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Approaches for Calculating Lost Earnings in a Personal Injury Case

Lost earnings can be among the most important components of the compensation a plaintiff can pursue in a personal injury case. Besides providing the plaintiff with the means to pay for the costs associated with medical care and recovery, a defendant should also be held responsible for the injury’s effect on the plaintiff’s ability to work, in both the short and long term. Although calculating lost earnings sounds like a fairly simple idea, in practice it involves a number of complex considerations that in some cases can require the advice and analysis of an expert. Personal injury cases seek a specific amount of compensation, which must be calculated in a way that is reasonable, fair, and based on provable facts. When a plaintiff sues for lost earnings, several factors must be taken into account:
  • The plaintiff’s earnings history. The simplest source of information about the plaintiff’s lost earnings is, of course, the plaintiff’s earning history in the period before the injury. For a plaintiff with a steady, full-time job, using earning history may be an appropriate way to arrive at a complete picture. Less clear are cases where the plaintiff’s income history is uneven or inconsistent. For example, a plaintiff who writes novels for a living may only earn a paycheck every two years, and the paychecks may have varied significantly from year-to-year.
  • The prognosis of the injury. In many cases the key component of lost earnings is an estimate of the injury’s long-term consequences for the plaintiff’s career. The defendant’s liability will be limited by the extent to which the plaintiff is expected to recover and resume work.
  • The plaintiff’s expected career arc. The longer an injury is expected to affect a plaintiff’s ability to work, the more complex the estimate of lost wages becomes. This analysis may involve several components, including the plaintiff’s age relative to expected retirement and the average career arc of others in similar jobs. Note that a plaintiff may not be able to recover for unusual, contingent career plans. For example, though a novelist might reasonably seek recovery based on the performance of previous works, it probably is inappropriate to argue that a future work would be a best seller.
  • Other forms of compensation. A plaintiff’s ability to recover compensation from a defendant may be reduced by other forms of compensation that are available to the plaintiff, including disability insurance.
Proving lost wages often requires the expert testimony of an accountant. Accountants who specialize in estimating lost earnings use established methods to analyze factors like those in the above list. Expert testimony helps the plaintiff arrive at a reliable estimate of lost earnings and gives the defendant a reliable means of reaching a fair settlement. The law firm of Greenman Goldberg Raby Martinez represents clients in the Las Vegas area in personal injury cases. We work closely with each client to pursue the full scope of compensation for the consequences of their injuries. For a free attorney consultation about your case, call us at 702-388-4476 or through our contacts page.