This document discusses how to identify and handle dangerous financial expert witnesses. It identifies four categories of dangerous experts: 1) those who are intellectually dishonest, 2) those whose work is substandard, 3) those who do not follow accepted standards and methodologies, and 4) inexperienced and unqualified experts. It provides tips for spotting potential issues, such as an expert being too eager to provide a certain opinion or having never testified for the opposing side. The document advises vetting experts to ensure they follow proven methods, consider alternative scenarios, and use reliable underlying data. It stresses having another expert review the work for reasonableness.

1. Financial Expert
Witness Issues:
How to Handle the Dangerous
Financial Expert Witness
Decosimo Advisory Services
& Baker Donelson

2. FINANCIAL EXPERT
WITNESS ISSUES
DANGEROUS TO
WHOM?
• You want your financial expert
witness to be the financial expert
witness who is dangerous to the
opposing side
• You don’t want your financial expert
witness to be dangerous to your
side

3. FINANCIAL EXPERT
WITNESS ISSUES
SO JUST WHO
ARE THEY?
• Who qualifies as a “dangerous
expert witness?”
• How do we unmask and expose
them?

4. FINANCIAL EXPERT
WITNESS ISSUES

5. DOES A LARGE FEE
AUTOMATICALLY INDICATE
BIAS ON THE PART OF THE
FINANCIAL EXPERT
WITNESS ISSUES
• The defense’s financial expert witnesses in the
Michael Jackson wrongful death case were
paid $825,000 in fees
• CPA testifying for plaintiffs as to what Jackson
could have earned from a potential world tour
had been paid over $322,000
-
Jeff Gottlieb, Los Angeles Times, Michael Jackson trial: Pop star was ‘tapped out,’
millions in debt, August 12, 2013
Jeff Gottlieb, Los Angeles Times, Michael Jackson’s survivors vs. AEG: a gold mine
for witnesses, August 3, 2013

6. DANGEROUS EXPERT
WITNESS CATEGORY #1
FINANCIAL EXPERT
WITNESS ISSUES
•
•
•
•
Experienced,
Knowledgeable,
Qualified,
Uses accepted methods, but…
o Sells himself out by becoming
intellectually dishonest

7. FINANCIAL EXPERT
WITNESS ISSUES
DANGEROUS EXPERT
WITNESS CATEGORY #1
• Sells himself out by:
– Ignoring evidence which is
unfavorable to the opinion which he
plans to express and often doesn’t
share such evidence with his counsel
– Misrepresenting the evidence used in
his report and conclusions to the
court
– Often very pompous and verbose

8. FINANCIAL EXPERT
WITNESS ISSUES

9. DANGEROUS EXPERT
WITNESS CATEGORY #2
FINANCIAL EXPERT
WITNESS ISSUES
•
•
•
•
Experienced,
Knowledgeable,
Qualified,
Uses accepted methods, but…
o Does a deficient job by
performing substandard work

10. FINANCIAL EXPERT
WITNESS ISSUES
Dangerous Expert Witness
Category #2
• Substandard work often a result of one or
more of these occurrences:
– Lack of review of subordinates
– Does not have or take adequate time to
properly assess evidence and prepare
his report and similarly his testimony
– Often a result of the low fees being
charged by the expert or an overly
restrictive budget imposed by counsel

11. FINANCIAL EXPERT
WITNESS ISSUES

12. FINANCIAL EXPERT
WITNESS ISSUES
DANGEROUS EXPERT
WITNESS CATEGORY #3
• Experienced,
• Knowledgeable,
• Qualified, but…
o Does NOT follow the accepted
standards and methodologies

13. DANGEROUS EXPERT
WITNESS CATEGORY #3
FINANCIAL EXPERT
WITNESS ISSUES
•
•
Ignores or “tweaks” accepted
methodologies as a result of:
– “Working backward” to reach a particular
amount or goal in damages and makes
calculations that result in that goal
– Usually very persuasive in their testimonies
– Often speak in very bold generalities “all smaller
companies have poor accounting records”
– Likes to tell all he knows, not just what the court
needs to know

14. FINANCIAL EXPERT
WITNESS ISSUES

15. FINANCIAL EXPERT
WITNESS ISSUES
DANGEROUS EXPERT
WITNESS CATEGORY #4
• Inexperienced,
• Unqualified,
• Looking to expand his/her practice

