Playing the Odds
To begin with, a prime directive of successful poker playing is to know the odds and to play accordingly. While understanding the odds is important to a number of decisions that may be made in the course of trial litigation, an area where this concept is paramount is in undertaking a careful analysis of the case’s value, strengths, and weaknesses. Moreover, just as every poker play is properly designed to tell a story to one’s opponents—sometimes a true story, and sometimes a deceptive one—a winning case at trial must be founded on a compelling story that fits the facts in evidence. Finally, just as good poker players will set up their opponents with clever bluffs and other tricks of the trade, an outstanding litigator can usefully set up the opponent by bluffing (of course, only if it’s ethical), by downplaying or “slow playing” powerful evidence in a case, or by otherwise creating an “aha” moment that is likely to make a powerful impact on a jury and that the opponent never sees coming.
To illustrate how poker concepts can be effectively employed in litigation, consider the following hypothetical case.
Betty Smith applied for a job as a security screening supervisor with the Department of Homeland Security (DHS). The job’s duties include carefully reviewing video feeds from security screening devices throughout a major metropolitan airport. The screening supervisor is responsible for both evaluating the security screeners and ensuring that they do not miss any suspicious items in their security scans. Because of the critical security role played by the screening supervisors, they cannot frequently stand up or take short breaks. Rather, they work 10-hour shifts seated in a static position at their workstations; they have a 15-minute break after 2 hours and 45 minutes of duty time; they have a 30-minute meal break after 5 hours of duty time; and they have a 15-minute break after 7 hours and 45 minutes of duty time.
Ms. Smith has a history of deep vein thromboses (DVTs), blood clots in her legs. She has been hospitalized twice for DVTs and received regimens of both Coumadin and low molecular weight heparin to treat her DVTs. She is 44 years old, is morbidly obese, has irritable bowel syndrome, and has elevated readings for one factor that can increase the likelihood of blood clots. Based on her medical history, DHS’s medical director, Steven Johnson, MD, a trained cardiologist, disqualified Ms. Smith from placement in the security screening supervisor position.
On Ms. Smith’s medical form, Dr. Johnson noted the following: “Applicant has a history of multiple DVTs and several other risk factors. Placing her in a job that requires static positioning for prolonged periods of time would increase the already high risk of future DVTs. A future DVT could easily break off and become a fatal pulmonary embolism. I cannot authorize placing any DHS employee in an unnecessarily life-threatening situation and thus must disqualify the applicant.” DHS’s human resources manager, Sandra Coleman, noted on Ms. Smith’s application: “Application denied as per medical disqualification from Medical Director.”
Ms. Smith sued DHS under the Rehabilitation Act of 1973 and the Americans with Disabilities Act (ADA), claiming that she was discriminated against on the basis of a disability, record of disability, and/or perceived disability. Ms. Smith has retained as her medical expert Jason Price, MD, president of the American College of Occupational Medicine. Dr. Price lists on his curriculum vitae affiliations with no fewer than seven hospitals, including Georgetown University Hospital. Dr. Price testified in deposition that, because Ms. Smith had been successfully treated for her previous DVTs, he believes that she is at a low risk for a future DVT and at a very low risk for a fatal outcome. Moreover, Dr. Price has testified that by taking prophylactic medication such as low molecular weight heparin and by performing leg exercises such as knee bends at her workstation, any chance of a future DVT could be reduced.
DHS has retained as its expert Jessica Rubenstein, MD, chair of the Occupational Medicine Department at Northwestern Memorial Hospital. Dr. Rubenstein testified in her deposition that the combination of Ms. Smith’s history of multiple DVTs and her other risk factors make it very high risk for her to work in a job that would require remaining in a seated, static position for prolonged periods of time, notwithstanding any prophylactic medication or exercises. Dr. Rubenstein further testified that there is a significant chance that Ms. Smith could die if she worked in such a job.
How will poker help us evaluate this case?
Most people have some understanding of the concept of playing the odds. We know, for example, that the odds of a flipped coin landing as heads or tails are 1/2 or 50 percent. We have a general notion that investing $1 in a stock that is 50 percent likely to pay $10 in five years would be better than investing $1 in a stock that is only 20 percent likely to pay $10 in five years.
For poker players, the odds are extremely important. Professional poker players are intimately familiar with the odds in a poker hand and will usually (but not always) play the hand as dictated by the odds. There are two primary categories of odds that are considered by poker players: the odds of prevailing in a hand (the chance for success) and the “pot odds” (the relationship between what’s at stake and how much a player has to bet to have a chance to win).
