According to the Federal Rules of Civic Procedure (FRCP), the goal of the US justice system is to provide a speedy, inexpensive and just resolution of each case. As forensic accountants and/or financial experts, Certified Public Accountants (CPAs) are frequent participants in the legal process and have witnessed cases that have been anything but speedy and inexpensive (it is much harder to assess “just”).
In response, the American Institute of Certified Public Accountants (AICPA) established a task force that worked with the Institute for the Advancement of the American Legal System (IAALS) to study the litigation process and make recommendations regarding the effective and efficient use of financial experts. The task force recently published the results of its study (the complete document is available here) and issued five recommendations:
Based on my experiences as a financial expert, a couple of these recommendations are particularly noteworthy to me.
Clients and attorneys should involve experts early in the process - Receiving a phone call from an attorney seeking to retain a financial expert in a case that has an expert disclosure deadline only days or weeks away is not an uncommon occurrence (although sometimes caused by circumstances that make such a call unavoidable). Earlier retention of financial experts can prove to be beneficial for a couple of reasons.
First, retention during the discovery phase allows experts to provide assistance with requests for production and interrogatories related to financial documents and issues. For example, obtaining appropriate and necessary financial statements and accounting/financial data in native format (e.g., in Excel or other data formats), can save time that would be spent reviewing extraneous documents or inputting financial data that was produced in PDF format.
Second, later retention, in particular after the close of fact discovery, potentially creates a risk that important financial documents or data were not produced and an alternative (and more costly) mean of obtaining needed information may be necessary.
Attorneys and the court should develop a process for the collaboration and cooperation of opposing experts where appropriate – There have been many engagements where I thought that the opportunity to talk directly to an opposing expert would be beneficial. Even if not all of the disagreements between experts were eliminated by such a conversation, a better understanding of the opposing expert’s position would likely be obtained (and perhaps more efficiently than through the typical exchange of reports and taking of deposition testimony).
Which of these recommendations make the most sense to you? Are there other practices that you use to make your use of financial experts more efficient and effective? Please share your thoughts in the comment section below.