About Us

Home|About Us|

Can Time Series Decomposition Allow Us To Settle The Score On Which Sport Is Best?

April 2013 Every fan loves his sport.  There is much debate over which sports are growing in popularity and which are on the decline.  Although popularity does not necessarily indicate superiority, it does tell us something about public opinion on the topic.  One way to approximate each sport’s relative popularity is to look at web [...]

PCAOB Issues Second Mixed Report On Audits By Smaller Firms, But Ultimately Puts Them On Par With Larger Firms

April 2013 On February 25, 2013, the Public Company Accounting Oversight Board (PCAOB) issued its summary report on smaller accounting firms. The PCAOB described its inspections and related reporting here as follows: “This report covers domestic audit firms that audit the financial statements of issuers, and that regularly issue 100 or fewer audit reports each [...]

Valuation Guide: Cargo Shipping

Industry Description The U.S. freight shipping industry comprises deep sea freight transportation, inland water freight transportation, and coastal and Great Lakes freight transportation (SIC 4412, 4424, 4432, 4449; NAICS 483111, 483211, 483113).  It is a subsector of the water transportation sector (NAICS 483).  The global deep-sea, coastal, and inland water transportation industry has experienced an [...]

Valuation Guide: Grocery Stores

Industry Description The grocery industry (SIC 5411, NAICS 7445110) consists of retail locations selling food products.  There are almost 65,000 grocery and supermarket locations across the U.S., according to Census data.[1]  U.S. supermarkets and grocery stores generate annual revenues of approximately $491 billion.[2] A typical grocery store is about 46,000 square feet in size and [...]

An Interactive Settlement Tool May Streamline Negotiations in Lost Earnings Matters

Lost compensation is a common element of economic damages in personal injury, medical malpractice, wrongful termination, failure to promote and other similar torts.  Economists or CPAs are generally engaged as independent damage experts to calculate lost compensation because of their unique skill set in addressing such losses.  However, these experts are often employed only after [...]

Seventh Circuit Bars Class Certification Because Of Damages

March 2013 The Seventh Circuit decided Espenscheid vs. DirectSat, Inc., (No. 12-1943, February 4, 2013), upholding the district court’s decision to not certify a class of employees containing wage and hour law violations. The ruling is notable as class certification was denied because the class members had different amounts of claimed work that had not [...]

Why Chocolate Doesn’t Create More Nobel Laureates For Your Country

March 2013 The article, “Chocolate Consumption, Cognitive Function, and Nobel Laureates” recently published in the New England Journal of Medicine (NEJM), demonstrates that even published research may contain errors.  The author, Franz H. Messerli, examines the correlation between countries’ chocolate consumption per capita and Nobel laureates per 10 million people. The linear relationship is strong, [...]

IRS Whistleblower Program Provides Opportunities For Some, Pitfalls For Others

February 2013 The IRS has had a whistleblower program for decades, but it was not widely used and not much was paid to whistleblowers. However, the efforts to improve the program are bearing fruit.  The current program is outlined on www.irs.gov, where information is available regarding the purpose of the program, how to make a [...]

SEC To Utilize Data Analytics To Identify Accounting Irregularities

February 2013 Data is valuable.  The question is once you have it, how can you use it?  Data analytics uses processes to extract and evaluate information from large data sets and identify potential areas of risk, fraud, or error.  Among the often used data analytics activities is benchmarking or trending of data.  Developing these strategies [...]

Valuation Guide: Newspaper Publishing

Description of the Industry The newspaper publishing industry (SIC 2711-98, NAICS 511110) is engaged in the production of daily, weekly, and bi-weekly newspapers as well as Internet news services. The U.S. newspaper industry includes about 5,000 companies earning combined annual revenue of about $35 billion with the top 50 companies controlling about 80 percent of [...]

Valuation Guide: Magazine Publishing

Description of the Industry The U.S. magazine and periodical industry (SIC 2721, NAICS 511120) includes general interest magazines, trade publications, and academic periodicals.  The magazine and periodical industry generates approximately $37 billion in revenue each year.[1]  Approximately 68% of this total is generated from sales and advertising in general interest periodicals, 17% is from financial, [...]

Valuation Guide: Book Publishing

Description of the Industry The book publishing industry (SIC 5111, NAICS 511130) is engaged in the production of books. Publishing companies carry out the design, editing, marketing, and distribution of books.  Publishers may distribute books in print, audio, or, increasingly, electronic form.  Textbooks make up the largest segment of book sales, followed by adult trade [...]

