Business Litigation: Seven Factors to Consider When Selecting a Financial Expert Witness
Introduction
Whether you have ever been a party to a lawsuit, your company has been the victim of employee theft, or you have been involved in a shareholder dispute, then you must know how stressful litigation can be. It can go on for years, and it can make your IRS audit look like a walk in the park! If you are looking for a CPA expert witness or CFO expert witness, HP Accounting is here for you.
You can get assistance for navigating your financial and legal matters with a litigation consultant, whether you need to reconstruct financial records or calculate economic damages. Attorneys use these reports in mediation, settlement discussions, and in court. It would help if you searched for the financial expert early in the process as they can guide you about the discovery you need for the case.
As a CPA, CVA, CFE, and CFO Expert Witness who has been retained in 150+ business disputes in California, here are the seven factors attorneys tell me matter most – and the mistakes I see them make.
1. Make Sure Your Expert Can See the Whole Case Through to the End.
Various professionals prefer to avoid deposition and testimony, so you should be sure that your selected expert is willing and can fulfill their obligations to take the stand if needed.
This is the #1 issue. I get calls from attorneys 60 days before trial because their first expert “doesn’t testify” or retired.
Questions to ask:
- “Have you been deposed in the last 12 months? How many times?”
- “Have you testified at trial in the last 24 months? Jury or bench?”
- “If this case goes to trial in 18 months, will you be available?”
At HP Accounting, I take cases intending to go to deposition and trial. I prepare every report as if it will be Exhibit 1 at trial – with workpapers that will survive cross-examination. Many tax CPAs will write a report but include an engagement letter that says “we will not testify.” Read the engagement letter.
2. Avoid Experts With a Heavy Tax or Audit Client Load.
Recurring clients can take precedence during tax season that leaves you without your expert’s attention for a third of the year.
This is critical from January to April 15 and again September 15-October 15. If your expert has 200 tax returns due April 15, your mediation on April 10 will get 2 hours of prep. I have seen this derail cases.
My practice is structured opposite: litigation, valuation, and fractional CFO is 80%+ of my work. Tax is seasonal and limited, so I can meet your discovery deadlines in March. Ask any expert: “What percentage of your revenue is tax and audit vs litigation/valuation/forensic?” If tax/audit is >60%, you are a side project.
For your case, you need someone who can turn a declaration around in 72 hours when opposing counsel files a motion.
3. Make Sure Your Expert Is Working With a Good Team.
Litigation can drag out over a long time, and you don’t want to be left beside your expert – and starting again at square one – late in the process. If you have a strong team behind your expert, it means you can have support even if the chosen expert cannot see the case through. Our CFO expert witness team is aware of what they are doing to make your case stronger.
A solo practitioner with no backup is a risk. What if they get sick, have a family emergency, or get conflicted out?
What a good team looks like:
- At least one senior (CPA/CVA) and one staff analyst who knows your file
- Documented workpapers so another expert can step in
- Access to valuation databases (BIZCOMPS, DealStats, Cost of Capital)
- Report writing and exhibit preparation capacity
At HP Accounting, I lead, but my team maintains the data room, financial models, and source document indexing. That means when you call for a settlement conference, I have the numbers, not “let me pull the file.”
4. Don’t Be Too Narrow When Evaluating Industry Expertise.
While industry knowledge can become paramount in some industries, it is not always the case, so avoid discounting the value that different experiences bring to the table. An expert who handles various cases and practices various disciplines brings a deeper understanding of complex matters. Furthermore, they can also adapt better to the inevitable twists and turns of cases when needed.
Attorneys often search “expert witness for construction company” – but the real issue is lost profits or business valuation, not construction.
What matters more than industry:
- Type of damages: Lost profits, business valuation, unjust enrichment, fraud/forensic
- Your venue: California Superior Court vs Federal Court – different Daubert/Frye standards
- Type of business: $1M-$100M closely held business expertise is more relevant than Fortune 500 audit experience
My background as CFO of companies that raised $35M in equity/debt, bought and sold retail stores (including a fraud case I litigated), and ran operations is more relevant to a shareholder dispute than someone who audited a similar industry but never made payroll.
Ask: “Have you valued a company this size? Have you calculated lost profits for a company this size?” Not “Have you worked in my industry?”
5. Give Yourself Options – Interview 2-3 Experts Early.
Even if you have dealt with an expert in the past, you need to consider different directions as every case is unique. So it would help if you talked to a few experts to be sure that you are selecting the best one for the matter you want to deal with.
I tell attorneys: hire the expert at the complaint stage, not after discovery closes. An early expert will:
- Draft document requests that get you the P&L by month, POS data, bank statements (see my retail fraud case)
- Identify missing data before it’s too late
- Give you a preliminary damages range for your demand letter and mediation
When you interview, compare:
- Preliminary approach (Income vs Market vs Asset)
- Timeline and fee structure (hourly vs flat for report)
- Sample report (redacted) – is it understandable to a jury?
- CV and prior testimony list – has it survived a Sargon challenge in California?
I offer a 30-minute conflict check and initial case assessment at no charge for business litigation attorneys.
6. Qualifications Matter – Mainly in Court Under Sargon / Daubert.
No doubt that CPA designation is highly respected, but it is essential to evaluate if your case needs an expert with additional industry credentials or specialized valuation or fraud designations.
In California, under Sargon Enterprises v. USC (2012), the judge is the gatekeeper. Your expert’s opinion must be based on matter of a type reasonably relied upon by experts in the field.
Credentials that survive Sargon:
- CPA: Required for forensic accounting, but not enough alone for valuation
- CVA (Certified Valuation Analyst) or ASA or ABV: Required if the issue is business value. I hold CVA. A CPA without CVA/ABV will get excluded on valuation opinions.
- CFE (Certified Fraud Examiner): For embezzlement, employee theft cases
- CFF (Certified in Financial Forensics): AICPA forensic credential
- MAFF: Master Analyst in Financial Forensics
I hold CPA, CVA, and have 30+ years as CFO and expert witness. That combination of credentials + real operating experience is what judges allow and juries understand. A professor with a PhD but no real business experience often struggles on cross.
Ask for: CV, 4-year testimony list (required under FRCP 26), and any Daubert/Sargon challenges – how many, and did they survive?
7. Lastly, You Must Be Comfortable With the Expert’s Style and Approach.
Litigation is stressful, so you need to choose an expert with whom you can communicate and trust to make the process go smoothly.
Your expert will be in your war room. Style matters:
- Can they explain accounting to a jury in plain English? I testify as a CFO, not as an auditor. “Revenue was overstated” vs “They booked fake sales.”
- Are they responsive? Do they return calls same day?
- Are they independent? Will they tell you when your damages theory is weak before you spend $50k on a report?
- Will they work with your client without condescending? Business owners are stressed – they need a CFO who has been in their shoes.
I work closely with attorneys and clients to find, quantify, and present the financial impact and economic damages of business disputes. Our team is highly experienced, trained, and specialized with credentials in business valuation, forensic accounting, and related disciplines. Their dedication ensures that each case gets the attention it needs and deserves.
Bonus: 5 Questions to Ask Before You Hire a CPA Expert Witness
- Will you provide a preliminary damages range before full report?
- What documents do you need in the first 30 days?
- What is your fee to get to mediation vs trial?
- Have you ever been excluded under Sargon/Daubert?
- Can you provide a sample report and testimony list?
If they hesitate on 2 or 3, keep interviewing.
If you’re a business litigation attorney in California looking for a CPA expert witness, CFO expert witness, business valuation, or forensic accounting expert, contact HP Accounting in Fremont. I work statewide and am available for plaintiff and defense work.
