How to Use a Financial Expert Witness? The Effective and Efficient Use of Financial Expert Witnesses: Recommendations from the Institute for the Advancement of the American Legal System and the American Institute of Certified Public Accountants

Financial Expert Witness

The founding principles of the Unites States Civil Justice System are grounded upon resolving matters in an efficient manner, while also safeguarding the legally bestowed right in having access to courts through fair and just determinations. Few deny the validity of the notion that there is clearly room for improvement in our judicial system. This topic has been the subject of several studies. This article explores the recommendations of a recent study examining the role of financial experts in civil disputes, through the eyes of those most directly involved.

How to Choose a Business Valuation Expert

Business Valuation Expert Witnesses

It is important to find the right expert witness in cases that require a business valuation. You want to make sure that you retain a valuation expert who has experience that is relevant to the particulars of your case. If, for example, you are hiring a business valuation expert for a case involving patents, you want to be certain that the expert has a thorough knowledge of patent issues on the particular product or process and any relevant local laws pertaining to intellectual property and the standards of the specific industry involved.

The Post-Daubert Effect: Expert Testimony in Antitrust Litigation

Justice wieghts and gavel

Matters involving anti-trust litigation are a highly complex area of litigation, for several reasons. First, the subject matter and parties involved in anti-trust litigation are ever expanding, partly due to advances in technology. Second, depending on the particular matter, anti-trust matters may involve state and/or federal law. Third, and most intriguing, are the controversial issues that anti-trust litigation presents in evidentiary matters related to expert testimony from economist in the post-Daubert era. It is the intent of this article to focus on this third area, in light of the available data, which demonstrates an overwhelming amount of evidentiary challenges.  There are disparities between Plaintiffs and Defendants in both the quantity of challenges and the frequency of exclusion.   We will examine the resulting effects such judicial determinations have had on anti-trust litigation outcomes.

The Role of Experts in Bankruptcy Proceedings: Loan Defaults

There has been a notable increase in litigation regarding loan defaults since the onset of our nation’s financial crisis. Apart from private sector actions brought forth in both state and federal courts, there has also been an increase in adversary proceedings arising in Bankruptcy Courts. Many of these disputes involve allegations of fraudulent transfer and conveyance in the commercial lending industry. Pursuant to section 9017 of the Bankruptcy code, the Federal Rules of Evidence apply to Bankruptcy proceedings. As such, the use of expert testimony in such proceedings is not only permissible, but is a common method of presenting evidence, whether for supporting or negating purposes. In consideration of recent decisions on this subject matter, this article explores the role of experts in Bankruptcy proceedings involving loan defaults in the commercial setting.

Antitrust Laws and Small Businesses

Antitrust attorneys

Antitrust laws make headlines when major corporations, like those in the banking or airlines industry, plan on merging.  Antitrust can be a complex area of law, requiring the use of mergers and acquisition expert witnesses, economists, and industry specific business expert witness in order to prove a case.  But it’s not just big businesses that are impacted by antitrust law.

Expert Testimony Necessary in Investment Fraud Case

Man in cuffs - arrested for laundering

The matters before District Judge Linda R. Reade in this case included the plaintiffs’ Motion for Partial Summary Judgment on Count IV against investment advisor Enterprise. This count alleged negligence and engaging in and attempting to engage in money laundering transactions.

Initially, 70 plaintiffs filed a complaint in October 2012 against 13 defendants.  Count I of the Complaint alleged that Enterprise violated the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1962(c). Count II of the complaint alleged that Enterprise conspired to violate RICO.  Count III alleged a breach of contract against Enterprise, and Count IV of the complaint alleged negligence against Enterprise. Counts 3 and 4 were brought by 41 individuals who maintained self-directed IRAs with Enterprise. The only remaining Defendants in this action were Enterprise and Sigillito, another investment advisor.

