Part I of III This is Part I of a three-part series discussing the basic components of a professional liability lawsuit brought against an accounting firm and its partners; and the factors a firm’s managing partner should consider before and during this type of litigation for utilizing applicable insurance coverage, maximizing effectiveness of defense and, where possible, bringing the controversy to conclusion by settlement. Part I focuses on the current litigation environment for accounting firms, relevant provisions in engagement letters, responding to subpoenas, professional liability insurance, and the risk of instigating a professional liability counterclaim in a fee-collection action. Part…
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Advise for Budding and Experienced Experts The third edition of The Comprehensive Guide to Lost Profits and Other Commercial Damages is marked departure from the prior editions. This two-volume set is replete with valuable information and insight from experienced practitioners.
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The Danger of Not Considering Other Potential Sources of Harm To recover lost profits in commercial damages litigation, three standards must be met: proximate cause, foreseeability, reasonable certainty. While all three are important, proximate cause does not always receive a great deal of consideration among experts. Although the question of causation is generally left to the trier-of-fact, financial experts not addressing other potential factors for declines in sales or profitability as a part of their analysis can find themselves excluding from testifying. This is because courts have found the failure to consider causation to be a flaw in the expert’s…
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Conducting Due Diligence on the Expert and Setting Expectations of the Expert Witness in a Litigation Engagement One of the risks of doing business today is getting involved in business disputes. Disputes take many forms. Disputes can be resolved through negotiation, mediation, arbitration, or litigation. Business disputes are frequently complex and the parties involved are sophisticated and motivated to succeed. It has become routine in complex commercial disputes to use expert witnesses to assist in preparing a case and in interpreting the facts of the dispute. Expert witness testimony and expert reports have become the norm in commercial disputes. This…
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As a Fraud Deterrence Tool Trained forensic professionals investigate accounting and financial transactions that are, or will become, subject to legal proceedings. It is an early step in a potential war, and many times it is the first shot. Attorneys and c-level executives are often not familiar with forensic techniques and see it as a means to quantify a loss. Financial forensics also provides a means to deter and detect fraud. In this article, I share my views on the value of forensic techniques used to deter fraud.
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The Importance of Being Truly Independent The rise of Daubert challenges to valuation experts has resulted in more than just the exclusions of valuation experts. When an expert is excluded for “subjective belief” and “unsupported speculation” by the court, a closer examination into such commentary made by courts reveals the increasingly problematic trend of experts failing to perform independent analyses.
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Thoughts from Experienced Litigation and Business Valuation Professionals Entering the Industry In this article, seasoned BV and litigation support professionals John DelGrego and Heidi Walker share why litigation can be invaluable to a BV professional. The co-authors also expound on the professional perils and high expectations placed by the Tax Court on expert witnesses. Expert witnesses must be objective, current on the law, and persuasive.
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Recognizing Hindsight and Projection Bias How can one expert opine that the company is insolvent and another expert—viewing the same financial statement—opine that the company is solvent? In this article, Michael Vitti answers this question and provides an overview of what is considered a preference and a fraudulent transfer.
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Opinions are like viewpoints; everyone has one Opinions are often provided in connection with calculation values and a conclusion of value. SSVS No. 1 does not prohibit or explicitly endorse either. In this article, Jim Hitchner shares his views on whether the term “opinion”―offered in a litigation or non-litigation engagement—should be used as part of the engagement or offered in connection with a calculated value.
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Anticipating questions allows us to think through the best ways to phrase our responses Questions about an expert’s skills and work can be phrased in ways that make it difficult to answer accurately on the spot, but advance preparation can smooth the process.
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Forensic professionals endure trench warfare Discovery provides a window of opportunity to gather evidence and develop expert reports. A trained forensics professional can ascertain whether cash deposits were all accounted for or secreted. It is advisable and well worth the time, trouble, and money to retain a forensic professional to conduct an analysis.
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Updated guidance for taxpayers seeking equitable relief from section 66(c) or sec. 6015(f) of the Internal Revenue Code Revenue Procedure 2013-34 provides update guidance regarding the circumstances under which equitable relief will be granted. It supersedes Rev. Proc. 2003-61 and makes significant changes to when and how relief will be considered and granted.
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Over 85 Percent of the World’s Information is Stored Electronically, and Over 50 Percent of that Information is Never Printed Out With over 85 percent of the world’s information stored electronically, and over 50 percent of that information never printed out, it’s more important than ever to make sure that electronic discovery related to pending litigation is performed thoroughly—and tracks information on multiple mobile devices, as well as desktop computers. Karl Epps explains how a forensic technologist can help.
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Annie Cushing is on a Mission to Rid the World of Ugly Data. Learn About Data Collection, Analytics, Technical SEO, Analysis, and Beautification. Annie Cushing, a Senior SEO at SEER Interactive, a Philadelphia-based online marketing agency, explains that “There comes a time in a marketer’s life when making pretty charts with a predefined dataset just doesn’t cut it. “And finding the sum and average of a column of data just doesn’t satisfy you anymore. Eventually — and it’s really inevitable — you will actually have to dive deep into the data and cull out a smaller dataset or manipulate it…
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Here are four surprising ways to protect yourself in a law suit and keep legal fees to a minimum. Kevin Daum at Inc. advises: “Shakespeare said, “First kill all the lawyers.” Maybe this seems a tad aggressive, but then again, for most people the last thing you look forward to is someone showing up at your door with a subpoena. Whether a lawsuit is business related or personal, the thought of engaging an attorney for protracted litigation can strike fear into a person’s heart.” Not only is there emotion and argument to contend with, but the sheer agony of…
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Innovation Decreased by 40% at Technology Companies After They Went Public, Finds Stanford Graduate School of Business Study Leslie Kwoh at the Wall Street Journal reports that while many tech entrepreneurs dream of taking their companies public, they may want to think twice. While public offerings raise cash, new research suggests that IPOs can also result in stunted innovation at technology firms. Here’s more:
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What Happens When a Business is In Over Its Head and Who is to Blame? When firms approach bankruptcy, a definition of what constitutes “deepening insolvency” becomes critical in establishing the legitimacy of litigation concerning damages, breach of fiduciary duty, and more. Michael J. Molder explains context, consequences, and case law on the matter.
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Maintaining Professionalism Under Pressure and Under Oath Different legal professionals can use vastly different deposition techniques. John R. Markel shares two starkly different experiences with depositions, and details how to prepare yourself for the standard questions as well as how to cope with curveballs.
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What Can be Won by Avoiding Litigation? By using the litigation-derived adversarial process as a template to educate and a resource for better decision-making, writes Paul Leiman, owners may well find that litigation itself can be avoided. Find out how.
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Avoid Hypotheticals. But Remember: Experienced Experts Recognize that Limited Evidence Will Often Support a More Limited Opinion Michael Kaplan explains how limited evidence can still support a limited opinion. Read about a valuator who had access to an insufficient number of documents and a hard cutoff date to complete a valuation by. Since the valuation was prepared in a manner that meets the professional standard of care, was generally in compliance with business valuation standards, and the expert’s approach and methodology was consistent with industry practice, the valuation stood up in court.