I am self-employed and I had to shut down my business for a couple of months after my accident due to my injuries. I missed important business meetings with current and potential clients. My business lost money while I was laid up. How will my losses be calculated? How can I prove lost income opportunities?

Lost Time Wages Self Employed Injury Law

I am self-employed and I had to shut down my business for a couple of months after my accident due to my injuries. I missed important business meetings with current and potential clients. My business lost money while I was laid up. How will my losses be calculated? How can I prove lost income opportunities?

Unlike simply losing wages because you had to stay home from your job as an employee with a company, losing self-employed income is much more complicated and often requires a forensic economist to consult on your case, especially if they are substantial. (A forensic economist is a specialist in determining your economic losses.) The damages to which you are entitled, if provable, are lost income, loss of earning capacity, lost profits, lost business opportunities and loss of good will. You will also want to show that you mitigated your losses, that is, to the extent possible, you reduced your losses by having an employee “cover” for you while you were out.

You will have to provide your tax returns, probably from several years to look for a pattern in your income, and financial statements for the current year. The difficulty is that the past years don’t always tell the story of the current year or the future (as you’ll see in the example below). In addition, you will want to provide your calendar of appointments, and possibly obtain letters from those with whom you would have been meeting if such meetings might have produced income in the future. While difficult to prove lost opportunities, letters from potential clients will be key in that effort.

Suppose you are a management consultant, incorporated as ABC Management, in business for yourself for only two years. You had a 6-month contract with Richman Corporation where you had consulted for 4 months when you were injured. At the same time, you were marketing your services to several other companies. You were in the process of negotiating a contract with Wealthco to begin in 2 to 3 months; you had appointments in the next month to meet with Joe Blo from Happy Company to discuss a future assignment; and with Susan Summer of WannabeCo. to discuss some part-time consulting work now and in the future. Nothing was a sure thing.

Your injuries required one month of recuperation. In the meantime, you lost a month of income on your current contract with Richman, and they hired another consultant to finish your contract, so that’s two months of lost income there. You couldn’t meet with Joe, so he hired someone else for that future assignment. You missed your meeting with Susan, and now she’s decided to use an in-house person to do the work. What are your losses? Besides the one month of income, you lost the balance of the contract with Richman Corporation; you lost the potential contract with Wealthco; you lost the part-time potential with WannabeCo. In addition, perhaps these companies will not call you in the future when something comes up, because you weren’t there when they needed you (loss of good will).

You also lost valuable marketing time. This is speculative and difficult to prove-especially since you are fairly new at this and you can’t point to your past tax returns as proof of a certain level of income. It is up to you, your attorney, and your attorney’s expert, to make your case with the best possible documentation. Here is a sample of this management consultant’s lost earnings:

Two months lost on contract with Richman:$ 36,000
Potential contract with WealthCo: $108,000
Potential part-time consulting with Wannabe: $50,000
Loss of Good Will$ 20,000
Loss of Marketing Time (based on # of phone calls
you make, letters you send out, meetings you have
with potential clients per week$ 10,000
Total Lost Earnings/Earning Capacity $224,000

These are fictitious figures based on the hypothetical situation detailed above. The companies are also fictitious and any similarity to real company names is unintentional and purely coincidental. The best strategy here and for you is to hire an attorney who has experience in cases involving self-employed clients. He or she will be able to tell you exactly what you need to provide in order to prove your case and get the most equitable settlement for your claim.

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