A commercial contract dispute needs an economist when the claimed loss is profits that would have been earned had the contract been performed, because that figure has to be reconstructed from the contract terms, the business's history, and the costs that would have been incurred to earn the revenue. A claim limited to a liquidated amount or an invoice may not require an expert. Once lost profits, lost related business, or the value of a destroyed business line are claimed, the but-for analysis and the incremental cost treatment call for an economist. Counsel should first gather the financial statements and the contract, because the analysis starts there.
Checklist
Gather the contract, amendments, and any projections or budgets prepared before the dispute
Assemble financial statements and tax returns for the years before and after the breach
Identify the revenue attributable to the contract and any related business that depended on it
Document what the business did after the breach to replace the lost volume
Note whether the claim is lost profits, reliance costs, or the value of a business line, since the method differs
Questions to ask the economist
How do you separate incremental costs from fixed costs so only the lost margin is claimed?
What do you rely on for but-for revenue when the contract had a variable term or volume?
How do you treat revenue the business replaced after the breach?
Can you provide a preliminary range from the financial statements before a full engagement?
Timeline
Two to three weeks to a preliminary lost profits range from the financial statements and the contract. The full report follows the retention and records phases.
Required documents
The contract, amendments, and correspondence bearing on performance and volume
Financial statements and tax returns for several years before and after the breach
General ledger detail or management reports for the affected revenue and costs
Pre-dispute projections, budgets, or business plans
Common pitfalls
Claiming lost revenue rather than lost profit, which the opposing side corrects at the first opportunity
Treating fixed costs as avoided, or variable costs as fixed, without support in the business's own records
Ignoring the revenue the business replaced after the breach
Is lost profits the same as the value of the business?
No. Lost profits measure the margin the business would have earned over a defined period; lost business value measures what the business or a business line was worth when it was destroyed. The two are alternative measures for the same harm in some matters and claiming both for the same period double counts. The economist identifies which measure fits the claim.
How long does a preliminary lost profits range take?
A few weeks once the contract and the financial statements are available, because the economist has to identify the revenue tied to the contract and separate the costs that would have been incurred to earn it. A full report follows the records request for general ledger detail and management reports. The timeline depends more on the condition of the business's records than on the size of the claim.
Who decides which damages measure applies?
Counsel does, from the contract and the governing law; the economist measures the loss under the measure counsel identifies and can present alternatives where the pleadings preserve them. Lost profits, reliance costs, and the value of a destroyed business line are built from different records and cannot be added together for the same period. Fixing the measure before the engagement keeps the report aligned with the claim.
References
American Institute of Certified Public Accountants. (n.d.). Statement on Standards for Valuation Services (VS Section 100). AICPA & CIMA. Retrieved August 27, 2026. aicpa-cima.com
U.S. Department of the Treasury. (n.d.). Daily Treasury par yield curve rates. home.treasury.gov
American Academy of Economic and Financial Experts. (n.d.). Journal of Legal Economics. Retrieved August 27, 2026. aaefe.org