Lost Profits and Damages Calculation: Everything You Need to Know in 2018
Lost profits damage is one of the most difficult types of damages to prove. The help of financial experts is typically employed to analyze and present complex financial quantifications. However, litigators should also understand how experts quantify lost profits. Understanding the framework, bases and facets of the calculation of lost profits damages can be critical in proving or defending a lost profit damages claim.
In a LIVE Webcast, a panel of thought leaders and damages specialists assembled by The Knowledge Group will discuss the framework, bases and facets of lost profit damages calculations. They will also offer strategies on how to prove or defend against lost profit damages claims.
Key topics include:
- Lost Profit Damages Framework
- Evidence and Documentation to Consider
- Quantification of Lost Profits Damages
- Presentation of Lost Profits Damages
- Defending Against Lost Profits Damages
- Unjust Enrichment and Other Damages
Carlyn Irwin, Senior Advisor
- Fundamentals of Causation: Has plaintiff proved the causal link?
- Correlation does not equal causation
- Plaintiff’s expert must understand and explain how alleged wrongful conduct caused economic harm
- Other Requirements:
- Reasonable Certainty
- Economic Loss Doctrine
- Proximate Cause
- Duty to Mitigate
Alexis Lavko, Director
- Calculating lost revenues
- Account for avoided costs and extraordinary costs
- Before and after method – account for changes in industry, economy, etc.
- Yardstick method – appropriate when there isn’t a long history of sales
- Regression analysis
- Determining the appropriate profit margin
- Incremental costs vs fixed costs
- Past vs future lost revenues & profits
- Panduit factors for determining if lost profits are the appropriate measure of damages
- Apportionment for the specific patented technology at issue
Justin N. McLean, Managing Principal
- Determination of the appropriate discount rate
- Evaluation of permanent or perpetual losses
Alex Brandon, Senior Manager
- Lost profits vs. disgorgement
- Types of disgorgement claims (e.g. unjust enrichment, design patent infringement, trademark infringement, copyright infringement, misappropriation of trade secrets, etc.)
- Disgorgement of defendants’ gains measured as:
- Head start – benefit to the defendant through use of plaintiff’s IP
- Increased profits – profit earned by the defendant through the use of the plaintiff’s IP.
- Cost savings – reduced costs from defendant not having to develop IP
- Reasonable royalty avoided
- Increased value
- Time horizon
- Incremental v. full absorption of expenses
Justin N. McLean, Managing Principal; M.S., industrial administration, Graduate School of Industrial Administration, Carnegie Mellon University; B.A., economics, Swarthmore College
Mr. McLean specializes in applying finance and economics to problems in complex business litigation, including securities, valuation, tax, and intellectual property matters. His experience spans several industries, from banking, insurance, and high technology to telecommunications and health care. He has served as an expert witness, and has provided assistance in many phases of litigation, including development, presentation, and review of pretrial discovery; preparation of testimony; and critique of analyses of opposing experts.
Mr. McLean’s case work has included general damages analyses, lost profit and reasonable royalty calculations related to intellectual property misappropriation, and assessments of fiduciary duties and investment management. In addition, he has evaluated the economic characteristics and risk transfer of a range of financial instruments, such as private mortgage insurance, subprime loans, and preferred equity in a new venture. He has led large case teams in a number of high-profile matters, including consulting to the U.S. Department of Justice regarding the financial issues involved in tribal trust fund disputes, and supporting counsel for a large electronics manufacturer in litigation associated with features on smartphones and tablets.
In addition, Mr. McLean has presented on topics related to damages assessment and patents. He has also worked with entrepreneurial companies, helping to develop financial projections, business plans, and marketing strategies.
Justin N. McLean, Managing Principal; M.S., industrial administration, Graduate School of Industrial Administration, Carnegie Mellon University; B.A., economics, Swarthmore College …
Alex Brandon is a senior manager in Sikich’s Forensic and Valuation Services practice. He has approximately 10 years of experience in providing valuation and dispute advisory services to the business and legal community. Alex has extensive experience assisting clients in all phases of litigation, including early case assessment, discovery, document review, damages analysis, and trial preparation. He has performed analyses related to lost profits, diminution of value, economic loss, reasonable royalty, and unjust enrichment. He also has experience in researching economic and industry data, building financial models, applying forensic accounting techniques, and writing expert reports.
Prior to joining Sikich, Alex worked as an experienced valuation manager in Grant Thornton’s corporate finance practice and as a manager in RSM’s litigation and investigative services practice, where he provided business valuation, forensic accounting and litigation support services to middle and upper middle market clients.
Alex Brandon is a senior manager in Sikich’s Forensic and Valuation Services practice. He has approximately 10 years of experience …
Alexis K. Lavko specializes in the assessment of commercial damages using financial and economic analysis in matters involving intellectual property, complex commercial disputes, and various business issues. Ms. Lavko has consulted on numerous engagements involving the valuation of intellectual property and the evaluation of economic damages related to patent and trademark infringement, false advertising, breach of contract, trade secret misappropriation and standard essential patent litigation with RAND royalty issues in a variety of disputes before U.S. courts and arbitration organizations and the U.S. International Trade Commission. Ms. Lavko has performed economic analyses in numerous industries, including pharmaceuticals, medical devices, consumer retail products, consumer electronics, industrial manufacturing, and telecommunications.
Ms. Lavko holds a B.S. degree in Industrial Labor Relations from Cornell University and an M.B.A. from the University of Chicago with specializations in accounting, corporate finance and strategic management.
Alexis K. Lavko specializes in the assessment of commercial damages using financial and economic analysis in matters involving intellectual property, …
Carlyn Irwin has more than twenty years of litigation consulting and expert witness experience, specializing in economic, financial, causation, and accounting issues. She focuses on damages claims, valuing businesses, and conducting financial forensic analysis in a variety of commercial disputes. Ms. Irwin has addressed matters that span a range of industries, including real estate, medical devices, technology, entertainment, consumer products, and financial and professional services. She has testified in U.S. district and state courts, as well as U.S. and international arbitrations.
Ms Irwin is certified in public accounting and financial forensics, accredited in business valuation, and is a certified fraud examiner. She has also conducted and analyzed consumer surveys. She holds a B.A. from the University of California, Santa Barbara and an M.B.A. from the University of Southern California.
Carlyn Irwin has more than twenty years of litigation consulting and expert witness experience, specializing in economic, financial, causation, and …
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Method Of Presentation:
On-demand Webcast; Group-Internet Based
NASBA Field of Study:
Accounting - Technical
NY Category of CLE Credit:
2.0 CLE; 2.0 NASBA-CPE
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