DMA Economics Damages Expert Frequently Asked Questions
When do I need a damages expert for my case?
Whenever your case involves damages calculations that require expertise and a level of calculation that is relatively complex.
When should I hire a damages expert?
As early as possible because the expert can help with discovery and getting the appropriate information for his or her calculations
What is the difference between a testifying expert and consulting expert?
1. A consulting expert is one not designated as a testifier, he or she works behind the scenes as an advocate for the client.
2. A testifying expert is designated as a court or arbitration testifier and must be unbiased and NOT and advocate for the client.
Should my damages expert be an advocate for my case or objective?
1. Testifying experts should always be unbiased and objective.
2. Consulting experts can work with the client as a consultant and advocate.
How much will it cost, and can I pay on contingency?
Generally, damages experts charge by the hour with rates ranging from $400 to $1,500 per hour, unlike consulting experts, testifying experts must maintain objectivity thus cannot be paid based on contingency.
Consulting experts can be paid based on the outcome of the case (contingency) but in such cases they cannot testify as independent experts.
Should I consider causation expert in addition to a damage’s expert?
Yes, it is usually a good idea to have one expert devoted to causation and the damages expert should compute damages assuming causation.
Causation experts are generally are not damages calculation experts and damages calculation experts are generally not causation experts
How will my damages expert calculate damages in my matter?
It depends on what the damages relate to, but in general, the damages expert will calculate damages based on but-for scenarios that would have occurred but-for the opposing party’s actions or breach of contract
What factors should I consider when hiring a damages expert?
Should I hire an PhD economist or CPA for my damages calculations?
It depends on whether the case involves a valuation or accounting issue,
2. Dr. May, Managing Partner of DMA Economics is a rare example of an expert who is both a CPA and PhD economist.
for example if the case involves irregular accounting, one would want a CPA to determine what the acceptable GAAP accounting would be (causation) but then one would need an economics expert to calculate how the correct accounting would impact value and hence damages.
What are damages associated with portfolio mismanagement and how are they calculated?
Damages in such cases are calculated as the value of investors’ but-for portfolio less the actual value of the investor’s portfolio.
What are damages associated with breach of contract and how are they calculated?
Damages in such cases are calculated as the value of specific contract absent the breach less the actual value of the contract subsequent to the breach.
What are damages associated with securities fraud and how are they calculated?
These generally fall into a few categories
10b-5 damages relate to fraud on the market as a whole and typically require an event study to measure damages and causation (section 11 is similar for IPOs).
Accounting fraud damages can be calculated based on the value of the company absent to fraud relative to the value of company near the time of the fraud.
What are damages associated with product mislabeling and how are they calculated?
Generally, these types of damages involve disgorgement of profits associated with the mislabeled product
In some cases, the expert must use a technique known as hedonic regression to tease out the value of just the false labeling claim such as “all natural”
What are damages associated with Lost profits and how are they calculated?
Lost profits are derived from lost revenues associated with defendants alleged actions less unavoidable costs needed to derive the lost revenues