Cedar Boschan in the Wall Street Journal

I commented in The Wall Street Journal on accounting messes and other blowback when employees at Meta and other companies 'slice the salami' of employer perks.

The court of public opinion is divided.

Read the article by Callum Borchers here: https://www.wsj.com/lifestyle/careers/the-little-sins-we-commit-at-workand-the-bosses-who-are-cracking-down-74929770?st

Food & Beverage Litigator? Four Damages Claims that are Trending

1. Sustainability and Environmental Claims: A New Frontier for Litigation in Food & Beverage

As sustainability becomes central to brand identity, food and beverage companies are increasingly promoting green initiatives and eco-friendly practices. However, claims about environmental impact, such as recyclability, carbon neutrality, or zero waste, are now under the microscope. False or exaggerated environmental claims, known as "greenwashing," could lead to substantial damages.

Litigation on this front often involves claims about the recyclability or biodegradability of packaging, which in reality may not be feasible in many regions due to limited recycling capabilities. The stakes are high as brands can face class actions if consumers feel misled about a product’s ecological footprint. Expect heightened scrutiny of sustainability marketing, particularly in states with strong environmental protection laws like California.

2. All-Natural and Health Claims: A Growing Challenge for Compliance

"All-natural" and "organic" have become popular selling points, but with consumers paying more attention to labels, these claims carry greater risk. Many cases have focused on whether products labeled "natural" contain synthetic ingredients or additives that might be considered misleading. Litigation on health-oriented labels is expected to surge, as ambiguous or loosely regulated terms like "all-natural" can lead to lawsuits if the product does not meet consumer expectations.

Attorneys specializing in food litigation should prepare for more disputes over product labeling, especially as brands introduce novel ingredients or formulations that might conflict with these health-focused claims. Companies must be cautious in their language or risk significant damages for failing to meet consumers' understanding of "natural" or "organic."

3. Deceptive Pricing: An Overlooked Risk for Premium Brands

In the competitive food and beverage market, brands often use discounts to attract customers. However, FTC guidelines specify that discounted prices must follow a period where products were genuinely offered at the regular price, a practice not consistently followed. Brands that advertise perpetual discounts without honoring regular pricing could face deceptive pricing lawsuits, especially in the premium product space.

Litigation attorneys should keep an eye on this area as regulatory bodies intensify enforcement. Such cases carry financial penalties and reputational risks, particularly as consumers become more aware of and sensitive to pricing transparency.

4. Charitable and ESG Claims: Brand Responsibility

Brands have increasingly incorporated charitable commitments and ESG (Environmental, Social, and Governance) promises into their marketing. However, claims about social responsibility or contributions to sustainability projects could backfire if deemed exaggerated or misleading. Cases focused on these representations—whether made on a website, social media, or product packaging—could generate major damages claims.

For instance, if a brand claims a portion of sales is donated to a specific cause, yet the contribution is minimal or misrepresented, this can lead to legal action. Lawyers should advise clients to align closely with their ESG messaging to avoid potential misrepresentation claims in the coming years.

Conclusion

At my damages consulting firm, Boschan Corp., we help attorneys analyze the complexities and potential defenses for your clients' unique matters. To explore whether we can strengthen your clients’ claims or defense with our thorough, defensible damages analysis, start with a conflict check by calling me at (424) 248-8866. 

NIL Valuation in Pre-Nuptial Agreements - Name, Image, and Likeness Can Be Key Assets

When an athlete or entertainer's personal brand has substantial economic value, it’s no surprise that name, image, and likeness (NIL) rights are key financial assets in pre-nuptial - and post nuptial - discussions. At my boutique firm, Boschan Corp., we conduct discreet yet rigorous NIL valuations that assist family law attorneys in representing celebrities with notable public profiles - or their future spouses - ensuring accurate and equitable outcomes in their clients' pre-nuptial agreements.

Why Is an NIL Valuation Important for a Pre-Nup?

The role of NIL rights in building wealth is only growing, and accurately appraising these rights can provide clarity and confidence for couples entering marriage. By including NIL valuations in a pre-nuptial agreement, both parties can agree on the intrinsic cash flow potential of these rights from the start, creating transparency and helping mitigate potential disputes down the road. Although the parties' respective CPAs may be able to provide a preliminary balance sheet to support your pre-nup negotiations, it is unlikely that such CPA will have the ability to include a full valuation of name, image, and likeness rights on the balance sheet. That is where we come in.

How We Value NIL Rights

Our approach at Boschan Corp. centers on assessing the projected cash flows that NIL rights can generate. By focusing on intrinsic value, we quantify the actual earning potential tied to a person’s likeness and reputation. This provides clients and their attorneys with a grounded estimate based on real financial metrics, offering a sound basis for negotiating financial agreements.

Practical Considerations for Family Law Attorneys

As NIL rights become more prominent in family law matters, integrating an accurate NIL valuation into pre-nuptial agreements can be a game-changer. For family law attorneys, NIL valuation adds an essential financial dimension to client representation, offering:

• Transparency: Clear, data-driven insights into NIL value set a foundation for mutual understanding.
  
