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Download Power Point VS – Economic Damages Presentation By – Steve Hastings

Attaining Reasonable Certainty in Economic Damages Calculation – Webinar Excerpt


The American Institute of Certified Public Accountants (AICPA) has issued a Practice Aid discussing significant issues that should be addressed in order to attain reasonable certainty when opining on economic damages.

This paper highlights information in the AICPA Practice Aid, 2015, Forensic & Valuation Practice Aid, Attaining Reasonable Certainty in Economic Damages. 

The Issue:

There is a borderline between permissible speculations to that of intolerable guesswork.  A damages calculation need not prove that all elements are certain.  The question is: do “uncertain” profits differ from “certain” profits? 

What to Focus On: 

Note that uncertain profits or speculative value is a characterization of the evidence and not a classification of profits or value.  It is becoming ever more important that the damages expert focuses on:

  • Rules for attaining reasonable certainty
  • Factors for attaining reasonable certainty
  • Guidelines for what is reasonable certainty
  • Economic Damages Calculation

Causation Considerations

A damages expert must demonstrate that, subsequent to the wrongful act, the plaintiff experienced some economic harm, such as a reduction in its sales, profits or value.  But just as important, the damages expert should consider the impact of qualitative factors, such as:

  • Generally prevailing economic conditions
  • Product quality issues unrelated to the defendant’s alleged conduct
  • Technology changes such as the loss of intellectual property
  • Market changes such as the development or acquisition of IP by a competitor
  • Reputational harm for any reason other than the conduct of the defendant
  • Loss of key personnel
  • Environmental issues such as hurricanes, earthquakes, freezes, and the like
  • Economic Damages Calculation