By Robert Carter¹
Simply put, choosing an economic expert is hard. How are you supposed to pick the best expert in a field you don’t know? It’s the equivalent of trying to find the next Michael Jordan when you’ve only played or followed soccer. By gaining an understanding of an expert’s educational and professional background, experience, and potential presence on the stand, you can perform a thorough evaluation of a potential expert allowing you to make a well-informed decision.
The first step is to understand an expert’s education and knowledge base. What is the area of expertise an expert claims to possess? It could be technical in nature such as business valuation, forensic accounting, or expert witness services. It could also involve specialized industry knowledge such as the construction, healthcare, or financial industries. If you expect many of your clients to require experts in these fields, it may be useful to take a few Continuing Legal Education (CLE) or Continuing Professional Education (CPE) courses in these subjects so you can adequately assess the expert’s level of knowledge beyond their use of industry buzz words.
Another important distinction when evaluating experts is reviewing their credentials. Most economic experts have some form of credentials beyond the standard Certified Public Accountant (CPA) or Charted Financial Analysts (CFA) designations. It is critical to understand what each of these represent and why someone would be qualified as an expert. Some common certifications you will see in the valuation field are Certified Valuation Analyst (CVA), Accredited Senior Appraiser (ASA), and Accredited in Business Valuation (ABV). When engaging a forensic expert you can expect to see Certified Fraud Examiner (CFE), Certified in Financial Forensics (CFF), and Master Analyst in Financial Forensics (MAFF) designations. There have been situations where holding only a CPA or CFA certification does not qualify an expert to perform the services for which they were engaged.
Furthermore, discuss and understand how an expert was awarded their certifications. As awarding associations develop new certifications, some of these organizations initially grandfather experts and award the new certification based on stated years of experience, rather than requiring prerequisite training and passing of a subsequent examination. Consequently, some experts that utilized this grandfathering process may not have a complete understanding or mastery of the underlying concepts of the certification. This is an issue on which experts may be attacked during the qualification process, since some never truly earned any of their designations beyond a CPA or CFA.
Once you understand an expert’s educational background and knowledge base, you will want to focus on the expert’s professional experience. Depending on the type of case, you may be better off engaging a professor with an academic background, a general accountant, or a practicing expert that has a particular area of expertise. Each background has its benefits and drawbacks. A professor could have more training or education but may have minimal practical expertise. A general accountant may have a superior understanding of how a company works but may lack the required specialized knowledge. An expert witness specialist may have the most experience and practical knowledge, but you may prefer someone with additional degrees from a higher education institution.
Beyond an expert’s general background, you will want to find out if the expert has any testimony experience and how many years the person has practiced in his or her chosen field. Some attorneys prefer an expert who appears more distinguished and has testified dozens of times; however, don’t immediately disregard experts with little testimony experience, as they may be amply qualified and have just recently decided to add trial testimony to their repertoire. Furthermore, it is an unspoken truth that in most cases, the testifying expert’s staff does the majority of the analysis during any given engagement. As a result, senior staff members may be more familiar with the facts, circumstances, and procedures utilized, and thus, combined with their educational background, they are qualified to serve as an expert witness even though they may have minimal testifying experience.
In addition to the tangible qualities an expert may possess, it is equally important to evaluate an expert’s intangible qualities. Does the expert consider your input even though the final opinion will be that of the expert? Is the expert willing to go the extra mile when deadlines arise? Most importantly, try to determine how the expert will appear on the stand. Do they have a calming presence, a quick wit, and charisma that will draw in the judge and jury, or do they appear frantic, daft, and uncomfortable? Ultimately, you want an expert who can provide succinct, accurate answers while appearing believable, knowledgeable, and trustworthy.
¹Robert W. Carter, CPA, CVA, CFE
Manager – Valuations, Forensics, and Litigation Support
Hertzbach & Company, P.A.
Mr. Carter manages the Business Valuation, Forensic Accounting, and Litigation Support Department for the Baltimore area accounting firm of Hertzbach & Company, P.A. and specializes in valuation and expert witness services for marital dissolutions, gift and estate tax transactions, shareholder disputes, and lost profit claims. He also has extensive experience managing forensic accounting investigations involving misappropriation of assets, fraud, and embezzlement claims. In addition to his practical experience, Mr. Carter teaches for the National Business Institute and the Maryland Chapter of the National Association of Certified Valuators and Analysts and is currently a member of the Advisory Council for the Association of Certified Fraud Examiners.