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Under Review: Key Skills for Critiquing Expert Reports
What area(s) of law does this episode consider? | Litigation; Expert Witness Reports |
Why is this topic relevant? | When it comes to building strong cases, expert reports are instrumental, especially in complex matters such as economic valuations or damage assessments. Forensic accounting experts frequently provide critical insights in these reports, which are often subject to scrutiny by opposing parties. Lawyers must be equipped with the tools and understanding necessary to assess the credibility and foundation of these expert opinions, particularly when preparing to challenge or defend against these reports in court. Evaluating expert reports also involves assessing compliance with legal standards and codes of conduct, ensuring that the expert’s analysis is transparent and based on reliable sources. Lawyers need to consider factors such as the expert’s qualifications, the scope of data reviewed, and the presence of any limitations or alternative interpretations included in the report, all of which affect the admissibility and strength of the evidence provided. |
What legislation is considered in this episode? | Uniform Civil Procedure Rules 2005 (NSW); Uniform Civil Procedure Rules 1999 (Qld); Uniform Civil Rules 2020 (SA) (UCPR) |
What are the main points? |
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What are the practical takeaways? |
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Show notes | Federal Court of Australia (2016), ‘Expert Evidence Practice Note (GPN EPXT)’ Accounting Professional & Ethical Standards Board (2019), ‘APES 215 Forensic Accounting Services’ |
DT = David Turner; AB = Alex Bell
00:00:00 | DT: | Hello and welcome to Hearsay the Legal Podcast, a CPD podcast that allows Australian lawyers to earn their CPD points on the go and at a time that suits them. I’m your host, David Turner. Hearsay the Legal Podcast is proudly supported by Lext Australia. Lext’s mission is to improve user experiences in the law and legal services, and Hearsay the Legal Podcast is how we’re improving the experience of CPD. When it comes to building a strong case in a commercial litigation matter, expert reports can be instrumental, especially in complex matters that involve economic valuations or assessments of damages. Forensic accounting experts often provide critical insights in these reports, which are often subject to scrutiny by opposing parties. Employers have to be equipped with the tools and understanding necessary to assess and critique the credibility and foundation of these opinions, especially when they’re preparing to challenge or defend their own expert reports in court. Evaluating expert reports also involves assessing their compliance with the legal standards and codes of conduct that apply to them, ensuring that the expert’s analysis is transparent and based on reliable and cited sources. Lawyers need to consider factors like the expert’s qualifications, the scope of the material and other data that they’ve reviewed, and the presence of any limitations or alternative interpretations included in the report, all of which can affect either the admissibility or the probative value of the evidence that’s been provided. Now joining us today to talk about how to critique and analyse an expert report is Alex Bell, a financial advisory partner and national head of forensic consulting at Grant Thornton. With extensive experience in forensic accounting and experience as an expert witness, Alex is a great guest to talk through this important topic. Alex, thank you so much for joining me today on Hearsay. |
00:01:54 | AB: | Thanks a lot, David. Great to be here. |
00:01:56 | DT: | Really excited to talk about this topic. Any keen listeners to Hearsay over our past more than 100 episodes, will have listened to a few episodes on expert reports but so often when we talk about expert reports in the context of sort of further learning for lawyers, we talk about what should go into the brief and what to think about in terms of formulating the right questions. We often think about that front-end of the expert evidence process. We don’t think as much about the back-end of that process. Once you’ve got that report, it’s been formulated, it’s been signed, it’s been served, perhaps, how do you defend that from attack at a final hearing? And how do you critique or challenge some of the expert evidence that your opponents may be relying on? So excited to look at the other side of that today. Alex, as I said in the intro to the episode, you’re an experienced expert witness, head of the forensic accounting practice at Grant Thornton. How’d you get into that? |
00:02:47 | AB: | Well, I started back in the UK in the audit practice, which is a pretty common thing. It’s much more general type practice. That was back in 2000 and I worked about three years or so in that practice and then managed to transfer to the forensic practice. I was at EY at the time. So I worked in that forensic group, which is great fun in London, and then got an opportunity to come out to Sydney in 2005. I was coming for 18 months and as you can tell, I’ve been here more than 18 years now. So yeah, it’s been a great journey. |
00:03:18 | DT: | And when we talk about the work of a forensic accountant, day-to-day, what sort of matters are you opining on? |
00:03:27 | AB: | So we do quite a wide variety of work, really. It’s anything with lots of complex data or financial information that you need to understand. The types of work I do is around damages calculations or valuation work, mostly in litigation. I also do quite a bit of payroll related work. So you’ll have read about the underpayments in recent years. We do quite a bit of that and actually in the last year or so have been doing both those where there’s a payroll issue in litigation and I’ve found that not many people doing that work have also done that expert work. So that’s been a really interesting crossover of the experience that I’ve had. |
00:04:07 | DT: | Interesting because I suppose one of the, I guess, advantages in doing that work that you have over perhaps other forensic accountants is that there’s, if not a different, certainly a discrete skill set involved in not just looking at the data, understanding the truth behind all of that material and performing the analysis that you need to perform to reach a conclusion but then also to robustly defend that opinion, and also appropriately defend that opinion, we should say, because I think inexperienced expert witnesses can think that the best thing they can do for the party that engaged them, or the best thing they can do for their own credibility as an expert witness, is to really quite ferociously and implacably defend their opinion whereas often a reasonable concession is one of the best things you can do to establish credibility with the bench. |
00:04:56 | AB: | Absolutely. Yeah. You can give yourself more credibility if something is raised and you’ve realised that you do need to concede something or change. I think that really helps. In the long term, you’re only as good as your reputation. So if you get a bad judgement or a series of bad judgements where it’s seen that you’re not appropriately conceding, that will really affect you in the longer term. |
00:05:17 | DT: | Absolutely. Now, as I said, at the top of the episode, we’ve talked about expert reports a few times on the show, but we might as well do a quick primer. So your typical expert witness report by the time it’s been prepared and served, what’s, kind of, the structure of the report? What are its ordinary contents? |
00:05:33 | AB: | So there’s some key components and each report will be slightly different depending on what you’re doing and in fact, that creative element in terms of how to structure something is something I find really interesting. It’s an interesting communication challenge. |
