Commercial Damage Modeling

Commercial damage modeling is calculating the claim for lost profits, which is the loss only to the property (i.e., his interest in a business or other revenue-producing asset).

“Simply stated, gross profits are the appropriate measure of recovery when a business is temporarily impaired and required to incur all normal fixed expenses during the period of impairment. On the other hand, if the business is permanently impaired, and some or all fixed costs associated therewith are thereby avoided, the appropriate measure of recovery is the net profit the business would have made, but for the complained-of act.” 21

“An entity suffers lost profits damages (lost profits or damages) when one of the following occurs due to the complained acts of the defendant: (a) revenues are lower than they would have been, (b) costs are higher than they would have been, or (c) some combination of the two. CPAS as damages experts do not determine whether the defendant(s) actually committed the acts in question; those factual disputes are determined by the trier of fact (judge, jury, or arbitrator). However, CPAs may and do provide opinions on causation, which is the relationship of the complained about acts to the damages, if it falls in their area of expertise. In cases where there are possible lost profits damages, CPAs are retained to estimate the extent of any profits lost as a result of the complained about acts. It is possible to have liability findings without any related damages.” 22



21Ladouceur, Raymond. Summary of the Louisiana Law on Lost Profits as a Measure of DamagesNovember 1993 LCPA Litigation Support Services Workshop
22 PPC’s Guide to Litigation Support Services Volume 1. 21st Edition. July 2016. 400.1 pg 4-1

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