Profile: Stan Smith:
Hedonic damages provide a model for more equal justice

It's no wonder Corporate Financial Group in Chicago gets calls from lawyers all over the country. Company President Stan Smith is the father of hedonic damages and has served as an economic expert witness in more than 100 trials.

Smith's method for measuring the value of life, developed from 30 years' worth of economic research, became the national standard after he introduced it in the Sherrod v. Berry wrongful-death case in the mid-1980s. The case was affirmed in the 7th U.S. Circuit Court of Appeals, where Smith's formula was termed "an invaluable guide to the jury." The case made front-page news in top law journals and has since been used successfully in more than half the states, Smith told The Frankenfeld Report.

"I'm tremendously gratified that there's a way to enlighten a jury in arriving at damages that were intractable. And juries report great relief at hearing about a way to think about these damages," he said.

Smith's model is based on the statistical costs of preserving life when we pay for safety. For example, he said, if a smoke detector costs $30, and if one life is saved for every 100,000 smoke detectors purchased, then it costs $3 million to reduce the death rate from fire by one human being. That figure gives juries a place to start.

Now taught in economics courses, the model is the subject of textbooks, including Economic/Hedonic Damages: A Practice Book for Plaintiff and Defense Attorneys, co-authored by Smith. See http://www.stansmith.com for his resume.

Yet because hedonic damages still are not universally accepted by the nation's courts, Smith advises lawyers to choose carefully when using this type of testimony. "As in any new field you want to pioneer new territory with an 'attractive case.'" That means having a sympathetic plaintiff.

Allowing reasoned, rational testimony about damages makes a fair result more likely by reducing the wide variability in awards and making them more predictable, Smith said. And that means lower litigation costs and more equal justice.

"For the right case I think attorneys should seek to push the legal envelope," he said.

Smith has a master's degree and a Ph.D. in economics from the University of Chicago and a bachelor's degree in operations research from Cornell University. He has two teen-age children.

Contact Stan Smith at:
Corporate Financial Group, Ltd.
1165 N. Clark St., Suite 650
Chicago, Ill. 60610
Phone: (312) 943-1551, fax: (312) 943-1016
E-mail: valuoflife@aol.com