Finding your business engaged in a dispute means diverting time, money and human resources from growing your organisation. Unfortunately, this is a growing issue.
According to one law firm, the English Commercial Court fielded 885 claims in 2022/23, pushing the court to near-full capacity. Litigation can cause severe disruption for businesses of any size, especially larger ones.
Part of defending your corner is employing the use of experts, and this is why expert witness valuation is so valuable during disputes. Let’s discuss how expert witness valuation works in legal proceedings.
What is the importance of expert witness evidence in legal proceedings?
Expert witness valuations are there to provide objective, unbiased valuations of businesses using documented techniques laid out within expert reports.
These professionals are recognised as experts in their field, lending credibility to any legal argument.
An expert witness is pivotal to providing clarity in legal proceedings where emotions often run high. Without experts, a legal proceeding becomes a matter of one side’s word against another, which is nearly impossible to rule on.
Naturally, perceived bias can become a talking point within legal proceedings. According to a Law Gazette survey, four out of ten respondents said they’d encountered solicitors who only instruct experts who provide favourable opinions.
Nevertheless, expert witnesses outline fact-based arguments based on professional knowledge and validated techniques. In fact, expert witnesses are bound by court rules to provide their advice to the court, which must be independent and impartial.he principal at the end of the loan term. This means that you don’t have to make any monthly repayments.
The role of expert valuation witnesses in legal proceedings
Expert valuation witnesses value businesses for various purposes, including business sales, tax matters, and increasingly, in matrimonial proceedings.
Within legal proceedings, they are often called by either side to provide firm figures on the value of a business but often, the expert can also be appointed on a joint basis with agreement of the parties involved.
Here’s a basic rundown of their role in the legal system.
Providing objective valuations
The core responsibility of an expert valuation witness is to provide a detailed report of a business and its assets. These reports take advantage of different accepted valuation methodologies to give a fair value figure to the court.
Offering specialised knowledge
Expert valuation witnesses are at the top of their field. They not only understand the ins and outs of valuations but often bring specific industry knowledge to the table. Moreover, they understand the various nuances of different sectors that could impact a valuation.
Additionally, expert valuation witnesses often possess other skills, including accounting, economics and financial analysis.
Testifying in court
Expert witnesses present their reports and submit them to the court. They can also be called for cross-examination by your legal representatives if there are any contentious issues to address. Since opposing counsel can cross-examine them, they must also be calm under pressure and defend their valuations when scrutinised.
Advising legal counsel
Legal teams also call in expert valuation witnesses to enable them to develop their case strategies. Solicitors will often ask them questions about complex financial data they don’t understand and connect it with their legal arguments.
What kind of evidence would a valuation expert witness bring?
Valuation expert witnesses are prized for their objectivity and independence because their arguments come from facts and figures, not emotions. Various types of documentary evidence may be used to defend your corner.
Examples include but are not limited to:
Financial Statements – Types of financial statements expert witnesses may present to the court include income statements, corporate balance sheets, financial forecasts and cash flow statements.
Valuation Reports – All expert witnesses will show valuation reports. These reports detail their methodologies to come to the valuation they did. Both detailed valuation reports and summary reports may be presented.
Industry Research – Comparable data often supports the arguments made by expert witnesses. They may conduct research into other businesses and industry averages to provide context to their numbers. Additionally, they may include broader economic data, like interest and inflation rates and macroeconomic growth forecasts.
Testimonies – Valuing a business isn’t an exact science, so expert witnesses may interview key personnel throughout your company to gain greater insights into its operations.
Business Contracts – Expert valuation witnesses will also source any business contracts that could impact its value. Examples can include client contracts, supplier agreements and lease agreements.
Corporate Documents – Understanding a business’s operations and strategy also matter within the context of valuations. This is why expert witnesses often gather different corporate documents, such as shareholder agreements and minutes of the latest board meetings.
Expert valuation witnesses conduct a thorough assessment of your business in order to arrive at a valuation. This is why opening your books and providing as much transparency as possible is vital to increase your chances of a court ruling in your favour.
Instructing a valuation expert witness
Instructing a valuation expert witness is crucial to any case, especially when dealing with something that isn’t an exact science, such as business valuations. Always take the time to research the expert witness you want to hire to ensure they are right for your particular case. More often than not, your lawyer will already have a number of suitable contacts who they can recommend.
Working with your legal team closely is vital for sourcing the right expert. Once you’ve appointed your expert witness, which is usually done through your legal representative, your lawyer will hire and instruct them with the specifics early. Many companies forget that expert witnesses also play a role outside the court.
Your legal team should be collaborating with your expert witness from the earliest stages of your case. It’s their input that enables your legal team to choose the best possible case strategy. Without their early input, you’re already losing the high ground.
Finally, instructing a valuation expert witness and gaining maximum value from their input means listening to them. Unfortunately, many clients may display reluctance to listen if their report is contrary to what they think, but remember, their role is to assist the court and to remain independent, even where they are instructed by you. Experts have an overriding duty to the court and the broader legal system. They are only there to advise, not to side with you. used to repay the interest monthly, meaning everything is paid at the end of the loan term.
In short:
· Hire the right expert.
· Ensure your legal team works closely with them.
· Collaborate early.
· Listen to what they have to say.
At Hilton Smythe, we support businesses through our expert witness service when facing defining legal moments. To learn more about how our director-led division can help, speak to the team today.