Think First and Then Act

Gordon Graham here and Happy New Year to each and all of you! I am prepping this piece a bit late – actually on January 1, but that is OK and it will be on time for you to read on Monday. I just finished up writing a piece for another fire related site – and my focus in that writing was the LODD issue.

According to the USFA, there were 86 Line of Duty Deaths in your profession in 2010 – and this is an improvement from 2009 where the total was 93 – and any reduction in LODD’s is good and what can be done to lower the number even further in 2011. We know how firefighters get hurt and killed – and if you have been to any of my live programs over the years – identifiable risks are manageable risks – and you have it in your control to manage this risks involved working safely. While important, this is not my focus today.

My focus today is on another form of risk – financial risks. I am not a big fan of football, so my television viewing today will be centered on the “Speed Channel” marathon of the Barrett-Jackson auction earlier this year in Scottsdale – and I am looking at all the cars going for mega-bucks on this auction that I could have purchased for considerably less decades ago – and I am kicking myself for not buying that 1969 Ferrari Daytona in 1974 for $20,000 – somehow the house purchase seemed more reasonable back then – and today the Ferrari has a value approaching the million dollar range. I deserve another kick for not buying a new Olds 4-4-2 in 1970 (I think they were in the $4,000 range when new) and one just crossed the block at auction for $200,000+. But enough of that “woulda, coulda, shoulda” – as that is all in the past and there is not a darn thing I can do about that today.

The pundits are predicting (and that is always risky) that 2011 will be a better year financially for the United States – but having said that, there is a major restructuring of local government going on nationally. As I listen and talk to the “money” people local government throughout the Fifty States is going to take a huge hit – with mandated reductions in spending ranging from 15% to 40% – but the public safety sector will experience a bit less of a hit – perhaps in the range of 15% – 25%. Those are some very big numbers – and only time will tell if their predictions are accurate. You have access to data from around America regarding the financial hits that fire departments are experiencing – and sadly many agencies are having to adjust staffing levels through layoffs – because of a lack of money.

Very little can be done by you or me to increase the amount of money coming into your budget – but we can do a lot to reduce the amount of money leaving your budget through unnecessary claims, settlements and verdicts. I wrote about this in an earlier piece (that generated a considerable amount of mail to me) but today I will continue on this line of thinking with some thoughts on eliminating “class action employment law lawsuits.”

A single class action employment law lawsuit filed against your organization can have a huge financial impact. In addition to the verdict or settlement – class action litigation is extremely expensive – many times requiring your City Attorney or County Counsel to “farm out” the litigation to a specialty firm – and these people are not cheap. I had some personal involvement in one of these lawsuits about 15 years ago and the pre-trial litigation costs were in the $3 Million range – and this was before we went to court!

“California Lawyer” magazine had a piece this month about this issue. In a piece entitled “Do Plaintiffs Prevail?” there was a chart that spoke to this issue. Taking a “chart” and translating it into words is difficult – but here is my effort at doing so.

The authors of this piece randomly selected 1,672 employment law cases filed in Federal Court over a multi year period. Of these, 19% (317) were dismissed and 81% (1,355) continued on in the litigation process. Of these 81% – 50% settled early and 31% continued. Of these 31% – 17% were lost by the Plaintiff in summary judgment and 14% continued. Of these 14% – 8% settled late and 6% continued. And of these 6% the plaintiff prevailed in 2%.

I know the numbers get confusing, but let me pull out something important for you to consider. 50% settled early on in litigation, 8% settled later on and in 2% of the cases the Plaintiff prevailed. All of this tells me that in way to many of these cases the Defendant (that would be the employer) settled the case prior to trial. Either they were afraid of the cost of litigation (which as I mentioned earlier is huge) or they knew that they could not win the case because they had in fact done something wrong.

Where do these “class action lawsuits” come from? My experience (personally and vicariously) has taught me that these cases often come from a bad decision made by a low level supervisor who acts without consulting with either competent counsel or competent human resources personnel – and that “decision” goes undiscovered over time and the aggrieved employee contacts an aggressive plaintiff lawyer who learns that other people in the same organization have been negatively impacted by this employment law decision – or other similar bad decisions – and boom! A class action lawsuit gets filed and everything goes downhill from here.

These lawsuits get very nasty with all sorts of investigations and depositions and a lot of bad feelings are generated – and whether you are on the Plaintiff side of the issue or the Defendant side of the issue – no one really wins these things in the long run – and bad feelings last for years after the case has been finalized.

So with all of this in mind, what is the purpose of this writing. For those of you in management, please ensure that your employment law practices are consistent with State and Federal law. If you have not updated your policies and procedures recently (and it is January 1 and every year the laws change in many ways) you have a problem “lying in wait”. I will assume (and that is an assumption) that you have well designed policies that are up to date. What is next?

You have to make sure that these policies are known and understood by supervisors and managers (Company and Chief Officers) – and they must be aware of how serious this stuff is. I have a great quote here for you to consider – taken from the thoughtful book “Inviting Disaster” – by James Chiles. I know it is not right on point with employment law issues, but you will understand why I put this here.

“When an organization develops people who are expert at picking out the subtle signals of real problems from the constant noise of routine difficulties, and when the boss allows them to report and take prompt action, that organization is doing the same thing that chess masters do. A chess master spends more time thinking about the board from his opponent’s perspective than he does from his own. The story of the Ocean Ranger shows what can happen to those who lean too heavily on routine, so certain are they that unpleasant “what if” scenarios will never combine in a single day to make a calamity. But as Winston Churchill wrote in describing the chain of mishaps that let the German warship Goeben escape a British task force in World War 1, the terrible “if’s have a way of accumulating.”

For all of you who are supervisors and managers, please really listen to what is going on in your organization. Really listen to what your people are telling you – and think first and then act. And part of your thinking has got to include a consultation with competent counsel or competent human resources personnel. All employment law gives you time to think – so think prior to acting. And this thinking might prevent some litigation – and the savings in terms of costs, settlements and verdicts could be substantial.

While I am here playing the “woulda, coulda , shoulda” stuff (now with a ’66 Mustang that has crossed the $100,000 mark) – I don’t ever want to have you saying “woulda, coulda, shoulda” after a devastating loss in a class action lawsuit that could have been avoided with just a little bit of thinking up front by all involved.

That is all and again thanks for all you do.

Gordon Graham

President, Lexipol