When to Use in Litigation Assignments In a recent engagement, the author was asked to prepare a lost business analysis for an operating business. In this article, the author discusses when a lost profits vis-à-vis a lost business analysis is best suited. Recently, I received a call from a new client. That is, I spoke with an attorney with whom I had worked in the past. He wanted to hire me to assess damages in a commercial damages case. The business had been injured by an alleged wrongful act. It was still operating and did not appear to be closing…
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A Review of the Basics for Lost Profits (Part V) This is the fifth article in a series reviewing the basics for lost profits. When calculating lost profits, some assignments will show results with future lost profits. The future lost profits must be discounted to a present value. This article will review issues relating to discounting future lost profits to their present value. The topics discussed will be (1) from what date to discount losses, (2) ex ante and ex post approaches, (3) modeling or not modeling projections of future losses, and (4) the appropriate discount rate. This is the…
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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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Revisiting the Energy Capital Corp. v United States Case Causation It is important for the research and literature in our field to advance. Books, articles, and presentations help us improve and perfect the work we provide to the courts. It is also important that we review the history of our field to remind us “why we do things the way we do.” When reviewing the Energy Capital Corp. v United States case, financial experts will find several discussions regarding calculating lost profits that continue to provide a guide for other court opinions. This article will review three of those discussions:…
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Ex ante, Ex post, and Hybrid Methodologies January 2019 will be the twentieth anniversary of one of the seminal articles written on discounting lost profits, Peter Schulman’s Economic Damages: Discounting Concepts and Alternatives. This article addresses the concepts and complexities of discounting lost profits that were discussed in the Schulman article and advances and additional methodology for discounting lost profits.
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Principles, Methods, and Applications Everett P. Harry, III and Jeffrey H. Kinrich assembled 45 authors, chosen for their expertise in lost profits damages, and contributed and co-edited this comprehensive lost profits damages “how to” book. The authors pay tribute to Robert L. Dunn, among others, for his vision in identifying the need for this book. The book marks an attempt by the authors to provide a single-source reference for practitioners who are tasked with selecting an appropriate methodology for determining lost profits, carrying out the analysis, and potentially defending their work during proceedings. In this book review, we provide an…