Your browser is currently set to block JavaScript.

For full functionality of this site it is necessary to enable JavaScript. Here are the instructions how to enable JavaScript in your web browser.

After enabling javascript, please refresh the page to go back to experts.com site with full functionality

Would you turn off/on JavaScript?

It's a widely used language that makes the web what it is today, allowing for websites to be more responsive, dynamic, and interactive. Disabling JavaScript takes websites back to a time when they were simple documents without any other features.

What are the advantages of using JavaScript?

Speed. Since JavaScript is an 'interpreted' language, it reduces the time required by other programming languages like Java for compilation. JavaScript is also a client-side script, speeding up the execution of the program as it saves the time required to connect to the server.

banner ad
Experts Logo

articles

Lost Compensation Settlement Tool Allows You To Assess Economic Damages Accurately And Efficiently, Under Various Scenarios

Originally Published in Financial Complexity Made Clear, March 2013

By: David Nolte
Tel: (213) 787-4100
Email Mr. Nolte

Website: www.fulcrum.com

View Profile on Experts.com.


Lost compensation is a method of capturing economic damages in personal injury, medical malpractice, wrongful termination, failure to promote and other similar torts. Independent damages experts are often employed to calculate lost compensation because of their unique background/skill set. However, the desire to minimize costs means that these experts are often employed after settlement efforts failed. This presents a difficult situation for counsel who are negotiating settlement without the benefit of the expert's opinion regarding damages.

Conceptually, lost compensation is what Plaintiff should have earned had the alleged incident not occurred (aka "but-for" compensation) less actual compensation (aka "mitigation"), discounted to present value. Although the concept may be relatively simple to describe, the data underlying the calculations varies significantly, as does the final result. The data underlying the calculations is a combination of (i) data specific to an individual Plaintiff and (ii) application of appropriate and credible statistics, all of which must be distilled into a proper methodology for damage computation.

Ideally one would have the full benefit of the testifying expert's opinions prior to settlement negotiations. However, access to an interactive settlement tool can provide counsel with the information necessary to provide meaningful advice to the client about appropriate damage amounts. This knowledge can also assist with settlement discussions in general by demonstrating that amounts requested/offered are based on application of defined inputs, properly applied.

The semi-automated model created by Fulcrum Inquiry calculates lost compensation based on Plaintiff specific inputs regarding dates, demographics and earnings, combined with government statistics, economic studies, and market conditions. Economic factors considered in the calculation include those generally accepted in these matters, such as:

  1. Future earnings and earnings growth
  2. Value of employment benefits
  3. Expected work life
  4. Present value discounts for future investment earnings

If necessary, the model can also be customized to include fact patterns that are unique to a particular case.

The interactive feature allows you to immediately see how various inputs affect the economic damage conclusion and enables scenario building. This facilitates preparation and assessment of settlement offers. Some of the more common points of disagreement amongst opposing sides of a lost earnings case include the appropriate discount rate, future earnings and earnings growth rates, and future employment fringe benefits. All of these variables/inputs (among others) can be altered in the model and presented in various combinations.

To provide an example, the following two damage calculations and accompanying graphics demonstrate the varying conclusions of the model changing just one important element, the discount rate (see article here regarding discount rates), while keeping all other inputs (e.g., Plaintiff's demographic and earnings data, trial date, future employment benefits, etc.) static:

Summary of Economic Damages with Fulcrum's Selected Discount Rate

Economic Damages

Summary of Economic Damages with a 10% Discount Rate

Economic Damages

The specific analysis presented in the above calculations and the accompanying graphics will demonstrate the thoughtful analysis underlying your settlement demand/offer.

Fulcrum Inquiry assists lawyers with economic damages associated with injury and employment matters, through both direct employment of experts and with our interactive settlement tool.


David Nolte is a principal at Fulcrum Financial Inquiry LLP with over 30 years experience performing forensic accounting, auditing, business appraisals, and related financial consulting. He regularly serves as an expert witness.

©Copyright - All Rights Reserved

DO NOT REPRODUCE WITHOUT WRITTEN PERMISSION BY AUTHOR.

Related articles

Michael-Pakter-Forensic-Accounting-Expert-Photo.jpg

1/22/2021· Damages

Economic Damages Calculations: Ex-Ante and Ex-Post Considerations

By: Michael Pakter

The choice and use of an ex-ante or ex-post analysis can lead to divergent results in protracted litigation. The article provides an illustration of how and why the results may differ. Litigation consultants are advised to consider the above and await instruction from legal counsel regarding the approach that needs to be taken.

Donald-May-Business-Damages-Expert-Photo.jpg

4/19/2021· Damages

Economic Damages From ERISA Portfolio Mismanagement

By: Dr. Donald M. May

The fund managers were alleged to have violated their fiduciary duty to maintain proper diversification in the fund by allowing one particular security to make up more than 25% of fund value and up to over 40% of fund value by mid-2015.

Michael-Pakter-Forensic-Accounting-Expert-Photo.jpg

11/25/2020· Damages

Attaining Reasonable Certainty in Economic Damages: What Constitutes Best Evidence (Part III of III)

By: Michael Pakter

The purpose of this article - the third of three (Part I and Part II) on this topic - is to provide the reader with an understanding Chapter 3 (What Constitutes Best Evidence) of the 2018 Practice Aid as well as certain other publications containing a body of knowledge on the best evidence to support economic damages in a court of law

;
Experts.com-No broker Movie Ad

Follow us

linkedin logo youtube logo rss feed logo
;