When attorneys think about financial experts, they often think about reports, depositions, and trial testimony. Yet many of the valuable contributions a financial expert can make occur much earlier in the case. In matters involving valuation, income determination, or forensic accounting, earlier expert involvement may help counsel identify key financial issues, assist in discovery, evaluate settlement positions, among others.
Financial experts may serve in three broad roles:
Consulting Expert – retained behind the scenes to help counsel evaluate financial issues, discovery, settlement positions, or another expert’s analysis.
Testifying Expert – retained to provide disclosed opinions through a report, deposition, or trial testimony.
Rebuttal Expert / Review Expert – retained to analyze another expert’s report, identify weaknesses or unsupported assumptions, and when appropriate, provide rebuttal opinions or testimony. This may be one and the same as the testifying expert, but the scope may be a rebuttal opinion, hence the nomenclature.
These categories are not rigid. A consulting expert may later testify, a rebuttal expert may provide behind-the-scenes review, and testifying experts may assist with case preparation before any report issuance or testimony. Experts can also be jointly retained or court-appointed, which most closely aligns with a testifying expert. In such cases, it is not uncommon for each side to also retain their own consulting expert to help interpret or even later rebut the joint/court-appointed expert.
Consulting Expert
A consulting expert generally is not disclosed in the same manner as a testifying expert. That can make the role useful when counsel wants/needs financial assistance without committing immediately to a formal expert disclosure. It may also be useful for a secondary opinion on other expert reports.
A sometimes-overlooked role of a financial expert is issue identification. Early in a matter, counsel may not yet know which financial issues will prove most significant Expert input may help counsel assess whether a suspected issue is material, or whether a different issue deserves closer attention.
Testifying Expert
The testifying expert is a familiar role for many attorneys, which tends to involve formal engagement and disclosure to provide opinions through a report, deposition, and/or trial testimony. The expert must understand the assignment, review relevant documents, perform appropriate analyses, develop supportable conclusions, and communicate those conclusions in a way that is understandable to the intended audience (often the trier of fact). A well-supported report may help settlement discussions and narrow disputed issues. A testifying expert may also provide demonstratives to aid the trial process.
Rebuttal / Review Expert
In some matters, counsel may not need a full affirmative report. Instead, an expert may be asked to review another expert’s work and help counsel understand (and sometimes rebut) the assumptions, methods, and conclusions. This role can be useful when the opposing expert has issued a report, or when counsel expects a valuation opinion from the other side. A financial expert may help identify mathematical errors, unsupported assumptions, inconsistent treatment of facts, methodological concerns, or areas where additional information may be needed.
This review can also help counsel assess which issues may affect the conclusion in a meaningful way. Some flaws may not change the outcome, and some disagreements may not be worth pursuing. Other issues may materially affect value and other components of the divorce like income. In some matters, even an expert’s limited scope review of another expert’s report may help counsel assess whether further analysis or rebuttal work is warranted.
Discovery and Document Support
Financial experts, regardless of role, can assist with discovery by helping counsel identify which documents are most relevant for the specific case. The appropriate information to request depends on the facts and circumstances of the assignment. Asking for a broad universe of documents can inflate costs and create delays. Asking for too little can leave the expert without sufficient information to address the relevant financial questions. An expert can help counsel tailor requests to the issues that appear most important. However, supplemental and further information may be necessary depending on the passing of time or additional information needed for valuation purposes. If an expert is brought in after discovery closes, counsel may have fewer options if important documents were not requested.
Mediation, Settlement, and Strategy Support
Many financial disputes may be resolved before trial and expert involvement can also be useful in mediation and settlement discussions. Examples may include developing a range of possible outcomes, identifying the assumptions that affect those outcomes, and explaining the risks associated with different positions.
For settlement purposes, a sensitivity analysis can help evaluate how changes in key assumptions like revenue growth, marketability discounts, and owner compensation may affect the range of outcomes. This may also help counsel evaluate where there may be room for negotiation and where a position may require additional support. The expert’s role is not to decide legal questions. Rather, the expert can help counsel understand the financial consequences of those questions.
Matching the Role to the Case
An expert may begin as a consultant, assist with discovery, evaluate whether a financial issue warrants additional attention, support mediation efforts, and later serve as a testifying expert. Bringing in an expert earlier does not have to mean turning a case into a full testifying expert engagement. It gives counsel access to financial expertise as needed as the case develops.
Matching the expert’s role to the needs of the case can improve efficiency and provide counsel with a clearer understanding of the financial issues in dispute. Whether serving as a consulting expert, testifying expert, or rebuttal expert, financial professionals can contribute at various stages of litigation and dispute resolution.
Mercer Capital’s professionals work with attorneys and their clients in valuation, forensic accounting, and litigation support engagements. Early involvement often provides greater opportunity to better understand the facts and financial questions at issue and may allow us to assist counsel in developing a focused and supportable strategy.