Preparing for Expert Witness Testimony, Part 2 of 2

Getting ready for your day in court

Part 1 of Preparing for Expert Witness Testimony was published in QuickRead in August 2013.  The article dealt primarily with the importance of effective engagement letters and information gathering in the expert witness preparation process.  It would behoove readers to revisit  Part 1 to receive the full value of the expert witness process. 

Part 1 of Preparing for Expert Witness Testimony was published in Quick Read in August 2013.  The article dealt primarily with the importance of effective engagement letters and information gathering in the expert witness preparation process.  It would behoove readers , to revisit  Part 1 to receive the full value of the expert witness process. Let’s now set the stage… 

The expert has been engaged by legal counsel to serve as an expert witness.  The expert has proceeded to gather all the information to support his or her calculation(s) and opinion(s).  The next step in the process is to prepare the report.

The Report

Expert report writing is an art.  Even though there is no exact method of presentation, there are required items that need to be provided in a concise and effective manner.  I was very fortunate to attend the Report Writing Clinic at NACVA’s 2013  Annual Consultants’ Conference in Washington, DC this past June.  The Clinic was very capably co-moderated by Howard Zandman, CPA/ABV, MAFF, who provided an in-depth refresher in this art.  I say “fortunate” because my knowledge was reinforced and supplemented with a few important details.  One such detail is that the expert’s  report could become a public document, if filed with the court.  Once a public document, the  report can be scrutinized not only in the current case, but future cases that the expert is  involved with.  It becomes a “living document’ that the expert  carries for the rest of his or her  career.  Hence, the importance of publishing a concise and accurately “word-smithed” report that supports the expert’s opinion(s).

Report Cover

The cover of the  report must include the court of jurisdiction, case name and number, and the expert’s name  and designations  which can appear, for example, as follows: “Expert Report of John J. DeLuca, CPA, CVA.”

Assignment

I typically then follow with the y assignment for the case.  The “Assignment” section will briefly describe who hired the expert (–typically legal counsel for either the plaintiff or defendant), why the expert was  hired (“…level of damages incurred by the Plaintiff…”) and, briefly, what the  expert opinion(s) will entail. 

Professional Background

Some experts prefer to start with  the “Professional Background” section before the “Assignment” section.  The “Professional Background” section can either be a detailed description of  the expert’s experience, background, and professional designations or a brief preamble.  I prefer the brief preamble and include a detailed Bio/CV as an attached exhibit in the report.  I review and update my Bio/CV bi-monthly and when a significant event occurs of note.  The expert must also be diligent in expeditiously updating any networking Bio/CVs that are out on the web (Such as: LinkedIn, NACVA’s web site, etc.).  The last thing an eExpert wants to face are “dueling” Bio/CVs in a court or deposition appearance.

Experts should be mindful that their Bio/CV in a federal court case must include, under Rule 26, a listing of all publications authored within the last 10 years and a list of all cases in which  one has testified as an expert witness (either in court and deposition) over the previous four  years.

Understanding of the Factual Background of the Dispute

The next section is  the “Understanding of the Factual Background of the Dispute.”  I typically footnote the heading of this report section to alert the reader as to my basis.  I acknowledge the factual background is based upon various sources, including the complaint.  The background provided is only a summary, and that fact witnesses will provide the actual foundation for the facts set out in this section.

The expert will then provide a description of the plaintiff and defendant and the allegations for which he or she is providing an expert opinion on.  Another caveat is also important at this juncture if the expert  was hired by the plaintiff’s legal counsel. The expert will need to alert the reader that, “This report was prepared based upon the assumption that liability will be proven by the Plaintiff’s attorney.”

Opinion of Damages or Summary of Findings

The next section should be the “Opinion of Damages” or “Summary of Findings,” based on what type of expert report one is preparing.  A measurement report calculates an opinion on damages. An investigative report provides an opinion based upon the review of factual information provided, whereby a “Summary of Findings” is appropriate here. 

This section is more of an executive summary of the expert’s  conclusions, which is followed by the “Basis for Opinion(s)” or “Detailed Findings” section. Again, this is customized based upon what type of report  is being prepared. 

