According to the U.S. Chamber of Commerce, the number of verdicts above $100 million reached a record in 2023, up nearly 400% from 2013. Although there is relative consistency of thought among the defense bar as to the likely factors at play in the cause of this increase (see root causes below), one method offered for controlling these awards has proven more daunting to accept: anchoring.
Defensive Anchoring Explained
Defensive anchoring involves the defense presenting a case for damages before the jury, aiming to introduce and support a reasonable sum if the jury finds in favor of the plaintiff.
When I started practicing, it was essentially unheard of for a defense attorney to present a case for damages or suggest a verdict number to a jury. The focus was solely on liability, with any mention of damages considered a sign of weakness or an admission of fault. Indeed, the standard response to the plaintiff’s damages claims before a jury was, basically, no response at all. We would label the plaintiff’s demand “excessive” or “outrageous” without any real substance to our position. We would simply advise the jury that if they found in favor of the defendant, as they must, there would be no occasion to consider damages. And we would move on. However, focus groups and juror interviews have shown that jurors want to hear the defense’s perspective on damages and do not view it as an admission of liability.
The paradigm shift in thinking regarding defensive anchoring is driven by the increasing disparity between verdicts and reasonable damages. Verdicts are becoming wildly disproportionate to the actual damages suffered, affecting various industries, such as trucking, manufacturing, and medical liability. In healthcare, specifically, increasing medical, claim, and litigation costs, on top of rising social inflation, pose a significant threat to healthcare organizations when combined because of adverse outcomes.
This exponential rise in verdicts and settlements cannot be ignored, and action needs to be taken to address this issue. Humbly, the defense bar remaining steadfast in its refusal to introduce and prove a damages case, from the defense perspective, is going to continue to yield excessive damages.
The Importance of Defensive Anchoring
Defensive anchoring is important with juries for several reasons. First, it allows the defense to present a reasonable and persuasive case for damages. By introducing and supporting a specific sum, the defense can provide the jury with a clear and coherent perspective on the appropriate compensation for the plaintiff. This helps to guide the jury’s decision-making process and ensures that they have a well-informed understanding of the damages at stake.
Second, defensive anchoring helps to counteract the potential bias and influence of the plaintiff’s damages presentation. If the defense remains silent on damages, it may create the perception that they are conceding value or that they have no valid counterarguments to the plaintiff’s claims. By actively addressing damages and presenting their own evidence and expert witnesses, the defense can challenge the plaintiff’s position and provide a balanced view of the case.
Furthermore, defensive anchoring allows the defense to shape the narrative and frame the discussion around damages. By presenting their own valuation and supporting evidence, the defense can influence the jury’s perception of what constitutes a reasonable and fair compensation in the event the defense is found to be at fault. This can help to mitigate the risk of excessive or inflated verdicts that are disconnected from the actual damages suffered.
Defensive anchoring helps to establish credibility and trust with the jury. By openly addressing damages and providing a well-reasoned argument, the defense demonstrates their commitment to transparency and fairness. This can enhance the defense’s overall credibility and increase the likelihood that the jury will consider their perspective when deliberating on the case.
Defensive anchoring aligns with the expectations and preferences of jurors. Focus groups and juror interviews have consistently shown that jurors want to hear the defense’s perspective on damages and do not view it as an admission of liability, as previously thought by defense attorneys. By addressing damages and providing a reasonable financial anchor, the defense can meet these expectations and engage the jury in a more meaningful and productive way.
Benefits of Defensive Anchoring
Throwing a stake in the ground helps to shape the narrative. The jury will have heard the number/value during voir dire (if allowed in the jurisdiction) and will be allowed to consider concrete evidence of a claim’s value. By introducing and supporting a specific sum, the defense can shape the narrative and guide the jury’s understanding of the appropriate compensation for the plaintiff, if necessary. This helps to ensure that the defense’s viewpoint is well-represented and considered during deliberations. It also gets the jury thinking about a specific number that is, in many instances, vastly different from that which is being argued by the plaintiff. If the defense does not provide a specific value, and the foundation for the value, the only “number” they’ll hear will be that of the plaintiff. And it will serve as the starting point to their deliberations.
By actively addressing damages, the defense can present a persuasive case and increase the likelihood of a favorable outcome in the litigation.
Excessive Jury Damages
There are a variety of reasons why exorbitant damages have been increasing dramatically over the last decade:
Increase in public distrust of companies. There is a general lack of trust in corporations, including healthcare companies. This skepticism can have a negative influence on jurors’ perception of damages and for how much money a company should be held liable.
“Diminished” value of money. The public has been desensitized to large sums of money and doesn’t fully grasp what $10 million looks like. This is evident in billion-dollar lotteries and sports contracts and can affect jurors’ perception of actual damages and what compensation for those damages should look like.
Social inflation. The gap has continued to widen between insurers’ claims costs and general economic inflation largely due to unrealistic expectations of what an insured individual should receive in damages.
Reptile theory/tactics. Often a plaintiff attorney will employ tactics that appeal to jurors’ primal fears, using the reptile theory to raise a sense of fear and transform jurors into community protectors, charged with the responsibility of public safety.
Third-party funding. While relatively new in the United States, third-party funding has been around for decades in other parts of the world. The involvement of third-party funders in litigation can influence the perception of increased damages to the plaintiff, which leads to increased pressure on defendants.
Counteracting the Tactics
Defense attorneys can counteract tactics used by plaintiffs’ attorneys to help reduce the chances of receiving excessive damages from a jury. Strategies include:
Humanizing the corporate defendant. By humanizing the defendant, the defense can counteract the public distrust in companies and present a more relatable perspective in a more neutral tone that may resonate better with juries.
Normalizing the value of a dollar. Defense counsel can attempt to normalize the value of money and can help jurors make more reasonable assessments of damages to the plaintiffs and their awards.
Counter the reptile theory. Through motion practice and procedure, the defense can challenge the validity of fears raised through the reptile theory and counteract its potential influence on jurors.
Defensive anchoring of the jury. Providing a defensive anchor is not a new concept and has been used by plaintiffs, defendants, and even used car salesmen, for years. The defense can utilize anchoring through motions and other strategic approaches.
Implementing Defensive Anchoring
Defensive anchoring begins when the lawsuit is filed. From the outset, the defense should consider the evidence it has to support its desired damages outcome. During discovery, it is crucial to build evidence that counters the plaintiff’s position, such as expert witnesses, economists, and attorneys specializing in damages assessment. Focus groups can also be invaluable in assessing the effectiveness of damages evidence and ensuring whatever is put forth will resonate well with jurors.
Using defensive anchoring as a tool for litigation is an important tactic with juries because it allows the defense to present a persuasive case for damages, counteract potential bias, shape the narrative, and establish credibility. By actively addressing damages up front, the defense can ensure a fair and balanced consideration of the case and increase the likelihood of a more favorable outcome for the client.
The increasing medical, claim, and litigation costs, on top of rising social inflation, pose a significant threat to organizations when combined as a result of adverse outcomes.