00:05:46 | DT: | Yeah. Was it Marshall McLuhan who said the medium is the message, right? So sometimes how you present the information is as important as the information itself. |
00:05:53 | AB: | Absolutely. I did a very complex tracing exercise a few years ago and a part of that on one page, we had a diagram showing all the funds that have come in and where they’d gone and that single page was actually, I think one of the most important parts of the whole report because it really clearly communicated what had happened and also when I was being asked more detailed questions, it was easy to refer back to that. And you could tell, “oh, where are we in this picture that we’re talking about?” So that communication is really important. In terms of the key parts of a report, you really have to have your instructions. What have you been asked to do and make sure that you’ve followed those instructions clearly. You need to set out any facts and assumptions that you’ll take and assumptions is an interesting topic. Maybe we can talk about it later. |
00:06:43 | DT: | Yeah, we’ll be talking more about that soon. |
00:06:44 | AB: | And then you’ve got your key analysis, and that might be several sections, depending on if they’re different parts of it. And then you’ve got your actual opinion at the end, although, you have to do an executive summary and we, at GT, we like to actually put that executive summary as the first section. A lot of other experts will have a sort of introductory section and then the exec summary section two. We really like to just get it out there. Say what is this report about? Realistically, not everyone’s going to read the whole report. So let’s have a really good summary upfront so that you can tell. What the report’s about and what we’re saying. |
00:07:22 | DT: | Yeah, I think that’s smart. And there are also some formal requirements that the report has to meet. Usually it has to append the expert witness code of conduct, including a statement that the expert who’s prepared it has agreed to be bound by that. And the expert witness code of conduct itself requires a few things in the report, including for you to state your assumptions and all of the material that you’ve relied upon in forming your opinion. TIP: Every court has a different expert witness code, but they’re very similar. I’m going to mention some general principles that apply across all Australian jurisdictions. First, the expert witness themselves is responsible for presenting relevant, objective evidence within their field of expertise. They must never mislead the court or advocate for the party that has retained them. They have to remain independent. It’s important to understand that there’s no issue with experts having different opinions or failing to come to the same conclusion. That’s not evidence of acting as an advocate, the court will simply draw its own conclusions with the help of expert evidence. An expert should be willing to modify their opinions though or make concessions when needed or appropriate, even if it contradicts their previous views. In their report, an expert should confirm in the report that they’ve read and agree to be bound by the relevant code of conduct in that jurisdiction and confirm that their opinions are primarily based on their specialised knowledge gained from their training, study or experience. They should identify in the report the questions that they were asked to address by the party retaining them, and the report should attach copies of any documents, including instructions given to them by the party retaining them, and any documents or materials that they were instructed to review. Above all, an expert witness must remain impartial, serving the court above any duty to the party that retained them, or any other party. Their primary duty is to assist the court objectively on matters within their areas of expertise. |
00:08:58 | AB: | Those court requirements and for example, there’s the Federal Court’s Expert Evidence Practice Note, obviously it gives you the key things you need. As an accountant, we’re also bound by accounting standards. So there is a forensic accounting standard called APES 215 that also has requirements as an accountant that I have to comply with. Although because it’s an accounting standard, I do find lawyers and the courts are not particularly as excited about that standard than maybe accountants get, but they’re broadly similar to the court requirements. So it’s not too hard to follow. |
00:09:31 | DT: | It’s funny you say that. Years ago, when I was still practicing at the bar, I did cross examine an accountant on the APES standards and yeah, I got the impression that I might’ve been the only person to do it. It’s certainly not something that comes up often. |
00:09:45 | AB: | No. And we’ve raised it occasionally where we think someone’s not complied with it or really if you’re getting to that level, I don’t know about your case, but it suggests that a lot of more substantive arguments maybe aren’t as strong. So I’m normally happy to receive those kinds of questions. TIP: So Alex just mentioned the APES 215 Forensic Accounting Service Standards. These standards, along with all other accounting professional and ethical standards, come from the Accounting Professional and Ethical Standards Board. Oddly enough, forensic accounting involves investigating fraud or financial manipulation by conducting in depth research and analysis of financial data. This specialised field is used in cases such as uncovering hidden assets in divorce proceedings, verifying financial records in M&A transactions, identifying irregularities in audits, or determining amounts owed in contract disputes. While not all engagements lead to litigation, most of the time forensic accountants are producing work to a standard suitable for court proceedings. APES 215 outlines mandatory requirements and guidance for professionals providing forensic accounting services. And these requirements apply in addition to the requirements of any expert witness code of conduct so far as forensic accountants are concerned. And the standard also emphasizes the public interest dimension of forensic accounting work and the professional obligations under another standard, APES 110, the professional and ethical standards board’s code of ethics, including compliance with independence requirements for engagements like an witness engagement. |
00:11:09 | DT: | All right. So you mentioned assumptions are often set out in the report, and these can either be the product of instructions – so you’re instructing solicitors might explicitly say “you’re to assume X, Y, and Z,” facts which may be proved or I hope to prove by lay evidence, or you might conclude those assumptions as a consequence of a dialogue with your instructors to say, “well, I can’t really opine on this without forming some conclusion about this proceeding requirement.” So, you know, what assumptions do I make there? These assumptions can often be a key battleground or point of contention in assessing the reliability or the veracity of an expert report and sometimes that is challenged by contest over the lay evidence, whether or not those assumptions are ultimately proven by other witnesses and sometimes that might be challenged by other expert evidence. So as an expert in your experience, what common issues do you see come up around assumptions and especially in the context of challenging and experts finding? |
