Category: Economic Damages
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Management’s Projections in Disputes
Financial projections prepared by management often play a central role in valuation and damages analyses. However, their use in litigation and dispute contexts presents a fundamental tension: while management typically possesses the deepest operational insight into a business, its forecasts may also reflect optimism, bias, or litigation-driven incentives. As a result, professional standards, judicial precedent,…
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The overlap between Lost Profits and Diminution in Value
Economic damages disputes often turn on how loss is defined, measured, and framed. One of the most challenging issues arises when different damage theories appear to quantify the same economic harm from different perspectives. The analysis of lost profits and diminution in value sits at the center of this challenge, requiring careful attention to economic…
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The Basics of Intellectual Property Damages
Intellectual property litigation continues to expand in both scope and complexity. Damages experts play a crucial role in quantifying the financial impact of alleged infringement. The job of your expert is to translate the technical claims into economic realities, both past and future. Types of Intellectual Property Litigation Damages experts are most often retained…
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Forensic Accountants in Class Actions
In class action litigation, forensic accountants serve as indispensable advisors who bridge the gap between abstract legal claims and the concrete financial evidence required to support or challenge them. Their work is at once investigative, analytical, and strategic—often influencing not only the calculation of damages but also the structure and viability of the class itself.…
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Common Pitfalls in Discount Rate Selection
In calculating lost profits and economic damages, selecting an appropriate discount rate is crucial. The discount rate affects how much future value is translated to current value. However, forensic accountants and valuation professionals sometimes fall into common traps that compromise the credibility and accuracy of their analyses. Here’s a deeper exploration of these critical mistakes:…
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Alternative Explanations in Lost Profits
In commercial litigation involving lost profits, the evidentiary burden to establish damages rests with the plaintiff. While expert witnesses are not required to prove causation—and are generally permitted to assume liability as a given—the credibility and strength of an expert’s opinion is greatly enhanced by a thorough and thoughtful consideration of causation and its alternatives.…
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The Basics of Deductible Costs
Please do not accept assertions by opposing counsel and/or their expert witness that 100% of costs are an appropriate deduction from lost profits or disgorgement calculations. Nor should you blindly accept assertions that none of the costs are deductible. While there are circumstances in which deduction of 0% or 100% of costs is appropriate, they…
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The Basics of a Monte Carlo Analysis
The Monte Carlo analysis is a useful statistical technique used to forecast potential outcomes from models that simulate complex systems.. It relies on random sampling and probability to generate a range of possible outcomes. Monte Carlo analyses are used to provide valuable insights for decision-making, risk management, and optimization by simulating a wide range of…
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The Basics of Fixed Fee Engagements
Fixed fee engagements are beneficial for both the client and the expert witness. The client knows in advance what the final deliverable will be and how much it will cost. For the expert witness, it is easier to bill and collect when compared to billing hourly rates, preparing a detailed bill, then wait for review…
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Common Pitfalls in Lost Profits
Accurately assessing lost profits is crucial for determining adequate compensation in legal disputes. However, this task is fraught with potential pitfalls, and mistakes can undermine the credibility of a claim, affect settlement efforts, and influence court decisions. To ensure precision and reliability, it is essential to be aware of and avoid common pitfalls in the…