Most valuation experts have dealt with retaining attorneys who want to steer the valuation by reviewing draft opinions and suggesting (or even ordering) recalculations that favor their side. Experts need to know the discovery rules because much of the communication between attorney and expert may be discoverable, advises David Laro, a senior judge of the U.S. Tax Court. “If the attorney’s involvement crosses the line, the valuation evidence may be spoiled,” he says, speaking at the AICPA FVS conference in Las Vegas.
Big blunder: Judge Laro mentioned a recent billion-dollar case in which a major law firm told the valuator in writing what number it wanted the expert to reach. The communication was discoverable and ended up in court. “Think of what that does to the valuator’s credibility in court,” the judge says.
Speaking at the same session, Michael R. Devitt (professor of law, University of San Diego School of Law) also cautioned appraisers about their dealings with the attorneys. “Don’t let overzealous lawyers push you into untenable positions,” he warns. And he advised experts to know the Daubert case and the factors it sets forth inside and out because it is almost certain that the other side will file a Daubert challenge. Sort of knowing the case is no longer enough to overcome the hurdle Daubert has become.
For more coverage of this session and the rest of the AICPA conference, see the January 2016 issue of Business Valuation Update (subscription required).
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