00:12:07 | AB: | So as you said, there’s two real types that we see, one is an instructed assumption. So that will normally be a question of facts that you’re asked to assume. If in a damages context, what would somebody have done in the alternative? For example, we might be instructed on that. That was really a factual question, that as you said, the lay evidence will either prove or not prove. The assumption that an expert might take, personally, I try to have as few of those as possible, because they’re obviously more subjective elements that you’d be open to attack on cross examination but when looking at others, the stages are really fundamentally, is it reasonable? Is it consistent with other information and other data? Is it aligned with standard accounting practices, for example? And really the other part of it is, what is the impact on these assumptions? I think experts can often end up writing really long, complex reports and have various assumptions and for me, it’s about understanding which of those might have an impact and can we have some kind of sensitivity analysis on those assumptions because I really think in helping the parties, and ultimately helping the court, identifying what the key things are, I see as a really important part of my job because I could probably have an argument with somebody about a discount rate or something for a long time, but ultimately if that’s not going to move the needle in terms of the damages, then I feel like it’s not worth concentrating on that. You need to be looking at the more substantive elements. |
00:13:41 | DT: | Yeah. Yeah. So your discount rate in a discounted cashflow analysis is the percentage that you use to value money in the near term versus money in the long term. I suppose in certain environments, especially in very low interest rate environments where the risk free rate’s so low, you might challenge an expert’s conclusion around what the appropriate risk free rate or discount rate is but as you said, it might not move the needle very much in a particular case. |
00:14:06 | AB: | Especially because that rate will have a greater impact if something goes a long way into the future, whereas if a calculation is only a couple of years, then the discount rate is not really going to make a massive difference. And when we’re looking at others’ assumptions, we really do look at is something within their expertise or not. Certainly we’ve had matters in the past where somebody was instructed on a certain growth of a business, for example, and say, somebody’s told, “oh, just assume the business is going to double in the next year and then double again the next year,” as an accountant, I wouldn’t be taking that assumption unless there’s some kind of evidence behind that because forecasting is within our expertise and just being told, “oh, just assume the business is going to be doubling.” You’d really question what are the facts and information behind that? And is it reasonable to take on? |
00:14:58 | DT: | That’s an important point, actually, where an expert has been instructed to make an assumption that is within their specialised knowledge to assess based on the material that’s in front of them. Do you see that as an often fertile ground for critiquing a report? |
00:15:13 | AB: | Definitely. If they’ve taken that kind of assumption. Personally, I’ll try and avoid that situation but, yeah, if they have done and you can clearly see it’s unreasonable, then that’s a great point. The other part of assumptions is what I would call an implied assumption. So whilst you say, you’ve got to outline all the assumptions you’ve taken. Often in a report, there’ll be something implied. So for example, I had a matter last year where somebody was forecasting cash flows that they say they would have received from this stock that sat in the company and they basically just took the amount of stock and multiplied it by the price they sold last year and said, “well, that’s the revenue we would have got” but they didn’t think about implied in that is that there’s a demand for all that product. And we really focused in on that demand point because whilst the stock sat there, they hadn’t shown that any of it could have been sold or sold in the proportion that they were saying and it wasn’t an assumption that was clear in the report. It wasn’t something I think they should have explicitly said, but there was an implied assumption. It was only when we really got into the detail that we identified this and this ultimately became a key issue and point of difference between us. |
00:16:32 | DT: | Interesting. So not so much the price that they expected to sell for, but the assumption that the quantity available to sell would be sold. |
00:16:39 | AB: | Correct. Yeah. TIP: Assumptions are often inevitable when preparing expert witness evidence or forensic accounting reports and courts have specific expectations about assumptions when it comes to expert evidence. Over the past year, several judgments have dismissed expert reports entirely due to unproven, inadmissible or inadequately explained assumptions. Now there are two types of assumptions that commonly appear in expert witness reports. First are instructed assumptions. These are provided by the instructing party as factual basis for the expert’s opinion. The instructing party has to support these assumptions with evidence. Experts, however, have to critically evaluate these instructed assumptions and disclose them clearly in their report. If an assumption is potentially misleading, then the expert is obligated to highlight this under the APES 215 Forensic Accounting Services Guidelines. Then, there are the other kinds of assumptions – the expert made assumptions. These stem from the expert’s analysis during the engagement. And the expert, in this case, has to detail the reasoning behind these assumptions. It’s possible that these assumptions are made by the expert without supporting evidence, or are accompanied by inadequate explanations. This could be grounds for the court rejecting the expert’s evidence, in whole or in part. So experts should really verify the credibility of instructed assumptions and solicitors instructing experts should really think about whether or not they can prove those assumptions at a final hearing, they should provide clear enough reasoning for assumptions that are made independently. And finally, there should be prepared to address assumptions thoroughly during cross examination. Now, we recently did an interesting professional skills episode withHans Weemaes, Head of Economics and Data Analytics at accounting firm Vincents, where he talks about how lawyers should closely consider the assumptions they’re relying on when asserting that something has caused something else, all about causation. I’d recommend checking that episode with Hans out, it’s episode 129. It’s called ‘Grasping Causation: A Data Science Explanation of Causal Inference and the Role of Counterfactuals’. |
00:18:25 | DT: | So a common and maybe almost trite piece of advice for lawyers preparing a cross examination of an expert witness is it’s dangerous, maybe even foolhardy to cross examine on those sections of the report that you described as the analysis and conclusion of the expert because the cross examiner will almost never have anything approaching an equivalent level of knowledge that would enable them to perform that analysis and they’ll almost always be a good reason and a cogent explanation for the questions that they ask about those sections of the report, which is why we focus on the assumptions and seek to critique an expert’s report on that basis and the examples you’ve given illuminate this. Even the assumptions themselves can be difficult to identify for someone without specialised knowledge. You don’t know what you don’t know. I imagine many lawyers wouldn’t have drawn the conclusion, for example, that you should interrogate whether or not that demand is present in the example you just gave. So how do lawyers who are preparing to cross examine an opposing witness who are thinking about the ways that an opinion might be critiqued come to know that which they don’t know? How do they identify some of these assumptions that might be open to attack? And when thinking about critiquing, the evidence of your own witnesses when you’ve received a draft report and you’re deciding whether or not to serve it, for example, when is it appropriate to get a second opinion from another expert to help you understand the first? |
