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Damages Evaluation and Assessment

In litigation, it is very common for people to have to translate their claims into dollar figures. Some types of injury are more easily translated into dollars than others. For example, the calculation of how much money a business lost as the result of a wrongful act can be relatively mathematical, as can the loss of value to damaged property or real estate. Yet calculation of other types of damage, such as "pain and suffering" in personal injury cases, can be very subjective.

The plaintiff has the burden of proving the types and amounts of damages suffered. Sometimes this will require expert testimony, such as the presentation of the testimony of an accountant or appraiser. Courts will not compensate plantiffs for damages deemed speculative, fanciful, or unsupported by admissible evidence. However, a plaintiff may be able to sufficiently evidence damages which are not yet fixed, such as future damages, on the basis of reasonable projections based upon the evidence and, as necessary, the opinions of experts.

Types of Damages

The types of damages available in litigation include:

  • Compensatory Damages - Damages which are intended, as much as possible, to put the plaintiff into the position he would be in had he not suffered harm from the defendant's wrongful conduct.

  • Economic Damages ("Pecuniary Damages") - The "out of pocket" losses suffered by the injured party.

  • Non-Economic Damages ("Non-Pecuniary Damages") - Expenses above and beyond "out of pocket" losses, such as "pain and suffering", "loss of enjoyment of life", or "loss of consortium".

  • Punitive Damages ("Exemplary Damages') - Damages meant to punish wrongful conduct. Whether or not punitive damages are available depends upon the law under which a cause of action arises. Some states do not permit punitive damages awards, or have a very restricted approach to punitive damages.

  • Nominal Damages - An award of a small sum of money (often $1) to a person who has proved an injury, but has not been able to demonstrate any appreciable compensible losses.

The "Collateral Source Rule"

The Collateral Source Rule holds that a defendant should not benefit from a plaintiff's fiscal prudence, for example, in purchasing insurance coverage against a loss. This can result in a plaintiff's collecting damages twice, once through an insurance settlement and a second time through legal proceedings against the defendant who caused the losses. In most jurisdictions, this rule has been modified or eliminated from application in certain types of cases. Where the collateral source rule does not apply, the defendant gets a "set-off" against the judgment in the amount the plaintiff has received from the collateral source.

Examples:

Lost Wages and Earning Capacity - In an employment law case, a plaintiff may seek economic damages for "back pay" (wages lost between the time of a wrongful termination and the time of the verdict) and "front pay" (wages that are likely to be lost in the future, as a result of the loss of the job and possibly the loss of a career path). Similarly, a person who suffers a physical injury may not be able to return to work and may be entitled to damages for lost wages. When determining the damage award, it is necessary to examine the plaintiff's earning capacity before the defendant's wrongful conduct, as well as afterward. As a part of the determination of earning capacity, it is necessary to examine factors which will affect future employability, including the person's age, physical and mental health, educational background, job skills and aptitudes, and the conditions in the labor market for the areas where the plaintiff may be eligible for work.

Expert testimony can help establish these various factors, as they relate to the plaintiff, and an expert will be able to produce a opinion projecting how the defendant's wrongful conduct affected the plaintiff's past and future earnings. In some cases, medical, vocational, or psychological testimony may also be required to establish the loss of physical or mental capacity to perform the type of employment previously held by the plaintiff, or to explain or challenge any limits asserted relating to the plaintiff's ability to return to work. Often, both the plaintiff and defendant will present experts with competing projections of damages.

Damages to Real Estate - Where real estate is damaged, for example as the result of harm to a physical structure, or due to a fire, economic damages may be assessed in the amount necessary to fix or remediate the damage. Depending on the circumstances, damages may instead be measured by the effect of the harm on the property's market value. It is often necessary to utilize experts in these cases, and there are a wide variety of appraisers who can provide testimony as to the value of pretty much any real or personal property, or damage to a business interest.

"Pain and Suffering" - There is no clear method of determining the value of pain, or the ability to lead a normal, pain-free life. This is an area where a lawyer's advocacy can have a significant impact on the amount of a damages award - given equivalent facts and injuries, the manner in which the effect of an injury or disability is demonstrated to a jury, and the manner in which damages are requested, can significantly raise or lower an award of damages.

Conclusion

Many people believe that the effective advocacy for damages is more of an art than a science. As outlined above, the extent to which this is true depends both on the facts of a case and the type and nature of the injury suffered. This is an area where good legal counsel, and as necessary the testimony of a good expert economist or appraiser, can potentially make an enormous difference in the outcome of a case.