Financial Planning and Review of Year End ReportsA computation of damages by an expert witness that yields a high number might dazzle your client, it might impress the jurors, and it might even become the verdict.  But, what if the expert witness testimony doesn’t survive the appeal because it bears no foundation relative to the facts of the case?

There are multiple reasons that a trial lawyer may not put the amount of elbow grease into discussion with the expert witness over the computation of damages, the leading cause of which might be the almighty “discount rate.”  Consider this:  every formula to compute damages consists of multiple variables and you must understand every variable selected by your expert witness.

A particularly good case in point involved a jury award of nearly $2 million in a wrongful death case.  The expert witness calculated the decedent’s lost wages at a rate of $8.00/hour for full-time employment.  Then he added a 4.25% annual wage increase.  Then he added an employer-sponsored 401(k) plan at a 3% employee contribution with a 3% employer match.  He made calculations to age 60 and to age 65.

Let’s stop right here and ask what could possibly go wrong with this approach by the expert witness?  Did you start with a minimum wage worker having a 401k plan available through work?  Did you start with the second variable, that the hourly worker would receive an annual wage increase approximating a cost of living adjustment?  Were you critical enough to start with the question whether the decedent was employed full-time?  Or, were you savvy enough to question the woman’s occupation and employment status at the time of the accident?

Working with an expert witness for the computation of damages doesn’t begin with complex net present value computations.  It begins with a selection of simple variables that must be connected to the specifics of the case.  In this case, the woman was not working at the time of the accident, had not worked on a full-time basis for the past several years, had a highest recent earnings of $7,000/annum, without annual wage increase, and without any retirement benefits.  The lack of connection between the victim’s life and the expert witness computation was a sufficient problem to cause a reversal of damages on appeal.

One piece of simple advice you might consider is to have the expert write out the formula(s) that he will use to compute damages.  The expert witness could then go over a rendition of the theory with you.  The expert can create a “Variable Worksheet” that you keep in your expert witness folder.  Any time you learn something pertinent to the variables, contact the expert witness and update the sheet.  At trial, as testimony comes in, you will be able to brief the expert witness on other variables and request an updated calculation if needed.

The longer I practice, the more I find clichés to hold truths that serve me well in the courtroom.  Just in case you’re not familiar with the one I’ve adapted here:  if it sounds too good to be true, it probably is.

by Paloma A. Capanna, Attorney & Policy Analyst