Providing Expert Testimony in Business Valuation

What to Watch For and What to Watch Out For

Expert testimony is not for the faint of heart. The best expert is that person who gathers trial experience well before the first testimony experience and in that time has not only developed the technical skills—meaning mastered and acknowledged the methodologies—but has also attended depositions, jury trials, and bench trials. The practitioner will also understand business valuation (BV) standards. This requires commitment, effort, and time. This article provides an overview of points shared by James Hitchner in his July13, 2021 webinar, “Providing Expert Testimony in Business Valuation: What to Watch For and What to Watch Out For.”

Expert testimony is not for the faint of heart. The best expert is that person who gathers trial experience well before the first testimony experience and in that time has not only developed the technical skills—meaning mastered and acknowledged the methodologies—but has also attended depositions, jury trials, and bench trials. The practitioner will also understand business valuation (BV) standards. This requires commitment, effort, and time. This article provides an overview of points shared by James Hitchner in his July13, 2021 webinar, “Providing Expert Testimony in Business Valuation: What to Watch For and What to Watch Out For.”

Evidence Rule 403, Excluding Relevant Evidence for Prejudice, Confusion, Waste of Time, or Other Reason, provides that:

The court may exclude relevant evidence if its probative value is substantially outweighed by a danger of one or more of the following: unfair prejudice, confusing the issues, misleading the jury, undue delay, wasting time, or needlessly presenting cumulative evidence.

As readers know, if the opposing party is funded, and an expert is disclosed on a timely basis, then, there may be a Daubert challenge. The goal of the latter is to remove the expert or limit the report. To get to this point, in theory, the party retaining the expert will have vetted the expert and received assurances that this is an area where the firm and expert is competent and prepared to offer helpful information to the court or jury in its fact finding. Readers of QuickRead are aware, that this does not always happen and that there are occasions where a so-called expert is proposed and listed as a witness. On those occasions, the firm name, personal relationship/network and/or prior unchallenged testimony, may have been instrumental in the selection process.

In this webinar, James Hitchner commenced the webinar using an actual transcript to highlight how an “expert”–well known—was removed by the court. None of the readers of QuickRead want to be removed. In this webinar, James Hitchner methodically broke down what one needs to know and what one needs to do and avoid doing.

The Deposition—What to Know and Avoid Doing

Once a report is prepared and one is named as the expert, one should expect to be deposed. Here are a few tips. First, this is a chance for the opposing party to test your opinion and basis. A case is not won at the deposition, but it can be lost or severely crippled. A big tip shared is that the expert has the right to answer questions by reading from the report. Second, if you take a break, anything said at the deposition is discoverable, including what was shared orally, via text and/or e-mail with legal counsel, your staff, or other expert friends. Come prepared. Third, do not waive your right to read and sign your deposition transcript. Fourth, you can correct your deposition transcript when the answer you gave is not what you believe is correct or is not what you meant to say. On this latter point, recognize that the reporter is human and working under pressure and may well have missed something in the transcription.

Of course, make sure your CV is correct and updated. Also make sure your website bio is consistent with the CV. Where the opposing counsel is hostile, be the better person and keep your calm and cool. There are also some business aspects too to address. Make sure your engagement letter contains language that your client will pay for the deposition time if the deposing attorney fails to do so.

The webinar also contained some “jewels” only learned from experience that touched on:

• What to do if the question asked does not make sense
• If the opposing attorney turns up the charm and says “help me out here”
• If you are being videotaped
• What to do if you need time to review a file or the report
• If you are asked to answer questions based on memory
• If you are asked at the beginning if the deposition to simply answer with a “yes” or “no”
• If you are not sure what to say
• What if you are asked to make assumptions
• What if you are asked about standards
• What if you are asked about other experts
• What to do if the attorney asking questions is supposedly reading from something
• What if you are asked how much time you spent preparing for the deposition
• What if you are asked whether you prepare differently for litigation vs non-litigation engagements
• What information, if any, was limited or excluded
• What documents, if any, where destroyed
• How many draft reports were prepared

Cross-Examination Question Skits

The second part of the webinar used materials created by James Hitchner or extracted from How to Become a Dangerous Witness, Steven Babitsky, Esq. and James J. Mangravati, Jr., Esq. and Cross-Examination: The Comprehensive Guide for Experts. The skits used underscored the importance of avoiding puffing to promote oneself as either “nationally recognized” or having “extraordinary independence.” There were also issues that one needs to recognize when it comes to the CV, Review or “Rebuttal” Testimony, claimed or lack of industry experience, training and qualifications, BV Standards, marketing of the expert witness practice, role attorney had preparing the case, what textbooks, if any, the expert considers as authoritative, whether the projections made could differ from what actually may happen.

Conclusion

Becoming an “expert” requires effort, dedication, time, experience, curiosity, the ability to self-assess, and ideally a seasoned mentor that is dedicated to bringing out the best in you and teach you in two hours what otherwise would take years. The person who does the latter is a true leader. This a superb webinar for aspiring experts, taught by a leader. Listen to it.

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Roberto H Castro, JD, MBA, MST, CVA, is Managing Member of the Law Office of Roberto H Castro, PLLC and Legal Compliance counsel for Equilus Capital Partners, LLC, a closely held Real Estate Limited Partnership Fund. He is also Technical Editor of QuickRead and a member of NACVA’s CUV team.

Mr. Castro can be contacted at (509) 679-3668 or by e-mail to rcastro@rcastrolaw.com.