Loss of Earning Capacity in Personal Injury Litigation

Perhaps a couple of examples will help to illustrate how rapidly economic losses can add up in personal injury litigation.

Example: John suffered a herniated disc in his neck and was laid off from his job due to his disability. He was 35 years old at the time of the accident. Even though he immediately found another position, he claimed losses in excess of $500,000. He arrived at his claim using the following economic principles.

The job John was able to obtain after the lay-off offered fewer responsibilities, smaller wage increases, and slower potential for promotions. His retirement and medical benefits were reduced, as were other legally required benefits, such as disability insurance, unemployment compensation, etc.

The numbers really begin to take off when the reduced earnings and slower potential for promotions are projected over the course of an entire career. While the annual losses suffered by John are relatively small, the claim becomes quite large indeed, when projected over the next thirty years.

Typically, the defense team retains an economic expert and a vocational expert of its own to rebut these types of claim. The defendant’s economist may question whether the plaintiff actually lost the benefits, salary, ability to perform household services, etc. The defendant’s vocational expert will no doubt have quite a different opinion from the plaintiff’s vocational expert as to the availability of alternative careers. The bottom line is that both sides present to the jury their view of the plaintiff’s economic losses and the jury decides which view is more credible.

Example: Brian had to miss a semester of school because of an injury. He expected reimbursement from the defendant for lost tuition, but his compensable losses actually go far beyond simple out-of-pocket losses. The lost semester will result in a one-year delay in the start of his career. Not only will he lose a year of earnings and benefits, but that year would have been one of his most productive.

If not for the accident, Brian would have earned a certain salary in 2004. That year represents year one in his career. Because of the accident, the 2004 salary will actually be earned in 2005, which is his new first year. Were it not for the accident, the salary for 2005 presumably would have included a raise over the salary earned in 2004. Year two in a person’s career typically includes a raise over year one. This loss will continue every year until his retirement.

The year that is lost forever is the last year the person would have worked if the accident never occurred. The salary and benefits during that last year are perhaps the most lucrative of the plaintiff’s work life. The loss of that year creates a large economic detriment that can be proven through expert economic testimony.

If you have suffered even a seemingly small loss of earnings due to an accident, do not fail to let your attorney know, since the value of your claim can be increased dramatically. Lawyers often overlook this kind of claim because it may appear on first glance to be insignificant. That insignificant aspect of your claim can turn out to be its most important part.