Owners of businesses, especially when the business is dependent upon the owner’s involvement, often stand to lose a lot when an injury forces them to stop working. A sole proprietor may lose more than just a salary; the business may lose clients or may be forced to close, depriving the entrepreneur of potential long-term growth. In a personal injury lawsuit the value of lost business can become an important component of the plaintiff’s damages claim.
The value of lost business is a category of economic damages. Economic damages are available to plaintiffs in every type of personal injury lawsuit. One reason this is true is that economic damages can be calculated with a certain degree of accuracy, ensuring that the defendant is not unfairly made responsible for financial consequences that are beyond the scope of the injury he or she caused.
A key problem for plaintiffs who wish to recover compensation for lost business is that the damages must be proven with sufficient reliability to be used by the court in assessing the plaintiff’s final damages award. Estimating lost future earnings can be especially tricky. There are a number of considerations that might go into this analysis, including:
- The business’s history. The business’s earnings history is of central importance in determining how much revenue was potentially lost as a consequence of the plaintiff’s injury. A longer track record makes historical data more useful. Newer businesses may need to rely on third-party projections to calculate lost earnings.
- Contingent profits. Although the plaintiff would like to argue that the business was going to grow exponentially and be wildly successful, fairness dictates that the damages award factor in a reasonable probability that the business would not always maximize its profits. This can be especially important for cases where the plaintiff seeks compensation for long-term lost profits.
- Other sources of recovery. If the business also carried insurance against the possibility of the plaintiff’s injury the amount the insurance paid will probably reduce the amount the defendant is liable for.
In some cases establishing a firm measure of a business’s lost profits can require the assistance of an expert witness. Forensic accountants assist litigators with matters such as these, using well-established standards to develop theories of lost earnings that will stand up in court. Whether a given plaintiff needs the help of an expert witness will depend on the specific facts in the case.
For more than 45 years the law firm of Greenman Goldberg Raby Martinez has helped injured clients recover compensation. If you have suffered a personal injury that has involved business losses and would like to explore your legal options, call us today for a free attorney consultation at 702-388-4476 or reach us through our contact page.