For example, consider a hand of Texas Holdem, currently the most popular form of poker, in which each player is dealt two “hole” cards face down, there is then a round of betting, three face-up cards are then dealt (called the “flop”), then there is another round of betting, a fourth face-up card is then dealt (called the “turn”), there is then yet another round of betting, and the final face-up card is then dealt (called the “river”), which is followed by the final round of betting.
Say you are dealt Q♠ J♠, a decent starting hand. There is $80 in the pot, and you call for $20, making the pot $100. The flop comes 7♠ 6♠ 2♥. Another player bets $50. Thus, you need to bet $50 to have a shot to win the $150 in the pot. You would be getting 3:1 on your money (the “pot odds”). To determine whether to make the call, you would consider that if another spade is dealt, you would have a queen high flush, which is very likely to win the hand. There are nine spades possibly left in the deck, and you have two more cards to draw. Thus, the odds of drawing a spade are approximately 9/47, or 19% x 2 = 38%. You could also possibly win by drawing a queen or jack, but those odds are somewhat offset by the possibility that your opponent could have a pair of aces or kings or could hit three of a kind or a straight. (A flush would beat all of those hands.) Because at least a 38 percent chance of winning is higher than the 3:1 “pot odds” that you are getting, you should call.
In contrast, if instead of betting $50, your opponent goes “all in” for $500, you would now have to bet $500 for a shot to win $600. You are now getting just a little better than 1:1 “pot odds.” Even if you think that your chances are a little better than 38 percent to win, it would be a very shaky call based on the odds.
If a player were to consistently call the $50 bet in these circumstances and consistently fold to the $500 bet, he or she would do well in the long run. On the other hand, a player who were to consistently fold to the $50 bet or consistently call the $500 bet (or both) might be called by those in the know a “fish,” “dead money,” or “bankrupt.”
Playing the odds is just as important in litigation as it is in poker. You don’t want to lose a great summary judgment argument in a sea of sure losers or bring a hopeless case to trial. The only witnesses you want to present at trial, if possible, are those who are going to be likable to the jury, and few lawyers want to ask questions in cross-examination that are more likely to backfire than to score points.
One of the most important ways to play the odds in litigation is to determine the realistic value of your case. Such an analysis can tell you whether it makes sense to bring a case at all, whether it makes sense to settle the case and for how much, and what a reasonable expectation of ultimate success would be.
Perhaps the most effective way to perform a case value analysis is to develop a decision tree that articulates the primary issues in the case and the critical decision points that could affect the disposition of those issues, and assign probabilities (even if very rough) for each of the critical decision points. There are several commercially available tools for creating decision trees, or they can be created using simple graphics. For example, a risk analysis using our hypothetical case would proceed as follows:
The plaintiff must first evaluate the chances of winning on liability.
The plaintiff could determine that she has an 80 percent chance of prevailing on liability.
Next, the plaintiff has to evaluate damages. One helpful way to do that is to estimate high-end, middle, and low-end damages amounts. For the high-end amount, you can use a number that you believe represents at least a 10 percent chance of recovery of that amount or more. For the middle amount, you can use a number that you believe represents at least a 50 percent chance of recovery of that amount or more. And for the low-end amount, you can use a number that you believe represents at least a 90 percent chance of recovery of that amount or more.
The plaintiff could determine that a high-end amount of damages is $2 million, a middle amount is $1 million, and a low-end amount is $400,000.
The damages range is helpful to consider the possibilities and range that exist for recovery. But typically, you would use the middle damages number to calculate the expected value of the case. To do so, you multiply the middle damages number and the chance of prevailing on liability. In this example, that would be 0.8 x $1,000,000 = $800,000.
If you were to alter the estimate of prevailing on liability, the expected value would change. Thus, if damages remained constant and you determined that you have a 50 percent chance to prevail on liability, you would multiply the middle damages number by 50 percent. In this example, that would be 0.5 x $1,000,000 = $500,000.
If you were to keep the estimate of prevailing on liability at 80 percent but change the middle damages estimate to $800,000, the case value would be 0.8 x $800,000 = $640,000.
This example is very simple, with only one liability element and one damages element. In actual practice, risk analyses can be far more sophisticated. Thus, you can account for many issues in a case and multiple elements that could affect liability—the chance that a jury finds that the plaintiff in the hypothetical case is not disabled and thus not protected by the Rehabilitation Act and the ADA; the chance that the jury finds that the plaintiff is not otherwise qualified for the job; the chance that the jury finds that the defendant did not act with discriminatory animus, etc. Likewise, you can account for multiple elements that could affect damages—the estimated amounts for compensatory damages for pain and suffering, the amount that the plaintiff could earn in a different job, her efforts at mitigation, etc. But the basic method remains the same. For each issue, estimate the chance of prevailing and the amount that the issue would affect damages. Then you can build that issue into a decision tree.