00:19:54 | AB: | So if it’s really complex, then you may well need a consulting expert on the side who can provide some advice on the robustness. I think it is a very difficult question sometimes for lawyers to understand how robust report is, although ultimately I find if their lawyers don’t understand it, then the judge is not going to understand it, so you’ve got to communicate effectively on it. I mean, if there’s a lawyer, I would be focusing on the clarity and logic of the expert’s reasoning. Can you follow it through? And if you can’t follow it through, then maybe focus on that or ask some questions about it if it’s your own expert. |
00:20:30 | DT: | Taking that opinion at its highest, assuming that each assumption is valid, does one conclusion flow to the next |
00:20:37 | AB: | Correct. Yeah. And making sure that it’s easy to read, but also as a lawyer, you’ve got a much broader and clearer idea on the facts of the case. And that’s one issue as an expert, you’re given a specific set of documents. You don’t actually know the broader history or whether there are certain issues in the case that you might not know about, and you might express something in a way that you could easily have expressed in a different way but the way you’ve expressed it causes issues and so it’s that kind of insight and questions that I really appreciate from lawyers that I work with. |
00:21:11 | DT: | Yeah. I mean, sometimes we call those consulting experts and I don’t know how popular this term is on the expert side of things, but the clean and the dirty expert. The clean expert is the one who’s followed the Code of Conduct whose report will be tended as evidence. The dirty expert or the consulting expert has no obligations of independence or impartiality and is engaged to assist the solicitors to understand the expert evidence. As you said, I think you’re straying into dangerous territory there if the evidence can’t itself be understood without specialised knowledge in the area. TIP: Now we’ve just mentioned different kinds of experts, sometimes colloquially referred to as clean and dirty experts. As I mentioned in the interview, a dirty expert, or maybe sometimes called a shadow expert, is an expert engaged by one party to advise them on a dispute before the court. Unlike so-called clean experts, since they’re not giving evidence in court, they don’t have a paramount duty to the court and they don’t have to be independent. Shadow experts are used to identify errors, inaccuracies, methodology issues in the clean experts report, and they can help with the preparation of cross examination for the other side’s expert witness. Dirty experts can be quite useful in understanding the opposition’s expert evidence or helping to determine what to brief your own clean expert on. Engaging a shadow expert can be particularly valuable in cases where the costs permit it, but it can be a costly exercise engaging twice the number of experts as you really need but when it’s a proportionate cost to incur provides a practical approach to strengthening both cross examination of the opponent’s experts and your own initial briefing to an independent expert. Using a shadow expert’s preliminary report also allows your team to gain a foundational understanding of complex expert evidence issues, and that preparation will enable more informed discussions with your independent expert, enhancing the overall effectiveness of the engagement process, again, if you can afford it. But even when cross examining on assumptions, which is relatively more safe than cross examining on, say, the analysis and process of reasoning itself, even then there’s a danger of asking one question too many, isn’t there? |
00:23:08 | AB: | That’s right. I mean, I was giving evidence in the Federal Court a few years ago where I had a very complex model. I wandered into the court and I could see printouts of the model and so I knew I was going to get asked questions about it, but this was a very complex Excel model and they had a printout, so wasn’t quite sure what was going to happen and they asked me about this one assumption that I’ve been given and it was about whether funds should have flown from one entity to another. And they asked me whether I was given an alternative assumption, what would happen to the numbers and sort of implied, “well, you’ve no idea what would happen.” And I answered that, “no, I didn’t know, but I could easily change it in the model and the numbers would just flow through and the answer would fall out,” at which point the barrister cross examining me lost all interest because I think he didn’t want to know the answer to that question, he just wanted to suggest that nobody knows what this number could be and oddly enough, I was never asked to produce that alternative. |
00:24:08 | DT: | Yeah. Isn’t that funny when they want to just leave that as that inherently unknowable uncertainty but of course that’s a great example of that one question too many and of course a forensic decision and a difficult forensic decision always for an advocate to decide whether or not to re-examine on a particular question, but it certainly would have been open to the other party in that case, the party instructing you to get up and say, “well, you were asked about this question, I’ve got a follow up question on that. Can you please make that change and give us your evidence?” Of course, you’d want to be careful what the conclusion was before you do. |
00:24:39 | AB: | I don’t think my party wanted to know the answer either. |
00:24:42 | DT: | That’s right. Yeah. It all depends. Just staying on the topic of examining your own expert witnesses findings, including the use of a consulting expert or a dirty expert to understand them, it can be a challenging or maybe a delicate area to discuss with an expert witness seeking clarification on a draft report or giving feedback on a draft report, even suggesting amendments to a draft report, because of course the reports that we seek to tender as evidence do have to be independent. It would be grossly inappropriate to suggest an amendment to the conclusion that a witness has provided, for example, to make it more favourable to your own case but there are circumstances where it is appropriate to give feedback or even request amendments to a report where it improves the readability of the report or takes into account things that were part of the instructions that have perhaps been missed. So as an expert who’s often had those delicate conversations with instructors, what’s best practice there? Do you have any tips on how to best approach that discussion? |
00:25:44 | AB: | So draft reports are always a bit tricky because they might get discovered, particularly in Queensland, people are very cautious around what draft reports might be provided. Personally, I think that feedback is really important because I’d much rather my own client ask me the questions to explain something than a barrister cross examining me or another expert coming back. So, I think, that process around making sure that you’re communicating what you’ve done correctly is really important. They’re the first non-accountants who are looking at the report, so if it’s not clear to them what we’re saying, then we need to make sure that we can word it appropriately. As I said a bit earlier, the lawyers will know more about the case, so there might be something that we’ve inadvertently phrased away that is a problem for them in terms of the legal case but actually there may have been two or three words that I could have used and I picked one of them. So that kind of feedback, I’m very happy to take as long as it doesn’t change the meaning of what we’re doing. I get nervous, a few times people have asked for like a Word version of the report to provide comments, and I really get very nervous around that because you get so many little things and people try to change wording. And for me, a report really needs to be in your own voice. |
