The Truth, Even When Unpleasant, Can Always Be Explained: Nonprofit Pointers for Conduct in Court

For nonprofits in court, the only thing fiction reveals is culpability.

In art, fiction may be the lie that reveals the truth, but in the courtroom, all that fiction ever reveals is culpability. And it never ends well.

More than once in the past months, I’ve faced fiction in the courtroom. An employee of a nonprofit client lied in sworn deposition, a lie that was or would have been uncovered by opposing counsel and that dramatically increased the settlement cost of the claim. Whether the false testimony arose from fear or embarrassment or the desire to hide some larger issue, that lie greatly increased the value of the case and what had to be paid to resolve the case far more than if the truth had been told initially.

As one trial attorney, in rebuttal to the stance taken by Jack Nicholson’s character in A Few Good Men, says, “I can handle the truth. What I cannot handle is building my case on a lie.” And she faced just that experience. She watched both the case and her own credibility crumble in front of judge and jury—and saw the resulting impact of the lie on the client’s bottom line. The truth, even if unpleasant, can almost always be explained. People have reasons for what they do and say, and those reasons can be shown in a better light than a lie exposed will ever be. A lie, on the other hand, not only increases the cost of a settlement but may itself be what costs the nonprofit the case.

The Consequences of a Lie in Court

Like many issues, there are several facets to this problem. From a legal perspective, if a witness is found to have been untruthful about something of significance to the case, the jury is instructed that they may then choose not to believe anything that witness has said. A case that might have been won is likely, under these circumstances, to be lost. From an insurance coverage perspective, if the statements are found to violate the cooperation condition within the policy and causes the insurance carrier to sustain actual and substantial prejudice, the coverage can be jeopardized.

There are other consequences as well, before judgment comes to pass. If a client lies and the attorney becomes aware of that lie, the attorney has an ethical obligation to withdraw from representation. Even though the attorney is not required to disclose the reason for the withdrawal other than stating that for ethical reasons the attorney can no longer represent the client, the fact that the attorney has withdrawn is itself a red flag. It will be clear that something is amiss, and the withdrawal will signal to opposing counsel that there an ethical conflict between the attorney and the client/deponent—giving the opposing counsel an edge.

I recently worked on a claim where the issue was of potentially wrongful termination of employment. The manager involved in that termination gave testimony that was contrary to the documents in the employee’s personnel file. There were also social media postings that clearly demonstrated animosity between the employee and this manager. Those documents and the online postings undermined the manager’s testimony. The defense counsel, aware of both the documents and the postings, had cautioned the witness in the pre-deposition preparation to tell the truth and, during the deposition itself, had taken a break to emphasize that not only was false testimony not helpful, but also it was contrary to the oath that the witness had taken. Nevertheless, the witness lied in his deposition.

Discovering the Truth Can Be a Matter of Routine Investigation

As the defense counsel later commented, in this day and age, there are an amazing number of ways for a lie to be uncovered by just about anyone, and many ways for that lie to then come to the attention of the other side in litigation. Someone lying about something significant generally means there is more than one way for the opposing side to discover the truth.

In this case, the claimant’s counsel was entitled to the personnel file, and finding the social media postings was only a matter of routine investigation. The value of the claim increased dramatically because the witness had compromised not only himself, but his employer as well. The witness was still employed as a manager by the nonprofit, and so when the lie was exposed, the employer was painted with the same brush of falsehood. For the employer, getting the phone call from the defense counsel to explain the situation along with several unappealing options available to the insurance carrier after the deposition was not a pleasant experience.

From the insurance carrier’s perspective, the case had to be resolved, and it was—but for a multiple of what it would have cost had the truth been told. Then came another unpleasant phone call, this time with the executive director of the nonprofit. This call explained why the case had to be settled for an inflated amount and discussed the concerns of the insurance carrier in continuing to provide coverage to the nonprofit in a situation where a manager had ignored the instructions of the defense counsel and lied in deposition.

There Is No Question of “Handling” the Truth

In a A Few Good Men, Nicholson’s character confronts the attorney with the accusation, “You can’t handle the truth.” There is no question of “handling” the truth. With respect to civil actions, the truth is a fact. It is the facts in a particular claim that dictate whether or not a case can be successfully defended. Unpleasant or inconvenient facts are still facts—facts that a good defense counsel can address and explain.

The bottom line to testifying—whether at deposition or trial, or even when speaking to the attorney or investigator before a claim becomes a case—is to tell the truth. There are too many ways for a falsehood to be ascertained, and once a lie has been told, it is only a matter of time before it is uncovered.

Standing on the firm foundation of the truth is something that defense counsel and the carrier can handle. But a case based on a lie is a case teetering on shaky ground. A lie cannot be defended, in the way that even an inconvenient or uncomfortable truth can be. And a lie, once told, cannot be taken back. Offering a lie in place of the truth will always—always—make things worse, rendering the claim or the case more costly for all concerned and not worth the price ultimately paid.

About the Author

Rand Chritton

Rand Chritton is an AV rated lawyer, licensed in California, enjoying over 25 years of experience of working with nonprofits and insurance coverage. He is a co-author of the California Insurance Law Handbook. Rand takes pride in being an attorney who solves insurance problems and overcoming legal challenges for the nonprofit community.

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