  
• Protection: For clients whose income largely depends on their public image, knowing the intrinsic cash flow potential of their NIL rights is invaluable.
  
  
• Future-proofing: A well-constructed valuation ensures that both parties have a realistic understanding of how NIL rights fit into their financial picture.

Ultimately, our goal at Boschan Corp. is to empower family law attorneys with NIL valuations that reflect both the present and potential future value of NIL rights, ensuring your clients can confidently navigate pre-nuptial agreements. Read mire about our name, image, and likeness valuation services here: https://www.boschan.com/nil-valuation or call us today to clear conflicts at (424) 248-8866.

The Importance of Damages in Civil Litigation

Introduction: Why Damages Are at the Heart of Civil Litigation

In civil litigation, damages aren't just numbers—they represent a plaintiff's losses, their potential recovery, a defendant's potential liability, and sometimes, both parties' path to justice. For litigators, understanding the importance of damages is crucial. It influences everything from case strategy to client relations and courtroom tactics. Whether you're working to restore or rebut claims to a business's lost profits, compensate an injury victim, or deter future misconduct, damages are the key financial stake in your case. Let’s dive into why damages play such a central role in civil litigation.

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1. Understanding the Function of Damages

Damages are awarded to restore plaintiffs to their pre-harm condition or, in some cases, to punish and deter wrongful behavior. These monetary awards serve various purposes in civil litigation, including compensating for physical or emotional injuries, lost wages, or even future harm. Damages fall broadly into several categories:

• Compensatory Damages: These cover quantifiable losses, like medical bills or repair costs, and non-economic losses, such as pain and suffering.
  
  
• Punitive Damages: Reserved for cases of particularly egregious misconduct, punitive damages serve to punish and deter similar future actions.
  
  
• Special Damages: These are economic damages that can be attributed directly to the defendant's conduct, like loss of business opportunities.

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2. Damages Shape Litigation Strategy

For trial attorneys, damages often shape the entire litigation strategy. The potential award can determine whether a case goes to trial or settles, influences the scope of discovery, and impacts negotiations. Calculating damages requires a deep dive into the client's losses, including expert assessments, especially in cases involving future earnings or complex business losses. Attorneys need to be ready to defend their damages calculations, counter the opposing side's valuations, and present a clear, compelling case for the desired outcome.

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3. The Role of Experts in Proving Damages

Expert testimony is often essential in substantiating and rebutting damage claims. Economic experts, forensic accountants, and industry specialists can provide the precise calculations and insights that make damages claims credible. An experienced expert can explain complex financial models to judges and juries, quantifying losses in a way that’s both understandable and compelling. Litigators who understand how to leverage expert testimony are better positioned to win substantial awards for their clients.

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4. Communicating Damages to the Court and Jury

Effectively communicating damages to a jury requires more than just numbers on a page. It demands a narrative that connects the figures to the plaintiff's actual experience. Jurors may be more likely to side with a plaintiff when they understand how the damages impact their day-to-day life or business. Whether representing a plaintiff, a petitioner, a defendant, or a respondent, skillful litigators know how to use demonstrative aids—like charts, timelines, and visualizations—to clarify the story behind the numbers and make a powerful impression.

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5. Conclusion: Why Damages Are the Litigator’s Foundation

In the world of civil litigation, damages are not just an endpoint—they are the foundation upon which cases are built. For plaintiffs, a well-argued damages case can bring financial relief, justice, or even peace of mind. For defense attorneys, limiting damages can mean protecting clients from excessive payouts. Either way, damages are a crucial element of case strategy, making them one of the most important areas of expertise for any litigator.

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Visit our website here: https://www.boschan.com/damages-expert or call (424) 248-8866 to clear conflicts and discuss how we can empower your client's case.

Fiduciary Duties of Non-Profit Board Directors: What You Need to Know

When you join the board of directors for a nonprofit organization, you take on significant fiduciary responsibilities. These duties are essential to the effective oversight and governance of the organization, ensuring its lawful and ethical operation.

Board directors must wear many hats, often balancing roles as directors and officers. The distinction between these positions is crucial because each role carries specific legal obligations. The core fiduciary duties of a director include:

1. Duty of Care: Directors must act in good faith, with the care an ordinarily prudent person would use in similar circumstances. This includes attending meetings regularly, reviewing financial reports, and being prepared for discussions and votes.

2. Duty of Loyalty: Directors must prioritize the interests of the organization over personal or third-party interests. This duty is critical when conflicts of interest arise, such as contracts between the organization and a director’s business.

3. Duty of Inquiry: When something seems off, directors are required to ask questions and, if necessary, hire experts to investigate. Ignoring red flags can result in serious legal consequences.

4. Duty to Follow Investment Standards: Nonprofits often hold charitable funds that must be invested conservatively. Risky investments like placing all assets into one volatile stock could violate this duty.

As I explained in an educational presentation to a nonprofit to educate them in their fiduciary duties, board members must also understand the organization’s bylaws, financials, and compliance obligations, including tax filings and conflict of interest policies. Fulfilling these duties is not just about avoiding legal trouble - it ensures the nonprofit remains aligned with its mission and continues to serve its community effectively.

