Loss of Earning Capacity

By now you would have heard or are familiar with the fact that loss of earning capacity is an element of your damages. Specifically, it is an element of special damages as is the reasonable value of the medical services provided to you. Let’s focus today on the loss of earning capacity and the basic concept behind it.

When a client is seriously hurt and unable to work the question I ask the client is, “How long would you have worked had this accident not occurred?” Another thing I might ask is, “Had you been able to work would you have been entitled to bonuses or various stock options or perks or other fringe benefits?” It has surprised me, but sometimes there is a little bit of confusion on this point. I guess the simplest way that I can frame the issue is by asking the client, and by presenting to the other side, the idea that had this accident or injury not occurred, the client would have worked until 67 years of age (or some other reasonable time period). Therefore, the client has lost those years in the labor force at their rate of compensation. You then do the arithmetic and you multiply the years by the gross annual salary. The judges will inform a jury and your adversary will tell you that it has to be reduced to present value, which recognizes that a one-time award is being made at the case’s conclusion. Present value, is an economic concept, accepted in the courts and very much part of the judge’s charge, or instruction, to the jury.

None of this necessarily requires an economist or a vocational rehabilitation expert. I think the concept is sufficiently clear and it has been deemed such by courts so that expert testimony is usually not necessary in most of these instances. See Griffin v. General Motors Corporation, 380 Mass. 362 (1980), which discusses the right to “past and future impairment of earning capacity” and goes further to say that most of that is “within the common knowledge of the jury”. Therefore, even though I am an attorney who favors the hiring of experts – and I would say that I am fairly aggressive in that respect- for this element of damages, I am disinclined to hire them in light of the clear language of the Supreme Judicial Court and because of tactical considerations.

For a long time now, the Superior Courts of Massachusetts have allowed the presentation that I put forth in the above paragraph. Some lawyers have presented those numbers on a blackboard (at least in the old days but the point is that it was done visually) and those numbers have remained through the closing argument and even after, such as during the Judge’s charge to the jury. Some aspects of this are discretionary as the Supreme Judicial Court is willing to defer to the trial judges on the length of time the figures can remain on the blackboard. But the rest of the presentation is not discretionary and should be made by your lawyer in the appropriate case. Goldstein v. Gontarz, 364 Mass. 800 (1974).

In summation, the key point that I want to make today is that you want to clear all the complicated stuff away to focus on the simplest and clearest framing of the issue of loss of earning capacity. I find that you will then ask of the client, “What would you have done had the accident not occurred?” “How long would you have worked?” ” What kind of money would you make?” Sure there are disputes about the level and adequacy of the proof. For certain people it is more complicated because of things like bonuses and stock options but again you say to that person, “Tell me what would you have earned had you not been injured?” That is the concept that should run through the entire loss of earning capacity element of a personal injury claim.