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Revisiting Modeling and Discounting Future Damages

The Case for Use of a Risk-Adjusted Rate in Damages Cases Robert Dunn and Everett Harry laid out a process for modeling and discounting future lost profits to present value in their article, Modeling and Discounting Future Damages. Not all experts agreed with the position presented by Dunn and Harry. In March, we revisited modeling and its level of acceptance. This article revisits the more controversial po ...

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Foreseeability Standard in Lost Profits Litigation

The Objective and Subjective Tests Used to Determine Foreseeability To recover lost profits in a commercial damages case, three standards must be met. They are proximate cause, foreseeability, and reasonable certainty. Of these three, foreseeability is the lost profits standard in which a financial expert will have the least involvement. But this does not mean the expert’s work would not benefit the trier-o ...

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Persuasion

Effective Opening Statements in Mediation What is an effective opening statement? How does one prepare such a statement? In this article, Nancy Neal Yeend, an experienced mediator, shares the steps and processes that lead to an effective opening statement and how that statement can lead to resolution of disputes. ...

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Demystifying Damages in Uncertain Cases

The Role of the Forensic Accountant There are a number of instances where damage estimates are uncertain and where a customer is lost. What should one do in these instances? Losses sometimes require reasonable estimates, as well as a reasonable forecasting of the market—both for the generation of revenues and for mitigation. In the case where there is greater perceived loss than a single contract, a forecas ...

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Revisiting Modeling

For Calculating Future Lost Profits Robert Dunn and Everett Harry published their oft cited Modeling and Discounting Future Damages in 2002. The article laid out the process for assessing future lost profits and discounting them to present value. They argued modeling future losses reduced the uncertainty related to the loss calculation and therefore reduced the risk premium to be included in the discount ra ...

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Defending the Devil

An Expert Witness Tells All Martin H. Abo, CPA, ABV, CVA, CFF shares the story of a fraud engagement, where he was retained to analyze the business practices of FirstPlus Financial. Mr. Abo shares his experience getting the engagement and testifying in the racketeering case. ...

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A Case for Mediation

What do You Have to Lose? Since only a fraction of the cases filed go to trial, it seems prudent to explore settlement sooner rather than later. It is not rocket science, and statistics support the claim that the earlier a case settles the lower the expense to achieve that settlement. If this is not enough to encourage someone to consider mediation sooner rather than later, then perhaps recent court statist ...

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Mitigation of Damages

Professional Obligations for the Expert Witness Computing Damages What can a court reasonably expect of value experts? What are value experts able to contribute to the proceedings? What about mitigation of damages, i.e., how should value experts address mitigation and do so when the retaining counsel is disinterested in discussing mitigation of damages? In this article, Dr. Kreuter, a Marks Paneth, LLP part ...

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Lost Profits and Other Commercial Damages

A Case Study (Part II of II) This is the second of a two-part article. In the first part, Dr. Needham provided factual background regarding this commercial damages case where he served as plaintiff’s damages expert—the case ultimately went to trial. In this second part, Dr. Needham describes the financial data, discovery challenges, the Daubert motion to disqualify him, how the case was decided, and then se ...

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Lost Profits and Other Commercial Damages

A Case Study (Part I of II) Most commercial damages assignments call for the calculation of lost profits or lost business value. However, some cases, particularly those relating to lost profits, contain elements of additional economic damages. These situations require the expert to focus on multiple areas of loss while insuring each element does not contain losses claimed by another. In this two-part articl ...

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Damages Remedies

A Closer Look at Unjust Enrichment Financial experts typically calculate damages remedies that focus on a plaintiff's loss that is quantified either through lost profits or lost business value. In contrast, unjust enrichment is a damages remedy that measures the defendant's benefit or gain. While the three remedies all serve to quantify damages, an expert must understand the similarities and differences amo ...

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Abolition of Mediation Joint Session

Can it Hurt the Expert? Mediation is a dispute resolution process. So, what is a process? A process is a procedure, a course of action, or a methodology. Mediation has been around for several thousand years, and the joint session has always been a pivotal part of that process. Historically, the mediation process included beginning with a joint session. Mediation is after all a facilitated negotiation. When ...

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How Much Information Do You Share With Your Spouse?

In re Marriage of Schneeweis, 2016 IL. App. 2d No. 140147 Marital law varies from jurisdiction to jurisdiction. In this article, Daniel R. Stefani discusses a recent Illinois Appellate Court case where the issue before the court was whether husband dissipated assets. The term dissipation is defined and the question raised is how much information do you share with your spouse and how that can impact an equit ...

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Impact of Inadequate Discovery

in a Divorce Proceeding Not all is fair in love and war when it comes to the fight for business records within a matrimonial action. When one spouse is denied adequate discovery, his or her case can quickly begin to unravel. Usually, some records are available either because the spouse had some previous access or there was a partial document production. Business appraisers should consider all appropriate me ...

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Analyzing Lost Earning Capacity for the Self-Employed

Income of Partners and Owners of Pass-through Entities (Part I of II) This is a two-part article where the author discusses the methodology for assessing the lost earning capacity of a self-employed person. This, basically, is the same as that for a traditional wage and salary worker. Even though the methodology is the same, assessing the data for the self-employed is different. The loss calculations are no ...

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The Court Has Spoken

You’re In or You’re Out (Part VII of VII) Will your testimony be admissible? Inadmissible? This series was written to help newly minted (and experienced) experts be mindful of Daubert, or a state’s own variation of Daubert or Frye throughout the litigation process. The key points made include: remember to only accept cases that you are qualified for, ensure you have a sound methodology in which to form your ...

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The Income Tax Treatment of Economic Damages Awards

Part 1: The Income Tax Treatment of Personal Economic Damages Awards Financial experts are frequently asked about the tax impact of damage awards, both paid and received. The complexities of the Internal Revenue Code (“IRC”) and judicial interpretations thereof make determining the taxability of receipts or payments difficult. The same is true when dealing with the taxability of economic damages awarded to ...

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