For a decade, discount rates were the quiet part of a damages report. In a higher-rate world, they have become the argument itself.
A discounted-cash-flow valuation compresses an entire future into a single present number, and the discount rate is the lever that does the compressing. When rates were low and stable, reasonable experts could disagree at the margin without moving quantum very far. That is no longer true.
Why the rate now dominates
As base rates rose and stayed volatile, the gap between a claimant’s and a respondent’s discount rate began to swing damages by amounts larger than the disputes that produced them. Tribunals have noticed. Increasingly they ask not for a number but for a defensible method, tested against contemporaneous market evidence.
The discount rate has moved from a technical footnote to the decisive battleground in quantum.
The better reports we see share three features: they separate the risk-free rate from the risk premium explicitly; they justify each component against observable data at the valuation date; and they present a range with attributed sensitivities rather than a single, brittle point estimate.
What it means for expert evidence
For testifying experts, the implication is practical. A model whose assumptions can be varied transparently in the hearing room lets the tribunal do its own weighing—and an expert who invites that scrutiny is far more persuasive than one who resists it. Robustness, not confidence, is what survives cross-examination.