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Litigation News | 2023

An Introduction to Damages

James Willson McElhaney

An Introduction to Damages
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The following is an excerpt of Chapter 8 from McElhaney's Trial Notebook, 4th ed., modified for clarity.

Most lawyers have at one time or another dreamed of breaking the bank with a huge verdict. And because money damages are sought in the great majority of civil actions, the problems sur- rounding proving and attacking damages are important.

Establishing the basis for damages, like other areas of trial practice, is not so much a matter of arcane art or gifted oratory as it is of applying basic principles and solid preparation. And while damages are easiest to discuss with respect to personal injury cases, the underlying principles are applicable, for the most part, in all sorts of litigation. Unfortunately, the superficial reaction of some lawyers to commercial litigation is that damages are so commonly liquidated that they are not worthy of serious thought. The truth is that many commercial cases have doubtful or subjective elements of damage that may be recovered, and most commercial litigators could improve their clients’ verdicts by giving damages the sort of imaginative attention it has received from the personal injury bar.

Deciding on Damages

The first step to take in proving damages is to determine what the case is worth should it go to trial. This can only be done by researching all the permissible items of recovery—something that varies considerably from one jurisdiction to another: knowing what sorts of verdicts have been rendered in similar cases, evaluating the strengths and weaknesses of the facts and the witnesses,and, especially in the case of young lawyers, seeking the advice of more experienced litigators. Similarly, one of the benefits of local counsel consulted when trying a case in an unaccustomed forum is in evaluating what such cases are worth in the locality.

Be careful in setting a value on the case. On the one hand, making a demand that is too low is a breach of the duty you owe your client and, moreover, a sign of weakness the other side may exploit even further. On the other hand, an outrageously high demand not only bespeaks the sort of sloppy practice where the secretary drafts all the pleadings and the lawyer says, “Oh, let’s ask for $100,000,” without much thought, but also may actually hurt the case.

For despite careful disclaimers to the client, an overly high ad damnum clause may create unreasonable expectations that will hamper settlement should the client hold out for more than the case is worth. Second, an exorbitant demand in the pleadings may well convince the jury that the plaintiff is being “piggy” and it may punish him with extremely low damages or even a finding of no liability. Third, an excessive demand detracts from your credibility in settlement discussions. It is nearly always a stronger position from which to argue if the other side fears that you might actually receive a verdict for your demand. Finally, making a realistic demand is more likely to result in a settlement or verdict that will make the client happy—a corollary of the first proposition—since measured by the demand, the degree of success is likely to be higher.

Understanding that you should ask for neither too little nor too much (and there is often room for disagreement about what a case is really worth), how much should you ask for? The principles are simple to state but more difficult to apply. You should ask for no more than you can plausibly justify to the jury, and it should be about twice what you really expect to receive. Certainly the reason for the first principle is evident. But what about the second? Doubling what you actually expect to receive is important because of the natural tendency on the part of juries to compro- mise in their verdicts. The starting point in many jury discussions is what jurors see as the halfway point in the case. Asking for twice what you expect helps them start where you want. The difficulty is in harmonizing these apparently conflicting positions, which is accomplished by making the evidence and argument a believable justification for the amount you have demanded.

There is a contrary school of thought. In it, the idea is that you should ask for exactly what you want and prove every penny of it so solidly that the jury will give an award for everything you ask. There are those who have achieved real success with this method, and it appeals to one’s sense of justice and candor. However, the tendency for juries to compromise is so strong that you ought seriously to consider demanding more than what you expect to receive, but not so much that the jury is offended.

In determining the value of any case you may also pay atten- tion to what the jury will look at as a matter of common sense, irrespective of what the letter of the law may justify. For example, in representing a young, attractive, childless widow in a wrongful death case, you should not expect to receive all you might theoretically be entitled to, even if in your jurisdiction the defendant is not permitted to argue the possibility of remarriage. The jury is likely to give such a person enough to “get started again,” rather than endow her for life with a high income.

Planning Proof of Damages

The second step is to plan in advance how you will prove every element of damages. In any action where the amount is going to be in dispute, the entire case should be prepared with a view toward proving what you want to recover.

A primary effort in this planning process should be gathering and creating effective demonstrative evidence. Charts, enlarged photographs, movies, videotapes, slides, celluloid overlays, models, skeletons—all manner of real and demonstrative evidence should be considered. The uncomfortable fact is that despite all that has been written about demonstrative evidence, too many lawyers neglect it utterly in favor of mere words—transitory sounds that lack force and vigor and are soon forgotten. Moreover, even among those lawyers who often take advantage of demonstrative evidence, there is a tendency to use it for liability and to overlook it for damages.

The challenge to the litigator is to be imaginative and creative in fashioning new ways to impress the jury (or judge, for that matter) with the severity of damages. Take the case of a quadriplegic plaintiff injured in a motorcycle accident. While the jurors can see for themselves how he is in the courtroom, they literally have no conception of what his average day is like. Rather than have him detail his difficulties with the simplest problems of just living—which at some point runs the risk of creating the impres- sion that he is complaining—consider hiring a professional photographer to make a videotape showing his mother helping him into his wheelchair, brushing his teeth for him, washing his hands and face, feeding him, combing his hair, and exercising his useless limbs so that they will not stiffen into immobility—tasks that must be performed every day.

