Factors to Review Before Choosing A Qualifed Witness

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March 27, 2006

Historically, the foundation for experts rested on Frye v. United States (D.C. Cir. 1923) and that foundation was generally considered both broad and long. However, in the wake of the Kumho Tire and Daubert decisions, the courtroom doors have swiftly and loudly closed for any “experts.”

Federal districts, and many state courts that follow the federal rules, generally agree on this: Although the methods of financial professionals are generally not acknowledged as “scientific” (they are considered part of the social sciences), they are still subject to the same standards and rigors put forth in Daubert (Daubert v. Merrell Dow Pharmaceuticals, Inc. 113 S.Ct. 2786 (1993)).

The factors in that decision can generally be described this way:

  1. The expert’s foundational theory or technique must be tested.
  2. The technique or theory must be subject to peer review.
  3. The “rate of error” within the technique must be known and the standards for controlling the application of the technique must be known.
  4. The technique must attract “widespread acceptance” in the relevant scientific community.

Certified Public Accountants are frequently the experts of choice in litigation involving valuation or financial issues, such as commercial damages, business value and lost profits. They are regarded by the public as professionals of the highest integrity and objectivity. In addition, CPAs are bound by a stringent body of professional standards and a Code of Ethics.
However, simply possessing a CPA license is probably no longer sufficient (and may truly never have been) to qualify as an “expert” in many matters. Being an "expert" is a trait that must be enhanced by:

  1. Focused experience.
  2. Specialized post-graduate training, such as an MBA or industry-specific continuing education.
  3. The accumulation of credentials recognizing comprehensive and in-depth training in specialty areas.

Attorneys seeking the best-qualified financial experts often seek out CPAs who present these different attributes of professional knowledge. Credentials are available to identify those who have specialized skills in business appraisals and valuations (Accredited in Business Valuation, Accredited Senior Appraiser, Certified Business Appraiser, Certified Valuation Analyst).

There are also specialists in misappropriations, commercial theft, fraud and arson (Certified Fraud Examiner), and those with broader and better-developed skills in financial and profitability analysis (Master of Business Administration/Finance).

When it’s time for trial, make sure your expert is comfortably seated and qualified in the witness chair — not leaving the court as the result of your opponent’s successful Daubert challenge.

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