Part 1:

Hiring an Expert Witness

Proving your case in a civil or criminal trial has become increasingly difficult. Working with a professional who can provide expert testimony can help to add credibility to your case and potentially tip the scales in your favor.

Purpose of an Expert Witness

Expert witness testimony can drastically alter the outcome of a trial. In fact, it is estimated that expert witnesses are used in more than 85% of civil jury trials. This is no surprise, as many cases involve technical aspects that are better navigated by someone with in-depth experience on the topic at hand.

The primary purpose of an expert witness is to offer his or her expert opinion concerning the presented information in a particular case. Expert witnesses are expected to give an impartial and well-articulated opinion of the facts and/or information that is under dispute.

Different Types of Expert Witnesses

A person with extensive knowledge and/or experience of a particular subject matter can be considered an expert witness. In most cases, this person will have years of experience and education within their chosen fields. Listed below are the five most common types of expert witnesses.

  • Different Types
    of Expert Witnesses
  • Medical Expert Witnesses

    This type of witness is typically a doctor, but could also be a nurse, medical tech, or PA. In the most extreme cases, this expert will be a medical examiner that testifies about the cause of death or contributing factors.

  • Forensic Expert Witness

    Forensic expert witnesses focus on acts that relate to criminal behavior and laws. In most cases, this type of witness is used by the prosecutor in a criminal case to prove the culpability of the defendant. However, the defense may also use a forensic expert witness to disprove the prosecution.

  • Financial Expert Witness

    As the title indicates, a financial expert witness specializes in financial matters. A few types of experts can include forensic accounting expert witness, a business valuation expert witness, and an intellectual property expert witness.

  • Mental Health Expert Witness

    Mental health expert witnesses are typically used to determine the fitness and mental abilities of a defendant in criminal proceedings.

  • Vocational Expert Witness

    When there is a social security benefits appeals hearing, a vocational expert witness may be needed to determine whether a person is able to work.

Reasons to Hire an Expert Witness

There are many reasons to hire an expert witness. The most common reasons are listed below.

  • Specialized knowledge (industry, business, fraud, etc.) - requiring subject matter expertise
  • Financial/accounting expertise - requiring mathematical calculations
  • Negligence/liability determination
  • Witness/trial testimony
  • Consultancy services

What to Look for in an Expert Witness

Before hiring your expert witness, it is essential to investigate them thoroughly. There are a few characteristics to look for when seeking an expert witness, such as his or her credibility, qualifications, ability to be objective, and skills as a communicator.

Expert witness not only must be outstandingly qualified and experienced within their field, but they will also need to effectively communicate their expertise and findings to a judge and jury. If they lack these qualities, it could potentially hurt your case.

Qualifying an Expert Witness in California

California Evidence Code - Section 720 (a) states:

“A person is qualified to testify as an expert if he has special knowledge, skill, experience, training, or education sufficient to qualify him as an expert on the subject to which his testimony relates. Against the objection of a party, such special knowledge, skill, experience, training, or education must be shown before the witness may testify as an expert.”

Federal Rules for Expert Witness Testimony

According to Federal Civil Procedure 702, a qualified expert witness is defined as a person whose specialized knowledge will aid the trier of the facts to understand information better. Their testimony must be based on sufficient facts. It must also be based on reliable methodology and principles.

Additionally, Federal Rule of Civil Procedure 701 gives direction for opinion testimony offered by a layperson. This type of witness must provide testimony that is based on their rational perception and help to clearly determine the facts or the understanding of another witness's testimony. It cannot be based on specialized knowledge.

Part 2:

Working with a Financial Expert Witness

Many attorneys choose to work with a financial expert witness because they help to perform investigations into complex financial disputes. For instance, an attorney may need a forensic accounting expert witness to analyze complex financial issues as well as financial records extensively.

In addition to their accounting expertise, a financial expert witness offering expert testimony must have an in-depth understanding of how a business and its industry operates. In many cases, they will need to compare the subject companies to standards set by the industry that they are in. Thomas Neches & Company, LLP focuses solely on forensic accounting, providing expert witness testimony across many industries and types of litigation.

Areas Requiring Special Knowledge
of an Expert Witness

Many areas within a business require the expertise of an expert witness. Listed below are the most common reasons that an attorney may need a forensic accounting expert witness.