00:27:04 | DT: | Absolutely. |
00:27:05 | AB: | So I’ve often rejected feedback where some wording has been suggested and I’m just, “well, I wouldn’t say that.” And you can tell an overly legalistic term or something like that, that clearly suggests that somebody else has written this and if the point’s valid then let’s make the point in a different way. |
00:27:23 | DT: | Yeah. My sort of rule of thumb has always been that that feedback needs to be given on the phone or in a meeting so that whatever the result of it, whether it’s to reject that feedback or accept it, it’s in the expert’s own words. And of course there’s a corollary benefit to that, which is it produces less discoverable material. |
00:27:42 | AB: | Oh, and as you’d expect, most of this draft report feedback happens in a meeting or on a call so that you’re not exchanging drafts. |
00:27:50 | DT: | Yeah, absolutely. Now, so far, we’ve been talking about how lawyers, as effectively lay people in your field of specialised knowledge, might digest a report, either their own evidence or the evidence of their opponents, to include whether they want to serve that evidence, to formulate a plan for cross examination on that evidence but realistically, what often happens is you’re served with the opponent’s report and there’s an order for the preparation of supplementary expert reports where you opine on the opinion that your opponent has been given. When you’re engaged to do that task, where do you start in performing that critique? |
00:28:30 | AB: | I find that task one of the most exciting parts of this kind of work, because you don’t know, necessarily, anything about the case and you don’t know what the report says. And you’re really trying to pick apart the little bits that may be hanging together and maybe you can unpack a reasoning that’s not working. So I find that a really engaging part. When I’m looking at it, as I said, it’s looking at the logic, trying to understand whether the instructions they’ve been given are the same instructions that I’ve been given and sometimes you’re just told to respond to the report. Sometimes you’re given different instructions and obviously that will mean that their opinion will be different, but it’s probably valid based on the instruction that they’ve been given. Disagreements are legitimate. We talked a bit about the discount rate earlier, which is a classic area where experts will disagree and it’s fairly subjective. So just because you’ve got a different opinion doesn’t mean that theirs is wrong, necessarily but we really need to identify the key areas where we might disagree and why. And if you’re just responding, really identifying those areas that make the biggest difference and later on, you might get to a joint report and that’s where those sort of differences can really be outlined. When you’re making a criticism of somebody, for me, you need to make sure that that criticism is valid. And sometimes I find that the best way to do that is to consult with other people within my firm and saying, “well, this is what I’m thinking of saying, what do you think about it?” And I had a large matter last year where we were very, very different, it was a huge dollar value difference between the approach that I’d taken and the approach the other expert had taken. And obviously you feel a bit exposed as an expert, but if you can talk to other people in the firm and go, “well, this is what they’ve done, this is what we’re thinking,” that can actually give you a lot more comfort, in terms of what you’re saying. I actually had a conversation yesterday with one of my other partners where we’ve got some new information in a case and there’s a question about how we’re going to deal with that and I had an idea of how we did it, but actually talking that through with somebody else really benefited what we’re going to do and gave me some additional comfort in our approach. TIP: Now, throughout this episode, we’ve talked about some different scenarios and services, which an expert witness might be engaged for. One of these situations is an expert witness assessing the report of another expert witness. Again, this can be done either as a clean or dirty expert witness. A dirty witness or shadow witness might be hired to simply consult on an expert report that’s been provided but additionally, a clean expert might be engaged not only to provide an opinion on that report, but to actually produce their own report, which may conflict with the original one. Critiques of expert reports often revolve around three primary aspects. The information that the expert relied upon, the assumptions and limitations that underpin the analysis, and the methodology or approach employed to reaching the conclusions in the report. And each element is critical, whether the report pertains to economic loss or evaluation dispute or something else. When assessing the information in an expert report, there’s six key questions to ask:
The answers to these questions are essential in evaluating the strength of the conclusions the expert draws. For instance, if the conclusions rely on assertions from the opposing party’s client without any supporting evidence, you can question whether the conclusions rest on a solid foundation. Removing those unsupported statements could significantly alter those conclusions. Assumptions and limitations also play a critical role, especially when a lack of information leads to valuation or loss calculations that depend on numerous limitations and assumptions, either instructed ones or implied ones. Both instructed assumptions and those made independently by the expert have to be tested for credibility. If the assumptions prove unsubstantiated or inadmissible in court, then the report’s value is significantly diminished, or maybe it’s not admissible at all. The methodology and approach chosen are equally crucial. In valuation reports, a forensic accountant may select from various methodologies, but not all will be suitable for every case. Reviewing an expert report requires assessing whether the chosen methodology is reasonable and appropriately applied, considering the nature of the business, the available information, and other factors. |
00:32:39 | DT: | I guess one of the other circumstances where you might have that real divergence in opinions where there’s such a stark contrast in the conclusions that each expert has drawn is where those opinions are informed by different fields of specialised knowledge. And there may be an argument to have about whether the other expert is in fact qualified to give the opinion that they’ve given. I certainly see that a lot in the context of medical opinions, where a person may not be specialised in a particular field but does that ever happen in forensic accounting, or has it happened to you where you’ve had cause to question whether the opposing expert is suitably qualified to give an opinion on this topic? |