Tow Truck Operator Expert: Assessing ‘Use’ in Insurance Coverage Disputes

As with any matter involving insurance coverage disputes, it is first necessary to assess whether the provisions of the policy specifically provide for coverage to a particular individual given the facts surrounding the incident. In cases in which a Plaintiff is seeking to confirm the availability of an employer’s insurance coverage, determinations commonly hinge upon whether the insured vehicle was being utilized for the purpose for which it was insured. Often time, considerations concerning ‘use’ include the evaluation of whether the injured was acting within the scope of his or her employment, such that the presence of an active relationship exists. For limitation purposes, this article focuses on an evaluation of the availability of insurance to truck drivers injured while allegedly acting within the scope of their employment as tow truck operators.

Tow Truck Operation Expert–Proving or Negating the Existence of Special Circumstances

Toe Truck and Operator

It is a well-established fact of law that the attachment of liability in a negligence action requires an initial determination as to the presence of a duty owed to the injured by an alleged tortfeasor. Therefore, in order for a Plaintiff to properly attach liability to an owner or bailee of a motor vehicle which has been stolen by a thief, it is necessary to show that the owner or bailee of such vehicle had a duty to protect third persons. Many jurisdictions follow the general rule that imposition of a duty is appropriate only if it can be shown that special circumstances exist which are sufficient to evoke a duty of care. Absent “special circumstances,” the owner or bailee of a motor vehicle has no duty to protect third persons against the possibility a thief will steal the vehicle and injure them with it. Richards v. Stanley (1954) 43 Cal.2d 60, 65-66 [271 P.2d 23]; See also  Cruz v. Middlekauff Lincoln Mercury, Inc., 909 P.2d 1252, 1255 (Utah 1996).; Kim v. Budget Rent A Car Sys., Inc., 143 Wn.2d 190, 15 P.3d 1283, 1287 (2001); Smith v. Shaffer, 395 N.W.2d 853, 856 (Iowa 1986)Illinois Farmers Ins. Co. v. Tapemark Co., 273 N.W.2d 630, 635 (Minn. 1978)Dix v. Motor Mkt., Inc., 540 S.W.2d 927, 932 (Mo. Ct. App. 1976)Felty v. City of Lawton, 578 P.2d 757, 761 (Okla. 1977).
“Considering special circumstances, then, is just another way of examining the degree of foreseeability of injury and whether the owner is subject to a duty to exercise reasonable care.” Richardson v. Carnegie Library Restaurant, Inc., 107 N.M. 688, 763 P.2d 1153, 1164-65 (1988). As with any negligence action, the specific circumstances of a case will guide the Court in its determination as to the appropriateness for application of the rule. As observed in Hergenrether v. East, 61 Cal.2d 440, 445 (1964), “each case must be considered on its own facts to determine whether the joint effect of them in toto justifies the conclusion that the foreseeable risk of harm imposed is unreasonable, and that the defendant owner or one in charge of a vehicle has a duty to third persons in the class of the plaintiffs to refrain from subjecting them to such risk.” A number of special circumstances have been specifically enumerated among the jurisdictions that have imposed a duty upon the owner or bailee of an unattended tow truck which was stolen by a thief and subsequently caused injury to a third person. For limitation purposes, this article focuses on the imposition of a duty of care to owners or bailees of tow trucks.

Setting Your Sights on a Firearms and Ammunition Expert

Firearms - Handgun

In the past six months, the complexity of statutes and regulations has significantly increased for Federal Firearms Licensees (“FFL”).  New statutes, regulations, and guidance documents are being issued by federal, state, county, and local municipal bodies.  Audits remain a routine part of business operations.  And various organizations and associations are actively pursuing lawsuits on issues of constitutional law, including the Second Amendment to the United States Constitution.

Securities Law: A New Direction for Litigators and Experts, or a Fluke in the Trends?