This challenge to the effective use of demonstrative evidence is far greater in commercial litigation, and for that reason, or because some lawyers may mistakenly believe that demonstrative evidence is beneath the dignity of a corporate litigator, is often neglected. Take the simple case of a broken contract to supply scarce materials in a rising market, causing a substantial dislocation for six months. Certainly, everything can be proved by testimony and documents. But it is an excellent opportunity for making a large calendar listing the lost profits caused by a temporary shutdown, the additional cost for obtaining materials elsewhere and the expenses incidental to searching for the substitute performance, together with whatever other damages might be recoverable. You could even introduce a picture of an idle assembly line.

Whenever you use demonstrative evidence to help prove damages, there are some guidelines worth following:

First is simplicity. While charts and lists must be accurate, clear and simple exhibits are always preferable to ones that are needlessly complex. Make them easy to follow and understand.

Second is size. Make exhibits bigger than life whenever you can. Photographic enlargements are almost always permitted, and they invariably create a strong impression.

Third, take the effort to make the exhibits visually attractive.

Fourth, choose exhibits that will maximize the dramatic impact of the damages in your case. Even the dullest seeming bit of litigation can be made to come to life.

Finally, in complex cases to be tried before a jury, consider making a booklet for each juror containing copies of all the important documents that must be referred to (whether or not they relate to damages).

Just as important as demonstrative evidence to proving damages is the skillful arrangement of testimony, which also must be a part of pretrial planning. To assist in this, some personal injury lawyers provide their clients with forms to fill out that show how their injuries affect them throughout an entire day.The advantage of this practice is to alert the careful lawyer to details he might otherwise overlook. Obviously this form would not, except under unusual circumstances, be admissible in evidence, but is rather a preparatory aid.

However, there are documents the client can make that may be admissible in evidence. One example is a record of losses as they occur, like a record of time lost from work in a personal injury case or daily expenses incurred by a business in commercial liti- gation. While the latter may be objectionable as a business record because it was created with a view toward litigation, compare Palmer v. Hoffman, 318 U.S. 109 (1943), that rule is not a limitation on the admissibility of documents offered as past recollection recorded, which requires a record made at or near the event, by someone with firsthand knowledge who has no present recollection of the facts, and who can vouch for the accuracy of the document. While documents that qualify as past recollection recorded are considered exhibits in many jurisdictions and are permitted to go to the jury room, under Rule 803(5) of the Federal Rules of Evidence, they may be read into evidence but not received as exhibits unless they are offered by the adverse party.

Next come expert witnesses. The most familiar example is the medical expert in personal injury actions who testifies to the nature and extent of injuries (and also establishes the causation of the plaintiff’s condition). In recent years the use of expert economists has gained favor among many lawyers in trying per- sonal injury and wrongful death cases.

Finally, in preparing your case on damages for trial, you should consider including a summary of the damages and a proof checklist on damages as part of the file. A damages summary is especially useful in settlement discussions as well as being a trial aid, and if you follow the open file system of settlement negotiations, where you let your adversary see everything except impeaching materials, the summary can show the strength of your case as well as let your opponent know you are really ready for trial.

Conducting the Trial

The third step in proving damages is what you actually do at trial. Once again, there are some basic rules worth following:

First, the jury should be selected with damages in mind. This does not mean that you should discuss the amount you expectto recover during the voir dire examination but that you should try to select jurors who are likely to be well disposed to award the damages you seek.

Craig Spangenberg, in his superb videotaped lecture on Summation, Association of Trial Lawyers of America Trial Advocacy Tape No. 172 from the 1972 National College of Advocacy, suggests that in our culture paying one’s just debts is a far more powerful sentiment than sympathy and that jurors who have an A-1 credit rating from paying their bills before the first of the month often make the best plaintiff’s jurors.

Second, the groundwork for damages must be carefully laid in the opening statement. It is generally agreed that the plaintiff should not mention the amount of damages sought in the opening statement of a personal injury or wrongful death case. The reason is that the specific amount of money, whatever it is, will seem terribly high until the jurors can see the justification for it. This means that the emphasis in the opening statement should be on liability, while in the closing argument it should be on damages, after the jury has seen the reasons for a substantial award. This principle is so important that it is a good idea to get a ruling from the trial court in advance of the opening statement whether the defendant will be permitted to discuss the amount of damages, should the plaintiff not mention any particular sum.

In this way a plaintiff can keep the defendant from taking advantage of the tactical decision to wait on the damage issue.

None of this, however, means that you should not deal with the injuries or the loss that gives rise to the damages in the opening statement. You should do so. The fact of serious loss is an essential ingredient to any discussion of liability.

Third, the logistics of the typical trial usually prevent a clear separation between liability and damages in your case in chief. But to the extent practicable, you should start with liability before moving to damages, a principle that should be reflected in the order in which you call your witnesses as well as in the direct examination of each witness.

Fourth, final argument is where you bring all the elements of your case on damages into a coherent whole. One of the real concerns is what you will be permitted to argue. It is, for example, improper in most jurisdictions to ask the jurors to put them- selves in the shoes of the plaintiff, such as asking them if they would be willing to sell their right arm today for $12 million.

One of the problems for plaintiffs in wrongful death cases is avoiding the appearance of being crassly commercial in demanding money for what is truly irreplaceable, a human life. Probably the best way to deal with this is to bring it out in the open, explaining to the jury the limitations on any human system of justice and how unforgivable it would be to award nothing for the life of a person.

Finally, summation is a good time to use the blackboard in discussing damages, and to bring out all of your demonstrative evidence once again, remembering at the end of the case to ask the court to send your exhibits into the jury room so they may be used in the deliberations.