The selection of the right forensic expert can assist in the settlement of the case.
By Michael Saccomanno, Business Valuator
Having an independent third-party prepare a business valuation report or forensic analysis does not guarantee success and/or an amicable settlement. If each party handles the process properly, however, having a joint forensic expert increases the odds of a satisfactory settlement – a settlement that will save the clients the expense of a costly trial and allow attorneys and experts to close cases in a more timely fashion.
Who to Retain?
The selection of the right forensic expert can assist in the settlement of the case. First and foremost, the character and integrity of the expert is a must. Most forensic experts have a degree, are experienced, and often accredited by one of the major designators. But all this may not help your case if the expert is not objective and unbiased. A joint expert must objectively listen to each party to determine an unbiased, defendable position regardless of what the clients believe. This requires the expert to be able to see the “big picture” – which most experts can do when they represent only one party, but a perspective that is much harder to maintain when jointly retained.
Joint experts should be cautioned not to attempt to render an opinion “in the middle” of what the clients originally believed was reasonable. Joint experts incorrectly view the “middle” outcome as a success. In reality, these experts did not perform the service of a qualified expert, but merely a service that engineered an outcome. This is a direct contradiction to the principles on which the accounting and/or valuation profession was founded: educated, informed, defendable conclusions. Furthermore, the concluded “middle” outcome (either high or low) was at the expense of one or both of the clients. Fortunately, such an approach is the exception than the norm.
Whether jointly or independently retained, the job of a forensic expert is to determine an outcome within a reasonable degree of certainty – not to be a psychologist, or worse, a hired gun.
Unfortunately, in all of our practices we have witnessed certain experts who are notoriously perceived as “husband friendly” or “wife friendly”; these experts manufacture artificially high or low values depending on who they represent. These professionals will not succeed in the jointly retained arena because, in the end, the attorneys and the clients are left with unsupportable or unrealistic conclusions – which may be worse than having no conclusion at all.
Key Elements to Successful Joint Retention
At the start of joint engagements, each attorney should provide the expert a timeline of reported deadlines. This is preferably done by conference call with both attorneys and followed up in writing to avoid any confusion.
Along with being independent, joint experts must be perceived as being independent. Is there a difference? Yes. One way to resolve any potential independence questions is to copy each attorney on allcorrespondence, memos, and draft schedules/reports. Joint experts must remember that they have been retained by both clients, and need to treat the engagement as such.
Another key element to a successful joint retention is the handling of the interview process. In a joint retention, the expert should independently interview both spouses regarding their respective perception and knowledge of the marriage, business, etc. Why interview the non-moneyed spouse? The non-moneyed spouse should be an essential part of the process, and the answers they provide during the interview are not as important as the comfort level one can obtain by including them in the process.
After concluding preliminary findings, the joint expert should contact each attorney for a three-way conference call or meeting to discuss the findings and address any questions that may arise. Once each party has an opportunity to ask questions, the expert should finalize their findings.
I am not suggesting that attorneys should attempt to retain a joint expert in every matrimonial case. Joint retention typically does not work when the clients are being unruly. Sometimes, the case at hand has so many complex issues that you, the attorney, believe that your client is best served with their own expert.
Michael A. Saccomanno (CPA, ABV, CFF, CVA, CDFA) is a FLVS Partner at Friedman, LLP. Since 2001, approximately 50% of his matrimonial cases have been jointly retained. www.friedmanllp.com