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.