For prospective board members, it's critical to do your homework: review the nonprofit’s legal standing, financial health, and bylaws before accepting a role. And remember, attending meetings and reviewing materials thoroughly is not just a recommendation - it’s your legal obligation.

If your non-profit or corporate board members could benefit from fiduciary duty training, please contact me - I provide this service. I can be reached at my accounting firm at (424) 248-8866.

Are Royalties a Good Investment?

Royalties—those often-overlooked cash flow machines—are starting to catch the eye of savvy investors. Why? They offer something increasingly rare in a world of volatile stocks and trendy crypto: predictability. Yes, royalties, whether from natural resources, music, film, patents, or literary works, provide a steady, measurable income stream that can outlast market swings and economic uncertainty. But before you dive headfirst into the world of intellectual property (IP) investments, let’s have a look at what makes these earnings tick and, more importantly, how to ensure you’re getting your money’s worth.

The Allure of Predictability

What sets royalties apart from your typical high-risk, high-reward investments? Stability. You’re not guessing which tech stock might moon next year; you’re buying into a pre-existing revenue stream. For example, if you purchase the rights to a well-established song or a blockbuster movie, you’re effectively buying a forecastable flow of income based on historical data. There’s no speculative frenzy here, just cold, hard numbers.

Sounds great, right? But the key is not just in buying any royalty stream; it’s in buying the right one. That’s where a bit of accounting magic comes into play—evaluating the quality of earnings and ensuring that what looks predictable on paper holds up under scrutiny.

Quality of Earnings: No Rose-Colored Glasses Allowed

You don’t want to end up owning the rights to some obscure garage band’s forgotten track, right? What you’re looking for is a revenue stream with staying power. This means evaluating earnings quality with a fine-tooth comb. Are the earnings from this royalty stream recurring, and if so, for how long? Are there any licensing agreements in place that guarantee future payments? How does the IP perform across various platforms—streaming, digital purchases, physical sales? What are the risks and liabilities associated with the rights to be acquired (e.g., copyright grant termination claims, AI reducing demand for original works).

If the royalty stream depends too heavily on one platform or licensing agreement, you might be setting yourself up for a dip in income when trends shift. Diversification matters even in this niche corner of finance.

How to Price a Royalty Stream: It’s All About the Numbers

So, you’ve got your eye on a royalty stream. How do you know if it’s worth the price tag? Enter: discounted cash flow (DCF) analysis. This isn’t the part where we get romantic; it’s where we get real. The value of a royalty is in its future cash flows, and we can calculate its intrinsic value based on those cash flows over time.

DCF methodology involves estimating the future income from royalties and discounting it back to its present value. In layman’s terms, you’re asking: “How much is this steady income worth to me today, considering future inflation and risks?” Sure, it’s a bit of financial alchemy, but with the right approach, it’s surprisingly straightforward. And the beauty of royalties is that, in many cases, these future income streams are more predictable than other assets.

Comparing Royalty Investments to Other Passive Income Streams

When stacked against other passive income opportunities—like dividend-paying stocks or real estate investments—royalties have their distinct advantages. First, they tend to be uncorrelated with the stock market. That means your royalty income isn’t going to take a nosedive just because the S&P 500 does. Second, they can be relatively low-maintenance. You’re not dealing with tenants, property taxes, or quarterly reports; you’re collecting checks from IP that’s already in use.

The key difference is that royalties aren’t a gamble—they’re an investment in a stream of predictable, recurring earnings. But that doesn’t mean they’re risk-free. You still need to evaluate their longevity and ensure that you’re not overpaying for a stream that’s past its prime.

So, Are Royalties a Good Investment?

In a word: yes—but only if you’re willing to do the homework. The predictability of royalties is their biggest asset, but it’s your job to ensure that predictability holds up. You’ll want to dig into the quality of earnings and evaluate the intrinsic value using sound methodologies like discounted cash flow.

Royalties can offer a stable, passive income stream that outperforms other investments in times of uncertainty, but as with anything in life, success depends on selecting the right ones. Do that, and you might just find yourself with a long-term investment that pays out like clockwork, no crown required.

At our firm, Boschan Corp., we can help you ascertain quality of earnings and intrinsic values during the due diligence process. Call us today at 424-248-8866 to run a conflict check and see if we can provide you with clarity and certainty in your royalty investment strategy.

Understanding Native American Royalty Rights: An Audit Perspective on Natural Resource Revenues

Native American and Indian tribes hold a unique position in the United States, both as sovereign entities and as major stakeholders in the use and development of natural resources, including gas, oil, and land-use agreements. These rights are often governed by federal laws, treaties, and contracts, and one of the most significant economic benefits available to tribes is the ability to collect royalties from companies that extract resources from tribal lands. This blog post explores the types of royalties tribes are entitled to, whether there is a statutory audit right to ensure accurate payments, and how audits can ensure that royalties from these resources are correctly reported and paid.