Basis for Opinion[s] or Detailed Findings

This is the “meat” of the report.  Here, one  must outline the process of information gathering; identify the significant information acquired; describe the calculations employed and the reasoning for  the opinions and conclusions; and state one’s conclusions, findings, and/or opinions based on the aforementioned information.

It is important to describe the process in a logical and concise manner, step by step, that leads the reader to the expert’s  ultimate opinion(s).  Remember who the reader/audience is.  Typically, the writer will find himself or herself  trying to explain highly technical calculations and/or accounting rules and techniques to laymen.  The best way to communicate is to provide the readers with “down-to-earth” language.  The previously provided credentials will prove the knowledge of the subject matter.  There is no need to attempt to impress the readers with a high- level lecture on forensic accounting and valuation theories.  The readers will be ‘lost in the weeds” by the time the expert  states his or her  opinions.

Also consider stating something to the effect that, “I have reached my opinion(s) within a reasonable degree of professional certainty” or words similar to that effect.  The expert’s  professional certainty/judgment, based upon his or her  experience and the professional standards followed, are the “guiding lights” in reaching one’s [ opinion(s).”

Compensation

The expert needs to  state the  rate of compensation in the matter.  Typically, the expert will quote the hourly rate agreed upon in the engagement letter and at which the expert has been paid.  It is also important to state that, “My fees are not contingent upon any finding or result in this matter.”  This is stated because, contingent fee arrangements could be deemed to affect the expert’s judgment, especially in measurement reports.  The higher the measurement, the higher the expert’s compensation.  Therefore, there is no way that an expert witness would enter into a contingency fee arrangement and maintain independence in the expression of an opinion to the court. 

Resources Relied Upon

The expert should also state which standards  were relied upon (e.g.,  generally accepted accounting principles (GAAP), NACVA, etc.) and the materials obtained to reach the  opinion(s).  I typically provide an attached exhibit to the report that individually names specific standards, data, and information relied upon and included within my working papers. 

Another caveat is appropriate here.  Since discovery may still be open as of the dating of the expert’s report and new information may come to light that may affect the report, the expert will want to provide a window of opportunity for these events.  A sentence such as, “…as discovery in this matter continues, I reserve the right to amend my opinions should additional materials become available that may require such amendment.”  This leaves the door open for accurately reporting significant future events beyond the date of the initial report.

Signature and Date

The expert has now arrived at the completion of the report.  Some experts may elect to add additional sections and information other than those aforementioned.  But all successful experts include the information previously discussed in a precise, concise, and effective manner.

To complete the report, the expert will sign his or her name  (not the firm’s name), including his or her credentials and providing the date of the report; the latter of which should coincide with the end of fieldwork.

Summary

The premise of this two-part article was how to preparing for expert witness testimony.  An astute reader of both articles may arrive at the question of, “Where is the discussion on expert witness testimony?”   That reader would be correct in that no direct discussion was provided.

The same astute reader, after some reflection, may soon arrive at the answer to the question,   “Why not?” Well, it is somewhat simple, as most important things are.  Preparing for expert witness testimony is a process.  The process follows a somewhat logical path.  No step in the process path is more important than any other.  The expert will conduct due diligence before  taking on the client; this is important. In addition, the expert will review the report to ensure the spelling and math, if any, is correct.  The expert that  treats each step accordingly and is the  lucky expert—that is, one in that 5 percent category whose case actually proceeds to trial—will be adequately prepared.   

[author] [author_image timthumb=’on’]http://m.c.lnkd.licdn.com/mpr/mpr/shrink_200_200/p/3/000/0c7/1ee/08ffc81.jpg[/author_image] [author_info]CJohn J DeLuca, CPA, CVA, is currently the managing director of Succisa Virescit, LLC, an international consulting firm specializing in the areas of forensic accounting, litigation support, business valuations, and expert witness testimony.  Mr. DeLuca’s experience spans more than 30 years of practice. John can be contacted at jdeluca@carpediemconsult.com. [/author_info] [/author]