Finally, this kind of risk analysis can also be used to assist in evaluating other decisions that can arise in the course of litigation. If you are trying to determine whether it is economically prudent to file a summary judgment motion, you could estimate the chances that such a motion would prevail, multiply that by the estimated recovery or savings if you would prevail, and compare that figure against the cost of the motion. For example, if you are defending a lawsuit, and you estimate your chances of prevailing on summary judgment at 20 percent, the ultimate case value for the plaintiff if the case were to proceed to verdict at $1 million, and the cost of briefing and arguing the summary judgment motion at $100,000, the expected value of the summary judgment motion would be 0.2 x $1,000,000 = $200,000, which is greater than the cost of bringing the motion. Thus, the risk analysis would counsel in favor of bringing the motion.
Poker players understand that every move at the poker table tells a story. If you play a lot of hands, it tells the other players that you are aggressive and loose—that you probably play a lot of weak hands for the opportunity to see a lot of cheap flops. If you also tend to make large bets or raises after the flop, the other players will believe that you are bluffing. On the other hand, if you play only a select few hands and show very strong hands when you have to show your cards (or if you decide to show your hand even if not required to do so), it tells the other players that you are a tight player and that you are likely to have the goods when you bet big.
Each poker hand is its own story, and good poker players carefully control the story that their actions appear to tell. For example, when a poker player raises before the flop, it indicates a strong hand. If several players call, and that same player makes a large “continuation” bet after the flop, the story is that the flop helped his already strong hand, or he has a monster hand (such as two aces or kings) that is likely to be the best hand no matter whether the flop helped the hands of the other players. In contrast, a player who merely “limps” into a hand by calling before the flop and then checks after the flop or simply calls the modest bet of another player tells the story of a relatively weak hand.
In some cases, a poker player tries to tell a true story. For example, if a player has J♦ J♥, raises before the flop, and the flop comes 8♠ 7♠ 3♥, he may lead out with a significant post-flop bet. His hand is likely the best, but there would be concern that anyone holding two spades would have a flush draw (with a 38 percent chance or better of winning the hand by drawing the flush) or that someone could hold a 5 and a 6 or a 9 and a 10, and thus have an open-ended straight draw (with about a 34 percent or better chance of winning the hand by drawing the straight). Thus, the player wants to make a large enough bet to give players holding a draw the wrong odds to call. He is therefore telling a story of a very strong hand to persuade his opponents to lay down their cards.
In other cases, a poker player tells a story that disguises the strength of his hand. Of course, this happens when a player bluffs—indicating a very strong hand by making sizable bets—when he holds a relatively weak hand. But it also happens when a player “slow-plays” a big hand. For example, if a player holds K♦ K♠, he may decide to limp into a hand by simply calling. If the flop comes A♠ K♥ 8♠, it is extremely likely that his three kings are the best hand, and he might check on the flop, hoping that somebody else has an ace and will bet big. If someone does make a big bet, he might simply call that bet in an effort to extract more money on the turn and the river. To be sure, one of the dangers of a slow play is that it is possible that another player will eventually draw out a bigger hand, but that is a risk that good poker players are often willing to take when there is a much greater chance of a big payday at the end of a hand.
In litigation, storytelling is just as important as it is in poker. To be sure, the story that a lawyer tells in a case must be consistent with the facts, but there is much that a good lawyer can do to spin the facts to favor his or her client.
The story that you want to tell should be closely related to the theme of your case and should be coherent and compelling. It is critical that you determine how to present the evidence and facts relevant to your case in a way that will make it seem as if your client acted reasonably, fairly, and in good faith.
In developing the story of your case, you should not focus too much on attacking the opposing party or counsel. While you can certainly highlight pejorative facts or other evidence that makes the opposing party seem unreasonable or unfair or to have acted in bad faith, ad hominem or direct personal attacks are very unlikely to improve the persuasive value of your case. Rather, you should try to develop a narrative of your case that would allow the jury or judge to draw the conclusion that your client behaved properly while the opposing party behaved improperly. You should also let your audience draw their own conclusions about any misconduct by opposing counsel.
