By Dr. Ken Broda-Bahm:
As civil jury trials continue to become more scarce, the need to reasonably assess what result a jury would return in trial becomes even more important. Even when the trial does not happen — especially when it does not happen – clients, counsel, and insurers need a rational way to ground an assessment of what the case is worth. This is one of the paradoxes addressed in an excellent new article called “The Damages Paradox” appearing in the DRI publication, For the Defense (p. 28) written by Decision Analysis consultants Richard Gabriel and Emily Shaw. The authors note that a common tendency to view the jury as irrational or unknowable drives case assessments that are not well-grounded when it comes to damages. “Most settlements and jury verdicts are based on speculative or arbitrary numbers rather than on a thorough understanding of how juries decide on damages,” they note. “That results in hundreds of millions and even billions of dollars in unnecessary settlements and verdicts.”
When we treat the potential jury as a black box or a random-number-generator, we fundamentally handicap our ability to meaningfully ground our case evaluation process in ways that would make an analysis of damages exposure more knowable and more rational. The thesis of Gabriel and Shaw’s research article is that a better understanding of the actual processes jurors follow in arriving at damages will lead to greater predictability and control when it comes to case assessment, resolution, and trial. In this post, I will add my own thoughts to the good advice offered by the authors, focusing on why damages speculation is an increasing problem, and what we ought to do about it.
The Speculation Problem
For all parties and trial teams, the question floats over the preparation process: “What do we think this case is worth?” In my experience, there are a few ways that question tends to be most commonly answered – and none of those ways are very good.
Plaintiff’s Demand Anchoring
The most basic way to value a case is probably to use whatever number is in the plaintiff’s demand letter, or to work from some fraction thereof. The case is worth X because X is what they’re asking for. But even when defendants apply a discount (e.g., X divided by 2 or 10), they are still anchoring off that plaintiff’s number. The number could come out of thin air, but once it lands in the letter, it takes on a concrete quality.
Rare Past Verdicts
Sometimes there are past verdicts to look to, and modern online searching makes those easy to find. But with more than 95 percent of civil cases being resolved without a jury, there is a scarcity problem. If the question is, “When is the last time a case just like this was resolved in this venue?” the answer is often, “A long time ago,” or even “That’s never happened.” There is also an “outlier problem,” in the sense that more extreme verdicts are more likely to be known. Also, given that it is increasingly the odd duck that ends up going all the way to trial, it is worth remembering that odd ducks aren’t great at assessing the far greater number of more conventional ducks.
Unknown Past Settlements
Settlements are often confidential, which means they generally can’t be simply looked up in order to provide a baseline average value for your settlement. And, like verdicts, those that are known through word-of-mouth tend to suffer from the same outlier problem due to the bias of the larger ones being the ones that tend to become known.
Gut Feeling
Probably the most common ways that cases reach a perceived value is for an attorney, a damages expert, a claims adjuster, or a committee of those individuals to just reach a number that feels right. In calling that a “gut feeling,” I don’t mean to downplay it too much. Those gut feelings can be based on long experience and research. But they are still highly uncertain, subject to disagreement, and at the end of the day, based on speculation about what a jury might do.
There are probably a few more ways of getting at a value – e.g., by looking at the costs of the trial preparation process – that have little to do with predicting the actual value that a real jury would arrive at. The fundamental problem is that we’re guessing at a value. There are consequences to that uncertainty. Without a trusted value, cases will often drag on, sometimes for years, with a “let’s see what happens” mindset, and that comes at a high cost for both sides.
Toward Some Possible Solutions
The DRI authors, Gabriel and Shaw, persuasively argue that attorneys, particularly defense attorneys, need a better practical understanding of the psychological processes jurors use to arrive at a damages number. Beyond understanding the evidence and the law, it is a matter of grasping the non-evidentiary and extra-legal processes that we can observe in a jury. For example, they note five categories of emotional motives that can drive higher damages numbers: Anger (a motive to punish the defendant), fear (the Reptile approach), empathy/sympathy (identifying with a plaintiff’s loss), uncertainty (providing “just in case” money), and activism (sending a message, righting a wrong).
The authors also helpfully share their own data and recommendations focused on getting the jury to be more recovery-focused (rather than loss-focused) as well as the benefits of a “restorative damages plan” designed to tie both economic and non-economic categories to more concrete and calculation-friendly costs that would help an injured or otherwise damaged party to move on with their life.
Building an understanding of a potential jury’s thoughts will certainly help with the case evaluation. Defendants still face the challenge of finding a rational and systematic way to distill that down to a number for the purpose of case assessment and valuation. One specific solution that I believe can lead us in a better direction is mock trial research that is customized to deliver more reliable feedback on likely damages. We currently have several cases where we are taking a more customized approach to testing damages. While a conventional mock trial is often too brief to give mock jurors much beyond a few broad numbers, a more adaptive design has the potential to provide detail that is more comparable to what jurors will hear in trial. As a result, a damages-focused mock trial can aid in the case assessment by allowing you to not only get a number, but also to see how the jury got to that number.
A deliberating body of citizens – whether a mock jury or a real jury – will not be perfect, but will also not be as much of a crap shoot as many skeptics make it out to be. In addressing the paradox of assessing possible trial results without actual trials, defendants ought to be doing more. You don’t have to necessarily be more willing to risk a trial. But you should be more willing to do the work to develop a grounded estimate.
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Other Posts on Damages Assessment:
- Trust (but Guide) Your Jurors on Damages
- Conduct an Informed Litigation Risk Assessment
- Get the Maximum Out of Your Mock Trial
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Gabriel, R. & Shaw, E. (2024, June). The Damages Paradox: For What It’s Worth. For the Defense (DRI). URL: https://digitaleditions.walsworth.com/publication/?m=55594&i=823406&p=28&ver=html5 p. 28