9780470400142

Measuring Business Interruption Losses and Other Commercial Damages

by
  • ISBN13:

    9780470400142

  • ISBN10:

    0470400145

  • Edition: 2nd
  • Format: Hardcover
  • Copyright: 2009-09-08
  • Publisher: Wiley
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Summary

An updated explanation of the methodology for how lost profits should be measuredNow fully revised and updated, focused on commercial litigation and the many common types of cases, this is the only book in the field to explain the complicated process of measuring business interruption damages. The book features an easy to understand and apply, step-by-step process for how losses should be measured so as to be accurate and reliable and consistent with the relevant laws.With a new chapter on the economics of punitive damages, the new edition also explains detailed methods for measuring damages in contract litigation, intellectual property lawsuits, antitrust, and securities cases. This new Second Edition incorporates the latest developments in the fields of economics and accounting, while also integrating the most current changes in case law.Here's what you will find Each chapter includes new materials and updated content Added websites for sources of data Includes a website for updated tables that can be utilized by readers A section of the new cases involving Daubert challenges to economists Includes methods on how to do industry research A new section covering the equity risk premium and the various recent research studies, which set forth the debate on what the premium should beContaining exhibits, tables, and graphs, new cases involving Dauber, how to do industry research, equity risk premium, research studies on the marketability discount, anti-trust, punitive damages, and more, Measuring Business Interruption Losses and Other Commercial Damages, Second Edition incorporates the relevant literature and research that has come out in this field over the past four years.

Author Biography

Patrick A. Gaughan has published eight books, including the award-winning Mergers Acquisitions and Corporate Restructurings, Fourth Edition, published by Wiley. He is President of Economatrix Research Associates, Inc., a firm that has conducted damages analysis for the past twenty years for corporate clients such as Airbus, GE, GM, Ford, Philip Morris, and Wyeth as well as insurance companies including Liberty Mutual, Zurich, State Farm, and many of the major law firms in the United States.

