When giving expert testimony, CPA valuation analysts should be prepared to have their reports and testimony withstand the scrutiny of litigation and cross-examination. The following guidelines can help the valuation analyst prepare for potential vulnerabilities that opposing legal counsel may try to exploit.
Check
your resume.
Opposing
counsel typically investigates the valuation expert’s resume or
curriculum vitae. Make sure that the information contained in the
resume is current and that it does not contain any misstatements.
Anticipate
questions.
Opposing
counsel will review the valuation analyst’s prior testimony and
published writings. Be prepared for questions concerning any prior
statements that appear to be inconsistent with the current opinion.
Consider
your relationship with the adverse party.
Valuation
analysts should have no confidential relationship with the adverse
party. Determine whether you were ever contacted by the adverse
party in connection with the subject case.
Be
knowledgeable about the facts.
Courts
typically find the opinions of even a highly qualified expert to be
unpersuasive when the expert is not familiar with the specific facts
of the subject case.
Be
prepared for the deposition.
Expect
the following deposition questions: Have you reached any opinions or
conclusions not contained in your report? Have you been asked to
form any other opinions? Do you plan to offer any other opinions?
What additional work, if any, do you plan to perform related to this
case? (The expert testimony may be excluded if the adverse party
shows that the valuation analyst was not prepared to state his or
her opinion at the deposition.)
Understand
the valuation analysis and how to perform the calculations in
that analysis.
Prepare
for the following questions: Did you write the entire report
yourself? Did anyone assist you? Does the report include any text
that was written by your assistants? Does the report include any
analysis that was performed by your assistants?
Understand
the requirements of Federal Rule of Civil Procedure 26(a)(2).
The
rule governs the report contents and when the expert report should
be completed and delivered to the client’s legal counsel. A
valuation expert’s report may be excluded if these discovery rules
are not followed.
Be
sufficiently versed on the information in the expert report.
The
report should include a list of the documents and testimony that the
expert reviewed. You should be able to explain why you selected the
information that formed the basis of the expert opinion.
Learn
everything possible about the opposing expert’s position.
While
there are some situations where expert reports are not exchanged
until the trial, valuation analysts will typically have access to
the opposing expert’s report. In addition, you should ask for the
workpapers that support the opposing expert’s analysis and conclusion.
Will
the expert opinion make sense to a layperson?
Even
if the valuation analysis is 100% correct, it may not be persuasive
to a finder of fact if it is not understandable to a layperson.
—By Robert Reilly, CPA/ABV/CFF, (rfreilly@willamette.com) a managing director in the Chicago office of Willamette Management Associates, a valuation consulting, economic analysis, and financial advisory services firm.
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