Commercial Damages and Unjust Enrichment

Financial experts in commercial damages normally calculate damage remedies that focus on a plaintiff’s loss that is calculated either as lost profits or loss business value. While unjust enrichment is a damage remedy that focuses on the defendant’s benefit or gain.

Lost profits and lost business value remedies measure damages from the plaintiff’s perspective with the purpose of making the plaintiff whole. Lost profits is a measure of damages utilized when a business suffers a temporary decline as” a result of” or” but for” the alleged damaging act. Lost business value is a measure of damages that is utilized when a business suffers a permanent loss such as ceasing operations or permanent loss of a business segment.

The third remedy, unjust enrichment,   measures damages based on the defendant’s benefit not the plaintiff’s loss.  It is not a measurement of damages based on the plaintiff’s records and operating results but a measurement of damages based on the defendant’s  records and results of operations. This can have a significant effect on the discovery process.  When parties  distrust each other, meeting an opponent’s request for a production of documents in a litigation matter can be a significant issue in the outcome of the case.

As a damage remedy, unjust enrichment seeks to deprive the defendant  of the alleged ill-gotten benefit or gain. Unjust enrichment is generally used as a remedy for breach of fiduciary duty and intellectual property infringement. Unjust enrichment has historically been associated with claims on trade secrets, copyrights, or trademarks but its use as a damage remedy has grown  with the  increasing role  of intellectual property in the economy.

Another difference between lost profits and unjust enrichment is how the benefit is measured. While lost profits uses ex ante evidence at the time of the alleged tort or breach and the commercial damages expert will  rely on the plaintiff’s forecasts, projections, or budgets to estimate  what would have happened if not for the defendant’s actions, in unjust enrichment the expert  will use an ex post measurement of the actual benefit the defendant received based on evidenced through the trial date.

As the differences indicate, unjust enrichment is a remedy that yields damages based on the defendant’s benefit and seeks a measure of relief without unfairly treating the defendant but carries enough weight to act as a disincentive for future unfair actions by the defendant.



The Benefit of Using a Forensic Accountant in Divorce Cases

One of the primary objectives in a divorce is the division of marital property , which includes all
assets and liabilities accumulated during a marriage. An experienced divorce attorney can help with property division however, when it comes to complicated financial assets a forensic accountant can be invaluable in assisting an attorney with a complex financial situation.

A forensic accountant can help discover essential financial information that could affect spousal
support, child support,and the division of assets. A forensic accountant can help with the following:
1. Discovery of hidden assets
2. Determine personal expenses
3. Evaluate inconsistencies in documents and statements
4. Assess the long term financial impact of proposed divorce settlements

In heated divorce situations, it is important to ensure that all assets personal and business are fairly valued before any division and prior to any agreement being finalized. When a divorce case requires special attention, the work of a forensic accountant can make a significant financial difference.

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Business Valuation Seminar Fraud

Business owners and their attorneys need to beware of companies that offer business valuation and consulting services seminars. These seminars are usually a closed invite only event that will snare a few business owners who are anxious to sell their business. The key is to convince  a business owner that his or her business is worth  much more than it is and in the process to charge a large fee  for a  written report to support this fictitious number. [Read more…]

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Tennessee Supreme Court Adopts Modern Valuation Methods For Dissenting Shareholder Disputes

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Business Valuation and The New Tax Law

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Business Valuation and Forensic Accounting

The business valuation and forensic accounting disciplines often are required when valuing a  closely held business for divorce and shareholder disputes. Controlling shareholders may attempt to minimize income and cash flow  and understate assets in order to minimize the amount of cash required to pay minority shareholders or divorcing spouses. Valuation and Forensic experts  are able to uncover these type of financial misstatements and make adjustments to correct these intentional errors to avoid undervaluing the closely held business involved in the litigation. [Read more…]

The Yardstick Method To Measure Economic Damages

The Yardstick Method is a tried and true way to measure economic damages in contract, patent infringement, and other tort claims. In a nutshell, this method is based on comparisons with similar type business in the same industry.    In damages cases the financial experts are hired to assist the court in estimating what a plaintiff might have earned ” but for” the defendant’s alleged wrongdoing. In order to withstand financial scrutiny, experts must base their estimates on real world comparable evidence and not pure speculation. [Read more…]