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Getting Personal with Economic Damages

CVAs (Certified Valuation Analysts), also known as forensic financial analysts are uniquely qualified to offer their services in matters pertaining to economic damages resulting from personal injury, wrongful death and wrongful termination.

The basic economic damage model is a discounted cash flow projection that captures the following elements as applicable:

1. Loss of earning capacity from a job or occupation, reduced by any mitigating earnings

2. Loss of all fringe benefits attached to the job or occupational earnings

3. Loss of a value stream reflecting household services performed, reduced by any mitigating capacity to perform those services

4. Medical and rehabilitation expenses incurred plus any future expense estimates provided by a life care planner

5. The economic value (present value) of the loss elements as of a specific date

Not unlike the traditional business valuation process, economic damage engagements require financial experts to research and collect earnings and market data. However, the interesting difference is the greater availability and application of empirical and statistical data. At Trustee Capital, our damage calculations refer to mortality tables, worklife expectancy tables, occupational employment studies and statistics, personal consumption studies and tables, household services studies, and interest rate and inflation rate data.

As analysts with a strong data science background, we understand the application of the data and the selection the between two or more studies relating to a loss element (worklife expectancy—Skoog and Cieka tables or Kruger tables). We overcome complex challenges through the integration of reports and conclusions reached by a vocational rehabilitation expert, life-care planner or other experts. The greater abundance and use of empirical and statistical data make a personal economic damage calculation complex but we make it simple.

As determined by the retaining counsel at the outset of the engagement, we provide two distinctive report types:

i. A calculation report reflects an engagement whereby we calculate an estimate of economic loss based largely on the financial and personal data of the subject of the analysis and application of applicable statistical data within an economic model. A calculation report provides a basic estimate of loss, assumptions, methodology and reference sources.

ii. A detailed report contains all of the elements of a calculation report, but reflects additional considerations such as personal interviews with employers, family, friends, any vocational rehabilitation expert or life planner or physicians of record. The additional data and considerations accomplish two things: first, it allows the analyst to personalize the analysis and breathe life into the numbers and damage estimate. Second, it allows the opportunity to make any subjective and necessary adjustments to the calculation not reflected in the statistical data and tables.

For example: Moore vs City of Chattanooga Summary: The Tennessee Court of Appeals affirmed an award of lost income in this personal injury case. Based on the earnings history of the injured party's sole proprietorship (auto repair business) the court determined the business lost $20,000 in past earnings and would lose $20,000 in future earnings over a two-year period ending when the business would be sold.

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