My primary job as a legal professional and leadership consultant is to help clients identify risks and circumnavigate problems in their day-to-day operations. This happens on both a macro and a micro level. Risk portfolios are sometimes narrow in scope and comprised of repeating patterns. A good example of this is active litigation. In other instances, like adjusting a contract to a newly established law, the scale is larger and patterns can be more complex.
Over the years, I have developed several strategies to help evaluate risk and accomplish my job. One involves a three-step process for which I cannot take credit on the terminology. Whether you like him or not, former Secretary of Defense Donald Rumsfeld is a smart person. I borrow his labels here.
In every situation, we should start with the “knowns.” This is information we know to be true. It usually appears in the form of things everyone agrees on or that can be shown to be the case definitively with some kind of proof. Written documents, photos, or other visual or auditory evidence fall into this category. Identifying the basic legal principles or practical leadership elements in play usually occurs at this stage.
Next, you will need to identify the “known unknowns.” These are things on which you don’t have the information or established agreement but need to develop a strategy or decide. Awareness of a project delay, for example, is often clear. However, until a full schedule and delay analysis is done, the knowledge of who and what caused the delay (putting hunches aside) is a “known unknown.”
The final part of the analysis is considering “unknown unknowns.” This represents complete blind spots. You don’t know the information. Even worse, you are unaware it’s missing. “Unknown unknowns” are complete surprises that violate any expected norm. A real-life example of this was the COVID-19 pandemic. In January 2020, no one could reasonably anticipate that the government would shut all businesses down. It was an “unknown unknown” risk that could not be accounted for in any contract.
This established terminology helps provide an orderly way to work through the process. Start the analysis by simply asking a lot of questions about the circumstances. An appropriate level of skepticism is essential here. My clients sometimes interpret my questions to suggest I don’t believe them. My goal, however, is to precisely establish the “knowns.”
I then identify the metaphorical holes in our knowledge. Sometimes, we can make reasonable assumptions about what happened or what law will apply, but we still cannot be specific about whether we’re right or whether the other side will agree. With the “known unknowns” isolated, we can develop a plan to turn them into “knowns.” A common way to do this in litigation is discovery. When negotiating a contract or something similar, we have to ask the other side to help us understand their position.
Finally, we need to spend time thinking about possible “unknown unknowns” after our “knowns” and “known unknowns” are established. By definition, there is no way to get complete answers to these questions; but solid judgment based on experience and intuition is beneficial here. There are often indicators from which we can discern potential areas for surprises. While a total government shutdown of COVID-19 was unforeseeable, planning for significant project changes may have been a reasonable guess based on news reports in early 2020.
Ultimately, the goal is to identify and mitigate the risks as part of a plan to move the project forward. This strategy provides a methodical way to funnel information into a simple form to support sound decision-making. I hope you can use this analytical strategy to navigate any risk mitigation process easily.
Josh Quinter is a commercial litigation attorney with a focus on construction law. He is also a member of the board of directors and a department chair at his law firm, Quinter Corbett, PC. Active in several construction trade and business organizations, Quinter is past president of the Mid-Atlantic Chapter of the Metal Building Contractors & Erectors Association (MBCEA), serves on the MBCEA national board, and is the organization’s general counsel. He can be reached at jquinter@quintercorbett.com
