For expert witnesses, acquiring accurate, timely, and comprehensive information is an important component in developing a reasonably certain opinion. Given the often contentious nature of commercial litigation, navigating the sometimes murky waters of discovery can be challenging, even for the most seasoned veteran of the courtroom. Involving a financial expert early and throughout a case is a proactive measure an attorney can take to ensure the proper questions are asked, the appropriate documents are requested, and that withheld information does not go unnoticed.
Common Challenges Encountered During the Discovery Process
While many attorneys recognize the need to engage financial experts "at some point" during a complex commercial dispute, determining when that point is can be a pivotal factor in both the quality and quantity of information requested and received. Common points at which experts are engaged include the following:
When counsel has become inundated with a flood of data.
When an attorney is unfamiliar with the type of financial information that would be used by an expert or when she or he realizes that the response to an initial document request is incomplete.
Finally, and potentially most damaging for a client's case, when the close of discovery has passed and not all information relevant for the expert has been requested or provided.
As a result, an attorney may find himself or herself in one of the situations below.
Too much. If overly broad or nonspecific discovery requests are initially issued, the result may be a broad and burdensome amount of data provided. When a deluge of information arrives, it becomes important to sift through everything provided to separate what is relevant from what is extraneous. At this point, either the attorney can attempt this undertaking himself or herself, or it can be delegated to an expert and his or her engagement team. In either case, receiving too much of the wrong information can cause slowdowns, decrease efficiency, and increase professional fees as this information is cataloged, analyzed, and ultimately disregarded.
Too little. It is also common for an expert to be engaged after counsel realizes he or she is not familiar with the information that will be required to complete a financial analysis or when counsel recognizes that not all pertinent information has been provided. At this point, an attorney has the option of hiring an expert to determine what additional information is relevant or devoting his or her own valuable time to learn more about financial analysis and valuation to determine what documents would be required.
Too late. The analysis a financial expert performs depends largely on the fact pattern of each case and the documentation to which the expert has access. In many cases, as more information is acquired and analyzed, more information comes to light. When this happens, the financial expert may note that additional information is required to properly form an opinion. If an expert is not retained sufficiently in advance of the close of discovery, the opportunity to request information that is potentially vital to a sound analysis may be lost. An adage states "garbage in, garbage out," meaning that if the information and assumptions that go into an analysis are faulty or incomplete, so too may be the conclusion. In court, the judge may understand the difficult situation one litigant's expert has faced by arriving late in a case; however, the accuracy of the expert's opinion still remains paramount.
Using an Expert Throughout the Discovery Process
To paraphrase a retired National Football League coach, if they want you to cook the dinner, they ought to let you shop for the groceries. While an expert can usually proceed with certain limited information, it is undeniable that the expert, as the proverbial cook of the analysis, has a unique perspective regarding the grocery list of information that will be used to reach his or her final conclusions.
In a case involving complex financial issues, many requests and subpoenas will likely be required as new information comes to light. As these facts are analyzed, new questions are raised and additional documentation must be requested to provide answers. Because of this "request, receive, repeat" procedure, it is often said that discovery can be a highly iterative process. The following paragraphs illustrate certain steps that can be taken to expedite that iterative process.
Initial review. Oftentimes a financial expert's first step is to review any financial documents previously produced. Commonly, the first round of discovery responses and document production will support the assertions made by the party producing the documents. However, a seasoned financial expert may be able to identify issues that were not addressed in the initial request for documents or in the actual documents produced.
Financial data request. After reviewing the documents initially produced, an experienced expert's next step may be the preparation of a comprehensive list of additional documents required to perform his or her analysis. If the expert is involved in the matter early in discovery, he or she will be able to request certain "exploratory" documents that will allow the expert to gain a better understanding of what the key issues are in the case. Conversely, if the financial expert becomes involved later on in the case, he or she may be forced to produce an "all-inclusive" document request, making it much less likely that the expert will receive a complete and targeted representation of the documents that he or she would like to obtain.
Review of new documents and follow-up data request. It is rare that all documents an expert requests are provided immediately or upon first request. After the expert receives the document production, a new list will likely be created to highlight those documents not yet provided and request any additional follow-up information to address new issues identified. Furthermore, sometimes the absence of documents from production can be just as telling as the information actually provided. For instance, a party's unwillingness to produce invoices for certain questionable expenses may provide an indication that the expenses themselves are not valid. If time allows, the expert can address these questionable expenses through the request of additional related documents.
Fact and opposing expert witness depositions. If fact witnesses or opposing experts are to be deposed, it can be very helpful to have your financial expert prepare a list of questions and a document production request in preparation for the deposition. Furthermore, it may be helpful for the expert to attend the deposition and supply the attorney with follow-up questions based on answers provided. If the depositions can be taken in two or more parts over a period of weeks or months, this would afford the expert the opportunity to request documents based on the deponents' answers and then follow up with additional questions once the information has been supplied.
Discussing the Need for Other Services
At this point, a cross-disciplined expert may be able to recommend other important complementary services. For example, a computer forensic "acquisition" and analysis may aid the attorney and financial expert in the discovery process. Typically, these acquisitions involve a computer forensic analyst who, with specialized equipment and training, creates an identical copy of a computer hard drive, cell phone, or other electronic device. This analysis can unearth documents, email, and text messages believed to be deleted. More important, this may recover additional information that a party failed to supply in response to document requests. If additional experts will be required for other services, it is important to identify the need before the discovery cutoff deadline has passed so these experts can request any information required for their respective opinions.
Further, the attorney may find it beneficial to involve his or her financial expert in the selection process. There are several advantages to selecting additional experts with whom the financial expert is familiar. For instance, the financial expert may share with the electronic discovery expert certain information that has already been produced. This can aid the electronic discovery expert in his or her attempt to identify and acquire undisclosed electronic data or documents. Most importantly, involving the financial expert in the selection process can result in the coordination of deadlines, allowing the electronic discovery to be completed with enough time for the financial expert to incorporate the results into his or her analysis.
There are a myriad of ways in which a financial expert can be a valuable addition to a client's professional team above and beyond simply providing an expert opinion. Engaging an expert to be involved "early and often" during the discovery process helps to address proactively the challenges of having too much or too little information, and it ensures that discovery deadlines do not expire without the "cook" of the analysis ever having had a chance to create his or her shopping list. Furthermore, a multidisciplined expert who can focus on financial discovery will allow the attorney to dedicate more time to the legal issues involved in the case, and will be engaged early enough to suggest other services that may provide significant benefits to the client.
Keywords: litigation, commercial, business, financial expert, discovery, forensic expert, computer forensics, document review, data
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