Michael Kaeding
What lawyers want from forensic and business valuation accountants

Here’s what you need to know to generate more business from attorneys.

July 17, 2013
by Michael Kaeding, J.D.

Due to the nature of their specialties, forensic accountants and business valuation experts often generate business through relationships with attorneys, especially litigators. That means it’s crucial for these accountants to understand just what attorneys expect out of such a working relationship.

Lawyers recognize the value of good forensic accounting and valuation services. Fallout from the Great Recession, along with increased government and regulatory scrutiny, have amplified the demand for these services. Whether it’s a complex lawsuit or an internal investigation, we regularly turn to accounting professionals who possess both the ability to analyze complicated financial data and the ability to persuasively communicate their results.

The decision to bring in a forensic or valuation accountant means that complicated financial issues are so crucial to a case that they justify the additional expense associated with such an expert. It also means that the lawyer gets to do something that is rare in the litigation world: Choose the witness who will testify or present on a critical issue. More often than not, a lawyer simply takes the witnesses as he or she finds them—for better or for worse.

The complexity of litigation requires that a forensic or valuation accountant possess a unique set of skills. He or she must be more than just a CPA. He or she must also be part investigator, part lawyer, part professor, and part communications professional.

Financial competence is just the start
Possessing the requisite financial competence is a given. The accountant must be unquestionably qualified and able to assist the lawyer with the required analysis and investigation. This includes not only a thorough understanding of the financial principles at issue, but ideally, an understanding of the industry context in which those principles are being applied.

Recognized professional certifications and other objective evidence of professional expertise can assist a lawyer in selecting the right expert (e.g., the ABV and CFF credentials, articles, speaking engagements, prior work history).

Access to quality forensic analytics software and programming skills is also a plus. That’s because the amount of potentially relevant data available in litigation and investigation matters continues to grow—even though clients have become less tolerant of the associated costs.

As we evaluate a case, good lawyers will involve a trusted forensic or valuation accountant at an early stage. That helps streamline the process, both in terms of time and dollars spent, and maximizes the quality of the analysis. Forensic and valuation services are typically billed by the hour and paid directly by the client (even if the expert was retained by the firm) after being reviewed by the lawyer, although there has been an increasing reliance on alternatives to traditional hourly billing. These include the use of blended hourly rates and fixed fees. If the accountant does a good job, the results often are reflected in both the bill and the litigation outcome. But if the job is done poorly, the outside professional can become part of the problem, often with negative cost and delay consequences that can quickly become a client concern.

Given the fluid nature of most litigation, forensic and valuation professionals should communicate early and often with lawyers to make certain everyone knows what needs to be done and how much it will cost. The expert cannot assume that he or she knows what to do or that the attorney would necessarily want a given task performed. The need for effective communication, coordination, and cooperation cannot be overstated.

Communicating to others is key
The forensic or valuation professional also must be able to communicate relevant findings in a litigation, boardroom, or government forum that will likely include numerous adversarial challenges to those conclusions. A forensic or valuation accountant operates under a microscope. He or she must understand, therefore, the various stages of the litigation and investigation process to make certain that the focus remains on the quality of the analysis and presentation. Missteps can compromise the effectiveness of the forensic professional as a witness and undo months, or even years, of hard work.

The expert must be proactive. A good expert understands potential litigation pitfalls and discusses them with the attorney early on in order to set the ground rules for the engagement. The goal is to prevent problems that can come back to haunt the expert’s perceived credibility. These include incomplete, poorly worded documents and emails that could be exploited by an opposing counsel. At times, experts simply march forward on a technical task without regard to how their work product trail can be used unfairly against them and the client. 

More generally, the expert must recognize and be ready to clarify with counsel potential issues such as when and how to communicate with the attorney, how and when to create work product, and the legal standards governing the admissibility of opinion testimony at trial. 

Most critically, the financial expert must know how to clearly and persuasively present his or her conclusions to the necessary audience in a manner that will survive challenge or cross-examination. He or she must be understandable and believable.

Lawyers meet with financial experts to determine if they possess the necessary communication skills. Lawyers typically seek out candidates who they know personally or who come highly recommended by other trusted sources, often other lawyers. A forensic or valuation accountant can maximize the likelihood that a lawyer considers him or her for a given engagement in several ways. The professional can work to establish and maintain an impeccable reputation as a testifying expert. He or she can also join professional organizations that involve lawyers and will allow an accountant the opportunity to demonstrate his or her communication skills.

Now that you know what we look for, I hope to see you on the right side (my side) of a litigation or investigation matter in the future.

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Michael Kaeding, J.D., is a partner at Kilpatrick Townsend and has more than 12 years of courtroom experience resolving disputes in complex business, white collar criminal, intellectual property, health care, and products liability litigation.