Scott E. Miller, CPA, CVA has given an example of an expert witness in his article entitled You Got the Litigation Engagement. So Now What, in the Value examiner. Read his example and then prepare a list of mistakes that the expert made in his expert witnessing engagement.
Scott E. Miller, CPA, CVA has given an example of an expert witness in his article entitled "You Got the Litigation Engagement, So Now What," in The Value Examiner. Read his example and then prepare a list of mistakes that the expert made in his expert witnessing engagement. Let's assume there is a CPA, Calvin P. Anderson. Calvin has been a practicing CPA for 15 years. He has a successful CPA firm providing a full range of traditional accounting and tax services but does no litigation support or business appraisal services. Neither Calvin nor his staff have any experience in litigation support or business valuation. Calvin learns from another CPA that litigation support and business valuation can provide profitable growth areas for CPA firms. He remembers hearing and reading about these practice areas being growth His friend informs him decides that he is interested and wants to consider providing this type of work. His friend informs him of an upcoming three-day seminar on litigation support that he should attend. Calvin takes the class and gets fired up about the prospects of entering this new and exciting practice area. When he gets back to his of When he gets back to his office, he immediately calls all his attomey prospects and lets them know he can provide these services. He develops marketing literature that he sends to his attorney contacts and many other attorneys in his local area. It's now mid-July and he gets a call from an attorney with a large firm in his hometown. Calvin is excited. Working for such a large firm like this one could really help his litigation practice grow. The attorney, Justin C. Esquire, with Peterson, Jones, Haskins and Dingle, LLP asks him about his current practice, education, experience, and whether he has any experience with economic analysis. Calvin says, "Of course, I have been doing financial analysis for over 15 years as a part of assisting my clients and besides, you have to analyze financial statements when you do financial statement work." When Esquire asks if he has any experience testifying before, Calvin says yes, knowing that the only time he did was when a client was getting divorced and they asked him to comment on the income reported on his client's tax returns. He thinks, "It was so easy, this can't be much different." Esquire asks his fees and Calvin tells him $150 per hour. Calvin had heard that you could get premium rates for litigation work, so he quoted 20 percent above his normal rate of $125 per hour. Esquire tells Calvin he is willing to pay $135 per hour. Calvin, thinking he is getting a $10 per hour premium, jumps at the chance. Esquire realizes $135 per hour is cheap and that Calvin is not asking for a retainer. Esquire thinks he is getting a great deal for his client. Mr. Esquire says, "Okay. Let me talk to my client, and I will call you in a couple of weeks." Calvin is excited but nervous. He can't wait to start but realizes this is new territory for him. Two weeks go by, and he doesn't hear from Esquire. Three weeks later, he gets the call from Esquire. His client has approved the cost of hiring Calvin. Esquire says he will prepare the engagement letter and mail it to Calvin for signature. Calvin waits for the engagement lecter. It is now lare August and the engagement letter hasn't come. He sends Esquire an email about the status of the engagement letter, and Esquire responds that he is busy now but will get to it. In late September, the engagement letter comes; Calvin signs it and immediately returns it to Mr. Esquire without carefully reviewing it first. 845 Calvin if there are any others that he may have inadvernently mined, Calvin is tocally ucunned. He lools at Esquire while frataticly flipping through his work papers, and thes he pives Darifhr a Wlank stare noe knowing how to fespond. Doright then reiterates, "Well Mr. Andenon, are there any drmenta of damages \& Order), he answers, "No, it'sall there," Unfortunately for "C. taxes, worker's compensation, television is noe realicy, and Mr. Doright a alo Calvin about social security to just crawl into a hole and die as s ployment insurance, and pension benefita. By this time, Calvin wants rity and unemployment insurace at will be earier than going through thic. Calvin anness, "Social secufunds and lived on them after her termination no, a nid she voluntarily widhdrew all of her vented pention. Mr. Doright is now smiting from eir to car. Eve give up asy potrntal pain the might lane had:" committed hari-kari. Me. Doright sits back in his cherpone in the courtroom knows that Calvin has juat to continue or fust let Calvin leave with his tall berit and loola at Calviat. He li contrmplating