Types of Royalties Tribes Are Entitled to Collect

Tribes often own substantial land and mineral resources, and they are entitled to various types of royalties based on their land's use for resource extraction, particularly oil, gas, and minerals. The types of royalties may vary depending on the nature of the resource and the specific agreements in place:

• Oil and Gas Royalties: Tribes can lease their lands for oil and gas production, and in return, they receive royalties from the revenue generated. These royalties are typically calculated as a percentage of the gross value of the extracted resources, usually ranging from 12.5% to 20%, depending on the agreement.
  
  
• Mineral Royalties: Similar to oil and gas royalties, tribes can receive payments for the extraction of minerals like coal, uranium, and precious metals. Mineral royalties can vary based on the resource, the method of extraction, and the negotiated lease terms.
  
  
• Land Use Royalties: Tribes may receive compensation for land use, such as grazing, forestry, and other surface activities. These royalties may be less substantial than those derived from mineral extraction but can still form an important revenue source.
  
  
• Renewable Energy Royalties: With the rise of renewable energy, some tribes are entering into agreements for wind, solar, and geothermal projects. These arrangements also typically include royalty payments based on the energy produced.

Federal Laws Governing Tribal Royalties

Tribal royalty rights are shaped by a complex framework of federal laws, regulations, and treaties, including:

• The Indian Mineral Leasing Act of 1938 (IMLA): IMLA gives tribes the right to lease their lands for mineral extraction, including oil and gas. The Act ensures that tribes benefit financially from their land and mineral resources. See link here for details.
  
  
• The Indian Tribal Energy Development and Self-Determination Act: This legislation allows tribes more control over energy projects on their lands, enabling them to negotiate royalty rates and terms directly. See link here for details.
  
  
• The Federal Oil and Gas Royalty Management Act (FOGRMA): FOGRMA ensures that accurate payments are made to tribes for oil and gas extracted from their lands. Under FOGRMA, the Department of the Interior oversees the collection and distribution of royalties owed to tribes. See link here for details.

Statutory Audit Rights for Tribes

FOGRMA also grants tribes the right to audit companies that lease their lands for resource extraction. Click here for a summary. This statutory audit right is critical for ensuring that royalty payments are accurate and fully reflect the terms of the lease. The act provides tribes with access to the records of lessees, enabling them to conduct audits and ensure compliance with the terms of the lease.

In addition to FOGRMA, many contracts between tribes and resource extraction companies include specific audit clauses, which give tribes the right to verify the accuracy of royalty payments. These clauses often specify the time frames, frequency, and scope of audits, allowing tribes to ensure that all production is accounted for.

How Audits Can Identify Amounts Owed to Tribes

Audits are an essential tool for tribes to claim royalty underpayments owed for the value of the resources extracted from their lands. See an example of public claims by clicking here. Forensic auditors with expertise in royalty, profit participation, and contract compliance can review a variety of records, including:

1. Production Reports: Auditors verify that the volume of oil, gas, or minerals extracted matches the reported figures used to calculate royalty payments.
   
   
2. Revenue Records: Auditors check whether the revenue reported by the lessee accurately reflects the sales price of the extracted resources.
   
   
3. Deductions and Allowances: Some leases permit companies to deduct certain costs (such as transportation and processing) before calculating royalties. Auditors review these deductions to ensure they are appropriate and comply with the contract terms.
   
   
4. Payments: Auditors compare payment records to the royalty statements provided to tribes, ensuring that payments are timely, accurate, and in accordance with the agreed-upon rates and/or minimums.

Conclusion

Native American and Indian tribes have significant rights to royalties derived from the use of their lands for resource extraction. Through federal laws like FOGRMA and contract-based audit rights, tribes can ensure that the companies extracting these resources pay what is owed. Forensic audits play a key role in verifying the accuracy of reported production and revenue, helping tribes protect their valuable resources and secure their economic interests.

A proactive approach, including regular audits, can help tribes assert their rights and ensure they receive full and accurate royalty payments. My firm Boschan Corp. provides this service. To clear conflicts and discuss your matter - please click here or call (424) 248-8866. 

How to Effectively Depose a Financial Expert: A Guide for Attorneys

Depositions can make or break a case, especially when it comes to financial experts who may provide critical testimony. For attorneys dealing with intellectual property, royalty disputes, or damages claims, a strong deposition of an opposing expert is key to uncovering flaws in their analysis, challenging their damages conclusions, or shoring up your own case. Here's how to prepare and execute an effective deposition of a financial expert according to me, your expert.

Forensic Accountant Cedar Boschan

Involve Your Financial Expert Early

Retaining your own financial expert before discovery begins is crucial, especially in complex cases. Early involvement allows your expert to advise on discovery requests, such as interrogatories and document production, that will provide the data necessary for a thorough analysis. This proactive approach can lead to a more accurate understanding of the case’s financial aspects, allowing your expert to better rebut opposing testimony.

