Plethora of reasons for defense counsel to argue damages at trial

Hey you! Pay attention!

In the latest issue of The Jury Expert, Jeri Kagel has contributed a very thoughtful article, entitled "Damages: The Defense Attorney's Dilemma." In her article, Jeri presents in stark terms the ambivalence that most civil defense attorneys experience regarding discussing damages before a jury. All of us in the trial consulting profession encounter clients who are stubborn about certain things.

"I never make opening statements." 

"I don't depose opposing experts because I don't want 'em to know what's coming." 

"I don't like my expert to use visual aids because it distracts the jury from what he's saying."

By a large margin, the most common immovable object is, "I don't argue damages at trial."
We trial consultants have read the experimental research on the topic. We have run our own studies. We know that arguing damages at trial is a winning strategy for defense attorneys. It generally has a negligible impact on the liability decision and can have a profound impact on the damage award.

Don't live in fear! Come into the light!

In fact, our frustration with our clients on this point has led many of us to write newsletter articles, editorials and/or blog posts about this very topic.

From myself, "Getting Defense Counsel to talk about damages is like conducting an intervention."

From Aaron Abbott, "New Research on Damage Awards: Do jurors split the difference?"

From Sarah Murray, "Strategies for minimizing damages in high damages cases."

From Jeffrey Frederick, "Searching for rocks in the Channel: Pretesting your case before trial."

I actually managed to convince a client to run a mock trial experiment on the question of arguing damages at trial. We had two panels who all watched the same mock trial for a day-and-a-half. We then separated them for closing arguments. To one group, defense counsel said nothing about damages. To the other, defense counsel added one paragraph, discussing the unreasonableness of plaintiff's award request, and suggesting a more appropriate figure.

Much to my client's surprise, the panel that had heard defense arguments about damages did not once discuss this fact with respect to the liability question. That is, when deciding whether the defendant was liable, not once did anyone point out that defense counsel had raised the damages issue in his closing.

The differences did emerge when we asked the two panels to calculate a damage award for the plaintiff. The panel that had heard a counter-argument on damages from defense counsel chose an award half the size arrived at by the panel that only heard plaintiff's arguments about damages. The provision of a "counter-anchor" for damage award calculations can substantially reduce the size of such an award.

Don't put off until tomorrow what you can argue today.

A significant contribution of Jeri's article in The Jury Expert is a cataloging of opportunities for defense counsel to introduce arguments about damages throughout the trial. The typical question a defense attorney confronts is, "Should I mention damages in my closing argument?" Jeri points out that this dilemma should not be so narrowly defined. Defense counsel should include questions during voir dire about how prospective jurors are likely to think about calculating damage awards. She advocates including arguments in opening statements that help "teach" jurors how to evaluate critically testimony about damages.

A more comprehensive strategy for dealing with the damages issue allows defense counsel to influence juror decisions about damages without having to resort to the "arguing in the alternative" tactic. (My client didn't do anything wrong, but if you decide he did, it wasn't really that bad.) In addition, in jurisdictions that do not permit an ad damnum (specific monetary request from the plaintiff), defense counsel can implement those strategies most appropriate to the local rules.

There is one big lesson one should glean from the experimental literature and the musings of trial consultants. Don't punt on damages. Ceding to the plaintiff total control over the way in which the jury discusses damages is a recipe for disaster.

Don't wait for mediation to fail before calling trial consultant

More Great Stuff in The Jury Expert

The most recent issue of The Jury Expert has just come out. For those who are still in the jury trial dark ages, The Jury Expert is the online publication of The American Society of Trial Consultants. It has quickly become the go to source for expertise on jury behavior, jury trial strategy and recent developments in the American Jury system. Any litigator who doesn't subscribe just isn't that interested in winning at trial. 'Nuff said.

How to Win a Mediation

In the November issue, Melissa Gomez has contributed a very nice article on the importance of conducting jury research prior to mediation. Melissa focuses on a particular aspect of jury research -- and a very important one -- figuring out what your case is worth. Any settlement discussion takes place in the shadow of a jury trial. What offer should you make? What counter offer should you accept? The answers depend, of course, on what you think a jury will do. Information is power. If you understand better than your opponent what a jury will do at trial, you will "win" at mediation. To this end, Melissa particularly advocates focus group research targeted at the damage award calculations that jurors will undertake. She also refers to these as "valuation studies."