Valuation Guide: Art Dealers and Galleries

Description of the Industry The U.S art dealer industry (NAICS 453920, SIC 5999), includes approximately 23,000 businesses nationwide and generates almost $9 billion in revenues each year. Art dealers, including art galleries, are retail businesses that buy and sell art. In addition to galleries, auction houses and dealers without gallery space are also included in [...]

The Northern District Court Of California Provides Useful ESI Guidelines That Should Be Duplicated

January 2013 Electronic data comprises a large portion of discovery and provides efficiencies in searching and manipulating the data for further analysis. Establishing a protocol for retention of electronic information and e-discovery of electronically stored information (ESI) is a critical step toward ensuring that relevant data is preserved and ultimately produced.  It is important that [...]

2019-03-04T16:14:15-08:00Discovery Advice|

Valuation Guide: Advertising Agencies

Description of Industry Advertising agencies (SIC 7310, 7311; NAICS 541810) are traditionally known to prepare and place advertisements through magazines, newspapers, the internet, television and radio. However, globalization of the industry has led many agencies to expand their suite of services. Many advertising firms now offer media planning, market research, graphic design, media buying and [...]

Valuation Guide: Hair and Beauty Salons

Description of the Industry The U.S hair and beauty salon industry (NAICS 812112, SIC 7231), includes approximately 250,000 shops nationwide and accumulates approximately $20 billion in revenues each year. The salon industry is dominated by small, single-owner establishments, although chains and franchises have become increasingly common.  The industry is highly fragmented, with the 50 largest [...]

Supreme Court Brings California Closer To The Federal Expert Witness Admissibility Standard

December 2012 In a unanimous opinion, the California Supreme Court clarified that trial courts may use either California Evidence Code Sections 801(b) or 802 to admit or exclude the expert’s testimony.  Potentially, the Opinion widens California judicial authority to exclude expert testimony by placing California closer to the federal Daubert standard and the majority of [...]

Rules Of Thumb And Other Short-Cuts Are Dangerous For Damage Calculations

November 2012 Plaintiffs often desire short cuts to damage measurements.  Given the cost of using experts employing proper methods and data, the temptation is obvious.  For example, business valuation programs are commonly available that will spit out a result once the user inputs a few financial statistics for the subject company.  Why pay thousands of [...]

DOJ & SEC Issue Guidance on Foreign Corrupt Practice Act

November 2012 The U.S. Justice Department (DOJ) and Securities and Exchange Commission (SEC) jointly published a much anticipated guidance on the U.S. Foreign Corrupt Practices Act (FCPA).  Entitled “A Resource Guide to the U.S. Foreign Corrupt Practices Act”, the “Guide” is 120 pages long, and is significantly more comprehensive than its predecessor, the “Lay Person’s [...]

Conflicting Rulings About SOX’s Scope Cause Private Company Employees To Stay With DOL Adjudication

October 2012 The Administrative Review Board (ARB) for the U.S. Department of Labor (DOL) recently issued a decision regarding the scope of the whistleblower protections under Sarbanes-Oxley Act of 2002 (SOX). In Spinner vs. David Landau and Associates, SOX’s whistleblower protections were extended to employees of contractors of publicly-traded companies.  In the Spinner case, the [...]

Severance Pay FICA Tax Treatment May Change

October 2012 In a decision having significant impact, the Sixth Circuit ruled that payments to employees as part of a severance program are not subject to tax under the Federal Insurance Contributions Act, or FICA.  The IRS is fighting the decision.  Employers should file protective claims before the statute of limitations runs out. The case involves [...]

Posner Opinion Provides Worthwhile Damage Guidance

October 2012 In re: Apple vs. Motorola, the parties sued each other for patent infringement involving smartphones.   Seventh Circuit Judge Richard Posner, sitting by designation, threw out all damage witnesses for both parties on Daubert motions.  Then, since both parties lacked damages testimony, he dismissed both cases with prejudice.  Interestingly, Judge Posner did not allow [...]

Federal Circuit Corrects Recurring Errors With The Entire Market Value Rule

September 2012 In LaserDynamics v. Quanta Computer, Case No. 11-1440 (Aug. 30, 2012) the U.S. Court of Appeals for the Federal Circuit overturned an $8.5 million lump sum jury award and remanded the case for a new damages trial. The Federal Circuit addressed three issues of interest to the calculation of reasonable royalties. The Appellate [...]

