Lost Wages VS Loss of Earning Capacity

10 Questions

Which of the following is NOT a way to prove loss of earning capacity?

Personal anecdotes

What is the primary role of a life care plan in cases involving loss of earning capacity?

To project the cost of ongoing care that may hinder work ability

Which type of expert is most likely to be consulted for assessing loss of earning capacity?

Both forensic accountant and vocational rehabilitation specialist

What is the primary advantage of considering loss of earning capacity in addition to lost wages?

It provides a more comprehensive understanding of the injury's impact

Which factor is likely to have the most significant impact on the valuation of loss of earning capacity?

All of the above

What is the primary purpose of considering loss of earning capacity in personal injury cases?

To demonstrate the severity of the injury and guide fair compensation

Which type of evidence is most likely to be used to demonstrate the potential for future financial loss due to loss of earning capacity?

Expert assessments

Which of the following statements is true regarding the impact of loss of earning capacity on low-earners versus high-earners?

Loss of earning capacity has a greater financial impact on high-earners

Which type of evidence is most likely to be used to demonstrate the immediate financial impact of an injury?

Employment records

Which of the following statements best describes the role of medical records in proving loss of earning capacity?

Medical records provide a direct link between the injury and the inability to work

Study Notes

High-Earner vs Low-Earner

High-earners experience greater income loss when unable to work due to injury
Injuries can impact future career paths and income growth for high-earners
Calculating damages requires specialized expertise to address unique factors in high-earner cases

Importance of Considering High-Earner Status

Valuation of benefits, including loss of non-monetary benefits (e.g., insurance, retirement), adds to the financial impact
Greater need for experts, such as forensic accountants and economists, to provide critical evidence for income analysis and projections
High-earner cases have the potential for greater settlements or verdicts, reflecting the scale of the losses

Definition of High-Earner and Low-Earner

Low-earner: individuals earning below the California median household income (2022: $91,905)
High-earner: individuals earning significantly above the California median household income, often defined as several times the median income

Proving Lost Wages and Loss of Earning Capacity for Self-Employed Clients

Gather tax returns (Schedule C) as official proof of income history
Provide financial records (income statements, invoices, etc.) to track the flow of work-related money
Show bank statements to confirm income was deposited
Share client contracts to demonstrate potential work and its value
Provide correspondence (emails, letters) to show delays or cancellations directly caused by the injury
Show appointment records to prove the disruption in earning ability due to missed meetings or workdays
Cite industry standards to compare earning potential to others in the field
Consult an expert for complex projections of long-term impact

Importance of Loss of Earning Capacity

Highlights the potential for future financial loss if the injury causes lasting disability
Anticipated future losses can be projected using expert assessment, providing evidence for potential future damages

Why Both Lost Wages and Loss of Earning Capacity Matter

Lost wages provide quantifiable evidence of immediate financial harm
Loss of earning capacity addresses future income disruption
Combined impact demonstrates the severity of the injury and its short- and long-term impact on livelihood, guiding fair and comprehensive compensation