cause to consequence” (id. at 57), and he wrote that the “mother of all harmful mistakes” was “mistaking absence of evidence [of harm] for evidence of absence” (id. at 93).

Remember that, other than the Federal Rule of Evidence 803(7) hearsay exception for evidence of absence of a record of regularly conducted activity, it is difficult to prove a negative other than through witness testimony that something did not happen or does not exist.

When analyzing litigants’ decisions and actions, it is only the beginning of the analysis to see that someone was holding a hand of low cards. The questions are causative in nature: How did that happen? What choices or courses of action were available? How did that person act next? With whom or against whom? Did that person accurately analyze the situation?

Yet another inquiry is whether the harm would have occurred anyway. That is, would the condition have occurred even without the defendants’ alleged conduct? Especially in antitrust cases and other lawsuits resulting from competition, injury can be claimed from litigants’ marketplace activities that are really the result of vigorous, tough competition. At least in theory, there is a distinction among infliction of harm, proximate cause of damages, and quantification of those damages. Sometimes the law provides a lesser burden of proof for quantification of damages (accepting, for example, a reasonable estimate), but proximate causation of harm has a higher burden of proof than does the calculation of damages.

Comparison and contrast. When a party has acted under orders or direction to act in a certain way or to proceed in accordance with what was done in a previous situation, it is useful to analyze the situations by comparing facts (how are they alike?) and by contrasting facts (how are they different?). Analysis of likenesses and differences can serve as a basis for arguments that a proper course of action was or was not followed.

If the adversary is relying on an analogy to knit together its case or as the basis of its factual narrative, then the comparison-and-contrast analysis of facts is necessary. Determine how alike and how different are the facts in the case and the facts in the supposedly analogous situation.

Competition. Business litigation is frequently between competitors or is an outgrowth of competition. Just as war can be an extension of diplomacy by other means, so litigation can be an extension of marketing by other means. Competitive pressures spur some litigation against noncompetitors. Recognition of the competitive pressures driving the parties can go a long way toward explaining their choices, conduct, and behavior. Identify among what companies, and for what, is the competition. How are the parties competing? Against which companies? A party’s capability must not be confused with its intentions. A corporation may have the capacity to act in an anticompetitive or injurious way, but do the facts show that such was its intent?

Chance and contingency. Lawyers often ignore the role of chance, though it plays a great part in life. Sometimes a party argues that an allegedly wrongful act was caused by the other party when it was really a product of accident or happenstance. Therefore, ask the question, was what happened here affected by chance? Focus on the documents that are inconsistent with the client’s position. What can be done with them? Are they ambiguous, misleading when considered alone, lying, forged or fictitious, inadmissible, or harmless when explained? Factual analysis is incomplete without consideration of the long arms of chance and coincidence.

Choices and conduct. Decisions can be narrowing (in that they foreclose some actions or next steps), broadening (in that they open up other possible actions), or a mixture of the two. Analysis of choices and conduct should focus on both actions and inaction. Sometimes people act to avoid decisions, so it is important to examine both decisions made and decisions avoided. Especially in the business world where generating options and alternatives is standard practice and where execution of decisions and plans is commonplace, the choices facing each of the parties should be identified. Always ask quo animo (with what intent?) and cui bono (who benefits?).

To analyze facts as objectively as possible, try to examine them without the benefit of hindsight. Put yourself in the position as it was at the time the choices and decisions were to be made. Reconstruct what alternatives were reasonably available to the client, and to the adversary, at that time. Ask what else the company could have done, given the circumstances and choices available to it. What facts show that the chosen course of action was reasonable? Which suggest that the rejected courses of action were unreasonable?

Motive and intent. These are two different concepts. The former refers to an inducement, need, or desire that causes a person to act. The latter refers to the state of mind with which an act was done, or the determination or resolution to act, and to one such state of mind—purpose. Both should be distinguished from capability, and both are different from hubris (exaggerated pride or excessive presumption), which is an aspect of personality more than of thought or intent.

Of course, people frequently act with mixed motives. The obscurity of motive in human conduct can make it very difficult to identify the motivation for a particular act or course of conduct. Frequently, motive and intent are revealed in emails. In business, motives can include money, market power or position, concealment of wrongdoing or embarrassing information, advancement in employment, greed, revenge, and cheating, to name a few.

Long before the Internet age, Judge Learned Hand, in the antitrust case United States v. Corn Products Refining Co., 234 F. 964, 978 (S.D.N.Y. 1916), wrote of intra-corporate communication by typewritten memoranda, in prophetic words that directly apply to the significance of emails today:

Ordinarily the intent, which plays so large a part in the decisions of the court in cases of this sort, must be gathered alone from the conduct of the defendants themselves; but in this case, by an unusual chance, the evidence goes much further. The offices of the Corn Products Refining Company apparently had a custom of communicating with each other by typewritten, unsigned memoranda. Apparently it was often difficult for them to interview each other personally, and the affairs of the company were discussed between them by means of these memoranda with the utmost frankness. The documents were never intended to meet the eyes of any one but the officers themselves, and were, as it were, cinematographic photographs of their purposes at the time when they were written. They have, therefore, the highest validity as evidence of intention, and, although in many instances Bedford attempted to contradict them, his contradiction only served to affect the general credibility of his testimony. In the face of these memoranda, which for some strange reason were preserved, there can be no question in my mind of the continuous and deliberate purpose of the Corn Products Refining Company, by every device which their ingenuity could discover, to maintain as completely as possible their original domination of the industry.