SEC Report Is Relevant To Litigators Presenting Financial Information

September 2012 This week, the Securities and Exchange Commission (SEC) released a report required by Section 917 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The study’s legislative mandate includes addressing: “the existing level of financial literacy among retail investors, including subgroups of investors identified by the Commission; methods to improve the timing, [...]

Standard Chartered Bank Still In Trouble Over Iranian Money Laundering Fraud

August 2012 In a quick settlement over Iranian-related illegal conduct, Standard Chartered Bank (SCB) agreed on August 14 to pay $340 million in a settlement with the New York State Department of Financial Services (DFS). The DFS settlement allows SCB to continue operating in New York, but requires an on-site monitor who will report directly [...]

Whistleblower Recovery Is Ordinary Taxable Income

August 2012 The Ninth Circuit decided a taxation case of first impression involving whether a qui tam or whistleblower recovery provides a taxable capital gain from a sale of property, or ordinary taxable income. The District Court in Los Angeles, and the Ninth Circuit both agreed with the IRS that the higher rate of taxation [...]

2019-03-01T11:55:13-08:00Tax Advice & News|

Proposed Changes To Litigation Accounting And Disclosures Are Dropped

July 2012 In July 2012, the Financial Accounting Standards Board (FASB) voted to drop a controversial project that would have required companies to disclose more about contingent losses, including most notably those arising from litigation. The now-withdrawn proposal would have required significant additional disclosure of litigation. The vast majority of those commenting on the proposal [...]

Federal Circuit Approves Evidence Of Both Settlements And Related Negotiations In Reasonable Royalty Damages

June 2012 Patent law (35 U.S.C. § 284) allows for lost profits in patent infringement cases, but requires damages of at least a reasonable royalty even if lost profits cannot be substantiated. The determination of a reasonable royalty is most often done through a hypothetical negotiation which attempts to ascertain the royalty upon which the [...]

Accounting Standard Will Require Significantly More Leases To Be Put On The Balance Sheet

June 2012 On June 13, 2012, after more than a year of deliberation, the International Accounting Standards Board (IASB) and U.S. Financial Accounting Standards Board (FASB) agreed on an approach for accounting for leases that generally will be simpler to implement than some of their earlier and more controversial proposals. The Boards plan to release [...]

A Primer For Valuing Options

January 2013 Option contracts existed as early as ancient Greece.  Aristotle wrote in his Politics how Thales made a fortune in option contracts for olive presses. Thales, who previously was poor, forecasted that the olive harvest would be exceptionally good the next fall season. Being confident in his predictions, he offered a deal to olive-press [...]

2019-03-01T11:28:53-08:00Valuation and Appraisal|

Sixth Circuit Provides Practical Guidance Regarding Expert Testimony Admissibility

May 2012 In Newell Rubbermaid, Inc. vs. The Raymond Corporation (No. 10-3912, April 3, 2012), the Sixth Circuit evaluated the trial court’s exclusion of Plaintiff’s expert testimony, and related successful defendant motion for summary judgment because of a failure to have minimally-required expert witness evidence.  In upholding the trial court’s exclusion under the abuse of [...]

2019-03-04T16:06:01-08:00Commercial Damages|

Second Excess Fee And Revenue Sharing 401(k) Trial Again Results In A Big Plaintiff Victory

April 2012 In Tussey vs. ABB. Inc. (Case No. 2:06-CV-04305-NKL, March 31, 2012),  a United States District Court for the District of Western Missouri decided an important case regarding common fees and revenue sharing within 401(k) plans.  The case imposed extensive liability on the plan sponsor, resulting in $36.9 million of damages, plus Plaintiff’s attorneys’ [...]

2019-03-04T16:12:06-08:00Commercial Damages|

Seventh Circuit Provides Primer On Regression Analysis And What Can Go Wrong

March 2012 After a jury trial, ATA Airlines (ATA) won a nearly $66 million verdict against Federal Express Corporation (FedEx). FedEx appealed that ruling.  In ATA Airlines, Inc. v. Federal Express Corp., No. 11-1382 (7th Cir. Dec. 27, 2011), a distinguished panel consisting of Justices Easterbrook, Posner, and Wood criticized the complex damages analysis accepted [...]

