A recent Above the Law article caught my eye this week, not just because of its catchy Kenny Rogers quipping headline, but because it offers an excellent example of when and how to leverage a very specific and powerful area of expertise.
Damages play a key role in a huge number of legal cases. The process of determining damages is critical to the outcome of the case for both attorneys and clients, not just financially, but due to the psychological impact of explaining and justifying the requested damages to the judge and/or jury. (At risk of making two pop culture references two paragraphs in a row, Damages is also a very very good show featuring the outstanding Glenn Close. Add it to your Netflix queue.)
Calculating economic damages can be relatively straightforward, as in some employment disputes or cases around unfair business practices (although these can certainly be complex, too.) In these situations, expert witnesses are definitely important to deciding just how much to ask for and why. These experts range from accountants to specialists in their individual fields, and lawyers rely on them to set out fair damages valuations.
In other cases, determining damages isn’t nearly as clear-cut – in fact, it can seem downright impossible. These cases often revolve around “hedonic damages,” defined by the Above the Law article as damages that “compensate a plaintiff for experiencing a loss of enjoyment of life due to pain and suffering caused by a damaging event.” You can probably see where I’m going with this. It’s hard enough to qualify just how much enjoyment someone lost over a singular action, let alone to quantify it. Who can be trusted to put numbers to quality of life?
Certain economists, as it turns out. The article’s author, a PhD in finance, explains two different methods for calculating hedonic damages. One is based on compensating variation and the other on equivalent variation, and both offer a fascinating perspective on how to put numbers around something that seems so intangible. You can read the details in the original article because I likely won’t do the explanation justice. But that’s also my point: this is dense, intricate stuff, made intelligible by a select few people who not only understand it, but can articulate how they reached those conclusions.
Expert witnesses are always significant to a case, but something as specialized as the calculation of hedonic damages shows us just how critical they can be. In these cases, the right expert economist changes the game before a trial even begins by determining which approach to damages valuation makes sense in this context. That decision may be the difference between millions of dollars. Once the approach is decided, the economist will not only perform the calculations, but be able to explain the theory behind them. That ability will almost definitely be the difference between millions of dollars, and determine the outcome of the case.
That kind of knowledge and capability is not something that your garden-variety expert can provide. Sometimes, you need expertise far beyond the folks in your typical expert witness Rolodex. When you require the kind of economist who can clearly explain why your client deserves x millions of dollars in hedonic damages – or the equivalent – that’s where we come in.