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.