William Morrison (Morrison and Company) led a great session with Hon. Thomas Zampino (New Jersey Superior Court) and Mark Sobel (Greenbaum Rowe Smith & Davis) on the rules of evidence at the BVR/Morningstar 3rd Annual Summit on Business Valuation in Divorce on Monday in Chicago.
The panel agreed that, ironically, many divorce lawyers don’t have a lot of “actual, on their feet, trial experience” because most divorces don’t go to court. So, Sobel pointed out that “they might not be facile” when working with appraisers. A most common new litigator mistake is to take over an expert’s testimony. ”The judge wants to hear from the expert, not the lawyer,” he says.
Sobel trains other lawyers to attack appraisal reports in four areas fraught with assumptions:
- normalization adjustments to the income statements
- projected growth rates
- specific-company risk, and
- reasonable compensation, if any
“Each of these aspects have multiple subjective elements, so any lawyer will want to look at them, and any expert must prepare to be cross-examined on them.” Sobel cites a case where an expert argued for a 19.5% annual growth rate going forward–it was easy for this experienced trial lawyer to tear that number apart until the judge stopped him, but by then the damage to the expert was done. How do you deal with this as an expert? ”Admit there’s a subjective element. But, also point out that your subjectivity is tempered by your experience, your studies, the information you collected, all the work in put in, etc. So, it’s subjective, but it’s not a guess.” In cross-examination, Sobel feels this answer is the surest way to shut down the opposing counsel.
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