Law Tips – Cross Examination of the Valuation Expert

You can destroy a valuation expert witness! So says William C. Wagner, Taft Stettinius & Hollister LLP, Indianapolis, our faculty contributor for Law Tips this week.  Bill provided his expert guidance on “Cross-Examining the Valuation Expert Witness” for ICLEF’s recent seminar on Intellectual Property Valuation.

His straight-forward advice begins with an overall look at the task at hand: Cross-examining a valuation expert can be a daunting challenge. The valuation expert witness is intimately familiar with the terminology of the industry and the many different methodologies that can be employed in the valuation process. That experience allows the expert to know how to game an opinion to drive damages up or down. The expert has often had several decades of experience and has been selected as your opponent’s valuation expert because of his or her excellent communications skills.  Finally, don’t be surprised to find that the expert has more courtroom experience than you. All of that said, you can still destroy a valuation expert witness at trial through detailed preparation. 

First, remember to use your common sense. When preparing to cross-examine a valuation expert at trial, remember to think about the case from the jury’s perspective.

The judge will instruct the jury to judge the expert’s testimony in the same way they judge the testimony of any other witness. The fact that such person has given an opinion does not mean that they are required to accept it. The jury will hear that they should give the  testimony whatever weight it deserves, considering the reasons given for the opinion, the witness’s qualifications, and all of the other evidence in the case.

In other words, Mr. Wagner reiterates: “create your cross-examination using your common sense.”

Also, he reminds attorneys that: what your jury thinks is important may not be the same thing that your client thinks is important…. Studies of hundreds of focus groups have determined that when it comes to experts, juries spend their time deliberating on the following elements from the least time (4) to most time (1) as follows:

4. Credentials

3. Expertise

2. Credibility

1. Objectivity

In other words, juries listening to well-credentialed experts believe that all the initials representing their credentials after their name tend to cancel each other out. They do not spend significant time deliberating whether a CVA is better or less well-credentialed that an ASA. Juries also tend to value real-world experience and expertise over book knowledge.

The second most discussed item for juries during deliberations are the experts’ credibility. That is, juries relate more to experts who explain complex principles simply. Valuation experts who drill down to the minutia and make theories more complex than they need to be are not as well received.

Finally, the most important item juries discussed in deliberations was the experts’ objectivity. In other words, did the expert look at both sides of the arguments and explain why he or she chose the evidence they used to arrive at their opinion and why they rejected certain evidence the other expert relied upon.

Another important tip that our speaker emphasizes: Remember the trial lawyer’s advantage.

What we lack in valuation expertise and experience, we as trial lawyers make up for through our mastering of the facts and evidence to be presented at trial. We need to use our own valuation expert to help us prepare for the opposing expert’s deposition and cross-examination at trial. Most importantly, we should use our right to ask leading questions on cross. We control the show on cross-examination.

Lastly, just for Law Tips, Bill provided us with a  summation of his thoughts:

“The most important takeaway for cross-examining business valuation experts is that you have to find out all of the assumptions the expert is relying on and then find the evidence that undermines each assumption.

The second most important takeaway is that business valuation experts use one of two basic methodologies – the “before-and-after” approach (comparing the future to what happened in the past) and the “yard stick” approach (comparing the subject company’s damages to market or industry data). The great recession has taught us that the past is no guarantee of future success and no company is really the average (just because the average player in the industry earns 20% net profit doesn’t mean this company would). This is where a lawyer can create fodder for cross-examination.”

We sincerely appreciate the contribution of Bill Wagner.


The referenced, “INTELLECTUAL PROPERTY VALUATION: Manner, Methods, Litigation, Enhancing Value & Portfolio Development” is no longer available as a Live In-Person Seminar. However, you can still view the Video Replay, the Online/On Demand Video or purchase the e-Publication of this seminar by Clicking Here.

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ICLEF • Indiana Continuing Legal Education Forum, Indianapolis, IN

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