Lost profits, lost business value, and the defendant’s gain measure genuinely different things. Choosing between them is the first real decision in a damages case, and it is usually made by habit.
Start a conversation with Cournot, the Institute’s damages concierge, already scoped to damages frameworks. Select a subject area to prompt it, or describe the dispute directly.
Most damages disputes are argued as though there is one correct figure waiting to be calculated. There is not. The same conduct can be measured by what the plaintiff failed to earn, by what the plaintiff's business is worth now against what it would have been worth, or by what the defendant gained — and these are not three routes to one answer, they are three different economic questions with different evidentiary demands and different vulnerabilities. Lost profits requires a credible stream of earnings that did not happen. Lost business value requires a valuation of an enterprise in a world that did not occur. Unjust enrichment looks at the wrong party's books entirely. Which one a case can support depends on the facts and the available data; which one it is permitted to claim is a question of law for counsel. Choosing badly is expensive, and it usually happens before an expert is retained.
Three measures of loss, each with its own proof problem.
The most common measure, the most litigated, and the one that turns entirely on a counterfactual nobody observed.
investigateWhen the harm is permanent, the question stops being earnings and becomes what the enterprise is worth.
investigateMeasuring the wrong party’s books — which reverses the usual evidentiary problem.
investigateHow the Institute approaches the measures — what each demands, never what any case is worth.
Largely by whether the harm ended. Lost profits suits a discrete, bounded injury: a period during which earnings were lower than they would have been, after which the business recovers. Lost business value suits a permanent impairment — where the enterprise itself is worth less going forward, or was destroyed. The distinction matters because claiming both for the same harm invites the objection that the plaintiff is being compensated twice for one injury: once for the earnings and again for the value of those same earnings capitalised. Where the injury has both a temporary and a permanent component, the two can sometimes coexist, but the boundary has to be drawn explicitly rather than assumed.
When the defendant did much better than the plaintiff did badly, and when the defendant's records are better than the plaintiff's. It reverses the usual evidentiary problem: instead of proving a counterfactual about your own business, you are measuring something that actually happened on the other side's books. That makes it attractive where the plaintiff is young, small, or has no trading history to extrapolate from. Its availability is a legal question that varies by claim — it appears routinely in trade secret and IP contexts and much less elsewhere — so whether it is on the table is counsel's call, not an economist's.
Frequently, and it is usually presented in the alternative rather than cumulatively. Pleading alternative measures is common where the facts genuinely support more than one and the legal availability of each is contested. What draws challenge is presenting them as additive without a clear account of why they compensate different injuries. The practical discipline is to be able to state, in one sentence per measure, what harm that measure compensates and why it does not overlap with the others.
Earlier than most firms make it, because the choice determines what discovery you need. A lost-profits case needs the plaintiff's historical financials, industry benchmarks and evidence of the but-for trajectory. A valuation case needs comparable-company data and a view on the discount rate. An unjust enrichment case needs the defendant's revenue and cost data, which has to be requested. Deciding the measure after discovery closes means discovering that the records supporting your best measure were never sought.
Describe the dispute. The Institute will help you see which frameworks the facts can support.