When the deceased operated a business or freelanced, projecting lost income is far more complicated than with a salaried employee. A St. Joseph wrongful death lawyer often works with experts to present credible financial models. This article explains why self-employment requires a distinct legal approach in wrongful death lawsuits.
The Variability of Self-Employed Income
Calculating salaried earnings is usually straightforward, as paychecks remain relatively stable. Self-employed individuals, however, often experience income fluctuations that are dramatic from month to month. Whether it’s from market shifts, client demands, or seasonal trends, the unpredictability makes projecting future earnings more complex.
Lawyers and financial analysts typically review tax returns, profit-and-loss statements, and business records to establish a baseline for their analysis. While useful, these documents rarely capture the entire picture, especially when considering potential growth or a business owner’s ability to adapt to changing markets.
The Influence of Industry and Economic Conditions
Beyond personal business records, broader industry and economic trends must also be considered when estimating future income. A person’s financial prospects are often tied to forces outside their control.
For instance, consider a restaurant owner: In a strong economy with rising consumer spending, their business could grow steadily, allowing them to expand operations or hire more staff. However, during an economic downturn—or as seen during the COVID-19 pandemic—restaurants may face reduced demand, supply chain disruptions, and higher operating costs. These external shifts can significantly impact the owner’s ability to generate income, regardless of their past financial performance.
Because of these realities, financial analysts don’t review historical earnings. They also examine industry forecasts, regional market data, and long-term economic trends to build realistic projections. By incorporating both personal business history and the broader economic context, experts create a more accurate assessment of what the deceased might reasonably have earned had their career continued.
Accounting for Non-Monetary Contributions
Self-employed individuals often provide more than just income. Their contributions to a household can include benefits and services that would carry significant costs if the family had to replace them. These non-monetary contributions are a vital part of understanding the full financial impact of a wrongful death.
Many self-employed people pay for health insurance through business plans because it can be more affordable than purchasing private policies. Losing that coverage would create an immediate financial burden.
Similarly, if parents are self-employed, they may have flexible work hours that allow them to save thousands of dollars in childcare costs. Others may take on major household responsibilities—such as managing home repairs, running errands, or caring for aging relatives—that would otherwise require hired help.
Courts and financial experts increasingly recognize that these intangible contributions have measurable economic value. When constructing a damages model, analysts often calculate the replacement cost of services like childcare, household management, or elder care. By including these non-monetary factors, legal teams can ensure that the compensation awarded reflects not only lost income but also the everyday support that the deceased provided to their loved ones.
Building Accurate Financial Models
Unlike salaried positions with predictable wages, self-employment involves varied income streams, including contracts, projects, and business profits. This complexity requires a specialized approach.
Forensic economists and financial analysts use sophisticated modeling techniques that integrate:
- Historical earnings and business performance
- Market and industry conditions
- Projected growth potential (balanced against realistic risk)
By weighing these factors, they create credible estimates of lifetime earnings. Their findings are then presented in court in collaboration with legal teams, often condensed into clear and understandable reports for judges and juries.
Final Thoughts
Wrongful death cases involving self-employed individuals demand a tailored legal and financial approach. Unlike salaried workers, self-employed individuals often leave behind an uncertain economic picture, shaped by fluctuating earnings, business dynamics, and household contributions.
Through careful collaboration between a St. Joseph wrongful death lawyer and financial experts, families can present reliable economic models that reflect the true scope of their loss. This comprehensive strategy ensures that compensation is both fair and grounded in sound financial reasoning.