By Stephen L. Ferraro, CPA/ABV/CFF, MAFF, CVA, CEPA
Whether working for the Plaintiff or the Defendant, selecting a forensic CPA and commercial damages expert is typically a very important decision all attorneys need to make in a complex commercial litigation matter. In most cases the jury, and even the trier of fact, will not be very well versed in the financial issues. Consequently, the damages expert needs to be a person who can explain complex accounting and financial concepts in a clear, concise and easy to understand manner. A capable expert will be able to explain how these concepts relate to the economic damage model and supporting calculations. As many attorneys recognize, finding a suitable expert can be a challenging process.
Several factors must be taken into consideration before selecting the right expert, particularly if the prospects for deposition and/or trial testimony are significant. Engaging an experienced and knowledgeable expert who has previously testified in a deposition and/or trial can be very valuable for the attorney and their client. The following are some specific factors that should be considered when selecting a commercial damages expert:
Relevant and Current Training: The expert should have formal forensic training specific to the calculation and presentation of commercial damage analyses in a litigation or similar contentious environment. Many organizations which grant supporting forensic credentials (discussed below) require that minimum continuing educational requirements be met to maintain their designations. A typical requirement is 120 hours over a three-year period…or. on average, 40 hours per year.
Related Forensic Experience: Attorneys should evaluate the commercial damage expert’s amount of relevant experience. Look for a damage expert who has worked on comparable cases. While lack of prior industry experience in most cases is not a deal breaker, it might be preferred in certain instances.
Previous Testimony Experience: Attorneys should investigate previous cases to see the opinions and reports the damage expert has issued in the past for deposition or trial. Counsel should also find out whether an expert has been subject to Daubert challenges and/or has had their opinion excluded at trial. This is a critical part of the selection process.
Supporting Credentials: The damage expert’s credentials are an important part of the decision-making process. The attorney should look for a damage expert with relevant credentials governed by the American institute of Public Accountants (AICPA), the National Association of Certified Valuation Analysts (NACVA) and other relevant organizations. Some of the more pertinent credentials are the following: Certified Public Accountant (CPA), Master Analyst in Financial Forensics (MAFF), Certified Business Appraiser (CBA). Chartered Financial Analyst (CFA), Accredited in Business Valuation (ABV), Certified in Financial Forensics (CFF) and Certified Valuation Analyst (CVA). The damage expert should also be an active participant in the organizations that monitor their relevant designations.
Communication Skills: It’s important that the attorney evaluate the damage expert’s communication skills. The attorney should consider how the expert will communicate their findings during testimony and determine if that communication style will be effective.
Positive References: Attorneys should also ask for prior case references from the expert and contact their colleagues to see if they have any prior experience or knowledge in working with or against the damage expert. There are many instances in which attorneys’ partners or colleagues have prior dealings with a damage expert and can give good insight into whether he or she will be a fit for a case.
Once the attorney has selected a commercial damages expert it’s important for them to keep the following in mind when working with the expert and preparing for your case:
Scope and Timing of Work: The damage expert should understand the scheduling order and work to develop the expert report and prepare for potential deposition and trial testimony. The attorney should understand the time it will take for the expert to prepare the report based on the scope of the assignment.
Damage Theory: Explore and debate various damage theories with the damage expert and decide together which damage theory best matches the facts of the case.
Document Requests: Whenever possible, the damage expert should make a formal document request well before discovery closes. This should allow for an initial review of preliminary documents and a follow up document request, if necessary. It’s imperative to provide the expert with all the necessary documentation for their analysis to enable them to prepare a sound expert opinion or rebuttal report.
The Expert Report: Discuss the requirements of the expert opinion or rebuttal report and the level of detail that needs to be included.
Preparation for Deposition and Direct & Cross-Examination: Work with the damage expert to prepare them for direct and cross-examination. Prior to deposition and trial, the attorney and damage expert should evaluate the opinions issued and information used in the expert report to anticipate the questions that might be asked in deposition and cross-examination. It is critical for the attorney to communicate questions or topics which may be asked by opposing counsel so the damage expert can be adequately prepared.
Attorneys who understand the process for selecting and working with a commercial damage expert can improve their chances of successful outcomes. Once engaged, the expert and counsel should work together to make sure that they both understand the scope of the assignment for both report as well as deposition and trial preparation.