Mitigation and offsets are the deductions that turn a gross loss into a net loss: the earnings the person has earned or can reasonably earn after the event, the profits a business recovered, and, where the governing framework directs, collateral payments such as disability benefits, personal consumption in a death claim, or income taxes. The economist applies each deduction explicitly and separately so counsel can include or exclude it as the law requires.
Every damages calculation involves at least one offset. Post-event earnings are netted in lost earnings and employment matters; personal consumption is deducted in wrongful death claims; replacement business is netted in lost profits; and the treatment of insurance, benefits, and taxes follows the venue's collateral source and tax rules as the collateral source guide explains.
Mitigation is a legal concept as well as an economic one: whether a person was required to accept particular work, or a business to take particular steps, is for counsel and the trier of fact, and the economist's role is to quantify the alternatives. Personal consumption percentages vary by method and data source, and the report should show the result under the alternatives when the deduction is contested. Collateral source and tax treatment differ by venue, so the report presents each offset separately rather than folding it into a single number.
Netting post-event earnings and deducting personal consumption in death claims are standard components of a damages calculation and are routinely admitted. Disputes arise over whether the post-event earnings assumed are supported by the vocational and medical evidence, over the consumption percentage, and over whether a deduction the venue prohibits was taken. A report that keeps every offset visible and separate is the practical safeguard.
No. The economist quantifies the post-event earnings the evidence supports and, where the parties dispute what the person could have earned, presents the loss under each version. Whether the person's efforts were reasonable is a question for the trier of fact.
The share of a decedent's income that the decedent would have spent on personal needs rather than on the household. It is deducted in a wrongful death claim because the survivors' loss is the support they would have received, not the decedent's gross income. The percentage comes from household expenditure data and depends on household size and income.
Where the venue requires after-tax figures, the economist computes tax on both the but-for and post-event streams from the person's filing status and presents gross and net figures side by side so the effect of the adjustment is visible. Where the venue prohibits tax evidence, gross figures are presented alone.
Request a consultation on Mitigation and Offsets or call (201) 343-0700. Plaintiff and defense counsel.