|Rebutting your client: How much involvement
is too much?
By Joseph Leauanae, CPA, CITP,
ABV, ASA, CFE and Bryant Petersen
In a situation that may be all too familiar, your client asks you
how much your professional services will cost them. Assuming that
you are feeling ethical that day, your response will likely be that
it depends upon how much work you will have to perform. When your
client follows up by asking how much of that work can be performed
by them, how should you respond?
Clients will often seek to involve themselves in the litigation process
in one form or another. Sometimes this attempted involvement is an
effort to minimize fees and in other cases it may reflect a desire
to exert control over an unfamiliar situation. If this article were
about the relationship between attorneys and their clients we would
likely be summarizing and concluding our narrative at this point.
However, as non-attorney expert witnesses
who are frequently faced with this dilemma, we believe this topic
to be an important one. Not putting it lightly, cases have been destroyed
because an expert relied too much upon the assistance and work product
of a client.
As experts in financial matters, our interactions with clients are
generally along the lines of reconstructing and evaluating financial
statements, investigating allegations of fraud, and valuing businesses
and business interests. Although our experiences are specifically
relevant to these types of analyses, our observations and conclusions
are universally applicable to experts in other fields. These observations
also provide insight to those in the legal profession as to the amount
of reliance an expert can and cannot be expected to have upon work
product and assistance provided by a client.
In putting together this article, the authors have relied upon a fundamental
difference between attorneys and expert witnesses. Other than the
fact that we experts typically look like nerds and are easy to pick
out of lineups, there really is an important distinction between the
way that an attorney and an expert view their relationships with clients:
although attorneys are advocates for their clients, expert witnesses
are expected to remain objective and neutral to the party that retains
them. How, then, can an expert witness interact with a client and
use client work product without compromising that objectivity?
What is objectivity? Where can I buy it? Can I get a used one on eBay?
To experts, objectivity is something that, once lost, is difficult
if not impossible to find again during an engagement. The American
Institute of Certified Public Accountants states that in the performance
of any professional service, a [CPA] shall maintain objectivity and
integrity, shall be free of conflicts of interest, and shall not knowingly
misrepresent facts or subordinate his or her judgment to others
. While this guidance applies to CPAs, it provides an excellent
barometer by which to gauge objectivity. Furthermore, the authors
contend that an expert must also maintain objectivity in appearance
and avoid even the impression of impropriety. With these concepts
of objectivity in mind, how does objectivity become endangered when
a client seeks to assist with or perform a portion of the work deemed
necessary by an expert?
Experts will typically begin an engagement by assessing the amount
of work necessary to reach a conclusion. Once this preliminary assessment
has been made, the expert will then segment the anticipated work into
chronological blocks that incorporate deadlines such as discovery
cut-offs, report due dates, depositions, and trial. Common sense would
seem to indicate that the client should not typically write any portion
of the expert report or put together any part of the expert’s
exhibits, but to what extent can an expert rely upon work provided
by the client prior to the preparation of the expert report? We use
Mel’s story to shed some light on this dilemma.
Mel was a client in a marital dissolution matter. She suspected that
throughout 20 years of marriage her husband had used marital funds
to purchase certain assets that were then purposely hidden from her.
Mel claimed that her husband, his brothers, and certain close friends
had conspired together to hide these assets. Mel engaged us to trace
the ultimate disposition of marital funds to determine whether she
could attach to any previously undisclosed assets.
The first time that Mel came into our office she thought that she
recognized our office manager. She thought that the office manager
was one of her husband’s cousins and that therefore she couldn’t
be trusted. In fact, Mel refused to believe that our office manager
was not related to her husband until we demonstrated it to her by
tracing the office manager’s family tree to show that there
really was no relationship. Even after this exercise, the first few
months of our engagement with Mel continued to be strained when she
was unwilling to leave messages for us with the office manager.
Soon after our engagement, Mel brought in a large plastic garbage
bag and a banker box, both of which contained documents that she claimed
would support allegations that her husband had been living a secret
life involving an illegal pornography ring, polygamist wives, a secret
identity, and hidden assets. Upon a cursory examination of the garbage
bag and banker box we soon discovered that the documents were in total
As our fees for Mel’s case began to mount, she asked us if it
would be possible to let her organize the documents so that she could
reduce her costs of litigation and thereby save our expertise for
use on the actual financial analysis. At that point we were relieved
that she wanted to organize the documents; in our initial review of
the documents we had found baby pictures intermingled with bank statements,
which was only trumped by the discovery that one of her teenage son’s
baby teeth had been stashed by the tooth fairy amongst promissory
note documentation. We readily agreed to accept her assistance.
