A Review of the Basics for Lost Profits (Part II) In this second part of our series reviewing the basics for lost profits, we will contrast the differences between valuing a lost business and calculating an ongoing business’s lost profits. Because many experts calculating lost profits also provide business valuations, both in and out of litigation, it is good to be reminded of the similarities and differences between these two approaches when assessing commercial damages. In this article, we review five key categories that separate the approaches for calculating lost profits from valuing a lost business. It also is a…
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Guidelines for Resolving Disputes in First Party Property Insurance Claims (Part I of III) Appraisal is a frequently used and often maligned method to adjudicate disputes in the property insurance world. Typically, appraisal is used for the purposes of evaluation only and will not bring finality to a claim in which coverage, or, in certain jurisdictions, causation is also being disputed. Although the perceived advantages of appraisal versus litigation are that it is considered fast, inexpensive, and relatively final, the appraisal process is often criticized because of unpredictable awards that are not helpful in settling a disputed claim and, in…
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A Review of the Basics for Lost Profits (Part I) Those who have worked in the forensic field for many years begin to take for granted how we approach and handle certain situations. We have a level of knowledge and experience that lets us move forward without much research. But, with this level of experience and understanding comes a level of forgetfulness. Not that we forget how to perform the analysis, but we forget why we need to perform an analysis a certain way. I believe it is good from time to time to stop and ask, “Why do we…
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September 2022 This article summarizes Agnelli v. Lennox Miami Corp., 2022 U.S. Dist. LEXIS 125346, 2022 WL 2788875 (S.D.Fl. July 14, 2022). This state of Florida case shows that nepotism does not always work out so well. The case involves misappropriation of corporate money, fair value valuations, the use of discounts for lack of control and marketability, and statutory interpretation. As Garry Marshall famously said, “When in doubt, you bring in relatives. Nepotism is a part of my work.” Agnelli v. Lennox Miami Corp., 2022 U.S. Dist. LEXIS 125346, 2022 WL 2788875 (S.D.Fl. July 14, 2022) shows that nepotism does…
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Targeting Construction and Real Estate Industries It has become commonplace in the real estate and construction industry to make electronic, digital, and wired payments, especially with the very large sums that are often transferred. With paper checks disappearing, cybercriminals are now targeting these industries—victimizing both payors and payees—and causing significant financial tension and reputational harm. As evidenced by a recent FBI bulletin specifically warning the construction industry, fraudsters have become increasingly sophisticated, hacking into e-mail servers, posing as escrow agents or company employees, intercepting wire transfers before the payee or payor even realize it. The author discusses the schemes that…
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From week to week, we need to work on making our practices better and more effective. It can be hard. It takes a commitment of time and effort, energy, and thought. But what IS easy is making small improvements from week to week that, over the course of say, a month, make a dramatic difference in the efficiency or effectiveness of our practice processes and procedures—by identifying and getting rid of drag and waste. So here are 18 ideas that can help. Got any engineering-type friends? If you do, you know they are all about substance over form. Performance over…
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Behavioral Underpinnings of Greed In this article, the authors discuss the unprecedented growth of cryptocurrency and the accompanying risks and fraud. They ask, Why does a person choose the characteristics of cryptocurrency to be not only a secure medium of exchange, but also one with upward price potential? The recent price drop in the spring of 2022 shows the magnitude of loss of value Bitcoin has suffered in a very short period. Is there an element of gambling that seeps into the mindset of the crypto investor? Or could it be that the primary allure is the relative anonymity of…
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Calculating Lost Revenue Lost profit damages are calculated when a plaintiff’s business alleges that the defendant’s actions impaired its operations in some manner. Determining lost revenues is a critical component in calculating lost profits. Lost profits are based primarily on lost revenues net of the cost associated with generating the lost revenues (saved and/or extra operating expenses can be additional components to lost profits). This article will discuss some of the most common methods used to calculate lost revenues and the importance of facts and data supporting such calculations. Introduction Lost profit damages are calculated when a plaintiff’s business alleges…
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and Credentialing Organizations The author in this article discusses cases where members of credentialing organizations sue the organization for injunctive relief and monetary damages. He discusses the role of the arbitrator and causes that appear to prompt members to pursue redress through the court once sanctioned. Introduction As I mentioned in my first article for QuickRead, my experience as an Arbitrator includes presiding over three disputes between aggrieved members, as well as an aggrieved, expelled member of more than one credentialing organization, fortunately not including NACVA. These disgruntled and disciplined members sued for both injunctive and monetary relief. In the…
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Valuation Implications Over the past couple of months, the Centers for Medicare & Medicaid Services (CMS) released the proposed rules for several of its payment schedules, indicating the state of healthcare reimbursement for the next year. This article briefly summarizes these proposed payment rules and discusses their significance to healthcare valuation professionals. The U.S. government is the largest payor of medical costs, through Medicare and Medicaid, and consequently has a strong influence on physician reimbursement. The prevalence of these public payors in the healthcare marketplace often results in their acting as a price setter, and being used as a benchmark…