Forensic Accountants are often asked to assist attorneys and insurance companies in the quantification of economic losses resulting from personal injury, wrongful death or lost employment. Individuals are assets that can generate a stream of current and future earnings and factors like age, education/training, geographic location, gender, race, occupation, industry, union membership, and health can impact this future stream.
The main goal of the forensic accountant in personal injury, wrongful death, and similar types of damage cases, is to calculate damages as a lump sum today that incorporates the economic losses the plaintiff has incurred in the past and will reasonably incur in the future. This assessment is made as of the trial date, which involves several challenges. Future damages are unknown, thus, how does the expert provide an estimate that is economically reasonable? The damages expert cannot opine regarding the probability of their analysis being correct without undermining their credibility and facing possible impeachment as an expert witness. What information and data is needed to make a damages argument? How does the forensic accountant deal with inflation, union status, partial year payments, fringe benefits, and a host of related issues? How does the expert compute an appropriate lump sum at trial date? The role of the damages expert is to assist the trier of fact and to be objective in estimating economic damages. This means that the expert’s opinions should not vary depending on whether the expert is working for the plaintiff or defense.
Attorneys typically choose a forensic accountant to estimate damages. Regardless of who is chosen, the expert should have knowledge and experience that uniquely qualifies them as a specialist or expert in the field. This typically means holding various graduate degrees. In addition to advanced degrees, the expert’s credentials may also include memberships in professional societies, a relevant publication record (especially in peer-reviewed journals), academic positions, and past experience in providing expert witness testimony. This last issue is most important, since credibility as a witness is crucial to courtroom success and that largely depends on demeanor, appearance, and non-verbal behavior rather than a long curriculum vitae. This is not to say that credentials and an excellent analysis are unimportant, but as these are becoming increasingly common, skill in courtroom presentation may be the critical element.
Whether you’re dealing with a personal injury, wrongful death or lost employment, the positive impact of an accomplished forensic accountant can be significant. Individual damage cases will often benefit from the services and skills of an experienced forensic accountant, which include: accounting, tax, general business and financial consulting, strong analytical and research skills, as well as legal knowledge. Forensic accountants also bring intellectual curiosity, professional skepticism, attention to detail, persistence and the ability to think creatively and communicate effectively.