Commercial Damages: Overview and Cross Examination – Bullet Proof or Bullet Holes?
The headlines are filled with the BP catastrophic oil spill in the Gulf of Mexico. BP has even agreed to a damage fund of $20 billion, but what about the other companies involved in the Deep Water Horizon drilling rig, Transocean, Halliburton and others? And what about the businesses that are damaged but their claim is turned down?
Commercial damages is like a three legged stool: the plaintiff has to prove liability, damages and collectability. If one leg is not there, the stool falls over. The reality of a plaintiff’s situation centers on the task of proving to a reasonable certainty all three legs of the stool within the confines of the rules of evidence. This can be very difficult. Damage calculations are generally fitted to one of several methods:
A. Before and after methodology (often by comparing the injured party’s activities before the wrongful event with its performance after the event).
B. Yardstick methodology (typically using other firms or the plaintiff’s other locations as a benchmark to estimate what would have happened to the plaintiff but-for the wrongful event).
C. Sales projection methodology (building a financial model of what would have happened to the affected business based on various model inputs).
D. Market model methodology (often by linking plaintiff’s losses to its market share of the overall industry sales it experienced before the event).
Many factors go into an expert’s consideration for the reasonable measurement of damages. Such factors are defined by the facts and circumstance of the alleged event as defined by the Plaintiff’s complaint. Some of the considerations by the expert might include:
- Determination of change in revenues perhaps based on historical trends
- Incremental costs avoided by the loss in revenues
- Reasonable profits expected but not realized
- Economic outlook affecting calculation
- Industry outlook affecting calculation
- Actual performance realized during the period damaged thus providing a mitigation to the profits claimed lost
- The length of time horizon of the period damaged
- Adjustments for risk and cost of capital (discount rates)
- Fixed and variable costs of production
- The impact of competition
- Capacity constraints on the business
- Available technology and its effect on damage
- Regulatory and environmental issues
The measurement of damages from a defendant’s infringement on intellectual property falls into three main categories:
1. Lost profits to the plaintiff
2. Reasonable royalties imposed on the defendant
3. Disgorgement of the defendant’s profits realized
The event would present three examples of claims for cross examination and discussion:
1. A statistical trend line
2. A contractual infringement and
3. A trade secret royalty
The Knowledge Group has assembled a team of experts to help unravel the complexities and understand reasonable measurements in commercial damages and how they will impact your firm. Click the “Register” button below to sign up today. Advanced registration is recommended as space is limited. Significant discounts apply for early registration.
- 45% of admissibility challenges on financial experts have been successful
- Ways that financial experts measure lost profits damages
- Implicit assumptions, strengths, and weaknesses of damage approaches
- How lawyers attack or defend damage measurements
- Case studies of commercial damages
Who Should Attend:
Corporate and litigation attorneys
Neil is the National Partner in Charge of Grant Thornton LLP’s valuation services group. He has over 25 years of experience analyzing both closely- and publicly-held companies. Neil has appeared as an expert witness across the country and in international tribunals, is an instructor for the AICPA’s business valuation courses, and speaks nationally on business valuation with a special emphasis on early stage and high technology companies. Neil has published two books and written many articles on early-stage company valuations as well. He has served on the AICPA’s National Accreditation Commission and the Financial Accounting Standards Board Valuation Resource Group. Neil has a Bachelor of Arts Degree in Economics from Stanford University and a Masters of Business Administration in Finance from National University. In addition to his formal education, Neil is a Certified Public Accountant, Accredited in Business Valuation, Certified in Financial Forensics, a Chartered Financial Analyst and an Accredited Senior Appraiser in business valuation from the American Society of Appraisers.
Neil is the National Partner in Charge of Grant Thornton LLP’s valuation services group. He has over 25 years of …
Michael A. Crain (The Financial Valuation Group) of Fort Lauderdale, Florida has been a licensed CPA for over 25 years. He holds several certifications in valuation: Accredited in Business Valuation (ABV) by the American Institute of CPAs, Accredited Senior Appraiser (ASA) in business valuation by the American Society of Appraisers and the designation of Chartered Financial Analyst (CFA) from the CFA Institute. He also holds the designation of Certified Fraud Examiner (CFE) by the Association of Certified Fraud Examiners. Mike is a past chairman of the AICPA business valuation committee and has been inducted into the AICPA Business Valuation Hall of Fame. He is a recipient of AICPA's Lawler Award presented by Journal of Accountancy for best article of the year. Mike is currently working part time on doctorate research in finance at the Manchester Business School in England at the University of Manchester.
Mike now works largely in the areas of business/economic damage measurement, valuation of businesses and financial assets, and forensic accounting. He has served as a consulting and testifying expert in many commercial cases working for both plaintiffs and defendants in state and Federal courts. He has also served as an arbitrator in commercial damages and minority shareholder cases and as a court-appointed accountant. Moreover, Mike has previously worked in the auditing and consulting areas in public accounting firms including an international firm where he was a senior manager.
Michael A. Crain (The Financial Valuation Group) of Fort Lauderdale, Florida has been a licensed CPA for over 25 years. …
Bill Dolan concentrates his practice on the resolution of complex commercial disputes. With more than 25 years of experience in courts throughout the U.S, his career has placed a special emphasis on antitrust and intellectual property lawsuits. He represented a defendant in a price-fixing conspiracy case that resulted in a unanimous verdict for his client, and The National Law Journal selected that case as one of the major defense victories of 1996. Bill is a frequent author and speaker on the subject of antitrust law and has addressed a variety of groups on complex litigation matters, antitrust developments, mergers and acquisitions, and cost-effective litigation techniques. He publishes an annual update on developments in antitrust law and has lectured at the Illinois Institute for Continuing Legal Education, the Practising Law Institute, and the Price Waterhouse General Counsel Forum. He is a native of Dublin, Ireland.
Bill Dolan concentrates his practice on the resolution of complex commercial disputes. With more than 25 years of experience in …
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