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.
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.
Serious injuries often force people to take time off work to recover. As a consequence, seeking compensation for lost income can be an important part of a personal injury lawsuit. Lost earnings come up in the damages phase of litigation, after the defendant’s liability for the injury is already established. Like other forms of damages, proving lost earnings can be harder than one might first assume.
The simplest lost earnings scenario involves the individual who needs to take a certain, clearly defined amount of time off work and wants to be compensated for the wages that he or she didn’t earn during that time. This situation applies most clearly where the personal injury lawsuit is ongoing after the injured person has returned to work. Pay stubs from periods before and after the accident, tax forms from prior years (such as an IRS Form W-2 for people who work for an employer), or other forms of wage verification from an employer can be sufficient evidence to establish the amount of the lost wages. Someone who is self-employed can use tax records, checks from clients, or bank statements to establish the income that has been lost.
Proving lost earnings gets more complicated if the person who was injured is no longer able to earn as much as before the injury, or has lost the ability to work altogether. In these cases the question is not just how much the injured person lost in the past, but also how large the person’s potential earnings were at the time of the injury. There are numerous ways to calculate future lost earnings, and some cases (like workers’ compensation) have predetermined methods. The analysis might consider one or more of the following:
- The individual’s earnings history.
- The medical prognosis of the injury, including how much recovery is possible (reduced to a percentage which gets applied to the wage figures).
- The scope of employment options available to the individual in light of the injury and the individual’s skills.
- Estimates of earnings growth, including the potential for reasonably foreseeable promotions, cost-of-living adjustments, and other factors.
- Lost benefits, like employer 401(k) contributions, lost pensions, and insurance coverage, including estimates of how the value of those benefits may have increased over time.
Some plaintiffs will have an especially complicated questions of proof to overcome. Self-employed individuals who are early in their careers, people who have wildly fluctuating earning histories, and individuals for whom future earnings are highly contingent (such as artists and entrepreneurs) will need tailored strategies to ensure that they receive their just compensation.
An experienced personal injury law firm knows how to get the most for its clients. For over 45 years the law firm of Greenman Goldberg Raby Martinez has helped personal injury clients recover compensation for lost earnings and other damages related to injuries. If you would like to speak to an attorney about your case, please call us today for a free, confidential consultation at 702-388-4476 or ask us to reach out to you through our contact page.