2012 saw an interesting and highly unpredictable number of cases pertaining to securities litigation being filed; taking into account the Presidential election, the so-called “Fiscal Cliff,” AND Hurricane Sandy, statisticians and analysts alike are scratching their heads to determine the future of securities litigation.  See, e.g., Suzanne Dawson, “PwC Releases Latest Securities Litigation Study,” PricewaterhouseCoopers (Apr. 9, 2013).  As one securities expert explains:

While the first three quarters of 2012 saw an average of 46 cases, securities litigation filings decreased dramatically in the fourth quarter, to 33 cases—the lowest level since the 30 cases filed in the second quarter of 2009… In the U.S., the last quarter was affected by two pivotal events: the impending presidential election and the political uncertainty inherent in the run-up, and a looming “fiscal cliff” of automatic tax hikes and government spending cuts. …Superstorm Sandy may have played a role by interrupting transportation, shutting down power, and blocking access to the Internet and phone service in the Northeast, thereby disrupting law firms, courts, and financial markets. Id.

Business Records & Expert Witnesses: What Attorneys Should Know About the Shifting Burden of Proof & FRE 803(6)

Business records and documentation

The Federal Rules of Evidence have long provided myriad hearsay exceptions, in cases when testimony is introduced. One of the most important hearsay exceptions, particularly with respect to expert witness testimony, is the “business records” exception. FEDERAL RULES OF EVIDENCE (FRE) 803(6). Although many attorneys have an extensive level of familiarity with FRE 803(6) and the business records exemption, trends indicate that the burden of proof has changed, significantly affecting each litigator’s practice and every expert witness who relies upon business records to assist jurors in understanding testimony.

Part III: Consumer Products—Strict Liability and Breach of Warranty

Quality and consumer products visualization

Most jurisdictions allow consumers to bring claims under the concept of strict liability, that is, the manufacturer is held to be strictly liable simply for having placed a defective product into the stream of commerce which results in injury to the consumer. Strict liability for consumer products arose as a matter of public policy, with the intent to provide consumers with a means of legal recourse in the event of injuries sustained as the result of a defective product.  Strict liability has often been referred to as no-fault liability, in that, actions permitting claims of strict liability, can allow for recovery without the need to prove manufacturer fault.

Part I: Consumer Products—An Introduction to Liability

Household consumer products

Consumer Product Liability is a general terms that encompasses a much broader topic. To best understand the term, it is first necessary to know precisely what a consumer product is. When presented in its most simplistic terms, a product that is made available for consumption by the general public, and thus placed into the stream of commerce, is typically considered to be a consumer product. Pursuant to 15 U.S.C. §§ 2301(1) and (3):

  1. The term “consumer product” means any tangible personal property which is distributed in commerce and which is normally used for personal, family, or household purposes (including any such property intended to be attached to or installed in any real property without regard to whether it is so attached or installed

Case Study: Bank Miscalculates Expert’s Value in Defining Directors’ Duties

A bank brought action against an accounting firm and its partner for aiding and abetting former bank directors in breach of statutory duties, professional negligence, breach of fiduciary duty, and statutory violations.  The Court of Appeals, held that statutory language stating a bank director’s duties did not make an accounting firm’s expert witness’s testimony unnecessary with regard to the specific duties of the directors.

Case Study: Trustee Gambles on Experts’ Testimony to Recover Millions from Casino

CasinoExpert testimony was one of the key issues in a recent case in Federal District Court in Nevada, where a bankruptcy trustee sought to recover $10 million from a Las Vegas casino in an alleged Ponzi scheme.  District Judge Phillip M. Pro was presented with Motions for Summary Judgment by Defendant (“Casino”).  Also before the Court were the Casino’s motions to exclude the expert testimony of RL, AS, and PD.  The plaintiff (“Trustee”) opposed those motions.

Case Study: Airline’s Industry Expert Cleared for Take-off in Suit with Passengers


District Judge Miranda M. Du in Nevada recently heard arguments on a motion to exclude the testimony of Defendant’s airline industry expert witness.

The plaintiffs were nine passengers (“the Nine”) who traveled on a flight from Vancouver to Las Vegas in 2003.  The Nine alleged that the flight captain and two flight attendants accused them of criminal interference with an air crew.  The flight was diverted to Reno, and the Nine were removed from the plane.

