"I’ve got a $1,000,000 lawsuit."
No – you have a lawsuit with a $1,000,000 ad damnum. There is a huge difference between the two.
Tennessee law requires an ad damnum in all cases except medical malpractice cases. An ad damnum must be stated in the initial complaint only in products liability cases; different judges impose different deadlines on when a specific ad damnum must be stated in other types of cases.
Whenever an ad damnum is stated, there is a risk that the client will assume the stated amount is value of the case. It might be, but it almost always isn’t, and in fact in Tennessee is should be higher than the amount that you reasonably expect the case to be worth because (a) you cannot collect a judgment in excess of the ad damnum and (b) I don’t know of a lawyer who is talented enough to predict with 100% certainty 100% of the time who will win the case much less the exact amount of money that will be awarded. Since there is a penalty for understanding the amount, the natural tendency to state a higher amount.
The problem with that is that you risk that defendant mentioning the amount and calling your client, you, or both greedy pigs. Judges should grant motions in limine prohibiting the ad damnum from coming into evidence, especially if they require one be stated early in the case, before the plaintiff has finished treatment and discovery is complete.
The above demonstrates that stating the ad damnum is fraught with danger.
Our ad damnums read something like this: "a fair and reasonable amount to be determined by the jury in an amount not to exceed $SSS." That helps us before the jury when the defense lawyer who wants to use the figure against us and gives us flexibility.
But what about the client who seizes on the number – any number – and refuses to let it go? We have a discussion with the client about the issues raised above (and of course about setting the actual amount), and then we follow-up the discussion with a letter. Brandon Bass in our firm has developed a form letter for this purpose and I am happy to share it with you:
I am writing in follow up to our phone conversation on _______, 2009, in which we discussed the amount of money to ask for if your case goes to trial and the amount to communicate to our opponents at this time.
Under Tennessee law, you must state, in your Complaint filed with the court, a specific maximum dollar amount that you want the jury to award you. Importantly, under Tennessee law, you may not recover any more money than the amount you ask for in your Complaint. Put another way, if a jury decides you should receive more than you asked for in your Complaint, the judge will not let you receive any more than you asked for. For example, if you ask for $100.00 in your Complaint, and the jury decides you should receive $150.00, the most the judge will allow you to recover is $100.00. The extra $50.00 is simply not recoverable.
Because you cannot recover more than you ask for, we typically lean on the side of stating an amount that is greater than the amount that we would expect any jury to award under even the best of circumstances. On the other hand, the jury may be offended if you ask for an unreasonably high amount of money, and that could negatively affect your case.
It is ultimately up to you to decide how much to ask for in your case. The amount we suggest you ask for is a judgment call based on our experience dealing with similar cases. There is no mathematical formula for deciding the amount of money to seek. The amount we suggest you include in your complaint is not the value of the case we would expect a jury to award; in fact, if we are successful the amount awarded by the jury at trial will almost certainly be less than we set out in the complaint. Depending on the way the case progresses, we may decide to ask the jury for less than the amount listed in the complaint. Finally, if we engage in any settlement discussions with the defendants, the amount we would recommend you ask for in settlement would be less than the amount listed in the complaint.
Based on our telephone call, you have chosen to ask for $XXXX, the amount we suggested to you. We will prepare the necessary paperwork and file an Amended Complaint for you that specifies that amount. We are doing so now because we are approaching the court-ordered deadline for filing amended complaints. Because of the court-ordered deadline, you should assume this is the last time we will be able to change the amount we seek from the jury. (It is possible the court could excuse us from the deadline at a later point, but the safe course of action is to assume you will not be able to change the amount later.)
Thank you. We look forward to continuing work on your case.
The goal here is to confirm the understanding reached with the client during the telephone call. I know of nothing that requires such a letter, but this type of communication can avoid a potential problem. At an abosolute minimum, in the event that there is a failure of recollection it permits you to reach in your file and have written confirmation of what you said.