As an attorney, having accurate work-life expectancy estimates is crucial for litigation and settlement purposes. It is one of the central figures required to calculate lifetime earnings, earning capacity, and damage totals in many legal cases. This article aims to assist attorneys in understanding the importance of having an expert use the best data available to calculate the work-life expectancy values in their case.
Since 1979, The Knowles Group has served the legal community by providing reliable economic damage calculations and expert witness testimony in courtrooms across North America. If you require an expert forensic economic witness to calculate economic damages and provide litigation consulting, call us at (206) 860-9477.
What is Work-Life Expectancy?
Forensic economists use work-life expectancy to illustrate the future earning capacity that should be considered when calculating damages. It is a statistical average of the total time an individual is estimated to be active in the workforce before retiring. Work-life expectancy is either assumed using Social Security and retirement age, or it is statistically measured using a combined average of probabilities of life, participation in the labor force, and employment rates based on work-life expectancy tables and labor statistics provided by The U.S. Bureau of Labor Statistics. Work-life expectancy is adjusted for periods when an individual may be involuntarily placed out of the labor force and affected by variables such as an individual’s age, gender, level of education, and disability. Work-life expectancy is also impacted by voluntary choices the average individual makes such as career transition and retiring earlier than would normally be the case.
Determining Work-Life Expectancy for Lawsuits
Determining work-life expectancy is critical to personal injury, wrongful death, and workers’ compensation, among other lawsuits. Expert forensics use work-life expectancy to calculate loss of earning capacity, total labor force participation, and other potential damage figures crucial to determining fair compensation and settlement values. When calculating work-life expectancy, expert forensics use multiple tools to reach accurate calculations, including
The Markov Model
The Markov Model is an essential tool for determining work-life expectancy in litigation. It is based on the idea that an individual’s future employment and earning potential depends only on their current state, not on past events.
When applying the Markov assumption to determine work-life expectancy, expert forensics use statistical methods and data analysis based on the plaintiff’s current state and the limitations or restrictions caused by injury and other factors. Using this data, the forensic creates an assumption that uses the Markov assumption to predict the plaintiff’s future employment, total labor force activity, and earning potential based on different scenarios and suppositions.
The Life-Participation-Employment Approach
Expert forensics sometimes use work-life tables and the Markov assumption in conjunction with the Life-Participation-Employment (LPE) approach, which considers an individual’s overall health, personal habits, and other variables that may affect their ability to work over their lifetime.
The LPE Approach involves a comprehensive assessment and analysis of the plaintiff’s medical history, current health status, employment history, and other variables to provide a more thorough analysis of the plaintiff’s work-life expectancy, leading to more accurate future employment and earning potential predictions used to determine damages and compensation.
Factors that Influence Work-Life Expectancy
Work-life expectancy is a complex concept influenced by a wide range of factors throughout the plaintiff’s lifetime. While the list is much more extensive, the following significantly impact work-life expectancy estimates, and therefore, average lifetime earnings.
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Age
Age is one of the most important factors when calculating work-life expectancy. As the plaintiff ages, their ability to work decreases, and they are more likely to experience health issues that limit their earning capacity and ability to participate in the labor force.
Level of Education and Occupation
Education level and occupation can also significantly impact work-life expectancy, as plaintiffs with higher levels of education and more skilled occupations have more job opportunities and higher earning potential.
Health Status
Health status is another critical factor in determining work-life expectancy. Pre-existing medical conditions, such as heart disease or diabetes, can limit an individual’s ability to work and may impact their future earning potential.
Injuries and Disabilities
Injuries or disabilities also significantly impact work-life expectancy, as they may limit an individual’s ability to perform specific jobs or tasks and lower their earning capacity.
Lifestyle Habits
Lifestyle habits also impact work-life expectancy. Smoking, drinking, and a sedentary lifestyle have all been linked to a higher risk of health issues that can limit an individual’s earning capacity.
Examples of Work-Life Expectancy Use in Litigation
Work-life expectancy is an important figure used to determine various forms of compensation in multiple litigation cases. Based on the nature of the case, expert forensics will utilize work-life expectancy estimates in different ways to determine accurate settlement calculations. The following are examples of how work-life expectancy can be used in litigation.
Work-Life Expectancy in Personal Injury, Accident, and Wrongful Death Cases
A 25-year-old software engineer is killed in a car accident caused by a negligent driver. They had a promising career ahead of them and were on track for early retirement. Now, their family is seeking compensation after their untimely death. During litigation, work-life expectancy is used to estimate the potential earnings they would have made if they had lived. Based on their education, occupation, and other details, it is determined that they would have worked for another 35 years, earning an average of $100,000 per year.
An expert forensic will use this information to calculate the total wrongful death damages the family may be entitled to receive, such as lost future income and other losses resulting from the death.
Work-Life Expectancy in Workers’ Compensation Cases
A 30-year-old construction worker falls from a scaffold at work and injures their back. They cannot return to work despite multiple surgeries and treatments, leaving them permanently disabled. During litigation, work-life expectancy is used to estimate the potential earnings they would have made if they had been able to continue working. Based on their education, age, and other details, it is determined they would have worked for another 25 years, earning an average of $75,000 per year.
An expert forensic will use this information to determine the extent of their disability and the compensation they may be entitled to receive from the employer.
Work-Life Expectancy in Medical Malpractice Cases
A 50-year-old lawyer undergoes surgery to repair a herniated disc in their cervical spine. During the surgery, the surgeon inadvertently damages a nerve in the patient’s spinal cord, causing permanent nerve damage and chronic pain. As a result, the patient can no longer perform their job due to the injury and sues for medical malpractice.
During litigation, the plaintiff’s legal team claims a work-life expectancy of 25 years and demands $2.5 million in lost earning damage. Likewise, the defendant hires an expert forensic to perform damage calculations. Using the Markov Model, the expert forensic calculates that the patient’s work-life expectancy is actually 15 years. Based on the patient’s previous earnings and other factors, the expert forensic calculates that the patient’s lost wages over these 15 years amount to $1 million and provides witness testimony to support the calculations. As a result, the court rules that $1 million is an appropriate amount of compensation.
We Provide Work-Life Expectancy and Economic Damage Calculations
Economic consulting is critical to achieving desired outcomes in both settlements and trial verdicts, of which our firm has decades of successful experience. At The Knowles Group, we work nationwide with attorneys and litigation firms to provide forensic economic consulting services. Our expert analysis helps to prove both valuation and damages in various legal cases, including those requiring work-life estimates.
If you’re an attorney with a case that requires the services of an expert forensic economist, contact us today to schedule a complimentary case evaluation and learn how we can serve you and your clients.
