• Home
  • About Us
    • Our Team
    • Our Mission
    • Testimonials
    • Service Areas
  • Services
    • Tax Services
    • Audit & Assurance
    • Accounting
    • Litigation Support
    • Valuation Advisory
    • Forensic Accounting
    • Business Consulting
  • Resources
    • Client Center
    • Online Tools
    • Important Sites
    • Timely Opportunities
  • MBA News
  • Careers
    • Senior Tax Accountant
    • Tax Manager
    • Bookkeeper / Accountant
  • Contact Us
  • Facebook
  • Google+
  • Linkedin
  • Savvy
  • Twitter
  • Home
  • About Us
    • Our Team
    • Our Mission
    • Testimonials
    • Service Areas
  • Services
    • Tax Services
    • Audit & Assurance
    • Accounting
    • Litigation Support
    • Valuation Advisory
    • Forensic Accounting
    • Business Consulting
  • Resources
    • Client Center
    • Online Tools
    • Important Sites
    • Timely Opportunities
  • MBA News
  • Careers
    • Senior Tax Accountant
    • Tax Manager
    • Bookkeeper / Accountant
  • Contact Us

Blog Post

Getting into the nitty-gritty when it comes to punitive damages

28 Jul 2016
0 Comment
MBA Site Administrator
Punitive Damages in St Petersburg Florida

Determining appropriate punitive damages is challenging for judges and juries. What amount is enough to effectively punish wrongdoers — and deter them from committing similar acts in the future — but not so much that the punishment outweighs the crime? Whether working for the plaintiff or the defense, damages experts can help judges and juries understand the details underlying punitive damages to help ensure that the award is appropriate.

Who’s responsible?

Experts consider several questions when building a framework for punitive damages, starting with the person who is responsible.

An expert witness for the defense can break a company into its components, providing jurors with a proper perspective on the division or department most directly responsible for the wrongdoing. Jurors can be shown that the division they have determined to be culpable can be adequately penalized even if the award won’t significantly affect the bottom line of the overall company.

Breaking down a company also can help humanize the defendant. The jurors might begin to see that the defendant isn’t an unfeeling corporate entity but an organization made up of many individuals. Jurors may identify with innocent bystanders — including shareholders and employees — who will be adversely affected by a disproportionate punitive damages award.

A plaintiff’s expert, on the other hand, can help overcome juror resistance by highlighting the layers of financial resources available to a corporate defendant.

What were the profits?

Damages experts also ask how the defendant profited from the alleged wrongdoing. Profits gained as a result of the defendant’s misconduct often play a central role in determining an appropriate award. Jurors, however, might not understand that revenues or sales aren’t the same as profits.

Experts, therefore, demonstrate the actual or expected profits from the misconduct. An expert for the defense will take into account any expenses the defendant incurred as a result of claims that grew out of the transgression, including those associated with recalls or redesigns.

A plaintiff’s expert can highlight costs that the defendant avoided because of its wrongful conduct. Or the expert might show how the defendant could have precluded recall or redesign costs by acting properly.

How deep are the defendant’s pockets?

Another critical question addresses the defendant’s resources. Plaintiffs frequently cite the defendant’s net worth to support their contention that only a large award will prove punitive.

While net worth may give a general idea of the defendant’s ability to pay, the defense’s expert can show jurors that the specific assets that contribute to net worth also must be examined. Experts may advise jurors to consider the form the assets take — for example, the percentage in cash. Fixed and other noncash assets might not be easily converted to cash, or their conversion might even make it difficult, if not impossible, for the business to continue operating.

The plaintiff’s expert, on the other hand, might emphasize the defendant’s ability to generate cash in the near future. A company that has a negative net worth because of high initial costs could produce impressive cash and profits later on.

Also, by the time a particular claim reaches the punitive award stage, the defendant may have already lost judgments for substantial sums. An expert testifying for the defense can explain how these liabilities affect the defendant’s financial statements and overall financial status.

Expertise needed

The issues surrounding punitive damages are complex. If you have a case involving punitive damages — whether you’re counsel for the plaintiff or for the defense — make sure you contact a financial expert.

© 2016

About the Author
McClanathan, Burg & Associates, LLC. is a full service accounting firm. Our team members provide services including: Tax, Audit, Assurance and Accounting, Estate and Trust, Forensic Accounting, Litigation Support and Business Valuation.

Social Share

  • google-share

Leave a Reply Cancel reply

*
*

Search

RECENT NEWS

  • IRS Extends the Tax Filing and Paying Deadline for Individuals
  • Do you know the tax impact of your collectibles?
  • Making 2017 retirement plan contributions in 2018
  • When an elderly parent might qualify as your dependent
  • AMT Calculations: It’s Showtime

Categories

  • MBA Events
  • MBA News
  • Opinion & Editorial
  • Resources & Tips

Archives

  • March 2021
  • February 2018
  • January 2018
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • November 2013

Social Media

Facebook
Linked In
SavvyCard
Twitter

“Best
Congratulations to this year's honored business!
Featured in the Tampa Bay Times.
Click here to view my profile >>

Categories

  • MBA Events
  • MBA News

Archives

Sign Up For Newsletter

First Name:
Last Name:
Email Address (required):
Company:
Phone Number:
© 2014 McClanathan, Burg & Associates, LLC | Website Design by ThinkTankConnect.com

Send to Mobile

Text or Email McClanathan, Burg & Associates online business card to your mobile device using the form below
From the card you will be able to:
  • Get turn by turn directions to the company's office
  • Access a visual company directory of employee cards
  • Call, email or text the company
  • Share/Refer the company to others
  • Save the card to your phone's home screen for future access