MSG-Sobel Interview Part I.wmv

[Music] welcome to forensic perspectives the legal community's online resource for the latest in forensic accounting business valuation and financial litigation support your host for this podcast is Mark gotle in addition to being a certified public accountant Mark has also obtained many professional accreditations in forensic accounting and business valuation as one of the tri-state's leading Financial experts Mark is also a frequent lecturer and wrer without any further Ado please welcome the host of forensic prospectives mark gotle thank you and welcome to today's broadcast in dalet versus meral Dow Pharmaceuticals the court concluded that the trial judge must act as a gatekeeper for expert testimony considering several non-exclusive factors applicable to the testimony's reliability and relevance although dalbert focused on the admissibility of scientific expert testimony it has had great impact on the financial expert testimony as well in another case Kumo thaia versus carmichel the court made it clear that the gatekeeper functions apply to all expert testimony not just one of scientifically based thus under the rule announced in dalbert and expanded in Kumo the courts must ensure that experts will offer testimony that is sound and relevant to the factors of the case before admitting their expert testimony in recent years challenges to the financial expert testimony have increased significantly since dabert an increasingly number of testimony experts have been subjected to challenges by opposing Council in an attempt to prevent experts from testifying however many prominent members of the legal community in recent years have acknowledged knowed that with the rapid increase in financial fraud cases and complex divorce cases the admissibility of the experts testimony needs to be significant nevertheless attorneys will continue to make frontal attacks on Experts credibility at any time just like attorneys expert Witnesses especially Financial experts have their own style and personality as such for good or bad reasons the effectiveness of a financial expert may vary depending on the outcome of cross-examination this leads us to today's topic cross-examination of a financial expert witness I'm happy to welcome attorney Mark soel Mark is the co-managing partner of the law firm greenbound row Smith and Davis located in rosand New Jersey and is the chair of the Family Law Practice Group Mr sobel's professional distinctions include being listed in the best lawyers of America Family blow category listed in Super Lawyers New Jersey Edition in the family law practice area and selected by best lawyers as their best family lawyer in New Jersey mock has also served as the managing editor of the New Jersey family lawyer and is involved in a variety of trable activities including supervision of the pro bono litigation support by his firm mark thank you and welcome to forensic perspectives thank you before we discuss cross-examination of a financial expert witness let's first talk about expert Witnesses in general what do you look for in an expert witness I look for somebody who can do a variety of things for me number one I want them to help me construct the best type of case for the particular factual Matrix I want them to challenge me and give me some independent thoughts in terms of valuation technique if it's a financial expert or methodology or problems uh with certain fair value methodologies that we might normally utilize so I want them to be both a sounding board as well as provide some thoughts that we can pursue together as we formulate the case I also want them to be the type of expert who will be clear definitive almost professorial when they're going to take the stand but yet not so rigid that they will be inflexible during their testimony at what point in time do you look to hire an expert the the first thing I would probably do in a matrimonial case is make a determination whether we need an expert chiefly in the financial area there would probably be two areas one is if we have a business that needs to be valued the second is if we need to do some form of Lifestyle analysis which we have utilized accountants for for the last probably 10 years underneath that there are breakouts in terms of that whether or not there might be some other things in terms of dissipation of assets or secreting of assets or tracing of assets or passive versus active assets but the primary two groups of areas that I look for initially in a case are business valuation as well as cash flow when you're looking at a financial expert do you consider their credentials I definitely consider their credentials as the cases have wound their way through the system and I've been doing this now for 31 years sort of like in Casablanca The Usual Suspects come to mind there's a certain Cadre of forensic experts that have developed a certain expertise within the court system that I believe are viewed by the judges as ones who know the business well and are looked to for guidance obviously that's the type of expert you want they have a certain already predetermined access to the court but beyond that one of the things that I think lawyers don't look at which I tend to look at is does that particular expert have some expertise in the particular business being evaluated so if it's a hedge fund have they done evaluations of hedge fund maybe not in a divorce case and often not in a divorce case sometimes it's better I had a car dealership case have they evaluated car dealerships and buyer sells so they can bring to the testimony at the trial that practical knowledge of I've been in these types of transactions before it's not just a hypothetical case for me that has a certain weight at trial do you think that industry experience Trump's valuation Theory they go hand in hand I won't necessarily say it trumps it I think it elevates the testimony it accents the testimony but if you do not have good methodology and you're going to get destroyed under cross-examination because you just haven't done appropriate type of methodology in this forensic area having expertise and giving somebody you know you know the back of a sheet the thumbnail type of analysis you know it's not going to really carry the day you really have to have both so if you just had the expertise in the industry and it was isolated that might not be enough for me in terms of being an expert and do you do you find that to be a difference if you're hiring an expert that's going to be questioned under direct examination as opposed to cross I always look for it both ways but I really emphasize in my mind in terms of making the determination how they are going to do under cross I believe I will be able to prepare my experts well I think that the direct examination will go in Fairly straightforward the real emphasis is how they are going to do on the cross judges tend to listen to cross very closely they think that's the search for the truth they will pay a lot of attention to that when you're doing the direct often times they're looking down at the report they may be even reading the report it's kind of wrote