HKA Partner David Duffus was invited to co-author a chapter in the Second Edition of Lost Profits Damages: Principles, Methods and Application.  The book includes loss profit damage advice from 56 renowned experts and is a mainstay reference for anyone dealing with commercial damages.

In all, this chapter discusses how financial experts can best prepare, plan, and execute credible lost profits and other economic damages analyses for disputes involving new businesses.

Duffus is a co-author of chapter 17 in conjunction with Bob Gray, Gray Schrupp & Associates and  Ira Bowman, Goodwin Bowman.  The chapter addresses the issues surrounding the analysis of lost profits damages for new businesses, including the identification of a useful framework for categorizing an entity as a new business.  David’s commentary addresses how the so-called new business rule has evolved over the years to allow new businesses to claim lost profits as long as they can be proven with reasonable certainty. It does so through specific examples of cases, legal doctrines, and various methodologies that are instructive for proving the recovery of damages for a new business. In all, this chapter discusses how financial experts can best prepare, plan, and execute credible lost profits and other economic damages analyses for disputes involving new businesses.

Following is an abstract from Dave Duffus’ chapter:

“At some point, most seasoned financial experts who provide expert witness services for economic damages measurement will encounter matters that deal with the challenges of estimating lost profits for a new business—that is, a business that has little or no financial history on which to base projections.  Estimating lost profits and other measures of economic damages for new businesses can be a challenging assignment for the financial expert.  The good news is that such damages are not impossible to measure for a new business. However, the bar for attaining reasonable certainty in proving lost profits can be a high hurdle to clear. For this reason, financial experts, attorneys, and attorneys’ clients must understand that proving economic damages to the required level of certainty for new businesses often presents additional challenges.” 

Click this link if you are interested in this publication.