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Employee benefits are significant in the computation of economic damages (losses) in a wide variety of legal cases. The expert witness, narrowly defined as a forensic economist in this article, often does not have the practical background to probe nuances that can significantly impact the estimate of losses. On the other hand, the benefits practitioner is often responding to legal requests without understanding the implications of the information provided, or being asked for input into benefits explanation or interpretation. This is a descriptive article that brings these two perspectives into the same arena by reviewing the methodologies and computational framework and providing illustrative anecdotes that catalyze practical and academic experience.
A few years after receiving my CEBS designation, I began preparing reports that estimated economic damages in a variety of legal cases. This evolved into more formal expert witness work, including deposition and trial testimony. However, some of the more interesting analytic work has been reviewing the reports submitted by other expert witnesses and providing "second opinions." After about ten years, I am still struck by the frequent lack of thoroughness in estimating the economic value of lost benefits in forensic reports.
This in part reflects a lack of applied experience of academics who serve as expert witnesses. Not that a practitioner background should be a qualification in every case, but there are many occasions in which the practitioner perspective can be invaluable. On the other hand, it is also instructive for the practitioner to have an idea of how the expert witness views benefits in the total compensation context. Bringing these two perspectives into the same arena is the objective of this article.
There are very few published works that have focused on benefits in forensic economics cases. A bit of Internet research (using variations of keywords: "benefits and expert witness") turned up only three Web pages, each describing consulting that was primarily keyed to insurance industry practices. I then reviewed the titles of all articles published in Benefits Quarterly to find only one (Weiss 1990) suggestive of the topic of this article. However, a subsequent reading of this find revealed that the objective was demonstrating how benefits growth impacted the value of total compensation over long periods. This is an important...