wherther Doright decides that be wants to bring it all out so his logs. used in his analysis. "Why did you choose six mon so he anks Calvin about whete he got the variables cost of insurance? Did you know that Ms. Brokenthe Whete did you get the $450 per mooth for the time finding employment?" he asks. All Calvin can diabled and thereffore may have a mote difficalt and pray for che torture to end. Dorighe knows that Calvin has been destroyed but decides he needs to be vure dus his ceperti damages figure of $1,000,000 is the onty one the jury thinks of, so he ails Cahin for his fle and then palls out some emails between Calvin and Exquire. He begins to auk Galvin a question abour one, when Faqueine objects but the judge overnules him. Doright intends to nead the cmull to the jury. His assds up, walls in frone of the jury box, then turns and asks Calvin if he had a coevernation with Mr. Eaquire about the cuatify of his case, Esquite objects again on the groundr of attoracy clieat privilege. The fadpe onerniles his objection. the notes of the conversation between Calvin and Esquine in which Escoire telis Cakin that be was "probably going to lose" and necds the damages to be as low at possible. After reading it aloud in front of the jury. Doright writing to the jury to see for themselves. Mr. Doelight decides to drive the point furnther finto Cakinis heart) and continues to ark Calvin about the comment and why Eaquirt told him chas Calvin ays be doent know: Doright, knowing better, asks if it was to leep the potential losses down. Cakin lools at Esquire and thinks he tr a bour to have a heart atrack. With what seems to be his last berath, Calvin ays, "Yes" Dorighe then asks the final question, "Do you believe your damages cakalation is comecer" Cahis hang his head and with a whimper he says. "No sis." Mr. Doright arys thar is all and sias down giving Eaquise a chance for redirect. Faguire knows the case is now over, and he has no way of countering the plaintift cepert who says ber damages are $1,000,000. All Esquire can think aboet is why did that idior muke that note? Ecquire determines the best thing to do is to cur his loses and not quention Cahin again. It in now appeoaching 5pm.. so the judge ends the trial for the day and sers it will ratt up again at 9 Lim, with any further witnesses Mr. Euguire may have. Calvin dashes out of the courtroom nearly in vears. When he gets back to the office, he finds five messuges from other CPAs alling for information oo Calvin' "ex.clienes" wo they can prepare their curtept year tax return. Calvin sits at his desk sobbing. He has fust lost a couple of thourand dollan a year of income, upserting his clicose, and will never get any butress from Esquire agaln, not to mention the porential malpractice isses. Calvin decides affer that fisco never to do is again. har docided to calke your pracious offer. Can you have a check to my offer within thee bainesr days?" Back it his office. Eqquire thinks back to his otiginal inserview with Cakin. He remembers bow he thought he war palling the wool over Calvin's eyes with a $135 per hour rate and gerring an incrperienced Fuy to glve him the low damage figare he wated. Fearse ane iveriticativi Acopust ik temained with the company. is as followe his work. Cilwin responds thse he is done. vided the amount, "What the heck ia an erpert report?" he thinke. He was never told one was repaits. whet it was due. Then Esquire tells him he has three days antil it mast be submitred to the coart. Cati trils Esquire be already surted ir (although he hadnit) and it will be done in time. He hangs up the phooe with hir hand shaking and ask himself, "Whar do these thing looklly 3 doing, but he needs to find out how to prepare his expert report. So, he calle his friend, Ocar Rig? Oregon so he can't help. Cahin cant undernand why one is due if they aren't required. He thendeds to call one of tis friknds who is an atomey for help. His friend, Justin C. Scales, tells bim soe io vam and fures him a copy of the Federal Rules of Civil Procedute rule 26 [FRCP (26)]. Calvin neads rkt) but is enclear cuctly what he needs to do. He taker a stab at it anyway. Calvin is fecling better now bat if still quite nervous. A light bulb goes off over his bead, and hed) Mr. Exquie and tiks if he has any particular fortrat he likes for expert reports bused upoa FNe? of sectetary fox him one tomorrow and hang up before. Calvin can object and ask for it todsy. Culie pt to himesif. "Oh great, all 1 have in 24 hours to get this report done." he only four hous. Yiked, He has a lunch appointment with a prospective new clicnt that is mppoeds Ho putr everyching aide and dives into his work. Hie prepares his report which consies setieg if thre more appoinements and mote if he deent pert back by 5 pies titroun to reliew them. 14-43 him for the profesisonal eoursesy and hange up. about his work for Esquire bat alio angrys rubmited by the end of the day
