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What Has COVID-19 Taught Us About Neutral Experts?

Posted in Business Valuation, on Oct 2020, By: Mark S. Gottlieb


The news cycle is currently inundated by the testimony of medical professionals of various backgrounds and experience, and as we have seen, their opinions and advice can starkly differ. While many have advocated for social distancing and the use of masks, others have sought to cast doubt on the productivity of these measures, claiming either that they are unnecessary or that they have no impact on the virus’s transmissibility.

Recently, lawyers for the CT Freedom Alliance offered two medical expert witnesses that were subsequently rejected on the basis that neither was sufficiently qualified to serve as an expert. In response to one individual’s previous attestations that viruses are nonexistent and vaccines poisonous, Judge Thomas G. Moukawsher expressed his clear inclination that established scientific evidence should not be disputed.

This is an extreme example but one that bears mentioning.

Judges are frequently confronted with radically opposing partisan expert opinions. Irrespective of their familiarity with the subject at hand, they must decide as to which opinion is most correct. With regards to COVID-19 and the preventative measures thereof, there are a sufficient number of credible and widely circulated opinions as to make the credibility (or lack thereof) of witnesses such as those described above relatively obvious.

But what of matters that concern subjects that aren’t so broadly known? Let us take for example the industry accepted principles and standards in business valuation. In a matrimonial, shareholder, or estate dispute, it is often that both parties hire a business valuation expert. Occasionally, these experts submit reports that differ. In situations where that difference is less than or equal to 15%, the court frequently “splits the difference,” and assume an average of the proposed values. But sometimes the difference is so radical that two reports cannot be so reconciled. In such instances, judges are called to make decision as to which report is most correct and credible. But how can this be reliably done without industry-specific insight regarding the accepted procedural methodologies? Especially now, when COVID-19 has cast a veil of uncertainty over valuation opinions, and the reliability of a given business valuation report.

Is the court hearing from an expert or advocate?

Of course, the complications which may arise from partisan expert testimony are well-known. Over time, various solutions have been proposed to mitigate their scope and influence, including the appointment of special fact finders, special masters, and technical advisors. These solutions have their limitations however, and none offer quite so many potential benefits as those of a court-appointed expert.

There are three core reasons why judges should consider the appointment of a neutral expert. Namely, she/he may potentially:

  • Remedy any potential confusion on the part of the fact-finder, and reduce the incidence of evidentiary stalemate
  • Reduce the risk of the nonproduction of critical evidence, apprising the court of any important factors not being considered by partisan experts
  • Defuse the dangers of “expert shopping,”

Each is worth discussing each in some detail.

  1. Reduce Evidentiary Stalemate

Occasionally, two experts with diametrically opposed views are called to opine on the issue at hand. An “evidentiary stalemate” results from conflicting testimony, with each expert’s opinion counteracting that of the other. In such circumstances, expert testimony fails to provide the court with a clear and nuanced picture of the business and/or assets in question, potentially leaving it in a worse position than before. In its distrust of all experts, the court might disregard the valid testimony along with the invalid.

Several courts have expressed their frustration in deciding valuation issues based solely on the testimony of partisan experts. In affirming the Chancery Court’s valuation determination in an important shareholder appraisal, the late Delaware Supreme Court Justice Joseph T. Walsh commented that:

The presentation of widely divergent views reflecting partisan positions in appraisal proceedings [add] to the burden of the Court of Chancery’s task of fixing value. Such extremes may result in the court’s rejection of both opinions in favor of a middle position. [I]f the court is limited to the biased presentation of the parties, it is often forced to pick and choose from a limited record without the benefit of objective analysis and opinion.

Justice Walsh concluded that the appointment of a court appointed expert was the best solution to these issues, suggesting that the Chancery Court particularly this option when making complex appraisal decisions.

In serving the interests of equity, a court-appointed expert could remedy the fact-finder’s confusion by sorting through conflicting expert testimony, thus lessening the incidence of evidentiary stalemate. She/he could also guide the trier of fact through partisan expert testimony alerting them to invalid arguments and helping them to rely on objective criteria, rather than their own sense impressions.

  1. Reduce The Risk Of Non-Production Of Evidence

A neutral expert might also reduce the risk of nonproduction of evidence. She/he could alert the court to any important factors neglected by the partisan experts, and even expose a venal expert if cross-examination failed to do so.

While cross-examination theoretically eliminates the possibility of a venal expert, in practice, this measure’s effectiveness is deeply reliant on the capabilities of individual trial lawyers. Not all lawyers are uniformly skilled, and express reliance on this systemic safeguard introduces the possibility that expert corruption will not be exposed.

  1. Diffuse The Dangers Of Expert Shopping

The partisan expert system has precipitated a tendency toward “expert shopping.” When seeking an expert witness, litigants are likely to select individuals with opinions favorable to their case. This introduces the possibility that the opinions presented to the court will be those most favorable to the respective parties.

In providing a neutral perspective of the partisan experts’ reports and testimony, a court-appointed expert could limit both the incidence and impact of expert shopping. She/he could inform the fact-finder of generally accepted professional methodologies, and alert them to invalid arguments.

Court appointed experts function well in the context of various proceedings that have financial concerns and present an opportunity for the courts to conserve judicial resources while reaching decisions.

For nearly 30 years our firm has been routinely appointed by the court as a neutral expert. In these instances, we have performed various functions, that include, but are not limited to (1) estimating the value of a business, (2) tracing funds in and out of selected accounts, and (3) performing forensic investigative services.

We appreciate your confidence and hope you will continue to keep us in mind when the need arises.

In the interim, we have created an “Expert Comparison Checklist” to assist you to compare and contrast expert valuation reports. Please email our office at Just indicate “Checklist” on the subject line.