Many professionals involved in civil litigation are likely acquainted with the concept of the “anchoring effect.” In the realm of damages, presenting an initial number can sway the way negotiations or judgments unfold. However, most may not realize the profound impact that this effect can actually have on a case. According to a recent article by Holland & Hart, this can be particularly relevant when it comes to noneconomic damages.
Non-economic damages, such as those awarded for pain and suffering or emotional distress, can often be difficult to quantify. Unlike economic damages, which can be calculated based on concrete parameters like lost wages or medical bills, noneconomic damages are more nebulous and subjective. This is where the power of the initial ‘anchor’ figure comes into play. The initially suggested figure for noneconomic damages can create a psychological point of reference, skewing all subsequent views and considerations towards it.
Counselors must hence approach number ‘anchoring’ with caution and strategy. If it’s used correctly, it can shape the perception of the value of a case significantly. However, if an initial number is perceived as unreasonable, it could backfire as counter-arguments push back the discussion from this anchor figure. More than just a simple negotiation tactic, anchoring can therefore fundamentally shape the outcome of a damage assessment. It can be a crucial factor to consider when preparing litigation strategies.
Overall, understanding the psychology of anchoring is vital for the modern legal professional. Grounding the noneconomic damages ‘anchor’ right, even though that might not evenly translate across cases or jurisdictions, could potentially play a pivotal role in legal practice moving forward.