Source of the following article Persuasive Litigator.

By Dr. Ken Broda-Bahm:

For plaintiffs, the topic of monetary damages can be a bit of a mystery. In making the request to a jury, the appropriately named ad damnum, the question is: How much? Obviously, more is better, but common sense and experience probably tell you that there is a point at which higher requests bear diminishing returns, or even bounce back on themselves resulting in lower verdicts, or even, God forbid, a point at which the extreme request causes jurors to doubt the motives behind the suit and question their liability determination. The level at which one should propose, or “anchor” a damages amount can be tricky. And the uncertainties apply to defendants as well, in two ways: Not only do they have to estimate and react to the effects of the plaintiff’s number, they also often need to come up with their own alternate damages number.

The uncertainty on both sides about the realistic value of a case can be a practical obstacle to timely settlement. Verdict research can play a role, but with a shortage of similar cases going all the way to verdict in the same venue, attorneys will often rely on their anecdotal experience or gut instinct. Recent research, however, highlights a better option as well as a few important principles to keep in mind. In a series of studies (Campbell, 2018), a law professor at University of Denver Sturm College of Law relies on data drawn from actual cases that are tested using online samples of mock jurors, looking at whether “there is a proverbial ‘sweet spot’ for demands where the maximum anchoring effect is obtained” without bouncing back or hurting the case on liability. In this post, I will call out four quick contributions from this research — points that active litigators ought to bear in mind. 

The Nuances Are Important

The influence of the requested amount, generally know the “anchoring effect,” is well known. Asking for an amount doesn’t guarantee that amount, of course, but it does play a big role in determining the starting point and reference point for jurors’ discussion. The result is that a higher ask gets a higher result, and that is pretty uniformly supported in the research, including Professor Campbell’s studies.

But there is also the potential for a “boomerang effect,” where the higher request produces a lower award than a lower request would have produced. Campbell found some evidence for that in some case scenarios but, more often, there is what he calls “decreased anchor saliency,” meaning that the higher ask still yields higher awards, but exerts less anchoring influence as it gets higher. In one fact pattern, for example, the low demand yielded a return of 65 percent and high demand was only 56 percent. The high demand still returned more money (56 percent of a larger amount was bigger than 65 percent of a smaller amount), but with a waning effect of the anchor.

There is also the concept of “fusion,” relating to the ways a party’s damages case influences their liability case and vice versa: Higher real damages produces the perception of greater liability even when holding liability constant, and in turn, weaker liability will result in lower damages even when holding damages constant. In Campbell’s study, he looks specifically at the risk that a higher request will lead to lower findings of liability, and finds evidence for it in some scenarios: a “cliff” where liability determinations and the overall case value tends to fall off as a result of a request that is too high. In one scenario, the higher damage request resulted in a 10 percent reduction in win rate.

There Is High Variability By Case and Demand

Professor Campbell tested the effects of various damages requests (low, medium, and high) in a number of different case scenarios and conditions of either admitted or contested liability. The result, which is predictable, is that the effect of any given damage request depends on all of those factors, and more. Beyond the online individual response methods Campbell is employing, there will also be variability based on the dynamics of the jury and their deliberations.

So There Is a Need to Test

The cases Professor Campbell tested included a personal injury burn due to an asphalt spill, eighteen-wheeler hitting a pedestrian, person hit by a dropped shopping cart, surgical malpractice, a vehicle rollover accident, and an incident in which a family drowned due to an unmarked hazard. The cases are all drawn from his own work with clients. He runs a service called “Empirical Jury” which tests case scenarios with large samples of online jury-eligible participants.

His participants come from Amazon’s oddly-named  “Mechanical Turk,” which is a crowd-sourced research methodology that is becoming increasingly popular. There are some plusses and minuses to the approach, with the plusses being the ability to quickly and cheaply conduct large-sample panel studies often in a matter of hours, and the minuses being the need for somewhat extreme quality-control measures to make sure the data is as good as it can be. For the trial lawyer, the approach may not be as satisfying as a mock trial — not allowing you to look into the eyes of your audience, and (more importantly) to see them deliberate. But the statistical power holds the potential to greatly expand your knowledge on your jury pool, enabling you to identify the true risk factors in jury selection, for example. For that reason, it may be a very useful supplement to in-person pretrial research.

The overall message is this: Damages are tricky, for both sides, so don’t just rely on gut, but learn as much as you can.

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Other Posts on Damages: 

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Campbell, J. (2018). Boomerangs, Cliffs, and Inverted U-Curves: Natural Delimitation of Damage Awards (June 29, 2018). Available at SSRN: https://ssrn.com/abstract=3205767 or http://dx.doi.org/10.2139/ssrn.3205767

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