Economic Damages Forensic Analysis — Methodologies

Your choice criteria for an economic damages expert witness should leave you no doubt that the work product will be clear, concise and defensible, and that the expert's ability to endure a challenge by opposing counsel will not result in a collapse or compromising responses. Even when difficult and repeated attempts to discredit the expert's conclusions or methodology occur — you should be certain that the expert has the testimony experience, confidence and strength necessary to defend the conclusion reached.

The expert can suggest several different ways to prove facts or make points, such as using the following three common methods to compute lost profits:

1. Before-and-after approach. The expert uses the periods before or after the period of the alleged violation or both periods to estimate what the plaintiff's performance would have been during the period of the alleged violation.
2. Yardstick approach. The expert studies a similar company, industry, or market that was unaffected by the alleged violation in order to estimate what the plaintiff's performance should have been during the period of the alleged violation.
3. Sales projections (hypothetical profits). The expert creates a model of the impacted business by making assumptions based on how the plaintiff would have performed but for the alleged violation.

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