00:33:23 | AB: | I think where it happens is where you have a more specialised area of accounting and different expertise. So my expertise is around damages and valuation and investigative type work. Whilst I said at the beginning, I started in audit and worked there for three years, I don’t have any recent audit knowledge and so whilst I am aware of the concepts, it’d be pretty dangerous for me to start talking about an audit issue because I don’t have that more recent experience and I think that’s where that happens in this field where you’ll have somebody who maybe did some audit work a long time ago and are now opining on audit opinions, but really they haven’t actually done any audit in the last five or six years and that’s where somebody with a real practical experience will come in and you might question whether the original person has enough expertise in that area. I’m very conscious that you have to make sure that you have the right expertise and what is my precise training or experience to give that opinion? That’s where you’re slightly going outside that as a consultant, people, consulting firms, they always talk about scope creep where you start off with one project and you end up with a slightly different one, I think you can do that. There’s a danger that that can happen with an expert report where you’ve given an opinion slightly outside or in a grey area, and then it’s more from there. |
00:34:47 | DT: | And it’s really important to ask that basic question of, is this opinion based on some specialised knowledge that the witness has because that’s not so much a submission about the force or the probative value of that evidence, that’s a submission about the admissibility of that evidence. If it’s not based on some specialised knowledge, it’s not admissible as evidence at all under the opinion evidence rule. So really important to consider that as a threshold issue before going into whether or not one or the other opinion should be preferred. |
00:35:15 | AB: | I had that a couple of weeks ago where I was issuing a report and going through the final review. I always print it out to read it before issuing a report because I find you always pick something up that you wouldn’t have picked up on the screen and one of the questions I had was, well, can I really give that opinion? Can we express it in a different way that makes it fit more within the expertise? Whereas the way it had been expressed, there might be more questions about it. |
00:35:42 | DT: | Made it sound as though it was in a somewhat different discipline or adjacent discipline. |
00:35:47 | AB: | Yeah or could I point, if I was asked, “point to me where you’ve got experience or study, training or experience on this issue and here’s your CV that’s attached to it.” Can I actually do that? I wasn’t sure the way it was phrased, we could do it. So we slightly tweaked the wording and it fit it better. |
00:36:04 | DT: | So far we’ve been talking about how to identify fertile ground for challenge or critique, right? Whether as a lawyer or as an expert, how do we pick apart an opinion, identify some of the places where we can challenge that opinion but, in fact, there’s a great deal of time spent in the civil litigation process on narrowing those opportunities for challenge and dispute and a great deal of time spent trying to get experts to limit the topics on which they diverge. So can you tell me a little bit about that, how the courts handle conflicting expert reports and some of the processes that as an expert you might go through to limit the extent of that conflict, like conclaves for example? |
00:36:54 | AB: | Yeah. So typically we’ll issue a report, the other side will issue a report and we’ll reply to that. There may be a further reply, but before the hearing, we’ll be instructed to have a joint report or conclave whilst they talk about it as a conclave, it’s typically a process in which both experts will initially sit together to talk about the issues and then one will go and start the first version of the draft and you’ll end up with issue by issue where you agree and where you disagree. I actually think that process can be really helpful for the parties because. It identifies the issues that are really at stake and the key differences. So you don’t have 2 100 page reports and you’re trying to work out where they exactly disagree. As an expert, you can really hone in on the areas that make a difference where you actually do agree because there’s often lots of areas that you ultimately will agree on or they’re not material to the calculation. It can be difficult, I know, for parties and lawyers, because you’ve sent your expert off, you can’t communicate with them, you don’t know what’s going to come back. I mean, in my experience, most experts don’t change their mind a lot in that process. It’d be very rare because you’ve already put on a report, unless there’s some issue that’s come back, that’s a clear mistake, it’s unlikely they’re going to significantly change their mind, but the process is really helpful in identifying what the issues are and the precise areas of disagreement. |
00:38:22 | DT: | Yeah. And as you said, the areas where, look, the parties may disagree, but actually that doesn’t really have an impact on the conclusions and so you can express in the joint report, “well, we each assumed a different discount rate, but that doesn’t materially change the result in either of our calculations.” |
00:38:40 | AB: | Yeah. And I know there was a judgment a couple of weeks ago where an expert had been asked on the stand about an opinion on valuation. And it was like the party who had engaged them didn’t want a specific answer on that, but reading the judgement, it sounded like the judge had helped lead some questions to actually get a more positive answer on the valuation and then said, “well, actually, they kind of agree. So it doesn’t really matter.” |
00:39:08 | DT: | Yeah. That’s interesting, that with a little poking and prodding and challenging, maybe all of the gaps between those two opinions can be eliminated. |
00:39:17 | AB: | Yeah. It sounded like the party could engage that expert objected to, you know, this being used, but I think the judge politely said, “thanks for that, but I’m going to use it.” |
00:39:27 | DT: | Take it up with the Court of Appeal. |
00:39:29 | AB: | I think. Probably. |
00:39:30 | DT: | You know, a lot of the practical tips that we’ve talked about so far in terms of how a report can be picked apart, you can turn them on their head and identify them as tips for producing more cogent, more potent, expert evidence for your own case. And I think certainly experts like yourselves play the primary role in producing that cogent, potent expert evidence but there are some steps that the instructing solicitor can take to strengthen your own report for the benefit of their client, isn’t there? |
00:40:05 | AB: | Yeah. I think firstly, making sure that we’ve got access to the right documents and getting timely access to that. When you’re doing the instructions, making sure that they’re actually clear and they can’t be interpreted differently and working with the expert around making sure that that wording is exactly what you want. Now, I know, courts often criticise instruction letters being dated the day before a report because it’s only at that point that the final wording has been agreed. I think whilst that’s not ideal, the alternative of receiving an instruction letter on day one can be actually quite problematic because often the phrasing will change or the question might change slightly once you get into the detail of the work, and if you’re issuing a really detailed instruction letter on day one, you’ll then have subsequent letters and I had a matter recently where we ended up with four subsequent letters and it just looks a bit messy because we’d raised a question on the information and then they had to go back and change it and I think, although the instruction letter would have been dated nearer the day of the report, it would have looked better to have dealt with that just in a single letter? |