Independent Experts in Oil and Gas Mergers and Acquisitions: Defusing the Factors That Can Inflame Litigation

Oil and gas fields

Mergers and acquisitions are a hot topic in the oil and gas industry at present.  This article sets out some of the human factors that can affect a business decision about a proposed merger or acquisition and the ways that use of an outside expert during the merger process can favorably affect potential litigation over the transaction.  Specifically, this article analyzes the interaction of psychological factors at play within the framework of objective factors in a dynamic field such as oil and gas in Texas.

Product Liability, “State of the Art” Design, and What Should Be Expected of Experts

On both a national scale and in California courts, product liability cases increasingly require the use of expert witness testimony on both sides, to determine whether a specific manufacturer should incur liability in court for an alleged product defect.  A product liability expert witness can be the key in such cases, because many jurors’ most probing inquiry in such cases often and inaccurately revolves around the issue of whether the product conforms to the standards of a particular industry.  The actual legal standard for product liability cases dealing with negligence is whether or not the product was “state of the art” at the time it was manufactured.

Hiring the Right Forensic Accounting Expert Witness

Attorneys, judges, and forensic accountants view the expert witness from different perspectives. Attorneys’ hire expert witnesses to arrive at favorable conclusions for the case, and to rebut the opposing expert. Judges will rely on the experts’ knowledge and give more weight to their conclusions, when the judge cannot reach one without such assistance.

Construction Delays: Who Is Qualified to Offer Expert Opinion

A large portion of litigation claims arising from construction projects stems from delays in the work schedule.  This sounds simple enough, but the actual cause of the delay can be quite complicated and confusing.  Was it the weather, lack of materials, safety issues, labor strife, or was it something else?  Was the delay foreseeable and preventable?

Creative Use of Experts in the Preparation of Corporate Governance Cases: Part 2

Part 2:  Fiduciary Duty Experts

By Donna C Kline, Attorney at Law

The conceptual and moral nature of corporate governance and corporate negligence litigation

The elements and nature of corporate governance litigation are well known to all commercial litigators, but a brief review of the conceptual structure of corporate governance places the role of experts in perspective.  In particular, it shows how an expert on fiduciary duty can help counsel formulate the story of the case.

Creative Use of Experts in the Preparation of Corporate Governance Cases

Part 1:  Industry Experts

By Donna C Kline, Attorney at Law

Early, creative, and well-focused use of consulting experts in corporate governance litigation can help the lawyers assemble the four key components of a successful trial.  Although a corporate governance case may involve sophisticated business concepts and complex technical or financial facts, the case still must be presented in a persuasive manner to a jury of ordinary persons who have only a few days to gain an appropriate understanding of those concepts and facts.  To persuade the jury to return a favorable verdict, the facts must be presented in a manner that dovetails with the legal instructions that the judge will give and that resonates with the jury’s moral sense of the case.   This article describes the vital role that an industry expert and a fiduciary duty expert can play in trial preparation.

Determining Whether A Client Has A Product Liability Case

Product Liability is defined by USLegal as referring to “the liability of any or all parties along the chain of manufacture of any product for damage caused by that product. This includes the manufacturer of component parts, an assembling manufacturer, the wholesaler, and the retail store owner.”

Product Liability: Expert Witness in the McDonald’s Coffee Case

Most people in the United States remember something about the Liebeck v. McDonald’s Restaurants case. The case involved a woman, Stella Liebeck, who suffered third degree burns after spilling McDonald’s hot coffee on her pelvic region. The case became famous due to the fact that Ms. Liebeck was eventually awarded $2.7 million in punitive damages. The case, which sparked a national debate about tort reform, is one of the most famous examples of a product liability suit.

