“How does a judge determine the amount of money to award in a personal injury lawsuit?”
A Court awards “fair and reasonable” compensation for the injuries sustained. This does not really seem like an answer, but the question is too vague to give a better answer. The best I can really do is to briefly explain the process that a court uses to determine monetary damages.
Although a judge can make awards for personal injuries, most cases are decided by juries. In New York, six people decide the amount of the award and only five have to actually agree on a number. The jury listens to testimony, reviews photographs, looks at medical records, and listens to doctors testify about the injuries. After attorneys present all of the evidence, the trial judge reads a set of jury instructions. Jurors go to private room where they talk amongst themselves to discus the evidence and the jury instructions.
The judge instructs the jury to use their common sense to award “fair and just” compensation. There is no magic formula, no schedule of injuries to guide a jury explaining what to award based on the body part or severity of injuries.
Judges have the power to over rule juries to lower outrageous verdicts (called remittitur) or to raise unconscionably low verdicts (called additur). Appeals courts can also raise or lower verdicts based on prior cases of similar injuries.
This is far from inexact science. That is why many times parties end up settling cases at a figure both sides can live with.