She points out another advantage of such studies. Sometimes, a lawyer has to convince her own client of what a case is worth. Mediation is only successful if client and attorney walk into the room on the same page. Melissa offers a nice example of a case in which pre-mediation research provided the client with realistic expectations of how a jury would react to a case. This permitted the lawyer to guide the client to a sensible settlement.

Ignore the data at your own peril

Melissa also offers a couple of cautionary tales about litigants who chose to proceed to trial notwithstanding study results that suggested doing so was a bad idea. Remember: It doesn't matter what you think the case is worth. It only matters what a jury thinks the case is worth. This does raise an issue that we trial consultants often encounter. For jury research to be successful, it is important to have buy-in from both litigants and litigators. While numbers are always involved, we are generally dealing with small enough samples that this is qualitative research. The trial consultant's expertise is critical to interpreting those results. If a lawyer, or her client, does not respect that expertise, the time and expense of a jury study will be for naught. If you treat your trial consultant as a glorified project manager, you will be squandering the value of your jury research.

It's not just about the numbers

Melissa has done a nice job of illustrating the value of pre-mediation jury research on case valuation. This is not, however, the be all and end all of trial consulting for mediation. A mediation is not a trial, but it is a legal process. It has its own rules, ebb and flow, and opportunities for information exchange and argument. In the same way that it is critical to have a solid presentation strategy for a jury trial, it is vital to have a game plan for mediation. If you plan to just show up and hear what the other side has to say, you are wasting an opportunity.

Typically, each side has an opportunity for an "opening statement" to the mediator. Each side can bring in exhibits, reports and data. In addition, this is a lawyer's one real opportunity to speak directly to the client on the other side of the case. A good litigator will use that opportunity to her advantage. I discuss how a trial consultant can help a litigator prepare for some of these other aspects of mediation in an article I wrote for Lawyers Weekly. While there is some overlap with the themes in Melissa's Jury Expert article, there are several other nuggets of wisdom, as well. Check it out!

From the ASTC Conference: Effects of the Economy on Jury Trials

I recently returned from Atlanta, where I was attending the annual conference of the American Society of Trial Consultants.

A lot of informal discussion, at the breaks, in the halls and at the bar, centered around the effects of the economic downturn on juries. What were they doing differently now?

Beth Foley chaired a session on the effect of the economy on damage awards, but the discussion freely flowed into behavioral areas other than damages. No-one really had any data, per se, unless you think of data simply as the plural of "anecdote." That said, there were some interesting conjectures offered, some of them supported by personal experiences with trial juries or mock jurors.

Welcome to jury duty, Mr. Executive Vice President for South Asian markets.
Several attorneys and consultants noted that massive layoffs of white-collar workers has resulted in executives being available for both pretrial research and actual jury duty. This is generally seen as beneficial for corporate defendants because these professionals will understand the decision-making structure of business better than typical jurors. They won't be so quick to adopt the "zero-risk fallacy" or assume that all corporate mistakes are the result of negligent conduct.

Let's not break the bank here!
Tara Trask commented that she had seen a definite upswing in arguments by research subjects pertaining to driving companies out of business. People have watched seemingly indestructible multinational conglomerates go under in the past year. This has increased sensitivity to the vulnerability of all companies. Jurors may think twice about an award large enough to bankrupt a company that provides jobs in their own community. Certainly, such arguments can no longer be dismissed out-of-hand.

I'm so mad, I could just spit!
There continues to be a lot of pent-up hostility towards big companies and firms in the financial sector. We know that jurors give vent to their desire to punish corporate defendants when calculating compensatory damages, despite instructions to only consider such factors if punitive damages are warranted. In the present environment, I would expect the desire to punish to infiltrate these values even more.