Involving your expert early also helps you anticipate weaknesses in the opposing expert's report, giving you a strategic advantage in depositions​

Understand the Opposing Expert’s Background and Qualifications

Review the expert’s qualifications, including their education, certifications, and professional experience. A financial expert with less relevant experience may struggle to explain complex valuation or auditing principles under pressure. Look for gaps in their credentials or areas where they may be overreaching.

Know the Opposing Expert's Report Inside Out

Start by thoroughly reviewing the expert's report and any supporting materials. Identify the key points of their analysis, especially any assumptions or methodologies that seem questionable. Make sure you understand the subject matter enough to spot inconsistencies or potential errors. Collaborating with your own financial expert during this stage can provide deeper insights into the opposing expert's weaknesses.

Decide Your Deposition Approach: Tie Them Down or Impeach?

When cross-examining a financial expert during deposition, it’s tempting to go after them aggressively. However, this can backfire.

Before you start, consider your goal for the deposition. Do you want to tie the expert to their opinions so they can’t modify them later, or are you aiming to impeach their credibility and methodology?  These two approaches require different strategies:

1. Tie them down: Focus on obtaining the expert’s opinions and gathering information underlying and locking them into a position that limits their flexibility at trial. Use this strategy when the expert seems sound but could be vulnerable under scrutiny. By getting clear answers, you can later work with your own financial expert to identify areas of weakness to address during trial. Leaving the hard-hitting cross-examination for trial ensures you won’t accidentally educate the expert on your strategies.
   
   
2. Impeach: Alternatively, if you aim to discredit the expert, look for opportunities to expose flaws in their methodology, challenge assumptions, or highlight bias. This approach can be risky as it may inadvertently "show your hand." In other words, it may cause the opposing expert to prepare by strengthening their testimony at trial, especially if they can correct their mistakes or clarify their testimony before then. To avoid this, it’s important to carefully plan your cross-examination with your financial expert early-on.

Tip: In many cases, a hybrid strategy can be employed - locking down the expert’s opinions while subtly probing for impeachment opportunities without showing your hand. 

Leverage Your Expert to Assist with Drafting Deposition and Cross-Examination Questions

Ask your expert to identify credibility weaknesses questions using tactics such as:

• Challenge their expertise if it appears they are not specialized in the relevant area (e.g., royalty audits vs. damages calculations)
• Ask about their track record in court or deposition to see if they have any vulnerabilities as a witness
• Establish bias or conflicts of interest including financial incentives, such as compensation structure

Sample questions:

• How many times have you testified for the opposing party or similar clients?
• What percentage of your income comes from working as an expert witness?
• Are there any professional or personal relationships with the party that could affect your impartiality?

An expert’s credibility can be damaged if you can show they selectively included or ignored data that doesn’t support their conclusions.  Therefore, ask your expert to highlight inconsistencies or omissions in the opposing expert's report or record. You can use the deposition to further uncover inconsistencies in the expert’s testimony, either with their report, other testimony, or known facts of the case. 

Ask the opposing expert to clarify:

• Why they chose certain data points while ignoring others
• If any alternative methods were considered and why they were rejected
• If there is any academic or industry criticism of the approach they used

A financial expert’s methodology is a crucial point of attack. Ask your expert to look closely at the processes the opposing experts used to arrive at their conclusions and ask detailed questions designed to disclose the following:

• Were industry standards followed? 
• Did they selectively ignore data? 
• Did they combine nominal and real rates —an error that skews projections and can be a major vulnerability during trial?
• Are they using current or historical data inconsistently?
• Did they overlook important factors, like work-life expectancy or inflation projections?
• What generally accepted specific methods did you rely on for your analysis?
• How do those standards apply to the facts of this case?
• Have you ever used a different method in similar cases? Why or why not?
• What assumptions did they base their analysis on?
• Are the expert's assumptions well-supported by the evidence?
• Has the expert made any mathematical or interpretive errors?

Have the opposing expert explain complex calculations in layman’s terms. Their inability to articulate their process clearly could cast doubt on the reliability of their analysis.

Test Their Limits: Push Beyond the Opposing Expert's Comfort Zone

Experts, no matter how experienced, have limits. Use the deposition to find those limits by probing deeply into their knowledge of specific accounting principles, economic theories, or valuation techniques. This can reveal overconfidence or expose gaps in their expertise, especially if the expert is more generalist than specialist.

Explore their depth of knowledge by asking:

• Can you explain the basis for [specific financial principle] in this context?
• How would this approach differ if the facts were [adjusted scenario]?
• Have you ever been criticized for this methodology in past cases?
  
  

Stay Focused: Avoid Tangential Debates with the Opposing Expert

While it may be tempting to engage in deep financial debates, remember that your goal is to collect information and expose weaknesses. Avoid getting bogged down in overly technical details that distract from your strategy. Keep the deposition focused on the big picture: undermining the expert’s credibility and methodology while gathering useful admissions.

Prepare for Trial Using the Opposing Expert's Key Admissions

Finally, try to lock the opposition's expert into key admissions that will support your case or undermine theirs. These admissions can be used during trial to cast doubt on the expert’s analysis or reliability. Aim for clear, concise statements on points where the opposing expert’s opinion is weakest or most vulnerable. 

