, Corbin, KY


June 25, 2013

Why Did Paula Deen’s legal team let her testify?


“Everybody’s got a secret sonny

Yeah, something that they just can’t face

Some folks spend their whole lives trying to keep it

They carry it with them every step that they take”

—Bruce Springsteen


I can’t imagine that Paula Deen and her legal team were blindsided by the line of questioning from Lisa Jackson’s lawyer.

Jackson is suing Deen and her brother Bubba for creating a hostile work environment. In her amended complaint to file the lawsuit, Jackson said that she had suffered from “violent, sexist and racist behavior.” It alleged that “racially discriminatory attitudes” were present. Although the allegations were primarily aimed at Bubba, it noted that “Paula Deen holds such racist views herself.”

Paula’s legal team flunked Risk Management 101. When they allowed Paula to give her deposition, they had to realize that the testimony would not be limited to her recipe for peanut butter pie.

The deposition process allowed the ugliest allegations to get on the record and in the public domain. They destroyed Paula’s multimillion dollar business empire.

All from a lawsuit that should have been settled.

As a settlement planner and licensed claims adjuster, I’ve been involved in thousands of legal negotiations.

From a risk management standpoint, the Deen lawsuit was a no brainer. The worst Paula and her insurance carrier could lose was $1.2 million. Paula has that in her hip pocket.

Paula’s team should have made the lawsuit go away quietly.

If I had been on Paula’s risk management team, I would have asked Paula to have a settlement conference with Jackson. I also would have told Paula to:

1. Bring her checkbook.

2. Apologize sincerely and profusely.

3. Make sure that the settlement agreement has a strong confidentiality clause so the settlement or anything said does not make it into the public domain.

Settling claims is about risk management. Risk management is a lot like my late father’s career as a bookie and professional gambler.

The key to bookmaking is not to hit a big jackpot. It is to minimize your losses.

Settling insurance claims works the same way. You have to look at what an ugly lawsuit will do to your overall reputation and business and weigh that against the amount of money a settlement might cost.

Obviously no one on Paula’s legal team saw the big picture.

Risk management means that when your opponents have a nuclear bomb in their arsenal, you do everything and anything to defuse it.

Long before the decision was made to allow Ms. Dean to take part in a deposition, someone on her legal and claims consulting team should have assessed the risk of that happening.

Looking at the case strictly from a dollar standpoint, it would have saved Deen millions to get the case settled.

Since Ms. Jackson is asking for $1.2 million, I suspect she would have taken a somewhat smaller amount, like a million dollars. Writing that check would have saved Paula from a million problems.

I’m not passing judgment on what she did or did not do. That is not my universe. The job of a risk manager is to see whether duking it out in court or quietly settling an allegation is the best business strategy.

Even if Deen goes on to win the lawsuit and pay nothing, she has already paid with everything.

The irony is that I missed most of the back and forth on the Deen lawsuit while I was at the annual convention for the Kentucky Bar Association. I attended a fascinating session on the use of mediation.

Mediation is a concept that barely existed 20 years ago and now is universally used in every type of litigation. It has been the ultimate game changer in the legal profession. Cases rarely go to trial unless all attempts at settlement are exhausted.

The panel contained stars in injury litigation like former Kentucky Chief Justice Joseph Lambert and Louisville lawyer Vanessa Cantley, but also tax and business attorneys.

I’ve been involved in the mediation process for 25 years, but it was an eye opener to see how it is used for every type of dispute, including settlement with the Internal Revenue Service.

In The Art of War, Sun Tzu said, “he who knows when he can fight and when he cannot will be victorious.”

Paula Deen’s risk management crew would have been smart to take advice from a wise Chinese general from the fifth century.

They lost a battle they should have never fought.

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