00:41:16 | DT: | I think that’s right. Some less experienced litigators look at this as a kind of mechanical process. I pick an expert, they’re an expert in the field. I send them a letter with the instructions and I’ll talk to them about it when they’ve done the job, right? Get that item in the court orders ticked off but it’s so important to have those early conversations potentially over a period of weeks to really understand what the task is, because formulating those instructions, this is a bit of a theme that we keep coming back to today, if you don’t know the field of specialised knowledge, it’s difficult to identify with particularity and precision what the right questions to ask even are. |
00:41:52 | AB: | Yeah. And the assumptions that might go with those questions and whether you can actually support them. So whilst I said we talked a bit about being instructed on certain facts, I’ll take those instructions, but obviously the lawyer is tasked with making sure that they can actually prove those facts and if ultimately you think you can’t, then you talked about how do you make it robust? Well, you got to make sure that all those assumptions can be made out because if they can’t and they’re really significant then you might find that the report or the damages figure falls away because you can’t prove that assumption. |
00:42:26 | DT: | Yeah, there’s a really inextricable link between the expert evidence and the lay evidence, isn’t there? And I think this is another argument in favour of, not common advice that you’ll hear, but briefing a little bit later, or formally providing those instructions a little bit later in the piece rather than earlier, is if you’re doing that at the earliest possible opportunity, you’re unlikely to have your lay evidence settled. You’re unlikely to actually be aware of what you can or cannot prove. I’m thinking if directions are made for the preparation of lay and expert evidence on January the 1st and you instruct your experts on January the 2nd, you don’t know what your lay witnesses are going to say, right, and that opinion could change markedly depending on what you ultimately conclude you can actually prove relying on your lay evidence. So it’s another factor that sort of argues in favour of not waiting or not doing it late, but taking the step of formally instructing your expert at a time where the assumptions that you’ll be asking them to make have crystallised a little. |
00:43:24 | AB: | Definitely. I mean, otherwise you do find that you’re up against a specific question and you’re like, “oh, I wish it had been worded slightly differently,” or you’ve got to then produce several letters that produce different questions. |
00:43:36 | DT: | Yeah. |
00:43:36 | AB: | I think the other part about making sure your reports of your own experts are robust is asking questions and if you as the lawyer don’t understand what’s being said, then the judge is not going to understand what’s being said. So often I get lawyers go, “oh, this is a stupid question but…” and there’s really no stupid questions because if you don’t understand it, I haven’t done my job properly and let’s work on a way of expressing it better so that everyone can understand what you’re saying. |
00:44:04 | DT: | One technique that courts sometimes use to improve the ability of the bench to understand an opinion and more importantly, to understand where opinions differ is for experts to give concurrent evidence. Is that a practice that you say often with forensic accounting? Have you ever done it? |
00:44:20 | AB: | Yeah, pretty much every time I’ve given evidence, it’s been concurrent. Although the form of that can be very different. Sometimes it’s effectively like cross examination, but you’re just sat next to the person and other times it can be on issue by issue and they’ll ask each expert their opinion. I think in my experience, if a bit of thought has gone into how the question is going to be structured, that’s a lot easier – better outcome for the court and the parties because you’ll get to the number of the issues. So sometimes it will be just a cross examination of one party. So I had one where they’ll go through the expert and one barrister will cross examine their expert and I was just sat there. |
00:45:01 | DT: | Oh, I see what you mean. They’ve prepared a cross examination of their opponent’s expert, they haven’t really thought about what, in the context of giving concurrent evidence, how can I best use the fact that my expert is sitting there to make my case more cogently. |
00:45:16 | AB: | Yeah. And if there’s five issues on the expert evidence, let’s deal with those issue by issue and hear from both experts rather than just going through one almost as if the other expert had not been there. I did have one case where technically I gave evidence because I sat next to somebody in the box as my client’s barrister cross examined them effectively. And then you could sense that they were getting to the end and wrapping up, so you’re getting ready to be asked various questions and the judge asked the other barrister whether they had any questions for me and they just went, “no.” So I went from this energy of, right, “I’ve prepared, I’m ready to face these questions” to being outside the court in about 30 seconds. |
00:46:01 | DT: | It’s a bit like being on the conference call and just sitting there on mute until the end, right? |
00:46:07 | AB: | Yeah, it was and actually one of my team had come along. I think it’s important to make sure that they see the court process and what might happen, but it wasn’t the most enlightening experience for them. |
00:46:17 | DT: | No. Well, I guess the circumstances in which I can imagine making that forensic decision not to cross examine a witness is where I think that the assumptions underlying that report maybe haven’t been proven or won’t be proven. Maybe I’ve been successful in an earlier cross examination in sufficiently undermining some of the lay evidence so that I’m satisfied that opinion really can’t be relied upon anymore or maybe I’m satisfied that the evidence that the other expert has given – I think in that case, you’re describing the party that engaged you had spent a lot of time cross examining the other expert – maybe I’m satisfied that that withstood cross examination adequately, and I don’t need to cross examine. It’s an interesting decision to make. |
00:46:58 | AB: | Yeah, I can’t see it happening regularly, but in that case, what I’d said was pretty factual. So, as you said, if they think that the underlying facts are not borne out, then they might not want to. Whilst there involved expertise in analysing the information and there wasn’t a lot of subjectivity around it. So it wasn’t a damages calculation. It was about the use of funds and for me, the documents spoke for themselves, but the other expert had had some other views on it, which I disagreed with, but in terms of what I’d said in the report, there wasn’t a huge amount to ask questions on, unless, as you said, you know that the underlying facts have been disproven. |
00:47:39 | DT: | Yeah. I want to talk about the consequences of getting some of this stuff wrong. We’ve talked about what best practice is, both in terms of challenging a report and laying the groundwork to make sure the reports that you’re seeking from your own experts are as strong as possible but I suppose possible consequence of getting this wrong, of instructing too early, of instructing with assumptions that you ultimately can’t prove or the proof to be quite different, is that your own expert produces an opinion that differs from their original opinion, right? Say after that reply evidence and that further reply evidence, the opinion of your own expert ends up being pretty materially different to where they started. Have you ever seen that happen? |
00:48:19 | AB: | It’s fairly rare because let’s say people have put on a report, you’re unlikely to run away from those opinions unless some new evidence or some new documentation has come to light. So ultimately, if you’re doing a report that’s going to be adverse to your client’s position, they’re unlikely to end up serving it if they can get away with not doing that. And I think that’s why a clear conversation is earlier in the piece where you can understand, “well, this is what we’re likely to say” and I have had instances in the past where we’ve explained that’s what we’re going to say and “okay, thank you. We’ll come back to you” and then that’s it. |