2019-03-01T11:33:22-08:00Commercial Damages|

Reasonable Compensation Analysis Needed For Closely-Held Corporations

March 2012 Reasonable compensation questions affect millions of closely-held corporations whose owners actively participate in the business.  The issue involves how much payroll taxes are due from the earnings of the business.  Amounts not characterized as salary are reported as S-corporation income on the shareholder’s personal tax return, where it is not subject to payroll [...]

2019-03-01T11:33:53-08:00Tax Advice & News|

Solving Everyday Puzzles Using Regression Analysis

February 2012 Regression analyses are commonly used in litigation because of their ability to ascertain both liability and damages.  However, the ability to communicate this relatively sophisticated statistical analyses to a layperson (e.g., jury) can be challenging to some experts.  We present two practical applications that demonstrate regression’s power to answer real world questions/puzzles. Why [...]

2019-03-01T11:35:05-08:00Commercial Damages|

A Primer On Regression Analysis

February 2013 Regression analysis is a statistical technique that is commonly used in litigation because of its unique ability to ascertain both liability and damages.  Specifically, litigation invariably involves questions of (i) whether event x caused event y, and (ii) if so, how much did y change because of x.  As regression is used more [...]

2019-03-01T11:36:12-08:00Commercial Damages|

DOL’s ARB Limits SOX & Dodd-Frank Whistleblower Protections To U.S. Employees

February 2012 By a 3-2 vote, the Department of Labor's Administrative Review Board (ARB) limited the jurisdiction of the Sarbanes-Oxley Act (SOX) whistleblower protection outside the United States. The case is Villanueva v. Core Laboratories, NV, ARB No. 09-108, ALJ No. 2009-SOX-6 (ARB Dec. 22, 2011) (en banc). The ARB received multiple amicus briefs setting [...]

2019-03-01T11:36:56-08:00Whistleblower Systems|

The 12 Days Of Christmas – A Lesson In How A Complex Appraisal Can Go Astray

December 2011 Is Christmas becoming more expensive?  For the first time ever, the cost of the gifts featured in the Christmas carol, “Twelve Days of Christmas,” totals more than $100,000.  Financial services company, PNC Wealth Management, just released its 28th annual estimate of the “Christmas price index”, a whimsical economic indicator that tallies the prices [...]

2019-03-01T11:37:22-08:00Valuation and Appraisal|

Court-Appointed Expert Will Likely Have The Final Word On Damages In Oracle vs. Google

November 2011 The District Court appointed an independent expert on the issue of damages pursuant to Rule 706 of the Federal Rules of Evidence. The public may learn about the Court-appointed damage expert’s conclusion as early as this week, since the independent expert’s report is due on November 14, 2011. No doubt, the District [...]

IRS Criticizes Every Marketability Valuation Approach But Does Not Explain What Should Be Done Instead

November 2011 When a minority interest in a privately-held company is transferred, a discount from the value of the entire company is calculated to reflect the lack of marketability of such an interest. These marketability discounts are important in many estate plans and related transfers. These discounts for lack of marketability (DLOM) should be calculated [...]

2019-03-01T10:41:44-08:00Valuation and Appraisal|

California Passes Tough Law On Independent Contractor Misclassification

October 2011 On October 9, 2011, Governor Brown signed into law Senate Bill 459 regarding independent contractors.  The law significantly increases the risks and penalties for misclassifying workers as independent contractors by imposing significant penalties on employers found to have engaged in a misclassification, as well as on non-lawyer advisors (like accountants) who advise an [...]

IRS Payroll Tax Amnesty Regarding Independent Contractors Should Be Carefully Analyzed

October 2011 Many small businesses attempt to save taxes and employee benefit cost by classifying their workers as independent contractors.  When business owners classify workers as independent contractors they do not pay the employer’s share of Social Security and Medicare costs, state employer taxes, state unemployment insurance taxes, and workers’ compensation insurance premiums.  Independent contractors [...]

Goodwill Impairment Tests Become Easier

September 2011 In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-08, entitled “Testing Goodwill for Impairment”.  This amends guidance in Generally Accepted Accounting Principles (GAAP) Topic 350 involving goodwill and other intangible assets.  Because early adoption is allowed, and the new guidance significantly simplifies the current procedures, expect the new [...]

