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.
Experienced family lawyers are familiar with the common ways spouses attempt to commit financial fraud in divorce: hiding or undervaluing assets, overstating debts, concealing income, and inflating or fabricating expenses. All of these are done in an attempt to get more than the spouse’s fair share in the property division, and to influence the amount of support that will be paid or received.
Successfully advocating for your client involves more than just knowing that these things occur during the divorce process. You must also be able to identify the red flags that indicate the financial issue(s) must be investigated further. Some are easier to spot than others, but once you have identified two or three red flags, it is time to get a forensic accountant involved. The financial analyst’s experience with fraud and deception will be invaluable in evaluating the red flags and determining if there is something of substance to investigate further.
This article was originally printed in the On Balance, the magazine of the Wisconsin Institute of CPAs, March/April 2013.
Divorce and child support cases often are highlighted by disputes over money. One party may be accused of artificially depressing earnings, hiding assets or manipulating the finances to lower the financial obligation to another party. Understanding the complete picture of the finances is necessary before a fair settlement can be reached.
Chicago divorce attorney Jeffrey Knipmeyer, partner at Nottage & Ward, cautions that spouses of individuals hiding income and assets rarely have the financial sophistication to recognize that manipulation is occurring. He adds that during the marriage, they typically have been hands-off, and their only knowledge of the finances depends on what the spouse has communicated.
Recently the AICPA published an article on its Journal of Accountancy website regarding private investigator licensing rules across the country. There is a concern that forensic accountants may be subject to private investigator regulations since they are doing investigative work. The AICPA has drafted a grid outlining the regulations by state, but you should do further research on your own because it does not tell the whole story.
The grid provides the following information on private investigators in Wisconsin:
Family law cases often focus heavily on financial issues. Whether the parties to a case are of modest means or great wealth, both sides want their own version of what is fair. Unfortunately, this can lead one or both parties to hide income and assets. With the help of a financial expert, counsel can identify income and assets that might otherwise go undiscovered, and hopefully reach an equitable end to a divorce or child support case.
Sources of income and assets owned can be identified with the right documentation. Attorneys need to be familiar with some of the most common financial documents so they know what to request. Attorneys with financial knowledge can also help identify issues that may need further analysis in a family law case.