16. DANGEROUS EXPERT
WITNESS CATEGORY #4
FINANCIAL EXPERT
WITNESS ISSUES
•
Everyone has to start somewhere...
– Usually fees are lower and therefore can be
attractive alternatives to clients
– Often in smaller, seemingly less complex cases
– Adequate training is paramount
– Training can be evidenced by professional
certifications and credentials

17. FINANCIAL EXPERT
WITNESS ISSUES

18. FINANCIAL EXPERT
WITNESS ISSUES
TOP 10 SIGNS YOU MIGHT
BE DEALING WITH A
DANGEROUS EXPERT
WITNESS
10. “Expert reports are due next Friday? Hey, that’s no
problem.”
9.“…and my fees are a fourth of what those other
guys are going to charge.”
8. “Sure, I can show damages of that amount.”
7. “No…, I can’t say that I’ve ever been an expert for the
defense.”
6. “Don’t’ worry. There’s never been a case where I couldn’t
come up with economic damages.”

19. FINANCIAL EXPERT
WITNESS ISSUES
TOP 10 SIGNS YOU MIGHT
BE DEALING WITH A
DANGEROUS EXPERT
WITNESS
5. “You’ll never hear anything negative about your case
from me!”
4.“I’ve been thinking about going to some format
3. “You don’t need to get another appraisal expert for that
equipment. I’ve worked with lots of manufacturers in my
career.”
2. “I don’t like to get too detailed in my report. I’ll just
explain everything in my testimony.”
1. “Tell me the opinion you need and then I’ll tell you my
fees. ”

20. FINANCIAL EXPERT
WITNESS ISSUES
EXCLUDING THE FINANCIAL
EXPERT WITNESS
– OR BEING SURE YOUR EXPERT
SURVIVES

21. FINANCIAL EXPERT
WITNESS ISSUES
MANTRA FOR THE
FINANCIAL EXPERT
• “Identify key variables, always
describe methodology, reason for
its use and consistency of its
application, cite published
materials that support
methodology and include
causative factors of lost profits if
appropriate.”
- American Bar Association, “Expert Witnesses: Selecting, Retaining,
Deposing and Examining Experts.”

22. DAUBERT CHECKLIST:
QUESTIONS FOR YOUR
EXPERT AND THE
OPPOSING EXPERT
FINANCIAL EXPERT
WITNESS ISSUES
•
Has anyone performed a review of your work to see if
it appears reasonable?
•
Have you followed all relevant standards?
•
Have you used proven methodologies?
•
If you have used an unusual method, has it been
exposed to peer review, and if so, is there a basis upon
which the method would gain general acceptance?
•
Is the methodology generally endorsed by experts in
the field?

23. DAUBERT CHECKLIST:
QUESTIONS FOR YOUR
EXPERT AND THE
OPPOSING EXPERT
FINANCIAL EXPERT
WITNESS ISSUES
•
Does the work you have done fit the facts of the case?
•
Is the underlying data you used reliable? Did you take
reasonable steps to ensure the accuracy of the
information on which the conclusions were based?
•
Have you considered alternative scenarios in reaching
your conclusions?
•
How have you dealt with the facts that are
inconsistence to those you used?
•
Have you been given relevant statutory or case law to
assist you in developing your damage theory?

24. DAUBERT CHECKLIST:
QUESTIONS FOR YOUR
EXPERT AND THE
OPPOSING EXPERT
FINANCIAL EXPERT
WITNESS ISSUES
•
Have you considered the track record of the
relevant industry and the performance of
comparables within that industry?
•
Are the assumptions used consistent with the facts?

25. Financial Expert Witness Issues:
How to Handle the Dangerous
Financial Expert Witness
CONTACT US
SHERI FOX
1800 REPUBLIC CENTRE
633 CHESNUT STREET
CHATTANOOGA, TN 37450
(423) 209 - 4230
SHARON P. HAMRICK
& MIKE COSTELLO
TALLAN FINANCIAL CENTER
SUITE 1100, TWO UNION SQUARE
CHATTANOOGA, TN 37402
(423) 756-7100