In the theatre of litigation, the lawyers are the “directors” of the drama, according to attorney Jim Hennenhoefer (James A. Hennenhoefer, A.P.C., Vista, CA). The financial experts are actors who help tell the story. “It is my job to make you (the expert) look good,” he told attendees at the 2008 AICPA/AAML National Conference on Divorce last week in Las Vegas. Direct examination consists of “softball” questions, aimed at telling the court why you (the expert) are so great and your standard of value is correct. “Judging is boring, routine drudgery,” Hennenhoefer said. “We want to make it easy for them.” And attorneys also want the play to hold their attention.
His job on cross-examination is to be the villain, he said, “to tear your throat out” in a way that shows the trier of fact that you are standing on shaky ground. “You can’t fix a destroyed painting,” he added, mixing his artistic metaphors—but certainly making a point. Before most trials, Hennenhoefer will run dress rehearsals with another attorney acting as opposing counsel. “If it’s important enough for me to hire you as an expert, it’s important for me to make you shine.”
‘Expert with the most industry experience usually prevails.’ That was another hot practice tip from Michael Berger (Berger/Schatz, Chicago), who spoke on “Dissecting a Business Valuation Report” with co-presenter William Kennedy (Anders Minkler & Diehl LLP, Los Angeles). (In a unique format, the biennial AICPA/AAML conference offers at least one speaker per session from the legal field, another from business valuation.) “Hands-on industry experience is more important as long as there is some valuation experience,” Berger said.
Site visits are also critical, even if you’re the expert for the non-owner and fully expect the other side to refuse your request. “Never assume that you are not going to get a site visit,” said Jim Hitchner (The Financial Valuation Group, Atlanta). “I have seen situations where the expert never asked for a site visit because they just assumed that the other side would deny it.” On the witness stand, the lawyer asks whether the expert asked to talk to management. (The answer: “No.”) But isn’t that a standard part of a valuation engagement? (“Yes.”) Why didn’t you talk to management? (“Because I knew you wouldn’t let me.”) But of course the opposing counsel indicates that he would have permitted the visit. The moral of this particular play, Hitchner advised: “Ask every time.”