Categories of damages
Compensation in a civil case is usually divided into economic losses, such as medical bills, lost income, repair costs, or lost profits, and non-economic losses, such as pain and suffering, which are available in injury cases but generally not in contract disputes. Future losses can be included when they are reasonably certain, which often requires testimony from doctors, economists, or vocational consultants. Punitive damages are a separate category meant to punish serious misconduct, and they are awarded only in limited situations. Contract cases are usually measured by what the deal would have provided, and the agreement itself may limit or exclude certain damages. Interest can also be part of a recovery in some cases.
The gap between an award and a payment
A judgment is only as good as the defendant's ability to pay it. Insurance coverage often defines what is realistically collectible, and policy limits influence settlement in many cases. From the gross amount, attorney's fees and case costs are typically deducted under the fee agreement, and in New York, contingency fees in personal injury cases are capped by court rules. Medicare, Medicaid, workers' compensation carriers, or some employer health plans that paid for your care may have reimbursement rights that must be resolved first. Tax treatment differs by type of recovery: compensation for physical injuries is generally not taxable under federal law, while lost wages in an employment case, interest, and punitive damages usually are.
Building the damages side of your case
Proving damages takes documentation, and gathering it early helps. Keep medical bills and records, pay stubs and tax returns, receipts for out-of-pocket expenses, and records of how your life and work have changed. For businesses, financial statements and contracts show what was lost. We review what you have, explain which categories may apply to your situation, and identify what further proof is needed. We will not quote you a number at the outset, because value depends on facts and evidence that develop over time. When the tax consequences may be significant, a tax adviser should review how a settlement is structured.
