Using an experienced Forensic Accountant to address earnings, profits and related losses can be invaluable in terms of achieving a good outcome for your claimant client in Personal Injury and Clinical Negligence claims.
Such a quantum expert can be vital with certain Employed Claimant situations – typically involving catastrophic injury, forced career change or death. In particular requiring research, career modelling and the calculation of a range of earnings losses or the calculation, or presentation, of more complex Employment Benefits (e.g. Complex bonuses, Pensions, Share options and other ‘Work Related Perks’).
Such specialist accountancy input with injury (and fatality) claims involving Businesses can likewise be crucial. Loss claims for a ‘Business Claimant’ are typically very different to those for an ‘Employed Claimant’. The business may be complex, at an important stage of development or have suffered significant change (in terms of cost structure, operation or customers and services).
Business records are not maintained for the purposes of demonstrating or quantifying damages – but rather for regulatory or commercial purposes. Annual accounts (and not all businesses have to produce them) may tell part of a story or indeed nothing – so often interrogation, analysis and interpretation of sales and costs data (pre vs. post injury) is required.
So, with PI claims involving Claimants ‘in business’ there can be important reasons why the involvement of a Forensic Accountant is beneficial - to assist with the extraction of relevant financial data, analysis and presentation of that data, interpretation of that financial evidence (within the context of wider evidence e.g. witnesses of fact, medical evidence etc.) and using appropriate financial and business expertise.
Often the accountant will need to analyse the raw financial data (looking for patterns, trends and changes), put it into context with other factual evidence and then quantify the lost profits/earnings (and ranges thereof) and finally present the outcome of that process in ‘user friendly’ (yet professional) format.
So with Personal Injury and Clinical Negligence claims involving Claimants in business there can be important reasons why the involvement of a Forensic Accountant is required, for :
- Extracting relevant data
- Offering Expert Evidence on financial and business issues
- Plus – doing those (horrid) tax & loss calculations
Against this backdrop, I have written a short ‘Five Top Tips’ guide for the effective use of Forensic Accountancy input on Personal Injury and Clinical Negligence claims.
My first tip is to - Manage the Claimant and their expectations - Tip 1
This is particularly important with claims involving businesses as the quantification of lost earnings in such cases is often a costly process, the stakes can be high and there is now great focus on the cost of litigation.
Positively manage the claimant, ensuring they deliver what is required on a timely basis and that their assertions are realistic and their expectations ‘grounded’ will help ensure you achieve ultimately a good result for your client and a profitable costs outcome for yourself.
- Its important for the claimant to contribute information and explanations relating to their business and the claim on a timely basis – otherwise you risk ‘racking up’ costs that will not be recoverable;
- Vague explanations and vain assertions about the business should be actively managed;
- The Loss of Chance can be a major headache. You are trapped between the need to explore the issue (in case it passes the balance of probability test) but ‘down the line’ discover it’s a lost chance. It’s important to assess these situations early and ‘tackle them head on’;
- Who should pay the price for poor record keeping or the exploration of unrealistic expectations? Tackle these issues with the Claimant;
- Going forward it seems the reality will become that Claimants may need to contribute towards the cost of achieving the optimum outcome for their claim. Whilst this may not be fair its surprising how many clients in business understand such a cost vs. benefit process.
Tip 2: Consider using accountant as an Expert Adviser, rather than an Expert Witness
Got a quantum accountancy query? Ask Richard a question!
Join us for the next Torte Club Event!