In a personal injury case non-economic damages, such as pain and suffering, will often receive the majority of the attention by both plaintiff and defense counsel. However, an experienced and competent economic damages expert can greatly increase the value of the plaintiff’s claim. This is by calculating and defining the various economic losses a plaintiff suffered as a result of an injury.
How so? A common theory held by jury trial consultants in personal injury cases is that juries often do not know how to place a dollar amount on a plaintiff’s pain and suffering. Without a finite dollar amount for a plaintiff’s pain and suffering, jurors might take the amount of economic losses and multiply that figure by an arbitrary number. If a plaintiff has suffered only a small economic loss, then it is likely the jury will find a similarly small amount for pain and suffering. Likewise, if the economic loss is not properly assessed and quantified, it becomes more difficult to support arguments for other kinds of damages.
Economic experts will typically offer opinion testimony regarding the amount of money the plaintiff did not, or will not, receive due to the injury that he or she has suffered. The claimed money lost by the plaintiff often includes lost wages, loss in earning capacity, lost business profits, and payments made to others for services incurred as a result of the injury. Notably, an economic expert will typically not offer opinions regarding medical bills or expenses since those damages are usually stipulated in the medical billing records.
So, how can an economic damages expert witness help your case?
1. Determine What Economic Losses are Recoverable
In a personal injury case, a plaintiff is entitled to recover any and all monetary losses caused by the injury. In smaller injury cases, economic damages are easier to calculate and may be relatively straightforward. If a plaintiff is injured in a car wreck, and the plaintiff subsequently misses two days of work, an economic expert may not even be needed. In that circumstance, plaintiff’s attorney may ask the plaintiff’s employer to verify the amount of work missed and of wages lost as a result. In larger cases where the plaintiff has suffered more severe injuries, however, the determination of what economic losses the plaintiff incurred are not so simple.
For example, in determining a plaintiff’s lost wages or business profits, an economic damages expert will often request and analyze at least five years of the plaintiff’s past income tax returns. By examining these past tax records, the expert can determine whether the plaintiff suffered a reduction in his or her income following the injury. This analysis can be fairly straightforward for employees with set salaries. However, when a plaintiff is self-employed with a varying income, the expert must dig deeper into business records to determine how the plaintiff’s injury caused the business to lose income.
Determining which economic losses are recoverable becomes even more complex when the plaintiff dies as a result of the injury in question. In most wrongful death cases, the decedent’s estate can pursue the decedent’s economic losses. These will ultimately be awarded to the decedent’s heirs or creditors. If the decedent has left behind a spouse or dependent children, those dependents will also bring claims for their own economic losses. These losses can include any financial support the decedent would have provided the dependents during his remaining lifetime. The economic expert will often be asked to prove the amount of money that the decedent was actually providing to his dependents during his or her lifetime.
2. Consult in Discovery
In most injury cases, certain economic damages information is always requested in discovery: the plaintiff’s age, nature and extent of injuries, and the employment status of the plaintiff at the time of the injury. However, in a case where economic damages may be significant, the attorneys will likely dedicate a large portion of discovery to these issues. Attorneys for both the plaintiff and defendant often turn to economic damages experts to identify what documents should be used to evaluate the plaintiff’s economic losses.
These experts will typically recommend the following documents be obtained and analyzed before the plaintiff’s deposition:
- Social Security Earnings Records (can be obtained from the Social Security Administration with an authorization);
- Income tax records (most want at least five years prior to injury); and
- Any documentation of plaintiff’s future pension or retirement benefits.
After these documents are exchanged the defense counsel will likely want to depose the plaintiff. An economic damages expert can also help with the deposition preparation phase on any economic loss issues. If, for example, plaintiff is alleging the injury caused him a long-term or permanent disability, the expert will need additional information, including:
- Has the plaintiff sought another job that, even with his injuries, he is able to perform?
- Has the plaintiff sought occupational therapy or job training for another job?
- How much money could the plaintiff now make at a new job that can accommodate his new disability?
If the plaintiff is a business owner, the economic damages expert will need even more documents to review prior to the plaintiff’s deposition. Such documents may include the business’:
- Balance sheets;
- Profit and loss statements;
- Income tax records; and
- Accounts receivable and payable.
In addition to obtaining these additional documents, defense counsel may also consider deposing the plaintiff’s employees or accountant to inquire further about any detailed business records.
3. Eliminate Calculation Issues
Any calculations used to determine plaintiff’s economic damages must be accurate. Courts will not simply accept a plaintiff’s own assertion that the injury caused him to lose X amount of dollars. The economic loss expert will help plaintiff get their claimed damages into evidence by relying on accurate foundational data and information.
Issues can arise when an expert relies on inadequate, inaccurate, or inapplicable information to determine the plaintiff’s damages. For example, in determining a plaintiff’s economic damages the majority of experts will assume the plaintiff has a normal life expectancy. The life expectancy is usually determined by looking at the plaintiff’s age and gender on the Center for Disease Control and Prevention’s Life Tables. If, however, the plaintiff had a life-shortening illness medical issue that pre-dated the injury which gave rise to the lawsuit, then defense counsel will likely challenge plaintiff’s expert on his calculations. Knowing when, how, and why to challenge an opponent’s expert’s damage calculations is a key asset for both plaintiff and defense counsel. It is a major reason to retain an economic damages expert early on in the case.
4. Determine Reductions and Deductions
Even if defense counsel agrees that plaintiff’s injury will cause him to lose $50,000 per year for the next twenty years, it is very unlikely that defense counsel will agree to pay a lump sum settlement of $1,000,000. This is because experts projecting future economic losses typically agree to reduce those losses to the present value. The assumption is that any money paid today for future losses will be invested by the plaintiff in order to make a profit. So, in the example above, the expert would calculate the amount of money that would have to be given to the plaintiff today so that, if conservatively invested, the plaintiff would be able to spend $50,000 each year for the next twenty years.
Consumption deductions are similar to reductions, but only apply in wrongful death cases. The heirs or dependents in a wrongful death case will typically seek recovery for all of the decedent’s economic losses as their own. But the heirs in a wrongful death case are only allowed to recover the economic losses they would have actually received from the decent throughout his lifetime. If defense counsel can show that the decedent would have spent certain sums of money on personal items as opposed to spending that money on the heirs, then those personal expenses would be deducted as consumption expenditures. These consumption expenses often include items such as a personal car, clothing, and workday meals that do not provide support for the rest of the family.
Economic damages experts can play a vital role in personal injury cases. Attorneys for both the plaintiff and defendant should consult with and rely on the expert’s experience and knowledge throughout the case. Refer to the four points above when you have a personal injury case where the plaintiff is claiming economic losses.