For example, in a breach of contract case, the story that you might wish to tell could be as follows: The parties carefully negotiated a contract that established a widget supply relationship and that requires written confirmation of all orders to avoid miscommunications that often occur with telephonic orders. However, the opposing party claims that on three occasions it placed telephonic orders that were not fulfilled, but these alleged orders were never confirmed in writing. Your client’s employees do have a recollection of some telephone communications with the opposing party about possible orders but do not believe that those conversations were firm orders, and they are all aware of the contractual requirement to confirm all orders in writing. Moreover, because the opposing party never followed up on its alleged telephonic orders, your client’s employees reasonably thought that the opposing party had changed its mind about the orders it had contemplated. In these circumstances, your client and its employees acted reasonably and according to the terms of the contract and should not be held liable for the opposing party’s carelessness.
The story that you tell should dovetail with your case theme, which should grab the attention of the jury or judge, succinctly convey the basic idea of your case and how you want the audience to view it, and also provide the rhetorical impetus for your case.
For example, in a breach of contract case, an effective theme might be something like “My opponent broke his promise and reneged on the deal.” In a criminal case, a defense theme might be as follows: “The prosecution has the wrong guy and they know it. The district attorney tried to suppress the confession of a known criminal that he, not my client, was the lookout for the robbery.” In an antitrust case, a defense theme might be “My client and the co-defendant did not and could not possibly have conspired to restrain trade. There is no evidence that they ever communicated at all.”
In a more complicated case, such as a patent case, a more sophisticated theme or set of themes may be appropriate. For example: “The opposing party is trying to game the system. He was not honest with the patent office and has not been honest in this lawsuit. He gained the patent only by failing to disclose to the patent office prior art that would render that patent obvious. And he brought a frivolous lawsuit even though he certainly should have known that the accused products simply do not infringe the patent.”
The theme you choose should generally apply to all the stages of your case. However, you should try to tailor your theme to your audience and the stage of the proceedings in your case. Thus, in a breach of contract case, an appropriate articulation of your theme in a summary judgment brief could be “As a matter of law, the contract authorized defendant’s conduct” or “Because it is undisputed that defendant provided plaintiff with advance written notice that it would use parts from a new manufacturer, no reasonable jury could find that defendant failed to comply with the relevant contractual provisions on substitution of the manufacturer.” In an antitrust case, an effective theme could be “There could not be any conspiracy as a matter of law because defendants had a genuine agency relationship and were not independent economic actors.” In a patent case, an appropriate theme could be “No reasonable jury could find infringement in light of the parties’ stipulated construction that a ‘square peg’ as used in the relevant claims could not fit into a ‘round hole,’ such as the hole used in the accused’s products.”
In our hypothetical employment case, the story that the plaintiff, Betty Smith, might wish to tell could go like this: “Ms. Smith is a hardworking and highly qualified airport security specialist who was an excellent candidate for DHS’s security screening supervisor job. While it is true that she has in the past had blood clots in her legs, her condition has been controlled by medication and poses little risk of recurrence. It was unfair and legally forbidden for DHS to deprive her of an opportunity to land the job based on its shortsighted and biased view that any risk to Ms. Smith disqualified her from that job. DHS’s view represents ignorance and bias against disabled job applicants and denies Ms. Smith her right to make decisions about what risks to her health she is willing to accept.”
Ms. Smith’s case theme could be something such as the following: “This case is about freedom of choice and of a competent adult to decide what minimal health risks she is willing to accept. Just as we don’t tolerate the government forcing us to eat certain foods, to take certain medications, or to say certain things, the government should not be able to tell us what risks in a job we can or cannot accept.”
But the facts of this case are also susceptible to being woven into a very different story. DHS might say the following: “DHS’s mission is to protect the lives of Americans, and that includes protecting its own employees. Ms. Smith has several risk factors that disqualify her from being able to perform the security screening supervisor job safely for herself and also for the public. That job is unique in that it requires the supervisor to sit for prolonged periods of time in a static position to review multiple passenger and baggage screening areas. While Ms. Smith is perfectly capable of performing a wide variety of jobs for DHS, including being a security screener (who can stand and move frequently), she simply can’t safely sit in a static position for a prolonged period of time. Ms. Smith could die if she were placed in this job, and if she were to have a health emergency on the job, public safety could be compromised. DHS did not act here out of any discriminatory animus against the disabled, but rather based on legitimate medical and public safety concerns.”
Similarly, DHS’s case theme could be as follows: “Every day, DHS strives to protect the lives of Americans. Our mission also requires us to try to protect the safety of our own people. Please do not force us to compromise our mission and to place our own people unnecessarily in harm’s way.”