During trial, your financial expert can then highlight these weaknesses, helping to undermine the opposing expert’s credibility in front of the jury.

Key admissions to target:

• Concessions about the limits of their analysis
• Acknowledgment of alternative approaches they could have taken
• Agreement that certain assumptions were subjective or speculative
  
  

Final Thoughts

Deposing a financial expert requires careful preparation and an understanding of both legal and financial principles. By asking the right questions and maintaining focus, you can reveal flaws in the expert's analysis, highlight biases, and make their testimony less compelling at trial.

Attorneys handling cases involving forensic accounting or intellectual property rights should be well-versed in these techniques to ensure a successful deposition. With the right approach, you can turn a financial expert from a strong adversary into a liability for the opposing side.

7 Tips to Ensure Your Expert’s Opinion is Admitted as Evidence

Successfully admitting expert testimony can be a game-changer in litigation, but it requires careful attention to legal standards and preparation. As a forensic accounting expert with experience in intellectual property infringement and other damages claims and rebuttal, I’ve seen how crucial these steps can be to ensuring the admissibility of expert opinions. Below are seven tips to strengthen your case—and legal grounds on which opposing counsel could move to disallow expert testimony if these tips are overlooked.

1. Understand the Admissibility Standards (Daubert & Frye)

Legal Risk: If the methodology used by your expert doesn’t meet the required standard, the court may deem the testimony inadmissible.  For example, see Waymo v Uber et al.

Under the Federal Rules of Evidence, particularly Rule 702 (expert witness testimony) federal courts and many states have adopted the so-called "Daubert Standard."  Under Daubert, an opposing party can argue that the methods used are not scientifically valid, are not based on sufficient data, or have not been subject to peer review. This standard tends to be strict in ensuring that the expert's methodology is sound and applicable. Please click here to learn more about the Daubert Standard.

Some states, including California (at least historically), instead follow the so-called "Frye Standard," a test which requires that the expert’s testimony be based on scientific methods that are “generally accepted” in the relevant field. Frye is seen as a more lenient standard than Daubert in some respects. Please click here to learn more about the Frye Standard.

2. Choose the Right Expert

Legal Risk: If your expert’s qualifications are insufficient, opposing counsel could challenge them under Federal Rule of Evidence 702 or an equivalent local statute. They may argue that the expert lacks the necessary education, experience, or training in the relevant field, thereby disqualifying their testimony. This point merits its own blog post, perhaps.

3. Establish Relevance Early-On

Legal Risk: Testimony must assist the trier of fact in understanding or determining a fact at issue. Under Federal Rule of Evidence 702(a), opposing counsel may argue that the expert’s testimony is irrelevant if it does not directly relate to the issues of the case or if it fails to address a matter outside the common understanding of a layperson. Ensure that the expert is clear on the scope of their deliverable, especially with respect to supplementary or rebuttal reports.

4. Thoroughly Vet Your Expert’s Methods

Legal Risk: As mentioned above, if the methodology your expert relies on is questionable, Daubert or other motions can be used to exclude testimony on the grounds that it lacks reliability or scientific validity. Opposing counsel may argue that the expert’s techniques are speculative or insufficiently tested, or that they fail to meet professional standards. Therefore, take measures to ensure your experts are complying with the standards you designate. I recommend you research recent and historic case law because outdated or discredited methodologies can lead to the exclusion of expert testimony under Daubert. Opposing counsel may argue that the expert relied on outdated science, recent case law rejecting the methodology, or new standards that call into question the validity of the expert’s approach.

5. Require a Detailed Expert Report (or Declaration)

Legal Risk: A weak or vague expert report is vulnerable to attack under Federal Rule of Civil Procedure 26(a)(2)(B), which requires a complete statement of all opinions and the basis for those opinions. Opposing counsel may file a motion to exclude testimony on the basis that the expert report is incomplete, unsupported by sufficient facts, or based on inadmissible information.

However, state laws differ. In California, experts are not required to prepare written reports as part of the discovery process in state court. This is in contrast to federal court, where Rule 26 of the Federal Rules of Civil Procedure mandates expert reports.

The relevant statute in California is California Code of Civil Procedure (CCP) § 2034.210-2034.310. Under this statute, parties are required to disclose the identity of expert witnesses they intend to call at trial, along with a declaration summarizing the expert’s qualifications, a general substance of their testimony, and the expert’s hourly and daily fees for services; there is no statutory requirement for a detailed written report like there is under federal law.

Instead, in California state court, the discovery process involving experts focuses on depositions. During expert depositions, attorneys can probe the substance of the expert's anticipated testimony and the basis for their opinions. This approach allows for expert discovery without a formal report requirement.

Thus, in California, if an attorney requests expert opinions or methodologies, many an expert may disclose them through declarations or testimony, rather than a written report.  That said, for a damages expert like myself who prepares complex calculations, I find I need to prepare, at minimum, report schedules/exhibits that set forth my calculations in order to testify about specific amounts and remind myself of the details.