especially for judges who've been listening to this for a long time as you're explaining the different methodologies but when cross comes they sort of perk up just like juries do and I want to make sure my expert can withstand cross-examination all right let's talk about cross-examination for a moment what is your initial intent when you are cross-examining a financial expert I think the best way to answer that is sort of to start with a negative what it isn't I am not going to battle with them on their Turf I will lose that battle almost always because it is their Turf even though I've been doing this a long time and I'm pretty knowledgeable in the area I'm still not a forens accountant I'm a trial lawyer so I'm not going to battle them on their Turf what I am going to do is force them to battle me on my turf which means we're in a court of law where I know the rules I know the procedures and I'm more versed in it than they are so one of the first things I want to do is I want them to concede that everything they've done is subjective to a certain extent experts bristle at that a little bit and they don't really have a sense that you know that's not really affecting their quote credibility but it is if they bristle with me or fight with me on that so one of the first things I want them to acknowledge is all this forensic evaluation is an art not a science it has a lot of subjectivity and I will get those parameters extended as far as far that reasonable Minds could differ by X by y by Z so we start out at the very beginning of the cross-examination with the judge hearing this is not precise it has a lot of flexibility it has a lot of subjectivity to it and people can differ about it it's a good way of starting the cross-examination I assume your adversaries flip the coin on you when they uh cross-examine your witness and your expert that they try to do the same thing to employ the same feeling that you're doing if they've listened to my lectures I'm sure that they have and that would be a wise thing to do but that goes to the preparation of the direct because I prepare my experts for that type of direct examination and the way you prepare an expert for that type of direct examination goes along the lines of something like this yes there is subjectivity involved in certain aspects of it but it is within a defined scientific Matrix that my experience tells me it's limited so yes there is some limited subjectivity involved in it but it is not wildly subjective which gets the expert when they refocus on yes there's a certain methodology there's a certain procedure there are certain documents you look at there's a certain way of going about it that is recognized uniform and approved so while there is some subjectivity there it's within a limited scope now if you are cross-examining someone two things have already happened number one there's been an expert report that has been uh submitted to the court I imagine and it's it's included as evidence and then also there has been a direct examination of this witness and so the witness has had probably an easy time expressing what he or she thinks are the pertinent parts of their report to allow them to formulate their opinion and for their opinion to be accepted when you're cross-examining someone what do you use as a road map do you use the direct examination or do you use the report that was issued or a combination of both It's a combination of both but let me go to the preface of your question because it wasn't entirely correct number one the expert report often is admitted into evidence it is not evidence it's hearsay it's an outof Court statement entered for the truth of the statement so technically under the hearsay rules it's hearsay and should not be admitted as evidence some judges honor that most do not and most judges will be very annoyed at you if you prevent them from admitting it into evidence because it's hard to follow the testimony without the report the better way of dealing with that is to reference that Mark it for identification perhaps it goes into evidence perhaps not but let the judge G read it along with the direct testimony if I think the other side has done a much better written product than my side has done I will have it admitted for identification purposes fight that it doesn't come into evidence let the judge look through it but I just don't do not want it admitted into evidence and become part of the record so that's one subtlety the other thing is in terms of the direct examination I often times prior to the direct examination we'll ask the judge for a brief auder which is to qualify the expert and whether I have any questions now most of these experts they're going to get all qualified and even if they're slightly unqualified the judge says well I'm going to take it for the weight of whatever it is that's not really the purpose of the vad Deere the purpose of the vaad Deere is to give the judge a sense that there may be one or two chinks in this especially if I've taken the deposition of the expert already which I have and I know that there may be one or two things that are important and I want the judge to hear that before they hear any direct testimony I know that the vad Deere is not going to eliminate the expert but the judge is going to hear that so the judge may hear something like you've never evaluated a car dealership before in your life have you okay and now I know he's going to get admitted but now the judge knows this is the first time he's ever evaluated a car dealership I want the direct testimony to be heard with that in mind so that's an opportunity that attorney should not pass on even though they know the expert's going to get admitted now to answer your question in terms of the way I go about it one of the mistakes a lot of attorneys make is they don't listen to the answers on the direct EXA exmination I listen to them and if I think there's some fodder there in the future I write down exactly those words but I never never never just follow the direct examination in my cross that is not proper strategy that's just reinforcing the direct allowing the witness to say it again twice for emphasis I have my own outline which never really follows the way the direct goes I don't want it to follow along I want the expert to be unaware where I'm going next I often go out of order I often ask things I know I'm going to get him a little worried about initially then he's not going to be maybe as confident later on I use my own deposition often times to ask a series of questions initially when I know I've got him to make certain admissions in the deposition and I ask those questions without looking at the deposition looking at my notes so that the witness doesn't know I'm reading from his deposition testimony and if he deviates then I'm going to confront him with the deposition testimony it's a nice way to start cross-examination in front of a judge when the witness has already deviated from his deposition and you hit him with that deviation so it's a combination but I would say much more likely I have my own notes my own outline I'm prepared to do my cross without the direct