The duties, roles, and responsibilities of directors, officers, and employees can also affect motivation and intent, and must be considered in assessing past actions and mental states. The effect of a person’s competing or conflicting obligations can further complicate the picture. Frequently, one can see, from the emails and other writings, how obligations, roles, and responsibilities shaped a course of action.

People act not on the facts as they are; instead, they act on their perceptions of the facts. Those perceptions are affected by self-interest, fear, uncertainty, doubt, and mistrust, and our varying tolerances for them. The ancients knew of these motivating factors. In Roman mythology, Phobos and Deimos were the gods of fear and panic. Thucydides wrote that the basic human motivations are fear, self-interest, and honor—all of which appear in many litigated cases.

The hierarchy of culpable mental states commonly used in criminal law helps to illuminate those facts that shed light on a client’s or adversary’s mental state, in descending order: purposely (with specific intent), knowingly, recklessly, and negligently.

Clients and witnesses have different abilities to be objective and to tell a story. It is difficult to look at oneself from the outside and to be concurrently both actor and spectator. It is also hard to be self-evaluative about motives and conduct. For some, self-criticism or fear may cripple them as witnesses, especially when they have failed in a project or persisted in counter-redemptive conduct. A comprehensive grasp of the facts enables the lawyer to handle such problems because the lawyer can help to furnish the witness with evidence, examples, and a cohesive factual account of what happened and why.

Do not accept uncritically any client’s or witness’s version of the facts. Here are some additional analytical inquiries: How do the parties’ stories contrast? Did the actions of the litigants match their business or economic incentives? What facts are missing? Where are the exaggerations in the tale just told?

Not all writings are equally important. Some will be more useful in witness preparation than in witness examinations. Even in large cases, the number of critical exhibits tends to be few. Identification of critical documents must also consider writings for what they do not say but should have said. Sometimes a writing becomes a critical document not because it deals with an element of the cause of action, but because it is important to credibility and potential impeachment.

In another context, Freud wrote of the narcissism of small differences. Not all differences are distinctions. One must look for meaningful distinctions. It is important not to extend or exaggerate the importance of a fact beyond its meaning or significance. One must be careful also of inferences; what can be imagined was not necessarily probable and it is not necessarily reasonable.

What does the lawyer do with these facts, once discovered, analyzed, and organized? They are the raw material of the case to be tried. They are entered in timelines and charts, give rise to the theory and themes of the case at trial, made into witness questions, and form the basis of the lawyer’s advice to the client.

As factual analysis should be guided by inquiry into what happened and why, not by categories or forms of legal analysis, what role do rules of law play? The application of substantive law factors into factual analysis in four ways. First, the substantive law tells us what facts are most important. Second, the elements of each claim or defense must be listed and examined factually. Third, burden of proof and other doctrines—like the parol evidence rule or the Uniform Commercial Code rules regarding warranties and disclaimer of damages—must be assessed and applied. Fourth, the lawyer uses both the elements of the claims and defenses and the applicable rules of law in formulating the questions to be asked in witness examinations.

A few words about interviewing clients and witnesses: We obtain more information when we ask to hear the tale chronologically, beginning with knowledge of the problem. To get a complete account, ask the witness to describe the development of the problem or dispute. When did you first hear about it? What did you know or learn? The idea is to start at the very beginning. In addition to proceeding chronologically, use the five Ws (who, what, when, where, and why) and the H questions (how, how much, and how many). Other useful questions include What did you plan? What did you expect? What surprised you?

With business clients and witnesses, the big-picture story most readily flows by asking the goals-strategy-plan sequence. What were the goals or objectives? What was the strategy to achieve those goals? What was the plan to implement that strategy? Ask directly about intent—What was your intent?—and about the choices available, considered, or made. Questions about choices, not just about decisions, elicit more information.

With witnesses or interviewees who provide large quantities of information, there are two structures that you can ask them to use. The first is for them to distinguish among what they know or knew; what they thought, think, believed, or believe; what they did not know or do not know; and what they think other people are not telling you. The second is to ask them to distinguish among known knowns, known unknowns, and unknown unknowns.