6. Anticipate Challenges to Credibility & Prepare for Deposition and Trial Testimony

Legal Risk: Legal Risk: Inconsistent or poor testimony under cross-examination can damage an expert’s credibility, leading to a motion to strike the testimony as unreliable. Opposing counsel could file a motion under Federal Rule of Evidence 702(d), claiming that the expert has not reliably applied their methods to the facts of the case or challenging an expert’s credibility by pointing to prior inconsistent statements, or limited experience in the field. I suggest role playing with your expert to ensure they know how to respond to credibility attacks and your direct examination at minimum.

7. Emphasize Objectivity

Legal Risk: If your expert appears too aligned with your client’s case, they could be disqualified for appearing as an advocate rather than an independent professional. Opposing counsel may argue under Daubert or Federal Rule of Evidence 403 (which balances probative value against prejudice) that the expert’s bias renders their testimony unfairly prejudicial or untrustworthy.  As part of this, do not engage the expert on a contingent basis - if they have a financial stake in the outcome of the case, their testimony can be excluded. This is one reason why my firm bills hourly.

Conclusion

Hopefully some of these tips will help you overcome challenges to your expert. For information about Boschan Corp.'s expert services, please click here or call us at 424-248-8866.

Understanding Forensic Audits: Beyond Fraud Detection

When most people hear the term "forensic audit," they often think of investigations to uncover fraud or criminal financial misconduct. While that is a significant use of forensic audits, fraud detection far from the only use. In fact, a forensic audit serves a much broader purpose, especially in industries where compliance with contractual and statutory obligations is critical. At my accounting firm Boschan Corp., we focus on forensic audits to ensure that parties uphold their contractual agreements and meet specific statutory requirements.

What Is a Forensic Audit?

A forensic audit is a detailed examination of an entity’s financial or operational records for a legal purpose (often identifying damages claims for potential civil court proceedings). Unlike standard audits, which focus on financial statements’ accuracy and adherence to accounting standards, forensic audits delve deeper into specific agreements or other legal obligations. This may involve investigating transactions, reviewing records, and interpreting data to determine whether all requrements set forth in a contract or law have been met.

Our Focus: Contract and Statutory Compliance

At Boschan Corp., we conduct forensic audits not to detect fraud but to ascertain compliance. This type of audit is especially important in sectors like intellectual property, where royalties, profit-sharing, or licensing agreements can be complex and subject to misinterpretation. Our forensic audits help clients ensure that their counterparties are fulfilling their end of the deal.

For example, imagine a scenario where an artist or inventor enters into a licensing agreement with a company to manufacture and sell products based on their creation. Over time, the licensor may wonder if they are receiving the correct royalty payments as per their agreement. A forensic audit of the licensee’s records can clarify whether the terms of the contract are being met and if the payments due are accurate.

We also perform audits related to statutory compliance. This could involve reviewing whether a company is meeting specific legal obligations, such as those relating to privacy or labor standards, or payment of certain statutory royalties, such as those under the music industry’s statutory license.

Why Forensic Audits Matter

Forensic audits serve as an essential tool for resolving disputes and ensuring fair dealings. When parties enter into complex contracts or agreements, misunderstandings or differences in interpretation can arise. Our forensic audits help clarify these ambiguities and provide clear, objective evidence to support our clients’ positions.

Whether you’re an artist seeking to verify royalty payments or a company ensuring that your statutory privacy obligations are met, forensic audits can provide the transparency and peace of mind you need.

Conclusion

A forensic audit is about more than detecting wrongdoing; it’s about ensuring accountability and compliance. At Boschan Corp., we specialize in using forensic audits to ensure that our clients’ contracts and legal obligations are met fairly and transparently. If you believe a counterparty may not be living up to the terms of your agreement, a forensic audit can provide the clarity you need to move forward confidently.

Navigating Corporate Challenges: The Essential Role of Entertainment and IP Expertise on Corporate Boards

In today's rapidly evolving business landscape, corporate boards are facing unprecedented challenges. Whether it's adapting to digital transformations, managing intellectual property (IP) in the age of technology, or navigating an increasingly complex legal and regulatory environment, companies are in need of board members with specialized expertise. One area that is often overlooked—but becoming increasingly critical—is the entertainment and IP sectors. Directors who can bring a deep understanding of these areas offer invaluable insights that can strengthen risk management, improve strategic planning, and bolster governance practices.

The Increasing Importance of Intellectual Property

As companies shift from a product-based economy to one driven by content, creativity, and innovation, the importance of intellectual property as a corporate asset has soared. IP management now touches industries far beyond entertainment and media, affecting sectors from technology to consumer goods. Content creation, brand identity, and patented technologies all fall under the umbrella of IP assets, which means that boards need directors who can not only appreciate the value of these assets but also ensure their protection and proper monetization.

Understanding the intricacies of IP is crucial for effective governance. Boards that fail to incorporate IP expertise risk exposing the company to unnecessary litigation, loss of competitive advantage, and missed opportunities for licensing or partnerships. For example, directors who have firsthand experience in IP-heavy industries are better equipped to identify emerging risks, such as the implications of artificial intelligence (AI) on copyright, or the legal ramifications of digital streaming and content sharing platforms.