2019-02-28T12:45:09-08:00Tax Advice & News|

Audit Report Discloses $4.2 Billion Annually Is Paid To Illegal Aliens Through A Refundable Tax Credit, With Practically No Offsetting Tax Revenues

September 2011 Undocumented workers in the United States received refundable tax credits totaling $4.2 billion in 2010, an amount which is dramatically higher than occurred previously.  An audit by the Treasury Inspector General for Tax Administration recommended changes in how these payments are made.   The IRS dismissed the recommendations, saying (without support) that they did [...]

2019-02-28T12:48:53-08:00Current Events, Other|

Getting More Money From Licenses

  Intellectual Property licensing is big business, and is getting bigger.  But most licensors do not earn as much as they should because they fail to perform royalty audits allowed under their license agreements.  The remedy is obvious, but is often not done for fear of the audit's cost or concern over disrupting the licensee [...]

Steps In Valuing Intellectual Property

Intellectual property (including patents, trademarks, copyrights, trade secrets, software, entertainment assets, customer lists, in-process research, etc.) is a large portion of the value of most business enterprises. When entering into any transaction involving intellectual property, you need to properly value these assets. This is easier said than done. This article cannot provide a complete "how-to" [...]

2019-01-16T15:36:05-08:00Valuation and Appraisal|

Goodwill Valuations – The Good, The Bad and The Ugly

Because of the current recession and related bear market, practically every company will need to pay greater attention to its annual goodwill impairment test required under Financial Accounting Standard 142 ("SFAS 142"). Many companies performing an updated goodwill impairment analysis will find that impairment has occurred. In addition, earlier goodwill assessments probably need to be [...]

2019-01-16T15:42:37-08:00Valuation and Appraisal|

Buyer Beware – The Alphabet Soup Of Appraisal Credentials

Appraisal disciplines have a confusing array of credentials. This occurs because: There are numerous asset types (e.g. real estate, businesses, machinery, fine arts, jewelry), with each asset type having its own sponsoring organizations, and There are numerous appraisal and other organizations that sponsor appraisal certifications, with wide variance in the standards employed. This is important [...]

2018-12-05T11:58:51-08:00Valuation and Appraisal|

Additional Disclosure Regarding Fairness Opinions Now Required In Proxy Statements

On October 17, 2007, the Securities and Exchange Commission (SEC) published its approval of amended Rule 2290 in the Federal Register. The new rule 2290 involves disclosures and procedures related to the issuance of “independent” fairness opinions included in proxy statements. Specifically, any proxy statement that includes a fairness opinion will soon need to disclose: [...]

2019-01-14T10:39:13-08:00Valuation and Appraisal|

SOX Whistleblower Protections Again Interpreted Narrowly

May 2011 The Ninth Circuit took a narrow reading of the whistleblower protections provided under Sarbanes-Oxley, and thereby eliminated the applicability of any whistleblower protection. The would-be whistleblowers were two internal auditors at Boeing. Based on the Court’s description: “In January 2007, plaintiffs Matthew Neumann and Nicholas Tides began working as auditors in Boeing’s IT [...]

SEC Issues Final Rules On Their Whistleblower & Reward Program Under Dodd-Frank

June 2011 The Dodd-Frank Act, which was signed by President Obama on July 21, 2010, includes (in Section 922) a whistleblower program sponsored by the Securities and Exchange Commission (SEC). This law (i) makes significant changes in the existing whistleblower provisions of the Sarbanes-Oxley Act of 2002, and (ii) authorizes the SEC to pay between [...]

Helping Your Expert Witness Succeed

Published in Los Angeles Lawyer, April 2003   Expert witnesses are more important than ever. Most complicated cases do not settle until after the experts have issued comprehensive reports or had their depositions taken. This trend will increase because education had not kept pace with the continuing increase in knowledge, causing an ever-widening gap between [...]

2018-11-21T15:31:40-08:00Commercial Damages|

Improving Cross-Examination Of Expert Witnesses

Published in Los Angeles Lawyer, April 2005 In many respects, the cross-examination of an expert witness is the same as for other witnesses. Some basics include: Be brief…Do not quarrel with the witness…Never ask a question to which you do not already know the answer…Avoid one question too many…and so on. However, there are some [...]

2015-05-13T11:07:38-07:00Commercial Damages|

Improving Your Expert Deposition Results Is Easy

Published in Los Angeles Lawyer, November 2004 In the vast majority of circumstances, your deposition results can be improved by adding a few questions that usually challenge expert witnesses. Consider the following practical advice gleamed from hundreds of actual depositions. These questions should be modified slightly depending upon your deposition strategy. Before the deposition begins, [...]