In complex cases, it usually helps to formulate a line of questions that causes the witness to re-create the decision-making of the client and the decision-making of the adversary. Such lines of questions go beyond merely asking what decisions were made and when. Lines of questions about the knowledge and evaluation by the witness of risks, hazards, or dangers; possible loss or injury; uncertainties and unknowns; choices or options generated and considered; how decisions were made, including what evaluations or studies were done and by whom; and what alternatives were rejected and why—all can be profoundly illuminating, especially as to causation and damages issues and defenses.

Juries are not immune from the human tendency to see events as predictable, when in fact only in retrospect may they appear to have been so. Typically, jurors do not know what “hindsight bias” is—our tendency to believe, merely from the fact that something happened, that the event was probable and foreseeable. With that in mind, focus on what the actors knew and when they knew it, not just on what happened.

Once grounded in a strong factual analysis, how shall we speak to a client who does not want our candid assessments or who is too beset by fear or worry to hear what we must convey? Our professional obligations include candid communication. ABA Model Rule of Professional Conduct 1.4 is explicit about our mandatory duties to inform and consult with clients. Yet, not all clients are eager or willing listeners—especially when they might not see the facts as we do.

For many years, I have prepared sets of notes about the “situation as I see it” (S.A.I.S.I.). First, I explain to each client that I have an obligation to convey to that client the facts of the situation as I see them and to provide my appraisal of the situation; otherwise, I am not doing my job fully. Those statements have made even the most obstinate, headstrong, know-it-all clients curious to listen.

I explain to the client that we see the case from different vantage points. We start with the client’s perspective. Then—borrowing an Army expression—we turn the map around to look at the disputed territory through the eyes of the fact finder and through the eyes of the adversary. This “S.A.I.S.I.” approach is compelling to clients because the clients come to understand that they are owed a candid assessment by legal counsel.

If necessary, tell clients that facts are stubborn things (citing John Adams) or that everyone is entitled to his or her own opinion but not to his or her own facts (citing Daniel Patrick Moynihan). When a client sticks to an account that is not supported by the factual analysis, I have said that “there is nothing so sad as the murder of a beautiful theory by a brutal gang of facts.” That statement has elicited both a laugh and the willingness to be more open-minded.

Many times in introducing the S.A.I.S.I., I have told clients this: “Cases do not stay the same. As witness interviews, discovery, and motion practice proceed, the case gets better or the case gets worse. Its strength never remains unchanged.” That simple logic has made clients eager to hear my views of the case and how its strength has changed from the initial assessment.

To promote client patience in the S.A.I.S.I. meeting, it is helpful to outline for them at the start the sequence of topics to be covered—facts, potential courses of action and choices, your analysis and opinions about the case, your recommended course of action, and any decisions that the client must make. Doing so tends to make the client sit and listen.

Typically, I conclude with a “tell me I am wrong” inquiry: What am I missing? or About what am I mistaken? The S.A.I.S.I. conversation leads to, but is distinct from, the discussion of what is to be done. And when clients realize how the fact finder and the adversary likely will perceive the facts, we as counsel must be ready to explain our litigation, trial, or settlement strategy.

Client advice can be difficult to give in a fashion calculated to get clients to understand and accept it. Business clients are accustomed to thinking in terms of identifying corporate goals, developing a strategy to achieve each goal, and defining the steps to execution of that strategy. Tying the S.A.I.S.I. analysis to the client’s goals and strategy can provide a broad-gauged look at how the litigation is furthering (or frustrating) the client’s business objectives.

Sometimes the lawyer must identify and describe false dichotomies (apparent binary choices that were not, at least in retrospect to a fact finder, in truth only binary),logical fallacies such as hindsight bias, and false analogies. It is best to explain to the client such concepts before applying them to the client’s case.

Especially when the client’s beliefs about how the case should be tried differ from yours, you must explain to the client the necessity of simplification in case presentation, and the use of chronology, case themes, and the role of cause and effect in such simplification. The persuasive power of the case frequently depends directly on your ability to simplify it. Clients must be made to understand that.

When clients get upset at hearing my S.A.I.S.I. analysis or when clients must listen to statements that they do not want to hear, I tell them my favorite Harry Truman story. President Truman was asked what he thought of the nickname given him by the press, which was “Give ’em Hell, Harry.” He laughed and replied, “I never gave anyone Hell. I just told them the truth and they thought it was Hell.” I tell them simply that is what I am doing.

Of course, your approach to advising clients will vary, depending on factors such as the client’s sophistication and knowledge about the case, the questions being asked by the client, the client’s acceptance or avoidance of issues that should be addressed, and the nature of the facts and opinions to be communicated to the client. Keep in mind the advice of Elihu Root: “About half the practice of a decent lawyer consists in telling clients that they are damned fools and should stop.”

The thinking required by this approach to factual analysis and client communication is an iterative process. As new information comes in—from the client, from third-party interviews, from discovery, from investigation—constant review and refinement must take place. Your mastery of the facts, your command of the factual analyses, and your firm candor in talking with the client allow you both to show the quality of your thinking and to prove the core realities of your case, if given that trial opportunity.

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