Quantifying Economic Damages

During a legal battle, damages are the key item on everyone’s mind. When you have been wronged by another party, you want them to pay for it. In civil matters, this means literally paying for it. The legal system is responsible for restoring order, ensuring that justice is served, and awarding damages to the wronged party. This quick guide will discuss economic damage quantification.


Litigation support and quantification of economic losses always start with causation. The damage calculation must always start with a theory that successfully links the actions of the defendant to an immediate economic loss of the plaintiff.

A court will award damages in order to establish a balance of justice between the plaintiff and the defendant. These damages are often based on a pre-tax basis. A plaintiff will usually owe taxes on the award.

When performing these calculations, it is important to remember that damages cannot be awarded based on external factors. Damages must only be based on the direct actions of the defendant that affected the plaintiff.

Recognized Methods

There are several recognized methods for calculating damages. It is important that your legal team approach the court with only information derived from one of these methods.

Yardstick method – This method determines damages in business disputes based on how guideline companies performed. Industry trends are a very objective source of information that can be used to determine if the defendant’s actions affected probable economic growth.

Before and after method – This method will use the plaintiff’s economic performance before the defendant’s actions and compare that with the economic performance after the suspected wrongdoing took place. If there is a significant difference that cannot be attributed to other factors, damages can then be calculated.

Sales projection method – This method uses trends that could be predictors of how the plaintiff would have performed economically if the wrongdoing had not taken place. If the prediction is significantly different from the actual performance, then it could be determined that the defendant’s wrongdoing created this outcome.

Prepare for Challenges

Economic damage quantifications when it comes to business disputes can be tricky as there are often no concrete numbers to compare to. There can be a lot of room for speculation, and the opposing legal team will take advantage of this. However, working with a knowledgeable attorney is your best option to ensure you have a chance at recovering the damages you feel you are owed.