Revenue that did not arrive, minus the costs that would have been incurred earning it. Both halves are contested.
Start a conversation with Cournot, the Institute’s damages concierge, already scoped to lost profits. Pick a starting point, or describe the dispute directly.
Lost profits is the default measure in commercial disputes and the one most lawyers reach for first. Its structure is simple: the profits the plaintiff would have earned but for the conduct, less the profits actually earned. Its difficulty is that the first term describes a world that never existed, and has to be built from evidence about worlds that did. Three routes are conventional — comparing the business to its own performance before the conduct, comparing it to a similar business or industry that was not affected, and constructing a but-for projection directly. None is inherently superior; each fails in a different way, and which one a case can support depends on what records exist. The second half of the formula is where cases are quietly lost: profits means revenue net of the costs that would have been incurred to earn it, and getting the cost side wrong is a standard and effective attack.
The choice is usually made by what data exists, not by which is theoretically best.
Compare the business to itself, pre- and post-conduct. Strong where there is a stable trading history; useless for a start-up.
Compare to a similar unaffected business or industry. The comparison itself becomes the battleground.
Build the counterfactual directly from budgets, pipelines and market evidence. Most flexible, most assumption-dependent.
Which costs would have risen with the lost revenue. Treating fixed costs as variable, or the reverse, moves the number substantially.
When the loss begins and, harder, when it ends. An unbounded period is a standard target.
What the plaintiff did, or should have done, to reduce the loss.
How the Institute approaches a lost profits question.
Whether the number survives challenge, and whether the discovery you took supports it.
Before-and-after is unavailable without a trading history, and yardstick comparisons for an unproven venture are contestable. Claims by young businesses are structurally harder, and firms often discover this after retaining an expert rather than before.
Whichever the evidence supports, which is a less satisfying answer than lawyers want and the only honest one. Before-and-after is generally the most persuasive when a business has a stable, documented trading history and the conduct is a clean break in it, because the comparison is to the plaintiff's own actual performance rather than to a construct. Yardstick becomes necessary where that history is absent or unrepresentative, and it shifts the argument onto whether the comparator is genuinely comparable. A but-for projection is the most adaptable and the most exposed, because every assumption in it is a separate thing to be cross-examined on.
On the counterfactual and on the cost side, in that order. The counterfactual attack is that the projected but-for performance is speculative — that the growth assumed was not achievable, that the market moved for unrelated reasons, or that the comparator chosen is not comparable. The cost attack is more technical and often more effective: that the expert deducted too little, treating costs as fixed that would in fact have risen with the additional revenue, which inflates profit per unit of lost sales. A third line, causation, argues the loss happened for reasons other than the conduct.
More than seems necessary at the time, because the useful records are the mundane ones. Monthly rather than annual financials, so the break can be located precisely. Cost detail at a level that allows fixed and variable to be separated on evidence rather than assumption. Sales pipelines, budgets and board projections prepared before the dispute, which carry weight precisely because they were not made for litigation. Industry data covering the same period. And customer-level records if the claim involves particular lost accounts.
Practically, yes, and the expert should have a reasoned basis for where. An open-ended projection running indefinitely invites the objection that the plaintiff would have faced competition, market change or its own execution risk at some point regardless. Common anchors include the period until the business recovered, the remaining term of a contract, or the time a competitor would reasonably have needed to enter. What matters is that the endpoint is derived from the facts rather than chosen for the size of the resulting number.
Describe the business and what changed. The Institute will help you see what the records can support.