Four factors when connecting causation with liability in lost profit cases

James O’Brien and Robert Gray (Parente Beard) list four important factors when connecting causation and the burden of proof with the liability of the damages:

  • Credible lost profits include economic damages that are natural, proximate, probable, or a direct consequence of an act, excluding remote consequences
  • Courts generally rule that Plaintiffs must establish lost profits damages to a reasonable degree of certainty
  • Calculations can’t be speculative, vague or contingent or some unknown, unreasonable, or unforeseeable factor
  • Financial models and analyses should be supportable by relevant facts, data, and reasonable assumptions.

“It’s easy for us to get into Excel and build a model but how does that model relate to the liability issues and the data that supports that calculation,” asks O’Brien.

O’Brien and Gray also presented a checklist of elements requiring analyses in calculating net lost profit damages, which BVLaw Alert readers can get here.