Seriously Injured Business Claimants – Look Out For Development & Expansion Plans

Complexities of Business Claims

A lot of my work on serious injury/fatal accident claims involves situations where a business is central to the claim. These can be complex cases. Unlike a claimant with a job (pay and a pension, maybe advancement, promotion etc), a claim involving a claimant who was running a business tends to have more grey areas.

Besides assessing ‘business as usual’, we also may have to grapple with the prospect of change. Development, improvement, technology and market changes are ‘lifeblood’ features of a business; nothing tends to stand still.

Consequently, serious injury claims involving people running businesses are fertile ground for lost growth and development opportunities, as well as the need to assess other potential changes.

Assessing Future Business Trajectories

It can be particularly challenging when dealing with business claimants, to predict how the future ‘would have gone’. Indeed the very nature of entrepreneurship brings significant uncertainty. If there is ever a situation that best illustrates why an expert should provide their range of opinion, then loss quantum with a claimant that was an entrepreneur must be it.

When formulating loss quantum with injured business claimants, one certainly needs to be alert to business expansion plans having been disrupted due to the injury. This applies equally to loss quantum with Fatal Accident dependency claims.

Investigative Approaches

When investigating business related claims, I look for evidence of whether a claimant/deceased had plans to change their business, where it was all going and what the retirement (or exit) plan was.  

I am interested in understanding how, why, and when the claimant had planned to make the changes. Forefront in my mind is:

• Was the proposed event ‘normal’ for this type of business, a path well-trod?
• Are there documented plans and emails? Were there conversations with advisers, staff, partners?
• How was the event to be funded, what steps had been taken?
• Were there technical, facilities and/or regulatory hurdles that needed to be addressed?

Whilst future business-based losses might, sometimes, fall into a relatively straight forward ‘balance of probabilities’ claim – these types of future losses may instead be better pictured in terms of multiple scenarios. Maybe a degree of chance can be applied, to reflect uncertainties – giving a composite loss quantum.

Case Studies: Expansion and Loss

Middle East Expansion Plans

I once interviewed a claimant about their UK based business, only to find out that pre-injury they had taken steps to launch a parallel business (a branch operation) in the Middle East. After more digging, witness statements from various Middle East agents (potential suppliers and customers) were obtained, and financial projections prepared. The case settled with a very sizeable amount (to reflect lost opportunity) added to the UK lost profit quantum.

Plans to Develop Regional Outlets

In another situation, a severely injured claimant indicated how they were planning to expand their local regional based business onto a national platform. That was explored, evidence gathered, and financial modelling undertaken to show how the profits may have developed, as a regional outlets structure was developed. Supporting evidence for the expansion plans was carefully gathered, including witness statements from a range of customers and business associates. Loss quantum was presented on multiple scenarios – core business and increasing branch outlets.  In due course, the claim was settled, based on profits from a much larger business than had been in place at the point of injury.

Expansion of Service Offering

At the other end of the business scale, I dealt with a proprietor (on the tools) of a car repair business that had plans to move premises, add an MOT facility and thereby develop their otherwise modest business activity. These plans were thwarted by negligent medical treatment. The discussions between the accountancy experts were not along polarised/entrenched: ‘yes it would… no it would not … have expanded’, but about what the enhanced business would have looked like, and how it might be approached (albeit delayed) with the claimant’s significant injury which was preventing them from working. All, helpful, and ‘grown up’ expert evidence that would really assist the Court, who was the final arbiter on the issue of fact regarding business expansion.

Final Thoughts

Whether you are representing an injured business claimant or defending against a claim involving disrupted expansion plans, the engagement of an experienced forensic accountant can be beneficial. Their expertise is instrumental in thoroughly reviewing the evidence and offering detailed insights on the financial implications, including the impact on profit and earnings, which are crucial for accurately calculating ‘the right’ loss quantum.

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