Table of Contents

Preface
Introduction.
Development Of The Field Of Litigation Economics
Lost Profits Business Interruption Analysis Compared To Personal Injury And Employment Litigation
Qualifications Of An Economic Expert
Qualifications Of An Accounting Expert On Damages
Interdisciplinary Nature Of Commercial Damages Analysis
Difference Between Disciplines Of Economics And Finance
Finding A Damages Expert
Critically Reviewing A Potential Expert's Curriculum Vitae
Getting The Damages Expert On Board Early Enough
Court's Position On Experts On Economic Damages
Standards For Admissibility Of Expert Testimony
Expert Reports
Defense Expert As A Testifying Expert, Not Just A Consultant
Quantitative Research Evidence On The Benefits Of Calling A Defense Expert
Treatment Of The Relevant Case Law
Legal Damage Principles
Other Types Of Damages Cases
Summary
References
Economic Framework For The Lost Profits Estimation Process.
Foundation For Damages Testimony
Role Of Assumptions In Damages Analysis
Hearsay
Approaches To Proving Damages
Causality And Damages
Using Demonstrative Evidence To Help The Client Understand Its Losses Or Lack Of Losses
Causality And Loss Of Customers
Graphical Sales Analysis And Causality
Causality And The Special Case Of Damages Resulting From Adverse Publicity
Length Of Loss Period: Business Interruption Case
Length Of Loss Period: Plaintiff Goes Out Of Business
Length Of Loss Period: Breach Of Contract
Methodological Framework
Summary
References
Economic Analysis In Business Interruption Loss Analysis.
Macroeconomic Analysis
Definition Of A Recession
Measuring Economic Growth And Performance
Business Cycles And Economic Damages
Using More Narrowly Defined Economic Aggregates
Overstatement Of Inflation Statistics
Regional Economic Trends
International Economic Analysis
Macroeconomic And Regional Economic Analysis And The Before And After Method
Summary
References
Industry Analysis.
Sources Of Industry Data
New North American Industry Classification System
Retaining An Industry Expert
Conducting An Industry Analysis
Relating Industry Growth To The Plaintiff's Growth
Other Industry Factors
Yardstick Approach And Industry Analysis
Summary
References
Projecting Lost Revenues.
Projections Versus Forecasts: Economic Versus Accounting Terminology
Using Graphical Analysis As An Aid In The Forecasting Process
Methods Of Projecting Lost Revenues
Curve-Fitting Methods And Econometric Models
Understanding Regression Output And Diagnostics
Common Problems Affecting Regression Models
Case Study: How The Chow Test Can Be Misapplied
Confidence In Forecasted Values
Frequency Of The Use Of Econometrics Techniques In Commercial Litigation
Seasonality And The Forecasting Process
Capacity Constraints And Forecasts
Sensibility Check For The Forecasted Values
Projecting Lost Sales For A New Business
Projecting Losses For An Unestablished Business
Case Study: Lightning Lube, IncVWitco
Summary
Appendix
References
Cost Analysis And Profitability.
Presentation Of Costs On The Company's Financial Statements
Measures Of Costs
Profit Margins And Profitability
Appropriate Measure Of Profitability For A Lost Profits Analysis
Case Study: Cost Analysis In Business Interruption
Burden Of Proof For Demonstrating Costs
Fixed Versus Variable Costs
Using Regression Analysis To Estimate Costs As Opposed To More Basic Methods
Pitfalls Of Using Regression Analysis To Measure Incremental Costs
Possible Nonlinear Nature Of Total Costs
Limitations Of Using Unadjusted Accounting Data For Measuring Incremental Costs
Treatment Of Overhead Costs
Must A Plaintiff Be A Profitable Business To Recover Damages?
Mitigation Of Damages
Cash Flows Versus Net Income: Effects On The Discounting Process
Recasted Profits
Case Study: Profits That Are Not Really Profits
Firm-Specific Financial Analysis
Cross-Sectional Versus Time Series Analysis
Summary
References
Time Value Of Money Considerations.
Determination Of Interest Rates
Types Of Interest Rates
Financial Markets: Money Market Versus Capital Market
Money Market Securities And Interest Rates
Capital Market
Real Versus Nominal Interest Rates
Determinants Of Interest Rates
Rejudgment Losses
Components Of The Cost Of Capital
Discounting Projected Future Profits
Common Errors Made In Discounting By Damages ˘Experts÷
Summary
References
Business Valuations.
Legal Standard For Business Valuations In Business Interruption And Business Failure Lawsuits
Lost Profits Versus Lost Business Value
Business Valuation Framework
Theoretical Value Of A Business
Public Versus Private Companies
Business Valuation Parameters
Revenue Ruling 59-60 And Factors To Consider In Valuation
Valuation Concepts
Most Commonly Used Valuation Methods
Case Study: Applying The Discounted Cash Flow Method Of Business Valuation
Capitalization Of Earnings
Comparable Multiples
Case Study: Use Of Multiples To Determine Enterprise Value
Adjustments And Discounts
Summary
References
Intellectual Property.
Patents
Computation Of Damages For Patent Infringement
Legal Requirements Necessary To Prove Lost Profits
Lost Profits Due To Price Erosion
Lost Profits Due To Changing Cost Conditions
Royalty Arrangements
Copyrights
Measurement Of Damages For Copyright Infringement
Trademarks
Trade Secrets
Summary
References
Securities-Related Damages.
Key Securities Laws
Damages In Securities Litigation
Fraud-On-The-Market
Comparable Index Approach
Event Study Approach
Broker Raiding Cases
Mergers-Related Damages
History Of Mergers In The United States
Client-Broker Claims
Churning
Case Study: In Re Computer Associates, International, Inc
Cases Setting Holding Periods
References
Antitrust.
Antitrust Laws
Antitrust Enforcement
Economics Of Monopoly
Changing Pattern Of Antitrust Enforcement
Antitrust And The New Economy
Monopolization And Attempts At Monopolization
Market Power
Measures Of Market Concentration
Common Types Of Antitrust Cases
Summary
References
The Economics Of Punitive Damages.
Evolving Position Of The U.SSupreme Court On Punitive Damages
Frequency Of Punitive Damages
Frequency Of Punitive Damages And The Shadow Effect Of Punitive Damages
Purposes Of Punitive Damages
Punishment Of Corporations And Corporate Governance
Spillover Effects And Punishment Of Corporations
Deterrence Theory And The Changing Litigation Environment
Deterrence And Regulatory Processes
Typical Financial Measures Used In The Determination Of Punitive Damages
Net Worth
Market Capitalization
The Uncertain Litigation Environment
Summary
References
Index
Table of Contents provided by Publisher. All Rights Reserved.

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