When navigating the court system, a small business owner encounters certain risk factors inherent in litigation.
For example, the low burden of proof in a civil jury trial often makes it easier to prove negligence.
But in many cases, the existence of a cause of action, such as negligence, may not be a real issue. For example, it would be unlikely that any question would exist as to whether a driver was negligent if he crashed his car into the rear of a car at a stoplight. The only real issue, in many cases, is the amount of monetary damages that should be awarded to the plaintiff.
In theory, compensatory damages, in a tort action such as negligence, are supposed to merely make the plaintiff whole. This is not usually what happens in practice. People who are severely injured will never be made whole and, thus, are under-compensated. People who exaggerate or simply fake their injuries, and rely on "experts" to bolster their claims, are frequently over-compensated.
The calculation of monetary damages in a tort case lends itself to malfeasance. Usually, the largest components in a damage award will be subjective and not verifiable in any substantial way. The award consists of reimbursement for past medical bills and past lost wages; an estimate of future medical bills and lost wages; and an estimate of past, present and future pain suffering.
Only past medical bills and past lost wages are objective and verifiable. Of course, exaggerating or faking injuries can produce even these items. Future medical bills and future lost wages necessarily are the product of estimates, and thus more subjective. "Experts," who are hired by the plaintiff, can easily exaggerate these estimates.
The last element in the formula, namely "pain and suffering," is the most subjective of all and, in many cases, is the largest component in the award of damages. The jury, of course, is the ultimate group that will decide on the amount of the award. Unfortunately, expert testimony, along with emotional appeals to the jurors, are likely to be the most successful in terms of the pain and suffering component of the award (see our case study on jury trial judgments).