Should your expert update a 10-year old valuation report for current testimony?

Analyst Nilufer Usta posed this questions in a recent discussion on LinkedIn (note: you may have to join the BV Professionals group to access the thread). Over sixteen comments have been posted as of this moment, touching on the central topic (short answer: the report need only comply with the standards applicable as of the date of issuance).   The BV Professionals discussion also touches on the litigation exception contained in the current SSVS-1 and NACVA standards, litigation strategy in general—and how to challenge an aged report under Daubert and relevant disclosure standards.

The discussion reminds us of a recent federal district case, Lawton v. Bank of America Corp., (D.R.I.) (April 14, 2010), in which the plaintiffs intended to rely on a 2002 valuation of closely held stock, prepared by a CPA in connection with an earlier stage of the litigation. But after disclosing her report, they discovered her underlying workpapers had been destroyed in the normal course of her firm's document retention policy. A deposition revealed additional memory gaps (about her prior methods and data) that only her workpapers could have answered. The defendants challenged the report underDaubert (reliability) and Rule 26 F.R.C.P. disclosure standards (requiring experts to disclose all underlying support for their opinions). The court ultimately let the report in along with a revised supplemental report, but it also expressed some credibility concerns and exposed some weaknesses that the defendants will no doubt use at trial.

The complete digest of the Lawton case and the court’s opinion is one of nearly 3,000 valuation-specific cases currently available at BVLaw™.