The Roles of Security Investment Management Experts

When most people think of the word security, they might think of an alarm system that protects their home or car. However, in the world of finance, a security refers to a negotiable financial instrument representing value. Securities are qualified as debt securities (such as bank notes or bonds), equity securities (such as common stocks and mutual funds) and derivative securities (such as hedge funds and futures). Securities were originally represented by certificates, but increasingly, they’ve come to be represented electronically.

Protecting Your Business with Professional Liability Insurance

When operating a business that provides services to consumers, there is often an inherent risk of something going wrong. It’s possible for consumers to get food poisoning from a restaurant or to injure themselves while swimming in a public pool that isn’t properly constructed. No matter how well-trained a staff, the risk of consumer harm does not tend to disappear completely. That’s where liability insurance comes in. General liability insurance can protect businesses against acts that cause damage to people’s health or property.

What Qualifies as Corporate Negligence?

Corporate negligence can often be difficult to establish. For a corporation to be declared negligent, it must be proven that a corporation or one of its employees did undue harm to a third party by breaching their responsibility.

Legal Malpractice Is a Growing Field of Law

Legal malpractice is a term that refers to breach of contract, breach of fiduciary duty or negligence by an attorney that causes harm to a client. For an attorney’s negligence to be considered malpractice, an injured party must prove that the attorney’s actions exceed poor strategy. Rather, it must be established that the attorney’s actions resulted in errors that no reasonable attorney would make.

Pregnant Women Still Face Employment Discrimination in the Workplace

Three fourths of women now entering the workforce will become pregnant on the job. The Pregnancy Discrimination Act (PDA) was designed to prevent employment discrimination when it comes to any aspect of pregnancy, including hiring, firing, promotions, layoffs, fringe benefits or any other terms of employment.  However, due to a gap between anti-discrimination and disability law, many women still face termination due to their pregnancies.

Ways That Workers’ Compensation Experts Can Provide Support

Workers compensation expert witnesses possess specialized knowledge that can allow them to deliver credible analysis both prior to and during litigation. Since workers compensation trials can involve complicated technical issues, it can pay to retain a witness who is familiar with the particulars of your trial. Whether the trial involves insurance premiums, audits, code disputes or experience modification factors, experts can help you understand complex issues and minimize the impact of opposition experts.

3 Effective Approaches to Expert Witness Business Valuation

Business valuation can be one of the most challenging aspects of commercial litigation. Forensic accountants are often hired as expert witnesses in order to give their expert opinion as to the value of a particular business. There are many factors that go into calculating the value of a business. When approaching business valuation, expert witnesses can take one of three distinct approaches, each with their own methodologies.

Construction Experts Help Expose Falsifications in Bay Bridge Structural Testing

Construction, Building Trades, and Architectural Disciplines and Expertise

Following a recent Sacramento Bee investigation, Caltrans fired two employees implicated in an assortment of problems involving tests conducted on the Bay Bridge and other structures throughout California.

The Bee reported that Duane Wiles, a technician who was responsible for testing bridge foundations and his supervisor, Brian Liebitch, were involved in at least three confirmed falsifications. The report also revealed several errors committed by Wiles that have called the validity of his testing methods into question, raising concern about several California structures.

How to Properly Review Expert Valuation Reports

One of the key duties of a forensic accountant is to provide business valuation reports. As the name implies, valuation reports estimate the value of a business. These reports are used by litigators for a variety of legal purposes including evaluating various partners’ share of ownership in facilitating buy-sell agreements, mergers and acquisitions.

Valuation reports can be a powerful tool in the courtroom, but litigators need to ensure that their experts have correctly prepared the valuation reports. There are several common errors that have been observed in valuation reports. Litigators should ensure that the purpose of the valuation has been clearly defined by the report. It is also essential that an overview of the company’s background, market, industry and competitors has been prepared.

Language Barrier Is Detrimental to Safety in the Construction Industry

Effective communication is important to safety in any work environment. In the construction industry, a lack of communication can cause property damage, injuries and even deaths. It’s no secret that there are many non-English speakers employed in the construction industry. According to construction expert Paul Gogulski, speaking English is necessary to avoiding hazards on construction sites.