Valuating Economic Damages in a Legal Case
One of Lawyer Monthly’s 2019 Expert Witness Awards winners speaks to us this month about economic damages.
Jennifer Vanderhart has been recognised for her work in damage analysis and speaks to us about how this impacts legal cases she works on.
Can you briefly share the process you undergo to valuate economic damages in a legal case?
The process will vary greatly depending on the case, but I typically start by reading the complaint and making sure that I understand the allegations and the remedies that are available for the allegations. For instance, unjust enrichment (disgorgement) is available as a trade secret remedy but not as a remedy for patent infringement. I then make sure that I understand the economic and market factors that impact the damages analysis, as well as issues specific to the parties-in-suit. This might require independent research as well as a review of documents and depositions given by the fact witnesses and other experts in the case. Financial documents and information are important, but information from fact witnesses testifying on matters that impact the underlying economics of the industry or the company is equally valuable.
Every case is unique, and it may be that there are specific economic factors affecting the industry, the market, or the company
What factors often contribute towards loss?
In many instances, the purpose of the damages analysis is to put the plaintiff in the position they would otherwise have been in “but-for” the actions of the defendant. This is inherently hypothetical, and there are economic factors must be analyzed in order to support assumptions about the future hypothetical world. Some of these factors are specifically required by the courts – for instance, a lost profit analysis in a patent infringement matter requires that the plaintiff show that it would have had the necessary additional manufacturing and marketing capacity. However, every case is unique, and it may be that there are specific economic factors affecting the industry, the market, or the company that should be accounted for in the damages analysis.
I do not think that the difficulty in an analysis comes from the claim, but rather from the information that is available for the analysis.
Are there any industries that you focus on?
The financial and economic tools that I use to calculate damages are broadly applicable and the cases that I have worked on are diverse. I have had clients from many industries including entertainment, telecommunications, toys, wine and spirits, education, computer hardware and software, medical devices, mining, tobacco, and financial services. Even when I have had many cases in a single industry, every case has its own twist, and while many of the tools and methods are fundamental, the data and specific approach will be unique in each matter.
One of the most important factors in an analysis is the ability to present the analysis in a clear and concise matter.
You evaluate claims arising from patents and intellectual property, all the way to contractual disputes; can you share which are the most difficult in your opinion?
I do not think that the difficulty in an analysis comes from the claim, but rather from the information that is available for the analysis. As an expert, I am required to make assumptions, and those assumptions will differ depending on the matter at hand and the information available. I am often asked to contribute very early in the dispute process by providing input for document requests, interrogatories and deposition questions. When that happens, I will usually have more support for my assumptions and analysis. If the budget allows, I have often found it helpful to attend the deposition of the opposing expert to help with follow-up questions that an attorney, who is typically not a financial expert, might not think of.
Is there a particular factor that can help strengthen your impact?
One of the most important factors in an analysis is the ability to present the analysis in a clear and concise matter. This is true whether the trier-of-fact is a panel, a jury, the court, or another decision maker. I have taught economics at the university level, and very early in my career learned to clearly communicate and teach complex economic concepts. One of the compliments I treasure most is when a client said to me, after hearing my testimony in court, that if she had had an economics professor like me, that she might have understood and even liked economics.
Jennifer Vanderhart, PhD.
912 F Street, NW
Washington, DC 20004
Jennifer Vanderhart is a PhD Economist who specializes in applied econometrics and microeconomic analysis, including theoretical and empirical analysis in the areas of intellectual property, antitrust, breach of contract, international arbitration proceedings, and commercial damages. Her clients include companies in a wide range of industries and retail sectors including education, computer hardware and software, toys, medical devices, entertainment, mining, tobacco and financial services.
Analytics Research Group is an independent economic, statistics, and data analytics consulting firm comprised of PhD economists serving clients facing complex issues arising in legal disputes, regulatory proceedings, and valuation analysis throughout the US and abroad. ARG experts offer expert testimony in court and regulatory proceedings and assist in strategic planning, pricing analysis, settlement negotiations, and damages analysis.