What makes a financial expert credible to a court? That was just the first in a series of provocative questions that sparked a dynamic panel discussion between four judges at last Thursday’s BVR Summit on Business Valuation in Divorce, co-sponsored by NACVA and ASA in Chicago. Highlights:
“I can tell you what makes an expert incredible: it’s being defensive,” offered Judge Jacqueline Silbermann (New York). If a judge or opposing attorney questions your valuation assumptions or facts—but you answer, “nothing will change, my report stands as it is,” then you risk losing your persuasive power. “Be prepared to recalculate your conclusion based on what the judge proposes,” Silbermann said. In other words, commented moderator Jay Fishman, “don’t get so intoxicated with your valuation conclusions. Be adaptable.”
“Show reasonableness,” added Judge Moshe Jacobius (Illinois). In a market approach, for example, don’t compare your small subject company to a Fortune 500. Likewise, be sure to demonstrate “transparent objectivity,” said Judge Edward Jordan (Illinois). “If the witness comes across as a ‘hired gun,’ that gets my attention quickly,” he said, “and if that person’s credibility goes—it’s gone forever. I look for you to show me the objectivity and transparency of your opinion, so much that it comes up and bites me. Then I will listen very carefully to what you have to say.”
Judge Howard Lipsey (Rhode Island) uses the smell test. “If it smells bad right off the bat, you know something is wrong, and all you have to do is figure out what that is.” Judges also don’t like the “wise-ass, defensive expert, who gets on the stand and says ‘I know everything’,” Lipsey said. “I look at them and say don’t B.S. me.” For a complete summary of all the judge’s comments, including their views on BV credentials, neutral experts—and their solutions to the recurring problem of “missing” discovery documents—catch the November Business Valuation Update™.