To facilitate our oversight of Mel’s work we provided her with
free use of part of our office space and gave her daily parking validations.
Initially Mel did as we requested, organizing the documents chronologically
by entity; however, as Mel went through the documents and found items
that she thought would link her husband’s activities to her
conspiracy theories, she would track us down and attempt to explain
why each particular document was crucial to our expert analysis. Thereafter,
each time she located a similar document we would have to revisit
the same issues. If Mel felt that a staff member in our office did
not buy into her conspiracy theory, she would make her way through
each consecutive office until she found someone who would believe
her when she made claims such as the assertion that her husband owned
a major credit card company because one of its call centers shared
administration costs with one of her husband’s entities.
After continuing in this fashion for some time, we reached a point
where we were dedicating large portions of the workday to hearing
and addressing numerous conspiracy theories. With each passing day
we conveyed our concerns regarding our rising professional fees, reiterating
that instead of interrupting us with every little document she should
instead make notes and continue organizing the documents, as we had
asked her to do, so that we would be able to review all of the documents
at once, prior to discussing addressing her individual concerns. Our
fees were adding up and we had only just scratched the surface of
The problem that arose in this instance is that we initially set out
with the best intentions: to save our client a certain amount of fees
by having her perform some of the more basic tasks that would otherwise
have been completed by our firm. What actually happened, however,
was that the client’s determination to perform the analysis
she wanted rather than the organization and analysis we had instructed
her to do, resulted in a situation where the client was requiring
daily attention but could not understand that our escalating fees
were due to our daily involvement with her in the performance of her
tasks. But how did this impact our objectivity as experts?
When is it time to put the client on the payroll?
Although we may not always have great clients like Mel, we should
be aware that even without explicit retellings of sex scandals and
conspiracies, most clients are capable of providing valuable assistance
to an expert.
A client can be a very helpful resource for information regarding
historical and background information. Since they often have firsthand,
detailed knowledge of the subject matter, whether it be a business
(such as in the case of a business valuation); another individual
(such as in the case of a marital dissolution); or a process (such
as a forensic accounting investigation), a client will often provide
background and insights not normally apparent to an outsider such
as the expert witness.
As financial experts, our engagements often involve a financial evaluation
or investigation of a business, business process, or industry. These
businesses have ranged from small single owner operations to international
conglomerates, and in each of these instances we have had clients
who have been able to provide us with useful information that would
have been difficult to obtain if not from an insider. Some of this
information has included an understanding of both official and unofficial
work processes and the identification of key people to interview within
To a certain extent, clients can also prove very helpful in performing
a number of the routine but essential tasks that are required prior
to expert analysis. As financial experts, we generally spend a lot
of time reviewing financial information. This financial information
must generally be compiled into schedules that can be used for our
analysis and for the presentation of our conclusions. A client can
typically do quite a bit to obtain and organize the data necessary
to prepare the expert reports and schedules, although the expert must
oversee the process to ensure that the compiled information is true
to the source documents.
Since an expert should always remain an objective party, it is imperative
that when an expert is considering what work they may be able to accept
from a client and what work they should not, they must consider how
the litigating parties would react if they knew the source of the
work product. For an obvious example, if the client were to put together
a historical narrative of the subject matter, the expert may generally
use such information to the extent that it does not draw conclusions
or reflect an unsupported bias.
On the other hand, having a client write any portion of the expert’s
opinion, or any report narrative that casts the expert as an advocate,
would compromise objectivity. But what should be done if the client
actually thinks that they can do a better job than the expert? Jack’s
story illustrates a not-so-uncommon situation.
Jack was a tenured engineering professor at a prestigious California
university who was involved in a dissenting shareholder action involving
a company in which he was a minority shareholder. The company at issue
had been designed to oversee the construction of a large professional
business plaza. The general contractor, who was the majority shareholder,
was also involved in a number of other contemporaneous construction
projects. We were engaged to investigate the use of business funds
for non-business activities such as payments to contractors for work
performed on other projects.
Since Jack had a strong background in scientific analysis and theory,
albeit with an underabundance of basic social skills, he wanted to
be involved in all aspects of organizing and reviewing the documentation.
Furthermore, Jack wanted 100 percent attention from both us and his
attorney. In fact, when the attorney indicated that he would be unable
to schedule a meeting for a particular date because he was getting
married, the client promptly contacted us and requested a list of
other attorneys that we worked with so that he could find an attorney
who was more dedicated to his cause (things ultimately worked out
for all of the parties concerned, including the attorney’s new
Jack was so confident in his academic background that he believed
he could easily perform the analysis and then simply rely upon us
to voice his opinions in a report and on the stand. To save money,
Jack insisted that we use him to perform some of the tasks. The client
had a number of theories and undocumented instances of how the general
contractor had abused his authority and misused company assets, even
though the client had not organized the documents in a fashion that
demonstrated the alleged abuses. We requested that Jack organize and
prepare a narrative on the general contractor’s abuses.