00:48:59 | DT: | And then the crickets. |
00:49:00 | AB: | That’s a very legitimate part of the process because as an independent expert, you’re only as good as your reputation and ultimately, obviously, if you have to say something that’s not going to be supportive of your client, ultimately my job is to be an independent expert and offer my opinion. I mean, if you’re looking at, your own expert is saying something that’s adverse to you, that probably says more about the strength of your case and the likely damages at that point. So I’ve certainly seen instances where another expert had offered an opinion and ultimately the parties have backed away from that opinion and that led to a settlement, because I think they realised that it wasn’t going to help them in court and if your own side is saying something against you, then it’s probably time to think about settling and getting some kind of agreement. |
00:49:46 | DT: | Yeah, absolutely. And as you said, if you receive a report you don’t like, you don’t have to serve it but of course neither can you keep it under wraps, it is discoverable and it won’t look great for you and I imagine it won’t look great for the subsequent expert who is engaged, who forms a more favourable conclusion. |
00:50:03 | AB: | Yeah, and your reputation is only that good if somebody else has formed a view. Yeah, very different. Obviously that would be very fertile grounds for cross examination if you’ve got a previous report that said something very different. |
00:50:15 | DT: | Absolutely. |
00:50:16 | AB: | As an example, I produced a report earlier this year where we had to review somebody else’s model, a very complex model that wasn’t part of an expert report and I was basically told to review that model and can I produce a report that said, “yes, it does what it says it does,” essentially. And, as part of that, we realised that the initial version of the model didn’t do what it said it does. So we ended up having to get a second version of that. And for me, it was important the report ultimately was structured in saying, “well, I was given this first model and these are the issues I found with it and then this is the revised model and now we’re happy with it.” |
00:50:59 | DT: | Yeah. |
00:50:59 | AB: | An alternative would have been to say just give us the revised model… |
00:51:03 | DT: | Yeah |
00:51:03 | AB: | … but I didn’t think that would have been a robust opinion because the fact that we found issues with the first one showed that we’d actually done a really good job. |
00:51:13 | DT: | Yeah. It goes back to what we said right at the top of the episode that making an appropriate concession is probably one of the best things you can do to establish credibility with the court. |
00:51:21 | AB: | Yeah. I mean, I think those experts and judges will criticise people for just holding onto an opinion and ultimately this is a very long game and it’s very easy to lose your reputation and got to make those concessions. |
00:51:36 | DT: | Absolutely. Well, Alex, we’re nearly out of time, and I know I said at the top of this episode that we were really talking about the back-end of the expert evidence process of critiquing a draft report or a served report, planning for cross examination, looking at how we attack or shore up the credibility of expert evidence, but so much of what we talked about today hinges on the quality of the brief to the expert, the quality of the instruction letter, this work really does start at an early stage. And a lot of that early work is done by relatively junior solicitors, especially putting together the brief, identifying all the material that has to go to the expert and collating it – that’s done by a junior solicitor. Of course it’s reviewed, but those newer lawyers are doing a lot of that work but those recent graduates, law students listening who are either doing that work, involved in briefing experts or soon to do it, what’s a tip that you could give them that maybe more experienced practitioners would already know by virtue of experience in practice that our newer colleagues might not? |
00:52:37 | AB: | First, it would be know a bit about what it is you’re asking the experts do and about the case before contacting them. I’ve received loads of requests over the years from a junior lawyer who’s probably not been given enough guidance, just ringing up and going, “hello, how much would it be for an expert report?” And obviously as a good accountant, the answer is: “it depends.” And we really need to know what it is you’re being asked and anticipate those kinds of questions. If you are an expert, what kind of things do you think you would be likely to do? I think understanding the basics of expert evidence and the role of the expert and making sure that you can have that sensible discussion. I mean, I find the opportunity, if you can read other people’s reports, always gives you a better way of doing things. At GT, as I said, we have an exec summary at the beginning of our reports, which was very different to everywhere else I’ve worked. And actually when I first saw it, I was like, “oh, that’s a bit strange.” Then you realise, “oh, actually for me, that’s a better way of doing things. And so reading, and as a junior lawyer, if you get the opportunity to look at different expert reports, then you’ll get a better grasp about how each expert operates. I think, as we said, ultimately it’s an expertise but it’s also about the people you’re working with. So being easy to work with as a junior lawyer, and certainly as an expert, I like to think that I’m easy to work with, anyone can ask questions as they go through. I think that’s a really important element of doing this type of work. |
00:54:10 | DT: | Yeah, that’s a great tip and if you’re working in a larger firm or even just a boutique firm or a smaller firm that’s been established for a little while, there’s going to be expert reports in all the files that you can go and have a look at to draw some inspiration. So that’s a great tip. Alex Bell, thank you so much for joining me today on Hearsay. |
00:54:24 | AB: | Great, thank you. |
00:54:35 | DT: | As always, you’ve been listening to Hearsay the Legal Podcast. I’d like to thank my guest today, Alex Bell, for coming on the show. Now, we’ve recommended two episodes in this episode, both with guests who’ve had their own experiences as expert witnesses. As a reminder, that first one was episode 52 with Matthew Hudson, that’s called ‘Expertly Prepared: Making or Breaking Expert Evidence’. And the second one was a bit more recent, episode 29, with Hans Weemaes called ‘Grasping Causation: A Data Science Explanation of Causal Inference and the Role of Counterfactuals’. If you’re an Australian legal practitioner, you can claim one continuing professional development point for listening to this episode. Whether an activity entitles you to claim a CPD unit is self assessed, as you know, but we suggest this episode entitles you to claim a professional skills point. For more information on claiming and tracking your points on Hearsay, go to our website. Hearsay the Legal Podcast is brought to you by Lext, a legal technology company that makes the law easier to access and easier to practise, and that includes your CPD. I’d like to ask you a favour, listeners. If you like Hearsay the Legal Podcast, please leave us a Google review. It helps other listeners to find us, and that keeps us in business. Thanks for listening, and I’ll see you on the next episode of Hearsay. |
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