Retaining an economist in a commercial contract dispute requires a scope that names the damages measure the claim relies on: lost profits over a defined period, reliance costs, or the value of a destroyed business line. The engagement letter should state the damages period, the discount rate convention counsel expects the venue to accept, and the records the business will produce, including the general ledger detail that separates incremental costs from fixed costs. The conflict check should extend to affiliated companies and the counterparty's affiliates.
Checklist
Run the conflict check on the parties and their affiliates
State the damages measure and period so the analysis fits the claim
Request financial statements, tax returns, general ledger detail, and management reports
Obtain the contract, amendments, and pre-dispute projections or budgets
Document the business's actions after the breach to replace the lost volume
Questions to ask the economist
How do you establish but-for revenue when the contract had variable volume?
Which costs do you treat as incremental, and how do you support that treatment from the ledger?
How do you treat replaced revenue and avoided costs?
What discount rate do you apply to future lost profits, and why?
Timeline
About one week for retention and the records request, then two to four weeks of analysis after the financial records arrive, then one to two weeks for the draft and final report.
Required documents
The contract, amendments, and performance correspondence
Financial statements and tax returns for several years before and after the breach
General ledger detail and management reports for the affected revenue and costs
Pre-dispute projections, budgets, and business plans
Records of replacement business and post-breach results
Common pitfalls
Retaining for lost profits without the general ledger detail needed to separate incremental costs
Leaving the damages period undefined, so the analysis and the pleadings diverge
Withholding post-breach results, which the opposing side will obtain and use to show replaced revenue
Why does the economist need the general ledger rather than the financial statements alone?
Because the financial statements aggregate costs, and the lost profits analysis depends on which costs would have been incurred to earn the lost revenue. The ledger shows cost behavior by account and period, which supports the incremental cost treatment the opposing side will test.
How long does a lost profits report take?
About a week for retention and the records request, then several weeks of analysis after the financial statements, general ledger detail, and pre-dispute projections arrive, then a draft and final report. The account-level cost analysis is the longest step, and it moves faster when the business exports the ledger detail rather than summaries. Post-breach results should be produced at the same time.
What does the engagement letter say about the discount rate?
That the economist will select a rate reflecting the risk the lost profits would have carried, state its basis, and show the result under the alternative conventions the venue may accept. Counsel should flag any convention the court has applied in similar matters. Agreeing on how the rate will be presented avoids a late dispute over the method.
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
National Association of Forensic Economics. (n.d.). Journal of Forensic Economics. Retrieved August 27, 2026. nafe.net