  • Business Valuation:

    A business valuation expert witness provides expert testimony in financial disputes and white-collar crimes. A business valuation expert witness is required to have in-depth training, plus exemplary education and experience. It is best to work with a company/person that is accredited in business valuation and a certified valuation analyst.

  • Fraud:

    Fraudulent behavior such as corruption, asset misappropriation, as well as financial statement fraud can be challenging to prove. Attempting to determine specific amounts of money owed to the involved parties can be particularly complex without the help of a financial expert witness.

  • Intellectual Property:

    Intellectual property expert witnesses can help to quantify financial damages where there has been an alleged infringement of a trademark, patent, copyright or trade secret. This can involve inventions, artistic and/or literary works, creations of the mind, and designs. Damages incurred usually include lost profits, unjust enrichment, or a reasonable royalty.

  • Lost Profit:

    One of the more common functions of Thomas Neches & Company LLP is to calculate the lost profits of a business. This involves making projections about a company's historical and future revenues/expenses if there were no wrongful acts committed by the defendant. These numbers are typically compared to what the company's actual financial forecast and historical data present. Lost profit calculations are only helpful when persuasively communicated to the judge and jury by a CPA expert witness.

  • Wage and Hour Class Actions:

    California is well known for its progressive labor laws. Wage and hour class actions are becoming increasingly common. Unfortunately, these types of suits can leave businesses financially exposed. Our firm uses advanced database calculations to determine the exact amounts owed. Our precise calculations have ensured that every wage and hour class action case for which we have been retained has not advanced to the trial phase.

  • Wrongful Termination:

    This occurs when an employee is terminated in violation of federal, state, and/or local laws, broken terms of an employment agreement or reasons that are contrary to current public policy. A financial expert witness can help to determine past, and future earnings that would have been available had the wrongful termination not occurred.

Financial Expert Witness’ Calculations

Financial expert witnesses utilize precise and detailed calculations to determine lost profits, economic damages, as well as damage assessment. Listed below are further details on each.

  • Lost profits: Lost profit expert witnesses help to determine the amount owed to claimants. This involves more than a single formula and can be complicated.
  • Economic damages: Economic damages are determined by the amount of loss incurred by the business in the form of money, property, medical attention, etc. Typically, a monetary value is placed upon the loss.
  • Damages assessments: Before a claim is filed, a damage assessment expert witness can help to determine the types of damages incurred within a potential lawsuit.

Providing an Effective Expert Witness Testimony

Providing a compelling expert witness testimony requires that your financial expert witness be well qualified and able to convey his or her points directly and clearly. Some of the more essential qualities of an effective expert witness include:

  • Accuracy/credibility
  • Simplifying complex terminology
  • Careful analysis – testing results
  • Knowing what questions will be asked, refuting the other side, making clear/convincing arguments
  • Use of technology/visual aids

If any of the characteristics above are lacking, it may negatively affect the credibility of the expert witness.

Part 3:

Expert Witness Qualifications
and Certifications

Whether you require a business valuation expert witness, intellectual property expert witness, or any other type of expert witness, there are a few core requirements that the State of California requires before the expert can testify. As previously mentioned, an expert witness must show specialized knowledge, skill, experience, training, and/or education sufficient to qualify them as an expert in their particular subject and/or field.

Furthermore, a financial expert witness typically requires advanced certifications to conclusively prove to a judge that he or she are indeed an expert in financial matters. Listed below are some of the more common certifications needed by financial experts before they can be deemed worthy of testifying.

CPA Certifications
(for CPA Expert Witnesses)

In most instances, a financial expert witness will be a Certified Public Accountant (CPA). Though this is quite a distinction alone, it is typically not enough by itself. The American Institute of Certified Public Accountants (AICPA) designates advanced certifications to qualifying CPAs. When a case requires a CPA expert witness, it is best that they have the following AICPA certifications:

Certified in Financial Forensics (CFF)

The CFF certification is exclusively for CPAs with a specialty in forensic accounting. Before obtaining the certification, CPAs must show that they have extensive knowledge of forensic accounting principles by passing a test and submitting their application.

