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A major part of any lawsuit is the question of damages [FOOTNOTE 1]. In some cases, the plaintiff claims the firm was destroyed by the conduct of the defendant, and therefore is seeking the value of the firm as damages. In other cases, the plaintiff may claim the defendant’s conduct caused a loss of sales and is seeking the profits on the lost sales as damages. If the loss of sales and profits continues into future periods, it is equivalent to a reduction in the value of the firm. Typically, lawyers retain an accountant or an economist to estimate the future lost income stream. If plaintiffs prevail at trial, however, they will likely be awarded a single lump-sum, not a stream of future or past payments. Thus, the parties’ damages experts will be asked to calculate the lump-sum payment that would be sufficient to compensate the lost stream of future and past income. To gain understanding of how to estimate damages, the lawyer should be familiar with the concept, “time value of money” (TVM). More precisely, the value of a dollar today (present value) is greater than a dollar tomorrow. This is because:

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