If I’ve learned one thing over the years working as a credit expert witness it’s that there’s no single metric for calculating economic credit damages. Some experts award a dollar for dollar declined as their damage amount. Some experts award a dollar for dollar declined plus the tax liability as their damage amount. Some experts assign a percentage of the dollar amount declined or lost as their damage amount. And still other experts avoid the quantification process altogether, likely because they’re uncomfortable with the process.
I’ve actually started using all three of the common methods in my expert reports when I’m asked to include credit damages, which means my reports now have a range of damage amounts. The “percentage of the dollar amount” is the low end of the range. The “dollar for dollar plus tax liability” is the high end of the range, with the “dollar for dollar” amount in the middle.
This is a good starting point for discussion because it gives your client and opposing counsel a variety of dollar amounts to consider going forward. It also, in my mind anyway, makes any numbers much more defensible because you’re using a variety of metrics used in the industry rather than just one. And while opposing counsel is certainly going to want you to choose a figure as your “final opinion” it’s certainly reasonable to consider damages in a range rather than as an exact figure.
Credit Damage Expert, John Ulzheimer, is the President of The Ulzheimer Group, President of Consumer Education at SmartCredit.com, the credit blogger for Mint.com, and a Contributor for the National Foundation for Credit Counseling. He is an expert on credit reporting and credit scoring with over 100 cases as a credit expert witness. Formerly of FICO, Equifax and Credit.com, John is the only recognized credit expert witness who actually comes from the credit industry.