- Indicators of problems in a business.
- Implications for the quantum of claims.
Businesses’ future prospects are an important factor in various types of litigation including commercial litigation, certain professional negligence claims, personal injury claims involving self-employed claimants and matrimonial cases in which one or more of the parties is a business owner. Loss of profits claims based on continuing losses will generally be computed on the basis of expected future profits and most business valuations will take account of projected earnings.
If a business’ financial statements show that performance has been poor in the past few years, it is unlikely its prospects will improve if, as seems likely, there will be little growth in the UK economy in the near future. It is probable, therefore, that legal advisers will need to take declining financial performance into account in discussing the quantum of claims in the current economic climate, whether by managing the expectations of claimants in terms of what can realistically be claimed or by advising defendants that claims against them may be overstated. In preparing reports which may