As we conducted our investigation and uncovered accounting improprieties,
Jack would, in each instance, claim that he had previously known about
the abuses we were uncovering and argued that we were billing him
for information that he already knew. We were put into a situation
where the client thought of himself as the expert. How would we prevent
ourselves from relying upon a client’s analysis?
Don't miss the donut by looking through the hole
There are a number of reasons that an expert may want to consider
using work produced by the client. (And no, “because they pay
their bill” isn’t one of them.) One of the main reasons
for accepting assistance is the fact that having the client perform
such work will reduce the amount of time that the expert will need
to spend on the engagement, ultimately reducing the fees that will
be billed to the client. While this may sound like a problem endemic
to smaller or budget-conscious clients, we have actually found that
clients who have retained us in both small and very large engagements
have sought to perform at least some of the analysis that we would
otherwise have undertaken. We found that we cannot generally assume
by a client’s size or the size of the engagement that a client
will or will not want to perform some part of the analysis. Obviously,
it is imperative that the expert remain involved in the client work
product process to ensure that the expert understands what the client
is doing, that the client is appropriately following the expert’s
directions, and that the work product does not become deficient due
to errors or the proclivities of the client.
The other reason that accepting assistance and work product from the
client may be useful is because the client, usually an insider with
detailed knowledge of the subject matter of the litigation, will have
insights and even access to information that is not readily available
to the expert. The main issue to be aware of in using this type of
information or data, however, is that the expert does not surreptitiously
fall prey to relying upon information and documents that should have
been routed through the formal discovery process. While experts routinely
rely upon inside information and documents provided by clients, courts
have not looked kindly upon experts who base their opinions on information
that was never formally produced, sometimes going so far as to deny
the admissibility of key information and imposing sanctions.
While there are some fairly good reasons why client assistance and
work product can be used, there are also corresponding reasons why
it should not. The client in a litigation matter is obviously invested
in their case and their position and therefore lacks the objectivity
that an expert is required to maintain. The client has an agenda.
Therefore, any assistance and work product proffered by a client to
an expert must be evaluated carefully. If the expert cannot ensure
that they will be able to oversee the client’s involvement,
they may be unable to testify as to the integrity of anything that
is received from the client.
Furthermore, while the client may be an expert in the litigated subject
matter, they may not have the requisite experience to perform certain
analyses nor recognize certain red flags that an expert might easily
identify as a result of training or experience. Additionally, depending
on the complexity of the case and the personality of the client, the
client may not understand or intentionally choose not to adhere to
the expert’s instructions. This may lead the client to attempt
to subvert the expert’s work with a biased analysis performed
by the client.
At the end of the day, when does an expert stop becoming an objective
third-party and start becoming an advocate for their client’s
position? While the answer can be as complex as the question is simple,
the authors believe that the line in the sand is primarily dependent
upon the type and amount of assistance and work product that the expert
accepts from the client. And we believe that such a line of demarcation
is crossed when the expert’s conclusions and opinions are directed
or inappropriately influenced by the client. Essentially, an expert
loses their objectivity when they compromise their integrity, whether
in fact or appearance, and becomes a spokesperson for their client.
Regardless of whether an expert’s client is the author of conspiracy
theories or a nutty professor, the plaintiff or the defendant, given
the same fact pattern and circumstances, expert witnesses should usually
reach similar conclusions. Unless, of course, one expert is better
than the other; but that’s a different story.
of Joseph Leauanae, CPA, CITP, ABV, ASA, CFE
Joseph L. Leauanae has over nine years of professional experience
in the areas of litigation support and business valuation. His engagements
typically include the performance of business appraisals or valuations,
investigative accounting assignments, and economic loss quantification
cases. He is one of only a few professionals in the United States
to have formal training, expertise, and experience in both forensic,
or investigative accounting, and business valuation. Mr. Leauanae
may be reached at firstname.lastname@example.org.
Biography of Bryant D. Petersen
Bryant D. Petersen has over five years of professional experience
and has participated in numerous litigation support and business valuation
engagements. His assignments have ranged from the tracing of funds
through a ponzi scheme involving offshore entities to valuing a business
that was destroyed by a product liability action. Mr. Petersen may
be reached by email at email@example.com
An expert witness is a specialist who, by virtue of special
knowledge, skill, training, or experience is qualified to provide
testimony to aid the fact finder in matters that exceed the common
knowledge of ordinary people.
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