Ultimately, developing a good story and a complementary case theme is critical to winning litigation. Just as poker players realize that a poker hand can be spun and presented in numerous ways for a desired effect on other players, litigators can spin very effective stories that are calculated to persuade a judge or jury.
Setting Up Your Opponent
Poker players use a variety of techniques to set up their opponents for moves either later in the same hand or in future hands. Many of the same techniques that poker players use to tell the stories of their hands and playing styles, such as bluffing and slow playing, can also be used to set up an opponent. However, a true “setup” is more elaborate than a normal storytelling event. For example, poker players often cultivate a reputation or perception that they are either aggressive, loose players or tight players. They then play off that reputation at critical times, with supposedly “loose” players seeking to get paid off on large bets when they actually have very strong hands, and the supposedly “tight” players making big bluffs to capture large pots. Poker players also can use their actions in previous hands to create the perception that they are acting consistently in a subsequent hand. For example, a poker player may continually limp into hands by checking before the flop, make minimal bets or check on the flop, and either has or is perceived to have fairly weak hands when doing so. That player will be able to use the same betting pattern to slow-play a monster hand and expect a big payoff at the end.
Litigators can use similar techniques to set up an opponent for a particularly dramatic and persuasive event during the course of litigation. There are numerous stories that litigators frequently tell about such moments.
For example, one of my colleagues told me a story about a seemingly innocuous cross-examination answer that became a featured event in closing argument. In a breach of fiduciary duty case, a witness for the defense had testified in deposition that the board of directors had commissioned a market analysis that showed a likely trend in the relevant industry of increased sales for internet-based marketing—but not for radio-based marketing. The witness further testified that at the time of the market analysis, the directors were uncertain what marketing campaign the company would use, and the witness testified that the material disclosed to shareholders simply suggested that an aggressive marketing campaign would likely lead to excellent future sales. In cross-examination at trial, the witness admitted that marketing in the industry had traditionally been done through radio campaigns, that internet campaigns had not traditionally been undertaken, and that the company had not decided what kind of marketing campaign it would use at the time of the market analysis. The company also had not provided shareholders with the details of the marketing analysis. When those answers were given in cross-examination, counsel treated them as matter-of-fact details but did repeat each answer to be sure that the jury heard it.
In closing argument, counsel seized upon these answers, which appeared innocuous when given, to make the forceful argument that the shareholders would have believed that the marketing analysis supported an aggressive radio campaign because that was how advertising in the industry had always been undertaken, that the shareholders were not informed that the analysis actually suggested that radio advertising would be ineffective, and thus that the shareholders were wholly unprepared to assess the likely future performance of the company in the event that an internet marketing campaign were to fail. Counsel thus argued that because the internet campaign did fail and the value of the company declined precipitously, the directors had breached their fiduciary duties by failing to disclose the critical details of the market analysis that they had commissioned.
We can use our hypothetical case to examine another scenario for a setup at trial. In the Smith case, the plaintiff’s medical expert, Dr. Price, testified on direct that he was affiliated with no fewer than seven hospitals, including Georgetown University Hospital. At the outset of cross-examination, counsel got Dr. Price to agree that, because of his affiliation, he would be familiar with the protocols and practices of each hospital. At the close of cross-examination, counsel asked Dr. Price about his opinion that Ms. Smith would be at low risk for a recurrence of her blood clots. In doing so, counsel was able to show to the jury an enlarged version of a checklist that Georgetown University Hospital uses to assess the risk of future blood clots. Counsel walked through that chart with Dr. Price, getting him to admit that the plaintiff had a documented prior history of blood clots, had at least one blood factor suggesting an increased clotting propensity, was between ages 40 and 60, was morbidly obese, had inflammatory bowel disease, and would have experienced prolonged immobility in the security screening supervisor job. Counsel was then able to show that by adding up the assigned values for those factors, Ms. Smith had a very high risk of future blood clots as determined by that checklist.
While it is particularly effective at trial, setting up an opponent is also possible in pretrial proceedings. For example, it is a common technique to ask deposition questions designed to show that there are no genuine issues of material fact such that summary judgment should ultimately be granted in a case. And seemingly innocuous questions about an expert’s background or methodology can often be used to establish the foundation for a motion to exclude the expert’s testimony.
Although it is not essential in every case to try to set up one’s opponent, in appropriate cases the setup can be a particularly effective litigation tool and can be very persuasive to a judge or jury.
Like litigation, poker is a contest between adversaries with limited information who must make decisions based on their assessments of each other and the strength of their hand or case. Using common poker-playing techniques, litigators can add to their arsenal of maneuvers to win a case before a judge or a jury.