Where's the check with my name on it?
There has been a lot of discussion lately about the value of identifying jurors with a "just world" attitude towards the world. There are several versions of this perspective. The more people who feel themselves to have been "mistreated" by the world, perhaps because they have been laid off or have lost a house of foreclosure, the more potential jurors there are who will be reluctant to give a "hand-out" to someone else. The thinking is along the lines of, "Hey, times are tough. We've all suffered. You don't see anyone giving me free money, do you? Why should I bail out this guy?" I would think that any plaintiffs attorney would do well to probe for such attitudes during voir dire.

I wish I could tell you, kind readers, that we have reams of definitive data, pinpointing exactly how the current economic climate is affecting verdicts and damage awards. Alas, all we really have are some basic trends, a few anecdotes and thoughtful speculation from some pretty intelligent and experienced jury experts. I am afraid it will have to do for now.

For those of you who might be new to The Jury Box Blog, you can read a couple of pieces I have previously published on my own perspective on the connections between economic climate and damage awards here and here.

How the Economy will affect jury damage awards

I published the following as a letter to the editor in the June 1 edition of Massachusetts Lawyers Weekly. The original article to which I make reference is well worth reading.

Trial consultant: beware of current juror reasoning

Published: June 1, 2009

To the editor:

Jocelyn Cinquino published a very interesting piece ("Impact of the economic downturn on juror reasoning," May 11) on the current economic climate's likely impact on jury decision-making. It should come as no surprise that this topic has been hot in the trial consulting community. There has been a lot of chatter about this on the American Society of Trial Consultants listserv and several sessions will be devoted to the topic at our June conference.

Cinquino's remarks largely mirror those I have heard from other consultants, and I think she has given a nice survey of current thinking on the topic. That said, there are a couple of specific points absent from Cinquino's piece that deserve some mention.
While predicting damage awards is a very tricky proposition, largely because jurors' monetary calculations tend to be all over the map, we do know something about the strategies that jurors tend to employ when thinking about damage awards.
The most common technique is known as the "anchor and adjust" strategy: A juror latches onto some tangible number that seems relevant to the damages calculation (or just in the right ballpark) and then adjusts up or down, depending on the persuasiveness of various arguments. The most common and influential anchor is the plaintiff's ad damnum. Other notable anchors are statutory damage caps and awards from famous cases.

In a state such as Massachusetts, without ad damnum requests, jurors look elsewhere (and seemingly everywhere) for anchors. Commonly used anchors include housing prices, annual salaries, pension benefits and school tuitions. It is important to realize that jurors use their own subjective estimates of these values, e.g. "My aunt Martha just sold her house in Methuen for $175K."
In a depressed economy, jurors' estimates of these anchors understandably will be lower than those associated with economic prosperity. I believe that this "sunken anchor" effect is probably the most important one driving down damage awards.

The second point I'd like to make concerns securities litigation and other suits related to the financial industry. I recently worked on a case involving the aftermath of a Ponzi scheme. We ran pre-trial research on the case in the form of a multi-panel, full-day focus group study. We learned many interesting things about the public's perception of the financial sector.
Most were fairly predictable and intuitive, such as suspicion of banks or a call for more regulation. One moderately surprising result was the inability (or lack of inclination) of people to differentiate between risky investment strategies and outright theft. Our subjects perceived the actions of hedge fund managers, sub-prime mortgage lenders and investment advisors as being simply different forms of fraud.

While they were happy to crucify the person in our case who had stolen money from his clients, they considered Lehman Brothers and Citibank also to have "stolen" billions of dollars. Perhaps due to lack of sophistication about the financial services industry, most people think of the sub-prime mortgage mess as a giant Ponzi scheme. Be prepared to run into resistance if you plan to defend a bank or investment house on the grounds that what they did was "completely legal."

Securities Lawsuits before scared, angry, fatalistic jurors

Well, it was bound to happen. People have lost money. Lots of people have lost lots of money. And they're pissed. They want to blame someone, anyone and they want their money back. So, they are filing lawsuits. Lots of lawsuits.