2016-11-10T11:30:50-08:00Commercial Damages|

Avoiding Common Mistakes When Selecting An Expert Witness

Published in Los Angeles Lawyer, November 2002 The following suggestions result from my experience serving as a witness, watching hundreds of other expert witnesses, and locating witnesses when servings as a confidential consultant. They are intended to help attorneys avoid common mistakes in selecting an expert witness. Be careful when your potential expert witness is too [...]

2015-05-13T11:07:59-07:00Commercial Damages|

Valuation Guide: Dental Practices

Industry Description The dental industry is generally defined as the professional and licensed practice of preventing, diagnosing and treating diseases, injuries, and malformations of the teeth, jaw, and mouth.  The dental industry is highly fragmented, consisting mostly of sole practitioners that practice general dentistry.  Typical dental offices have one dentist, two oral hygienists and one [...]

Valuation Guide: Dry Cleaners

  Description of the Industry The dry cleaners industry (SIC 7211, 7212, and NAICS 812320) provides full service laundering and dry cleaning for consumers and commercial clients. The growth of a dry cleaning business depends on consumer spending, operating efficiency, and favorable locations.  The dry cleaning industry is highly fragmented, with the 50 largest firms [...]

Valuation Guide: Hotels

Industry Description The hotel and lodging industry (SIC 7011 and NAICS 721110)  includes a variety of properties that offer short-term lodging. [1]  The properties range from five-star hotels to recreational vehicle parks.  Within the United States, the industry includes 51,214 properties of 15 or more rooms. [2]  The industry generated $137.5 billion dollars in sales [...]

Valuation Guide: Fast Food Franchise

Description of the Industry The fast food industry (SIC 5812, NAICS 722211) consists of eating establishments where customers pay before eating, including eat-in, take-out, drive-thru and delivery establishments.  Fast food franchises, carryout restaurants, delicatessens, pizzerias, and sandwich shops all fall within this category.  In general, fast food restaurants emphasize dining at a low cost with [...]

Valuation Guide: Restaurants

Description of the Industry The restaurant industry (SIC 5812, NAICS 722110) consists of table-service dining establishments.  These establishments may also engage in the sale of alcoholic beverages, takeout services, and entertainment.  In general, full service restaurants differ from fast-food or other dining places in that they (i) have a full menu of appetizers, entrees, desserts, [...]

Valuation Guide: Auto Repair Shops

  Summary Because the starting financial statements often contain important transactions with owner/operators and other related parties, the financial statements will need to be scrutinized and probably adjusted.   Once reliable adjusted financial statements are available, the following valuation methods are most commonly used to value auto repair shops: Asset-based valuation – Particularly for a company [...]

Valuation Guide: Auto Dealerships

Summary The value of an auto dealership facility generally fluctuates with the strength of the auto sales market and interest rates.  Although each appraisal assignment is different, the value of a healthy and profitable auto dealership is generally going to place primary reliance on the income and market approaches.  A summary of public and private [...]

Computer Forensics Deserve A Place In Your Human Resource Toolkit

June 2008 Computers contain evidence useful in many human resource circumstances. Allegations of discrimination, sexual harassment, and unfair discharge are serious threats that are better understood by knowing what an employee did. Since computers are such a pervasive part of most employees’ work lives, analysis of data stored on these computers helps address these issues. [...]

Keeping Track Of Federal Government Spending Is Supposedly Just Too Hard

March 2011 The Government Accountability Office (GAO) again reported that it “cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weakness, significant uncertainties, and other limitations.” This has occurred for years. Although each year the federal government states improvements are being made, the bottom [...]

2019-02-28T12:26:07-08:00Government Deficits, Other|

Selecting Discount Rates For Personal Injury & Employment Damage Calculations

Updated February 2021 When calculating damages covering future periods, the future amounts must be reduced to present value to account for the time value of money.  In many cases, economic damage calculations in personal injury, wrongful death, and employment cases use discount rates that are too low. Consequently, the calculated damages pertaining to future periods [...]

IRS Toughens Position On Deductibility Of Government Settlements

 In September and October 2008, the IRS issued two pronouncements that address when litigation settlement payments with governments are deductible. These settlements could occur under any government regulation, including for example the False Claims Act, Medicare billing, environmental laws, anti-trust laws, as well as any state law. This issue will likely arise more regularly under [...]