Risk Management and Legal Oversight

With the fast pace of innovation in digital and creative sectors, corporate boards are also tasked with understanding the legal frameworks that govern intellectual property. This is not limited to traditional industries like film and music but now encompasses technology, biotech, and even manufacturing, where patents and trademarks play a crucial role.

Boards need to be proactive in managing IP-related risks, whether it’s defending patents or copyrights in court, or ensuring compliance with new regulations like data privacy laws and global trade agreements. Legal missteps can be costly, not only in terms of financial penalties but in reputational damage. Having directors who understand these legal intricacies can provide essential guidance, preventing issues before they arise and ensuring that the company remains in compliance with shifting regulatory landscapes.

Moreover, effective risk management in the realm of IP extends beyond merely understanding legal obligations. It involves actively participating in strategic discussions about how to leverage intellectual property for growth, how to guard against infringement, and how to capitalize on new revenue streams from licensing or joint ventures.

Strategic Thinking for the Digital Age

In addition to legal and risk management concerns, strategic thinking is another area where corporate boards can benefit from entertainment and IP sector expertise. In the digital age, traditional business models are being disrupted at an unprecedented rate. Boards need to be forward-thinking, anticipating not only potential risks but also opportunities for growth and innovation. This is particularly true for companies looking to expand into digital content, media platforms, or technologies that rely heavily on creative assets.

Strategic board members with experience in industries driven by intellectual property and creativity are often well-versed in adapting to change, as these sectors are regularly impacted by technological advancements and shifts in consumer behavior. A director with a deep understanding of how IP and digital content evolve can offer critical insights during key decision-making processes, whether it's exploring new partnerships, expanding into new markets, or defending against potential disruptors.

Governance and Compliance: More Than Just Box-Ticking

In the wake of high-profile corporate scandals, governance has become a central focus for boards across all industries. But while regulatory compliance is a key aspect of good governance, it must go beyond mere box-ticking. Effective governance involves fostering a culture of accountability, transparency, and proactive decision-making.

Boards can gain a competitive edge by including members who understand their fiduciary duty to investors and how to integrate compliance with broader business goals. For companies managing complex portfolios of IP assets, this can mean ensuring proper royalty auditing, monitoring licensing agreements, and enforcing rigorous standards in contract negotiations. Strong governance in these areas is essential not only for maintaining shareholder trust but also for securing the company’s long-term financial health.

Adapting to Regulatory Change

The intersection of government policy, public relations, and intellectual property is another area where experienced directors add value. Rapid changes in technology, coupled with evolving public policy, mean that boards must be constantly aware of how regulatory shifts could impact their business. Whether it’s negotiating the evolving frameworks surrounding digital copyright, managing data privacy regulations, or complying with new international trade agreements, businesses need directors who understand the broader implications of these changes.

Directors with experience navigating these regulatory waters can help boards anticipate challenges, develop strategies to adapt, and maintain compliance without sacrificing innovation. For example, upcoming changes in copyright law may have significant implications for companies producing digital content, and directors with specialized knowledge can ensure that the company is well-positioned to adapt to these changes.

Conclusion

The need for specialized expertise on corporate boards is clear, particularly in industries driven by intellectual property and rapid technological change. As companies face growing challenges related to governance, risk management, and legal oversight, having directors who understand the nuances of IP management, regulatory compliance, and strategic innovation can be the difference between thriving and merely surviving in today's competitive environment. As the role of intellectual property continues to expand, companies that invest in board members with this unique expertise will be better equipped to manage risks, seize opportunities, and drive long-term value.

Catalog Chaos or Clear Profits? How to Optimize Your Music’s True Value!

Here’s a little secret in the world of intellectual property and music catalog valuations: the key to maximizing the value of your rights lies in a bit of "data hygiene." 

This is because nobody wants to buy a mess, and music catalogs are no different! When a buyer sees that everything is well-organized and documented, they’re more likely to pay top dollar because they can see clearly what they are buying.

So, if you want to attract high bids, consider these must-dos:

1. Keep detailed records of who owns what, down to every last split.
2. Track royalty payments collected and paid out - don’t forget payouts or liabilities to creators and other stakeholders
3. Sync deals? Document them all! Who paid, how much, and what renewals are in place.

Buyers will start the bidding process by reviewing 3-5 years of net earnings history by income type and composition.

Trust us, we are experts: Whether you’re selling or just getting an evaluation, data discipline makes it all smoother. Buyers want peace of mind—and when they see your catalog's meticulous presentation, there is less uncertainty about their investment, making them willing to pay a higher price.

Ready to get your catalog in top shape? Dust off those dusty old files and get organizing - future-you (and your wallet) will thank you! 

Call Boschan Corp. at 424-248-8866 if you need help.  We can get you organized by creating a presentation package to potential buyers including a virtual data room with 3-5 year earnings history reports as well as the available copyright chain-of-title documents, agreements and accountings (inbound and outbound, if applicable). We also perform intellectual property valuations, and provide other relevant services. Call us today!