Because that's where the money is

I recently worked on a case in which a "Madoffian" villain absconded with tens of millions of dollars of his clients' money. He's in jail but that is of small consolation to his victims, many of whom have lost their lives' savings. Just as Bernie Madoff seemed to have used one particular account at Chase Manhattan Bank to perpetrate his scheme, this crook used one account at a local bank branch to steal over $25 million. Rather than investing the money, he just converted it to his personal use, making small payments to "investors" when necessary.

The victims of this Ponzi scheme, unable to collect from the crook, sued the bank, on the grounds that the bank was complicit in the crime. After all, the bank still has (a little) money. I am hearing similar stories from other trial consultants, concerning other investors suing other banks, accounting firms and lawyers for the misdeeds of their clients.

These lawsuits are all long-shots, of course, because proving negligence first requires proving that these defendants owed some legal duty to the plaintiffs (who were not customers). In the case I worked on, the bank clearly owed a duty not to lose the account holder's money, but it was a real stretch to argue that the bank owed a duty to the people who gave money to the account holder. (Does your bank owe any duty to your employer for what you do with your paycheck? Or to your family for how you choose to squander your Bar Mitzvah money?).

A bank does have an obligation to act if it knows that illegal activity is taking place. It is not enough, however, to show that someone at the bank suspected, should have known, or was negligent in not knowing that something illegal was going on. There are further obligations associated with money laundering statutes, but they only cover large cash transactions.

So, in short order, the plaintiffs lost their suit against the bank. Plaintiffs have been similarly unsuccessful to other suits I have heard about. Unless you can prove a knowing conspiracy, you'll be hard-pressed to collect from institutions peripheral to the actual fraud.

Juror anger flows freely in all directions

While the facts of this case are certainly interesting and timely, I think that many interesting things can be learned from the reactions of focus group participants in the pretrial research we ran for the case.

We ran a full-day multiple-panel focus group for this case. First, we offered the participants a very heavy-handed plaintiff's argument to see just what kinds of passions we might ignite. Well, half the group was ready to revoke the bank's license and lock up all its officers. This kind of hostility should not be too surprising in an environment in which banks are largely blamed for our financial meltdown. It became very clear that most participants did not differentiate among savings banks, investment banks, brokerage houses, hedge funds and mortgage companies. To most people, the entire "financial sector" is lumped together as one giant, evil monster. If you need to represent any financial institution in court, you'll need to work very hard to differentiate your client from other firms in the industry. Good luck with that.

We followed up in the afternoon with a presentation of the defense case, along with direct and cross-examination of the branch manager. Participants started to soften their stances a bit when it became clear that the bank employees really had no idea where the money was coming from and to what purpose it was being put.

The participants were still plenty angry. They just directed their criticism in multiple directions. They heaped lots of blame on the victims, expressing incredulity that anyone would pay so little attention to what was happening to their money. Many people adopted a "caveat emptor" attitude, pointing out that when they lost money in the market, no one was there to save their butts.

This raises the important issue of relative vs. absolute notions of fairness. In unfamiliar decision-making environments, it is common for people to reason from what they know. Jurors are always analogizing from the case facts to their own experiences. "Well, when my Aunt Agnes had her hip surgery, they insisted that she stay in the hospital for five nights, not just three." As such, in securities litigation, a juror will see a case through the lens of her own experiences and current situation. I expect that, as we move through these difficult economic times, jurors will be reluctant to "bail out" investors who have lost money (even through fraud). Everyone feels defrauded and jurors are unlikely to believe that others deserve special treatment (especially if those others are rich).

This relative evaluation process is certain to carry over to calculations of damage awards (and not only in securities cases). As jurors' own financial situations deteriorate, the baselines they use for assessing damages will decline. Their houses are worth less. The average salaries earned by various types of professions are perceived to have declined. Expectations about bonuses and commissions have gone down. As a result, I expect to see damage awards drop precipitously across the board.

The American Society of Trial Consultants, of which I am a member, has just launched a flash poll among its members concerning perceived changes in juror (and mock juror) behavior, in response to the market collapse and subsequent stimulus package. Once the results of this poll are released, I'll be sure to discuss them in a future blog entry. Stay tuned!