Module 7
Communicating risk honestly
By the end of this module you can write a one-page risk memo that leads with the answer, show numbers without misleading anyone, recognise false precision, and keep the ethics and confidentiality of the work in view.
Part 1. The lecture
Lead with the answer
A client or a board member reads the first few lines and decides whether to read on. So the first thing they see should be your recommendation, then the decision it answers, then the numbers, then the reasons. Background and law go behind that, or in an appendix.
A one-page risk memo has this shape:
- Recommendation, in a sentence.
- The decision the client must make.
- The numbers: chance as a range, impact as a range with a likely value, the expected cost.
- Three reasons, each specific to this case.
- What new fact would change the advice.
- Limits and assumptions, stated plainly.
False precision
“A 63.4 per cent chance” claims a certainty no legal estimate has. Give a range (“55 to 70 per cent”), round the figures, and never leave a loose word (“likely”, “substantial”) standing without a number beside it. Precision you cannot defend is a form of misleading the reader, even when each digit came from a calculation.
Charts that tell the truth
- Start bars at zero. A truncated axis makes a small change look large.
- Show the whole period, or say why a window was chosen.
- Show spread, not only the average. Use a range or percentiles.
- Compare on one scale. Charts meant to be compared must share an axis.
- Keep it plain. No three-dimensional bars, no decoration that changes how sizes look.
Limits, ethics and confidentiality
- Numbers support judgement and do not replace it. Say so in the memo, and do not hide behind it either.
- Be honest about weak data. If there is no real base rate, say that the estimate is an informed guess.
- Do not manufacture comfort. A client who wants a low number should still get your real estimate.
- Protect confidential matter details. Before using any online tool, check what it stores and who can see it. Privilege and confidentiality can be lost by careless sharing. Use made-up or anonymised figures when practising or experimenting.
- Record your estimate before the result is known, so you can learn from it later without hindsight.
Common mistakes
- Burying the recommendation on page three.
- Showing a single average with no range.
- Pasting a client’s confidential details into a public tool.
- Using a chart to persuade when it should be informing.
- Leaving out what would change the advice.
Part 2. Lab: Spot the misleading chart
Four charts, each with a common flaw. Name it.
Chart A: legal spend
Annual legal spend, in thousands of dollars
Chart B: new claims per month
Claims received (the report says “claims are collapsing”)
Not shown: the same count was 38 to 42 in every month of the previous two years.
Chart C: expected loss
“Our legal risk for next year is $50,000.”
Not shown: the simulation behind it ranged from $0 to $420,000, and one year in ten cost more than $190,000.
Chart D: two matters side by side
Dispute, cost in $
Complaint, cost in $
Part 3. Lab: Memo Studio
Write the one-page memo for the Alderwick decision. A starting draft is filled in so you can see the shape; replace every part with your own findings from the earlier labs. The memo on the right builds as you type.
Risk memo
Alderwick Exports
Recommendation. Settle, unless the key witness can be strengthened before the deadline.
Decision. Whether to accept the $90,000 settlement offer or go to trial on the unpaid shipment.
| Chance | 55 to 70% |
| Impact | $90,000 to $170,000 (most likely $105,000) |
| Expected cost | $65,625 |
- The contract terms are clear, but the delivery records are incomplete.
- Similar claims of this size succeed in full about four times in ten in our (invented) reference group.
- Trial adds $40,000 in cost and several months of delay before any payment.
What would change this advice. A signed delivery receipt for the second container, or an offer below $75,000.
Limits. Figures are estimates from a small reference group and assume the other side can pay. They support a judgement and do not predict the result.
Self-audit: does your memo pass?
Tick each one honestly. Nobody grades this but you.
0 of 10 ticked. Rework it before anyone reads it.
Part 4. Check your understanding
Ten questions drawn from a larger pool. In this pilot your score is shown but not saved.
This course teaches a method with invented figures and fictional parties. It does not give legal advice, and its numbers are for practice. Never paste a real client’s confidential details into any public tool.