Accredited in Business Valuation (ABV)

CPAs that are specialized in calculating a business’ value are eligible to receive their ABV certification. Applicants must be a CPA, pass the ABV test, and participate in ongoing specialized education.

Business Valuation

Attorneys that wish to work with a business valuation expert witness will want to ensure that their witness is well qualified before undertaking such a complex task. Business valuation expert witnesses that are a part of the NACVA and have their CVA typically provide more compelling expert testimony.

National Association of Certified Valuation Analysts (NACVA)

This is a group of professionals that are experienced and skilled in providing business valuations as well as other litigation services. Each member of this association receives specialized training, education, and certifications.

Certified Valuation Analyst (CVA)

A business valuation expert witness with a CVA has shown that they have extensive training in determining business valuations. They must have requisite education, training and experience, pass an examination, complete a peer-reviewed business valuation report, and participate in ongoing specialized education.

Fraud

The Association of Certified Fraud Examiners (ACFE) is the largest anti-fraud organization in the world. It provides in-depth education and training in the anti-fraud field. Members of the ACFE are eligible to take an examination to become a Certified Fraud Examiner (CFE).

Part 4:

Overview of Expert Witness Reports

Expert witness reports are produced by expert witnesses to provide evidence, opinions, additional details, conclusions, data, and more. Within the report, the expert witness will give their opinion of matters based on the facts and information presented.

Though much of the report is opinion based, it must be rooted in facts. Expert witness reports help to educate the court on issues that are not within its expertise. The opinions and facts provided within the report as well as during testimony are used to help the court resolve disputes.

Additionally, the expert witness report can be used to further inform the presenting attorneys on technical matters which will allow them better to determine the merits of their case. The report will also be shared with the opposing side of the dispute.

This will aid them in determining the strength of their case. In the case that both parties have utilized an expert witness, each may issue reports rebutting the opinions stated in the opposing expert’s report.

Structure of an Expert Witness Report

There is no one structure of an expert witness report that is necessary by law. However, they are all somewhat similar in the type of information that they convey. Most expert witness reports include the following information:

  • Qualifications (education and experience) of the expert witness
  • Type of task required of them (evaluations, recreating conditions of an accident, etc.)
  • Any information, data, and/or documents reviewed
  • Clearly stated opinion of the expert
  • Disclaimers and/or warnings if necessary
  • Date of completion and signature of the expert witness

Depending on the scope and depth of the matter at hand, expert witness reports can be brief or lengthy. Generally, it is best not to put anything more than what is needed by the courts into the report. Within the opinion section, expert witness should be concise, honest, and clearly convey their points in an easy to understand and digestible manner. In addition, citations should be similar to those used by the experts within their industry.

Part 5:

Expert Witness Fees

Expert witnesses typically charge an hourly rate for their services. In some cases, the expert may charge a fixed fee for his or her services. Experts cannot be retained on a contingency basis. It is a violation of the Code of Professional Conduct for a CPA’s fee as an expert witness to be tied in any way to the results of the case in which he or she has been retained.

In a typical arrangement, the expert is retained by the law firm representing the litigant party, who is responsible for paying the expert’s fees. For CPA, both the law firm and the litigating party are considered to be a client of the CPA, to which the CPA has a fiduciary duty.

If the expert requires transportation and/or lodging, that must typically be paid for as well.

Expert Retention Contract

Unfortunately, many expert witnesses deal with the very real prospect of not being paid on time or at all for their services. Therefore, experts often require retainers be paid before commencing work on a new engagement.

The billing and retainer agreements should include the following information:

  • The extent of services performed by the expert witness
  • Fee structure (how much they will get paid for each type of service provided)
  • Retainer information and fee schedule
  • How all expenses will be paid or reimbursed (travel, food, lodging, business expenses)
  • What happens in the event of a cancellation
  • Who is responsible for paying the expert

Does Your Case Need a Financial Expert Witness?

Thomas Neches has more than thirty-three years of experience as a forensic accountant. With an expansive background in multiple industries, he has been retained as a financial expert in more than 700 engagements, and he has testified at trial more than 80 times.

Learn more about the types of cases we've handled, or contact us at 213-624-8150 to see how we can help win your case.

IF YOU HAVE ANY QUESTIONS, PLEASE CALL THOMAS NECHES DIRECTLY AT 213.624.8150.

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