Michele Miles: When Picking a Financial Expert, Beware of Hormonal Imbalances

By Tom Hagy

 

 

Battle metaphors are frequent when talking about litigation and trials.  Verbs like kill, shoot, crush, and destroy are not uncommon.  Michele G. Miles, both a J.D. and accredited business appraiser, sees a danger in taking the macho metaphors too far, especially when they affect the conduct of a financial expert. 

 

Miles said you need to avoid what she calls “testosterone poisoning,” and urges you to learn the signs.

 

First, she said during the recording of a Mealey’s Litigation Conference / BVR audio, that you do not want a witness who is going to pick a fight.  Instead, she said, you want one who is proud of their process – “so proud that he will be glad to go through it again and again.”  This will give counsel an indicator that the expert will exude credibility.

 

But what are the signs of a testosterone-poisoned witness?  Miles said such a character may refer to a place in their office as a “war room” where they store and summarize documents.  They may be inclined to place a photo of themselves in their expert report.  They tend to come to you with checklists, suggesting rigidity in their process.  They may have trademarked some of their terms or processes.

 

If you want someone to pass Daubert review, she said, you do not want to show “personally developed methods” were used in place of “real world” methods.  

 

Testosterone-engorged experts may also have a tendency to read or interpret case law for the attorney.  If case law makes its way into the expert’s report “something is badly broken,” Miles warns.  If an expert must discuss a case in his report, he should refer to a treatise written by an authority on the subject, something everyone agrees is authoritative. 

 

A testosterone imbalance also can lead to a decision to have one expert to attack another, something Miles cautions against.  “Don’t use your expert as a paid assassin,” she said.  “Your witness can’t testify on his own opinion while throwing rocks as someone else’s.”   She said to stick to the process and avoid getting into past conflicts. 

 

Not only should an expert not be an assassin, they should not be a “crutch” for an attorney making his way through new subject matter.   “Do your learning behind the scenes,” she advises.  “Ask dumb questions behind the scenes.”

 

Miles warned against appearing to be too close to your witnesses.  Never take your expert out for “show and tell,” she said.  Do not pass notes during hearings, do not take him to depositions, and do not hang out during trial.  “Don’t treat them as part of the team,” she said.   

 

“What you want is an expert that, when he leaves, prompts everyone to say ‘and we never even got a chance to thank him,’” she said, recalling romanticized heroes from the Old West. 

 

You can hear more from Michele Miles, who also is former executive director of the Institute for Business Appraisal, plus commercial litigator James Dugan of Willkie Farr & Gallagher and financial expert Steven Schroeder of Schwartz & Associates LLC,  on the CD package entitled “Effective Timing & Use of Financial Experts.”   For more information, write to me directly at tom.hagy@bvresources.com.

 

Willkie’s James Dugan on Professional Experts & Expert Professionals

By Tom Hagy

 

When selecting a financial expert, you first want to make sure you need one and, if so, why type.  Speaking for Mealey Conferences, James C. Dugan, partner with Willkie Farr & Gallagher LLP, said not all cases require a financial expert.  The attorney needs to ask:  will an expert genuinely help inform the judge or jury?   “In some cases an expert will be cumulative and not additive,” he said – you don’t want an expert when the other side’s case is clearly weak otherwise you risk dignifying your adversary’s position. 

 

Once you’ve made the decision that a financial expert is what you need, another question is whether you want a “professional expert” or an “expert professional.”  Professional experts, whose primary source of income is testifying, and professionals who rarely if ever testify, both have advantages and disadvantages for different situations.  “It’s important to get this [choice] right early on,” Dugan said.  The advantages of a professional expert are his ability to testify across disciplines and their experience in the courtroom.  They are less likely to become flustered and are used to analyzing large amounts of data.  “However, professional experts have a huge public record that can be used by an adversary in cross-examination,” Dugan cautioned.  “It’s very hard to be completely consistent on every issue you are tapped to opine on.  The larger the record, the more likely your adversary will find something.”

 

Another downside to the professional expert is that the jury or judge may infer a lack of credibility to someone who testifies for a living, Dugan said, especially if they have only taken one side of an issue in their testifying career.  Counsel must scrutinize the expert’s record thoroughly during the vetting process, Dugan said, just as their adversary will do later on.

 

In practice attorneys do not always get the choice between types of experts, he said, and sometimes a subject is so esoteric that it simply cannot be addressed by an “arm-chair practitioner.”   Sometimes you need someone who acted in the relevant role, such as an investment advisor, to have more credibility with a jury.   The disadvantages in this situation are that the witness will not be familiar with the litigation process.  “It’s pretty hard to withstand cross examinations if you haven’t done it before,” Dugan said.  Or, the expert professional may not be a good communicator to a jury.  The advantage of a professional expert is that they will have been in front of juries before and the attorney will have some idea of how the witness will come across.   Dugan added that some professional experts – despite deep technical knowledge – also know how to come off folksy, which is a winning combination.

 

This is adapted from audio recordings and materials available on CD by Mealey’s Litigation Conferences and Business Valuation Resources.  These audio packages — “Effective Timing & Use of Financial Experts” and “Compelling Statistical Evidence: Mining, Modeling, and Presenting Quantitative Financial Evidence to Juries” –contain presentation materials and full transcripts.  For more info, write to me directly at tom.hagy@bvresources.com.  

 

Defendant’s CEO a Valuation ‘Expert,’ Not Fact Witness

Compania v. Titan International, 2008 U.S. App. LEXIS 14571

CHICAGO – The Seventh Circuit has affirmed the exclusion of testimony from an officer of the defendant in the case, because the defendant attempted to offer his opinion as a fact witness.  The court said his valuation was not based on “particularized knowledge” gained by working at the company, but on his “extensive experience purchasing and selling the type of goods at issue.”  Since the court said the CEO was truly presenting an expert opinion, and he wasn’t disclosed by the deadline, the trial court was correct in excluding him.

“[Former Titan CEO] Taylor purported to value the collateral by applying his generalized knowledge of the worldwide tire market, gained through his experience in the worldwide tire business, to a proffered list of specific items owned by a third party.”  Noting that Taylor had no personal knowledge of the items, his position was “not akin to the owner of a small business testifying to the value of that business.”  The court said that since his testimony was based on his “special training or experience,” his testimony was that of an expert.

Compania’s law firm is Sonnenschein, Nath & Rosenthal in Chicago and Brown, Hay & Stevens in Springfield, Illinois.  Titan’s firm is Pepper Hamilton in Washington, D.C.