Hiring a Financial Expert: Why Attorneys Should Do It Sooner Rather Than Later

A financial expert can provide valuable assistance to attorneys throughout the discovery phase of a litigation case.

Cases involving economic damages often depend on documents to establish or disprove the amount of the plaintiff’s damages. A financial expert gathers, analyzes and evaluates information from documents to calculate damages, and to provide expert testimony opining as to the amount of damages.

When is the right time to hire your financial expert? The answer is simple: sooner rather than later. Let’s consider why.

Requests for Production of Documents

Requests for production of documents are one of the primary means of obtaining the data and information the expert will need to calculate damages.

Financial experts know the types of documents typically maintained by businesses and individuals, and the accounting lingo used to refer to certain documents so the opposing party will understand what documents are to be produced. Financial experts retained early in the case can assist the attorney in developing a more precise and effective request for production of documents to obtain key relevant documents.

Serving requests for production of documents early on in the case, rather than late in the game, carries several benefits:

• Obtaining relevant documents sooner provides the attorney and expert more time to review and analyze the data to evaluate its impact on damages and other aspects of the case.
• Documents are useful in preparing for depositions. Obtaining those documents early allows more time to develop specific questions.
• Information contained in documents may identify additional individuals that the attorney needs to depose and those depositions can be scheduled promptly.
• Based on review of the documents initially produced, you may identify additional documentation that needs to be requested.

The specific documents to be requested will vary based upon the facts and circumstances of each case. Some documents tend to be more reliable than others. A financial expert can provide the attorney with information as to the typical reliability of certain documents.

Generally, financial documents should be requested for a period of three to five years prior to the event or act causing the damages and for all subsequent periods.

The financial documents typically needed include the following.

Tax Filings

• Federal income tax returns, including all forms and schedules
• Payroll tax returns, federal and state (quarterly and annual)
• W-2 forms

Financial Statements (Balance Sheets, Income Statements, Statements of Cash Flow)

• Prepared by external accountants (audited, reviewed or compiled)
• Internally prepared
• Forecasts and projections
• Personal net worth statements

Business Records

• Detailed general ledgers
• Sales reports — by month, customer and product
• Payroll registers and wage summaries
• Inventory reports
• Depreciation schedules
• Accounts receivable agings
• Accounts payable agings

Other Documents

• Shareholder/partner/operating agreements
• Contracts including employment agreements, non-compete agreements, etc.
• Loan agreements
• Lease agreements
• Minutes of board of directors and stockholder meetings

The Risk of Waiting

If you wait until late in the discovery phase before hiring your financial expert, you run the risk of not having obtained key relevant documents from the opposing party that your expert will need to properly evaluate and calculate damages. This could put the success of your case in jeopardy.

How Your Financial Expert Can Help as Your Case Progresses

By hiring the financial expert early in the case, the expert can help the attorney by identifying specific documents to request from the opposing party to obtain relevant information that the expert will need to evaluate and calculate the plaintiff’s economic damages.

Financial experts retained early in the case can also provide assistance with interrogatories by suggesting relevant questions or assisting in answering questions from the opposing party. As the case progresses, the expert can also assist the attorney in preparing for portions of depositions that pertain to financial and other matters to gather evidence as to economic damages. Once the opposing expert has issued a report, the expert can evaluate the opposing expert’s work, prepare a rebuttal report, and discuss the strengths and weaknesses of the opposing expert’s position and opinions with the attorney.

Need Help?

Our Forensic, Valuation & Litigation Support Group can help in your next case. Contact us online or call us at 800.899.4623.

This article was originally published in 2018 and was updated in June 2024.