Side-take.pdf

8-18 FoRENSIC AND INVESTIGATIVE AccoUNTING

by someone else and placing one’s name at the bottom to indicate agreement. In other words t.
of counsel contemplated by Rule 26(a)(2)(B) is not synonymous with ghost-writing”12

In Bank One Corporation, the Tax Court rejected a jointly prepared 20-page expert rebuteal
the behalf of two experts since it was prepared primarily by only one expert and by taxpaver”Por
The report went through 12 revisions. The Tax Court complained that the expert never explainUn

satistaction that the words, analysis, and opinions in that report were his own work anda refersth
own expertise. This court was not persuaded that the expert played any meaningtul role in prenfh

contents of the rebuttal report. “He was vague, uncertain, and unfamiliar with the contents of hth
and he was uncomfortable and evasive, and he was uncomfortable about his role in its preparapo

Hurwitz and Carpenter say that permissible assistance certainly should include familiarizine.
with the requirements of Tax Court Rule 143(F)(1) and helping the expert understand what infoP
must be included in the expert report. By contrast, an expert’s report written entirely by an atto
automatically suspect. Behavior falling between these two extremes poses more trouble, s1 They ac

it is likely that the U.S. Tax Court will allow an expert to serve as a scribe only when the expe

capable of articulating his or her thoughts in the form of a written report.
Another type of ghostwriting occurs when lawyers draft documents and pleadings for pro se litio

without disclosing this fact to the court. Some federal jurisdictions are opposed to this form of eho
ing, because pro se litigants receive greater leniency, which is unfair to opposing parties.

Side-Taking

the assistant

tion.””

10Stwrit

Side-taking or result-oriented work may result in a trial judge dismissing an expert. Hints at a lawo
line of arguments provided before reviewing evidence can infHuence an accounting expert’s decision ah
an auditors compliance with GAAS. 133 For example, in a 57-page decision involving the valuation of

company, the U.S. Tax Court attacked a valuation expert, Dr. Shannon Pratt.”” Ihe IRS used as its expe
on the valuation questions Dr. Shannon Pratt, managing director of Willamette Management Associates
and the acknowledged guru of business appraisers. Tax Court Judge Renato Beghe nevertheless concludad
that “Willamette’s report was result-oriented and this was reflected in Dr. Pratt’s testimony” The Jude
noted that appraisers “have third-party responsibilities-just as certihed public accountants do-to those
who rely on their opinions, and their determinations must be independent and objective…”

The judge said that Dr. Pratt strayed from the standard of objectivity and cast aside his scholar’s mande
and became’a shill for respondent.” Thus, Judge Beghe rejected most of both the Willamette report and
Dr. Pratt’s testimony, but did consider Dr. Pratt’s criticism of the taxpayer’s expert reports and testimony

Tips on Preparing an Expert Report
Following are dos and don’ts accountants should remember in preparing an expert report:!30

155

Discuss the report with the attorney Ask the attorney to list the issues that should be addresed in the

expert report.
Focus on empirical and market-derived data. Courts expect empirical and market-derived data to dive
an expert’s conclusions, not vice versa. Avoid phrases such as “in my opinion” and “based on my exper
ence and instead explain what the data shows.
Rely on authoritative treatises, professional standards, and accepted industry practices. The foundation tor
an expert’s opinions should be authoritative treatises, professional standards, and accepted industrypractices. Avoid relying on the opinions of single individuals, no matter what their level of knowledge.
skill, experience, training, and education.

Relate theories andjformulas to the specificfacts and circumstances of the case. Explain why and how an theories and formulas used apply to the specific facts and circumstances of the matter being litigateul. Clearly state opinions. State opinions clearly and confiden1ly. Do not hedge opinions with such wor as I believe, it seems, probably, possibly, apparently, evidenty, or supposedly. Use objective language. Use objective language, not language that is biased or argumentative. Do not state an opinion on the law in the report. Do not give an opinion on what the law is, and be ful about citing law, code sections, and court decisions. Stating an opinion about the law may resutthe exclusion of the report and testimony from the trial. For example, in FPL Group, Inc.,” MIIci M. Wilson, an attorney, filed a report on behalf of FPL. Tax Court Judge Robert P. Rume, observi that the report stated legal conclusions, granted the government’s request to exclude Wilsons icp Stay within the field of expertise. Do not offer opinions on issues outside the specific field of expc Do not be the person in the cartoon at the beginning of this chapter.

