Don't Be Scared of Scrutiny

The service expert witnesses provide is an important one, which is why it is crucial that testifying professionals maintain high standards, especially in litigation cases. As a testifying expert, we naturally open ourselves to scrutiny every time we take the stand. And there is always the possibility for that scrutiny to go beyond cross examination to a formal challenge. We live and work in a litigious society, where disputes in court can often carry high stakes for the parties involved. And so each party’s advocate (their attorney) will look for every available way to legally win the battle – including challenging the opposing experts.

One option for that challenge takes form under Daubert. Following the court rulings in Daubert v. Merrell Dow Pharmaceuticals in 1993 and Kumho Tire Co. v. Carmichael in 1999, the courts have increased their scrutiny of expert reports and testimony for all types of experts.

Daubert challenges are on the rise – according to a 2016 whitepaper published by PwC, 2015 saw 230 financial expert challenges, a 10% increase from the year before. Of these challenges, nearly half of the financial experts (44%) were excluded, and most were excluded due to a lack of reliability in their testimony (non-standard methodologies, lack of sufficient data, etc.) or their testimony was deemed not relevant to the case.

As financial experts, we testify in a wide range of disputes. The PwC study found that from 2000 to 2015, the highest exclusion rates of financial expert testimony under Daubert were in cases related to intellectual property, product liability, fraud, securities litigation and bankruptcy.

So how can financial expert witnesses prepare for the possibility of a Daubert challenge? Most importantly, they should become acquainted with the kinds of credentials and testimony that are most likely to be challenged. Accountants have seen the most challenges and exclusions under Daubert, with economists coming in second. 

In recent years, the courts have found that “any step rendering the [expert’s] analysis unreliable…renders the testimony inadmissible.” Expert witnesses should be armed with objective information that supports their approach, methods and conclusions, and be able to explain their methodologies every step of the way.

Expert witnesses should stick to their specialty. It may be tempting to stray to issues that are technically outside of the scope of your specialization, but reports, opinions and testimony should be consistent, narrow and within the boundaries of your field.

There may come a time when a financial expert’s testimony is challenged, whether it be through motions in limine or on appeal. It is important that financial experts have a solid foundation on which to support their conclusions.

Financial experts shouldn’t be scared of scrutiny, but should be prepared to explain and defend their positions.



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