As a result, it is quite common for cases to launch without the plaintiff ever having thought how it is going to recover for its alleged injury. Most business competition disputes are not about recovering a liquidated debt which is easily calculable. Rather, they are about stopping conduct deemed threatening and, if that conduct is not stopped, recovering some lost business damages.
By definition, those are difficult to calculate and amenable to wild speculation. For any attorney representing a plaintiff in non-compete litigation, it is essential to figure out what remedy his or her client is primarily seeking. If it is damages, then special care must be taken to figure out how those damages will be proven.
A couple of things to keep in mind.
(1) Projecting lost profits requires an assessment of the cost the firm would have to expend in order to obtain that profit. This means that a plaintiff must consider the incremental cost (commissions and direct selling expense) that it would incur to produce new business.
(2) Some amount of guesswork is permitted, as long as it has a rational basis. Rank speculation, such as wildly off-the-mark growth rates, will doom an entire damages presentation.
(3) Expert witnesses are likely necessary, particularly if a plaintiff seeks future lost profits. It is usually beyond the scope of fact witness testimony to establish a growth pattern in client revenue, derive an appropriate terminal period, and introduce evidence of an acceptable discount rate. Incompetent evidence on any lost profits variable may ruin any chance of recovery.
(4) Finding an expert who knows the industry is essential.
(5) Clients should be prepared to disclose more information than they're comfortable with. To recover for lost profits means a client will need to allow an expert unfettered access to sensitive business records, and the defense will generally be entitled to see whatever business documents the plaintiff's expert reviews.
(6) Researching the jurisdiction's lost profits case law is essential. Not every jurisdiction has the same types of rules. It also may be helpful to review trends and patterns in cases that go bad and those that turn out well for the plaintiff. An attorney who spends a little time up front sifting through damages opinions may find expert witnesses whose testimony has stood up to appellate review and whose theories have been accepted by judges and juries. There is no substitute for preparation.
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