2019-02-28T12:10:38-08:00Commercial Damages|

Employers Should Implement Whistleblower Reporting Changes Because Of The Dodd-Frank Act

November 2010 The Dodd-Frank Act, which was signed by President Obama on July 21, 2010, includes (in Section 922) a whistleblower program sponsored by the Securities and Exchange Commission (SEC). This law (i) makes significant changes in the existing whistleblower provisions of the Sarbanes-Oxley Act of 2002, and (ii) authorizes the SEC to pay between [...]

Punitive Damages Now More Difficult In Patent Cases

September 2007 In a landmark decision that overturns long-standing precedent, the Court of Appeals for the Federal Circuit (CAFC) unanimously heightened the test to determine whether an infringer is subject to enhanced damages because of willful infringement of a patent. Such enhanced or punitive damages can be up to three times the compensatory damages. The [...]

Change In “Accredited Investor” Definition Will Cause The Investor Pool For Private Financings To Shrink

August 2010 Issuers conducting private offerings of securities often rely on Regulation D as the exemption from the registration requirements of the federal Securities Act of 1933. When raising money, most hedge funds, private equity funds, and private real estate investment vehicles, as well as those arranging angel financing, generally restrict themselves to “accredited investors”. [...]

Federal Circuit Throws out Economic Damages as a Double Recovery

November 2018 In Texas Advanced Optoelectronic Solutions Inc. v. Renesas Electronics America Inc, f/k/a Intersil Corporation, the Federal Court of Appeals recently overturned the trial court’s economic damages award based on an impermissible double recovery across the multiple causes of action involved. Texas Advanced Optoelectronic Solutions, Inc., (“TAOS”) and Intersil Corporation (“Intersil”) each develop and [...]

Post-Judgment Reasonable Royalty Rates Get Important Additional Guidance

May 2009 The Supreme Court in eBay v. MercExchange, 547 U.S. 388 (2006) overturned the Federal Circuit's "general rule" of automatically issuing a permanent injunction after a finding of patent infringement. District courts must now use a four-factor test to exercise equitable discretion in deciding whether to issue a permanent injunction. The four factors are: [...]

Federal Circuit Court Of Appeals Provides Guidance On Reasonable Royalty Damage Calculations

April 2010 In ResQNet.com, Inc. v. Lansa, Inc., Nos. 08-1365, -1366, 09-1030 (Fed. Cir. Feb. 5, 2010), the United States Court of Appeals for the Federal Circuit (CAFC) provides useful instruction regarding common (but poor) practices that are seen in reasonable royalty damages analyses in patent infringement cases. The CAFC referenced its recent decision in [...]

New Caution Warranted When Selling To Entities In Bankruptcy

April 2010 Most businesses assume that payments they receive from an entity in bankruptcy for post-petition transactions can be kept. A new bankruptcy case instructs those doing business with entities in bankruptcy to exercise more caution than commonly occurs. Suppliers should not make post-petition sales until their customer in bankruptcy provides a cash collateral order [...]

Reasonable Royalty 25% Rule Is Dead

January 2011 The Federal Circuit ruled in Uniloc USA, Inc. v. Microsoft Corp. (January 4, 2011) that the widely used but fatally flawed 25 percent rule can no longer be part of reasonable royalty damages calculations. Generally speaking, the rule pushed patent infringement damages higher. Because a reasonable royalty is the most frequently used measure [...]

Avoiding A Contingency Fee Tax Trap

In re: Commissioner vs. Banks and Commissioner vs. Banaitis, the Supreme Court ruled (8-0) that contingency attorney fees paid by an individual must be included in the taxpayer's income and then deducted.  This has the following adverse outcomes: Once included in gross income, the legal fee is deducted as an itemized deduction, causing: i. the standard [...]

2019-03-04T10:49:32-08:00Commercial Damages|

Affluent Should Consider Roth Conversions In 2010

October 2009 Starting in 2010, taxpayers at any income level can convert regular IRAs to Roth accounts. Roth accounts have easy-to-understand advantages and disadvantages. Roth advantages include tax-free income and no required minimum distributions. But, taxes must be paid on all initial contributions to a Roth account, including immediate additional taxation on conversions from a [...]

Monthy Archives

Go to Top