How much does your judge really understand about financial issues? Will he or she be able to sort out cases with complex accounting and finance scenarios? Tracy Coenen and Miles Mason discuss how your expert witness can help the judge understand.
One of the hot new things in the area of divorce, especially for high net worth clients, is using a law firm that has forensic accountants on staff. Sometimes the divorce attorneys themselves have credentials in the area of forensic accounting, such as a CPA license, CFE (Certified Fraud Examiner) credential, or CFF (Certified in Financial Forensics) credential.
These law firms tout a number of advantages of retaining them:
- Expertise in financial matters, including business valuations, tax law, and forensic accounting
- Ability to investigate the value of financial assets
- Skills necessary to perform a lifestyle analysis
Family Advocate – ABA Section of Family Law Magazine
By Tracy L. Coenen
Forensic accountants are usually retained in family law cases as expert witnesses, with the intention that they will provide expert opinions and testimony on behalf of the client. Although retention as a consultant is less common, it is an important option to consider. Sometimes, the work of the consultant can be even more important than the work of the testifying expert. The consultant may be able to dig deeper into sensitive issues because there is no fear of testimony or of disclosing the consultant’s work.
One of the biggest benefits to retaining a consultant is the fact that the consultant’s communications and work product enjoy privilege. Because the consultant is essentially an extension of the law firm, the identity of the consultant, the scope of work, the evidence examined, and the results of the work need not be disclosed to opposing counsel. (Note that documents examined by the consultant may very well need to be disclosed as part of the discovery process, but the consultant’s work or impressions of the documents should not be disclosed.)
Should forensic accountants and expert witnesses provide services to criminal defendants? Tracy Coenen discusses the work that can be done on the criminal defense side, and a few issues that the accountant should consider before accepting such a case.
Tracy Coenen talks about what it is like to testify at trial as an expert witness.
Damages experts are a routine part of litigation, as the issue of financial losses is often complicated. A variety of subject matter experts and financial experts are a standard feature in litigation to sort out the issues and help judges and juries understand the numbers. But what if there is no damages expert? Can a proper award of damages be made?
In an opinion issued this spring, a judge in federal court in the District of New Jersey granted defendant’s motion for summary judgment on plaintiff’s claim for damages.
Unicom Monitoring, LLC was granted summary judgment its patent infringement claims against Cencom, Inc. The plaintiff alleged that it could prove the revenue and profits earned by Cencom related to the infringement, and the reasonable royalty that Unicom was entitled to because of the infringement.
Why might an accountant providing traditional tax or auditing services want to branch out into litigation work? There are lots of opportunities for expert witnesses, and the work is interesting. Watch the video below for Tracy Coenen’s commentary on this topic.
The issue of “income available for support” in divorces can be huge, particularly if only one spouse works. The issue gets complex if the earnings of one or both spouses are non-traditional. Regular wages are usually easy to evaluate in a divorce case, while income from businesses, real estate, and other investments become more complicated.
As a general rule, there is latitude in state courts when it comes to income and what is included or excluded for support calculation. There are general rules about the most common forms of income, but they don’t cover every issue and they all have a bit of “gray area” within them.
It is important to know the tricky kinds of income and cash flow that come up in divorces, as well as the varying views of how and why they should be included or excluded. Some of the types of income or expenses that may be treated differently from divorce to divorce and jurisdiction to jurisdiction include:
A lawsuit recently filed in federal court in Chicago by Cottrell Inc. against J. Nigel Ellis highlights the issue of conflicts of interest for expert witnesses. Ellis is reportedly the founder of Ellis Litigation Support, Dynamic Scientific Controls, and Ellis Ladder Improvements. He has two roles in his career: selling safety products, and testifying as an expert witness about safety products.
According to the complaint, Cottrell says that Ellis approached the company in August 2005 to sell a “fall protection design” them. Prior to talking with Ellis, the company says they asked him if he was working with any of the attorneys representing plaintiffs who had sued Cottrell. He said he was not, and he signed a confidentiality agreement with the company. Ellis and Cottrell began exchanging information and letters regarding safety designs, and the relationship went on for nearly two years.
Earlier this year, I recorded a Sound Advice podcast for the American Bar Association’s Section of Litigation. When dividing shared business assets in a divorce, it is important to fully evaluate the finances of the businesses. It is impossible to fairly divide these assets if you do not dig into the financial details.
This podcast goes through the financial documents needed, including the tax returns (and which forms you should ask for, based on whether the business is a corporation, partnership, LLC, or sole proprietorship), the financial statements, and the detailed accounting records.