rt

ertise

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LTiGATION SERVICES PROVviDED BY ACCoUNTANTS 8-19

Use first-person singular and actire voicc. Write the expert report in thec ntstpe found”) and use the active, not passive, voicc.
Deine technical terms. Provide definitions of all technical tctms that arc usced in the cCxp¢r

Avoid mistakes. Mistakes in an cxpert’s report can be deadly. Opposing counsel will genc’ he such mistakes, no matter how small, on the thcory that if the expert is mistaken au or she may be mistaken about other things (including. perhaps, the entire opi

on

WORKING PAPERS
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Expert witnesses should bear in mind that any notcs, memoranda, working papers. aiu ” d als prepared n anticipation of litigation may have to be disclosed to opposing counsel and can be uscd
during croSs-examination. Unlike attorneys, there is no work product rule protecting an expert s 0
papers from discovery.

According to U.S. District Court Judge Robert E. Pavne”the basic precepts of the Federal Ku

Civil Procedure relating to the work of testifying experts requires… he retentto” n rhar the rule reports and the correspondence reviewed by the testifying expert”” Judge Payne has writen that the rule
in torce since the Danbet decision requires that any “information reviewed by an expert will be subject

ro disclosure, including drafts of reports sent from and to the testifying experts… he party requesting
disclosure no longerbears the burden of demonstrating that the expert actually relicd on the document.

Thus, the work product of non-testifying consultantswill be discoverable if the testifying expert uses it

Need for Completeness
There are no specihce rules governing the form and content of an expert witness’ working papers. What

expert witnesses include in their working papers is left to their professional judgment. However. the docu-

mentation should be sufhcient to justify the experr’s opinion. In their working papers, expert wtnesses

should incude the basis for their opinions, copies, or references to materials that they used to torm tne
basis for their opinions, details of any calculations, and all assumptions made.

Poor paperwork is what attorneys dislike the most about expert witnesses.” If an experts hles are

disorganized and/or incomplete, then the other side’s counsel will spend time harping on the experts

poor method. If the file contains a mass of nores and preliminary thoughts about the case (particulary
if based on discussions with the lawyer who prepares the expert), these, too, will be a fertile ground tor
cross-examination. Worst of all, if the file contains obvious omissions, which indicate that the expert has

destroyed documents, there may be intense inquiry (and sometimes an adverse inference) concerning the
missing materials.

Disclosure of Problems

yers generally dislike working with expert witnesses who view paperwork as a nuisance,
or who think

that they can make up tor lack of preparation on paper with a facile courtroom presentation. Perhaps
the worst sin, in this regard, is for an expert witness, once confronted with problems in a hle or report.

to insist that there is no problem. The expert witness generally should admit, candidly (and preterably
even before cross-examination exposes the problem) what the problem is (with an explanation tor why

the problem is not material).

8161 EVALUATION OF OTHER EXPERTS
One of an expert witness’s duties

is to evaluate the opinions of other expert witnesses
and help prepare

attorneys to question those
other experts. As an expert

witness, the torensic accountant will be expec ted

to review the expert reports prepared by
other experts, identity problems

with the conclusions reached by

opposing experts, and help the attorney
he or she is working for frame questions to expose

those problems.

The forensic witness will be expected to help attorneys
develop a working knowledge of the technical

area at issue and recommend treatises
for attorneys to consult,

Fie or she may be asked to suggest questions

for attorneys to ask opposing experts
and may be asked

to be present at the
examination of an opposing

expert witness to clarify the meaning of
answers and suggest tollow-up questions.

It is not sufficient to say that
another experts

conclusions are
incorrect. Ihe expert witness has to help

an attorney
communicate why those

conclusions are incorrect. Ihe cxpert
witness should help the attorney

develop questions that
make it clear to nonexpert jurors

that thosSe conclusions are incorrect.

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