RESOURCE ARTICLES BY CATEGORY
Lost Profit Damage Claims
When Loss Is Personal
Damage Claims for Employment Loss, Injury and
One minus one does not always equal zero when calculating personal economic
damages, especially when engagements involve highly compensated individuals
or self-employed business owners.
"Our role is to help determine the dollar amount that will allow
the affected individual or their family to continue receiving the income
and/or benefits they would have received but for the loss," says
Heather Bays, director of Gleason & Associates,
who specializes in personal damage claims analyses. "While there
are some basic components to these analyses, the situations often are
not straightforward and sometimes result in damage calculations that are
less than clients expect."
When damage claims result from loss of employment, Gleason investigates:
- Actual earnings and benefits
- Expected earnings and benefits
- Work life expectancy
According to Bays, determining actual and expected
earnings can be challenging, especially when the claimant is a well-paid
executive with stock options and incentive plans as well as a salary.
When a high level Fortune 100 executive was dismissed from his job and
sued for age discrimination, Gleason was asked to determine the reasonable
value of his complex compensation package. We also evaluated his future
earnings in his current position as the chief executive of an entrepreneurial
business. Although the jury agreed with the discrimination claim, no damages
were awarded since the executive's future income was potentially
as rewarding as his past compensation.
When the claimant is a self-employed business owner with tax returns that
may not reflect actual income, determining earnings to support a damage
claim can be a contentious process. In these cases, we analyze the tax
returns, comparing the reported profitability to the amounts the plaintiffs
claim they would have earned but for their loss," explains Bays.
"A successful claim in these cases requires credible testimony from
the business owner and customers. Typically, though, plaintiffs are made
to live with their tax returns."
Personal Injury and Wrongful Death
The burden of proof in injury loss and wrongful death claims is similar
to claims resulting from the loss of employment, although work life expectancy
is often a prominent factor. While plaintiffs typically claim an intention
to work until age 65 or 70, statistics show that the average person retires
"When clients claim expected earnings into the late 60s and 70s,
a case must be made for why their situation is atypical," says Bays.
In addition, damage claims for personal injury or wrongful death must
take into account the potential purchase of household and personal services
that were not required when the claimants were healthy enough to do chores
for themselves. This, too, can be a mine field.
"If a husband dies, the wife might need to pay someone to mow the
lawn, but she wouldn't be necessarily entitled to the value of a
handyman unless her husband also maintained the house on his own. And
then, the value of his potential handyman services would be limited to
the historical amount of the services he actually provided," Bays
The issue of personal consumption also factors into wrongful death claims.
When a financial contributor to the family unit dies, the family loses
the person's income, but it also loses the individual's expenses
and spending habits. This must be considered in an economic loss evaluation.
"Most people consume the majority of their income," notes Bays,
"so at the end of the day, the actual economic loss itself can be
Excerpted from Briefly
Speaking, a complimentary newsletter published
by Gleason & Associates.
Why Gleason | Practice
Areas | Meet Our Team | Case
Studies | Continuing Education | Resources
| Site Map | Contact Us
© 2013 Gleason & Associates
One Gateway Center, Suite 525, 420 Ft. Duquesne Blvd., Pittsburgh, PA
15222, Phone: 412.391.9010,