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Coordinating the Efforts of the Forensic Accountant and the Attorney

By Brian Harris

Accountants who provide litigation consulting services such as forensic accounting, economic damage analysis and business valuation must develop a mutual understanding with counsel regarding the goals and objectives of the case, the scope of the assignment and the methodologies to be employed. This mutual understanding is obtained through effective communication. At best, a failure to communicate will lead to an inefficient engagement and an unhappy client. At worst, it may lead to the preclusion of the expert?s testimony.

Based upon my years of experience working with counsel in litigated matters, I have identified a number of factors that lead to a successful engagement and have learned to avoid the factors that lead to an unsuccessful engagement. An effective forensic accountant will know how to maximize the former and minimize the later.

Factors that lead to a successful engagement:

 ? The attorney is fully informed of the accountant?s qualifications, expertise and experience. If the matter is one that will require expert testimony, the accountant selected has sufficient testimony experience. 

? The accountant and attorney reach a consensus regarding goals and expectations.

 ? A clear and concise engagement letter is executed between the accountant and the attorney (or the accountant and the client).

 ? The attorney and accountant agree to a reasonable timeline to perform the agreed upon tasks. The accountant provides regular status reports.

 ? The attorney and accountant establish a budget for the work to be performed by the accountant. The accountant makes the attorney aware of the effect on the budget should there be a change in circumstances.

 ? Counsel and client are informed in advance of the information and data required to prepare a credible expert?s report. If possible, the accountant should assist counsel with the discovery request.

? The accountant informs counsel of the professional accounting standards and methodologies that are relevant to the case. 

? The accountant and attorney verify that the expert report is free of errors, satisfies evidentiary and procedural rules (e.g., Federal Rules of Evidence, Rule 702 and Federal Rules of Civil Procedure, Rule 26) and is relevant and reliable (Daubert).
Factors that lead to an unsuccessful engagement:

? The accountant accepts the engagement without possessing the requisite qualifications and experience.

 ? The accountant fails to gain a complete understanding of the assignment prior to accepting the engagement.

? The accountant is unaware of the professional standards and rules governing the engagement.

 ? Counsel places unreasonable or unattainable expectations on the accountant?s work product or tries to influence the expert?s opinion.

 ? Counsel fails to seek the accountant?s input during discovery or hires the accountant too late in the process.

 ? The accountant does not have access to sufficient data to prepare an accurate and credible report.

 ? The accountant fails to consider alternative methodologies and fails to discuss reasons for excluding these approaches.

 ? The accountant fails to keep counsel apprised of his or her progress and billings.

The factors listed above are intended to serve as a common sense guideline to establishing an effective attorney/accountant relationship. In my opinion, experience and communication are the keys to a successful engagement. Attorneys and accountants working in the litigation arena often have exceedingly busy schedules. I cannot over-emphasize the importance of the team approach. In the end, the success of the case will be directly proportional to the quality of the teamwork.

Terry Silver is a certified public accountant, certified valuation analyst and certified in financial forensics, for Citrin Cooperman, an accounting, tax and business consulting firm in Philadelphia, where he is a partner with more than 33 years of experience as an accountant and auditor. He focuses his practice on business valuation and financial forensic services, expert testimony and matrimonial actions. He can be reached at tsilver@citrincooperman.com or 215-545-4800.

Full post as published by The Legal Intelligencer Blog on October 06, 2010 (boomark / email).