Forensic Accounting for Personal Injury

Accidents happen all the time. Personal injury is a legal term for an injury to the body, mind or emotions. The term is most commonly used to refer to a claim alleging that the plaintiff’s injury has been caused by the negligence of another.

The most common types of personal injury claims arise from road traffic accidents, workplace accidents, tripping accidents, assault claims and accidents at home. The term personal injury also incorporates medical issues which may be caused by medical negligence claims or industrial diseases.

Claimant or Defendant

We have experience of acting on instructions from either claimant’s or defendant’s solicitors together with insurance companies directly.

We also have experience of acting as a single joint expert.

On instruction from a claimant’s solicitors, it is typically incumbent upon us to prepare an expert accountant’s report including initial calculations to enable a schedule of loss to be prepared.

On instructions from the defendant’s solicitors, there is usually already prepared an expert accountant’s report together with a schedule of loss. Our role then is to advise the defendant’s solicitors on the veracity of these calculations together with the supporting documentation available to evidence the claim.

Loss of Earnings

We have vast experience of the calculation of loss of earnings typically arising from accidents at work, road traffic accidents and clinical negligence.

These accidents will usually involve the business owner and expert accountancy evidence is required to determine how the business would have progressed other than for the accident. The fundamental requirement of the compensation is to put the claimant back into the financial position he would have been in had the accident not happened.

Therefore the calculation of loss of earnings requires a detailed assessment of the pre and post accident profitability of the business and its prospects at the time of the accident, together with considering the contemporaneous documentation available such as accounts, business plans, sales records, etc.

Expert evidence is particularly useful with fledgling or embryonic businesses where significant business experience is required to assess how they would have progressed in the absence of the significant disruption caused by an accident.  Often a business can be lost altogether following an accident and an assessment of the claimant’s likely future or mitigating earnings is also needed.

The loss of earnings calculations should reflect the business structure involved and how the claimant withdrew their remuneration as a mixture of salary, dividends and benefits in kind.

The calculations will be split between past loss of earnings through until a notional date of trial or settlement, together with thereafter a future loss of earnings until the claimant’s likely retirement age. Income tax should be deducted in the calculations as the compensation and damages are awarded net and are tax free.

We have experience in determining the illustrative multiplier for future loss calculations together with calculating interest on the past loss of earnings.

We are also very familiar with the appropriate calculations when the claimant is an employee rather than self employed or a shareholder. In this instance the expert needs to address likely salary increases and promotions together with what level of mitigating earnings the claimant will be capable of generating in the future.

Loss of Pension Rights

Individuals who are employed and have suffered an accident may also belong to a company pension scheme.

As a result of earning less, being unable to work again, or losing years of employment, the actual pension on retirement may be less than it otherwise would have been.

It is important to establish if the scheme to which the claimant belonged is a final salary scheme providing defined benefits or was a defined contribution scheme.

As a result of the accident the claimant typically loses employer contributions, tax relief and professional investment advice regarding the contributions themselves.

The court uses a specified approach to the calculation of loss of pension rights to value the loss of future pension which is then discounted back to the date of trial or settlement as part of the overall damages to be received.  We are very familiar with undertaking these calculations.

Loss of Dependency

This arises where there has been a fatal accident with a consequent loss of dependency for the deceased’s wife and family.

There is a traditional method to the calculation to be adopted, assuming the deceased would have spent a certain proportion of the overall family income on himself with the balance available to his dependants.

In applying the formula, assessment needs to be made of the deceased’s likely earnings beyond the point of his death. If he is a business owner, that will follow the future expectations of the business, if he was an employee then future salary increases and promotion prospects should be considered.

Also, the degree to which his dependants will suffer as a result of there no longer being pension provision for the deceased at his notional date of future retirement.

Within the calculation of loss of dependency will be a deduction for the actual future earnings of the wife herself.

Again an illustrative multiplier is used in the calculations, this time from the date of the deceased’s death over the rest of his own life, using life expectancy tables, rather than from the date of trial or settlement.

Cases of the Utmost Severity

Typically these claims involve very serious personal injury such that the claimant has permanent injuries and may never be able to work again together with the potential loss of mental faculty.

We are also experienced in undertaking calculations on behalf of seriously injured children where there is a loss of lifetime’s earnings arising.

In cases such as these we are also usually provided with the reports of other experts, e.g. care, housing, etc and can assist instructing solicitors in preparation of the overall schedule of loss as well as the loss of earnings aspects.

Similarly, we can advise on the likelihood or otherwise of State Pension Benefits still being available.

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