Mod 3 - CBV as an Expert Flashcards

1
Q

In the role of an expert witness, what to characteristics are paramount?

A

1) Objectivity

2) Impartiality

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2
Q

With regards to Valuator Bias, who do the courts see the opinion of a professional valuator?

A

1) Bias goes to weight, not admissibility. Put another way, the courts will consider the amount of bias the valuator has in the situation before determining how much weight should be placed on the accuracy of the report.

2) Bias means lack of objectivity.
The goal is to gain opinions from the expert that the courts could not arrive to on their own, however, it is believed that no party can be 100% neutral, as they are engaged by a party to offer an opinion to support the advocate of the party.

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3
Q

Common ways that bias can arise

A

1) a pre-existing relationship with a client (if payment is excessive or based upon a particular result)
2) the terms of the engagement, including payment of a fee, adopting facts and assumptions without sufficient analysis
3) Advocating a particular position such as one that was authored in a textbook by the expert.

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4
Q

Types and levels of Provincial Court System

A

1) Provincial and Territorial - have unlimited jurisdiction and unlimited power to adjudicate disputes including federal and provincial law (they are able to administer civil law in Canada, even though set out by feds). Each Province has a Superior Court.
2) Appellate Courts - hears appeals from the Superior Courts and sometimes administrative tribunals.
3) Country or District Courts - some provinces have these, whose jurisdiction is typically limited to a specified geographical area within the province and has jurisdiction over subject matters similar to that of the Superior Court.

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5
Q

Types and Levels of the Federal Court System

A

Supreme Court of Canada - is the highest court of appeal for all of Canada. It hears appeals from other courts of appeal of all provinces and territories, and from the Federal Court of Appeal.

Federal Court of Canada - Limited jurisdiction, governing

1) intellectual property
2) patents
3) trademarks
4) copyright
5) claims against the federal government

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6
Q

Administrative Tribunals

A

Both federal and provincial jurisdictions have a set of administrative tribunals that handle specialized matters.

Commons examples in ONT include:

1) Land Compensation Board - deals with expropriation claims, including claims of loss of business profit and relocation expenses.
2) Workplace Safety and Insurance Board - hears disputes with respect to Ontario Workplace and Safety Insurance Act. It makes decisions on claims, assessments, and the enforcement of the regulations.
3) Environmental Appeal Board - hears appeals from administrative decisions related to environmental issues.

Common examples of Federal tribunals include:

1) Canadian Radio and Television Commission - regulates matters relating to all forms of electronic communication, including radio, TV, and telephone communications.
2) Competition Tribunal - investigates and regulates matters covered by the Canadian Competition Act, including mergers, misleading advertising, and anti-competitive practices.
3) Canada Industrial Relations Board - investigates and regulates labour matters involving corporations that are subject to the laws of the Federal Parliament (for example, Canada Post of Air Canada).

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7
Q

The core steps of the litigation process

A

1) Pleadings
2) Affidavit of Documents
3) Examination for Discovery
4) Interlocutory Motions
5) The Trial
6) Judgement
7) Appeals

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8
Q

Pleadings Process (Step 1 of litigation process)

A

Pleadings (are the official documentation that is served on the opposing party and filed with the court, used to define issues in dispute and provide notice t othe opposing part of the claim.)

Three components of Pleadings include:
1) Statement of Claim - plaintiff files statement of claim, including name of plaintiff, name of defendant, facts alleged by plaintiff in support of claim (relationship, reference to applicant agreements/contracts, material facts that give rise to claim, sought after remedy). Document is provided to the court and defendant. The defendant can then pay the remedy, contest in whole, or contest in part.

  • Valuator can help ensure the description of the damages claimed is adequately set out and quantified.
    2) Statement of Defence - if defendant contests claim, they are to file a statement of Defence and serve it to plaintiff and file with court.

Statement of Defence will include:

a) Admit to those facts alleged in statement of claim that are true.
b) Deny those facts alleged in the statement of claim that the defendant claims are false.
c) Identify those facts alleged that the defendant has no knowledge.

*CBV can assist in the preparation of defence by identifying damage-related issues and assessing the validity and quantum of the plaintiffs damages claims.

3) Reply
In response to Statement of Defence, the plaintiff can reply with additional facts that were not set out in the Statement of claim, which will be relied upon in the proceeding.

4) Other Pleadings - in complex disputes other types of pleadings may be made allowable by the courts:

Counter-claim - where the defendant defends the claim and also assets its own claim against the plaintiff

Cross-claim - where there are multiple defendants and one of the co-defendants assets a claim against a co-defendant that arises out of the plaintiff’s claim.

Third party claim - defendant assets a claim against a third party who the defendant alleges is responsible for the damages claimed by the plaintiff.

Statement of agreed facts - a list of various facts that both parties agree too, such as names of those involved, date of occurrence, ect.

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9
Q

Affidavit of Documents (Step 2 of litigation process)

A

Develop and provide a list of documents in each party’s possession, control, or power that are relevant to the issues in the action as defined by the pleadings. One the list is provided, each party must swear an affidavit, verifying that all relevant documents are listed. All documents in possession must be listed, even if not in party’s best interest. (exceptions to this rule include confidential info between party and counsel protected by solicitor/client privilege, documents prepared by client/counsel/CBV in contemplation of the litigation that are protected by litigation privilege, and communications between opposing parties made on a “without prejudice” basis that are made for the purpose of attempting to settle the litigation).

“document” includes all paper documents, electronic documents, emails, video, and audio recordings.

This documents must all be made available to opposing party for inspection and copying. This is referred to as Production of Documents.

*CBVs can assist in identifying documents that are particular relevance to the quantification of damages, and in assisting the lawyer in understanding those documents.

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10
Q

Examination for Discover (Step 3 of litigation process)

A

enables a party to a civil action to examine another person orally and before trial to obtain relevant facts to the claim.

The scope of the examination is broad, but the right to examine a witness before trial is restricted in most Canadian jurisdictions.

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11
Q

Interlocutory Motions (Step 4 of litigation process)

A

a written notice by defending party that they disagree that the statement of claim disclosed a valid cause for the claim or the opposing party has not sufficiently discharged its obligation to disclose all relevant documents. ie, trying to get the case stopped before going to trial.

The court will look to resolve the dispute in the interlocutory motion, determining if the claim will proceed to trial of be actioned in a different way.

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12
Q

Trial (Step 5 of litigation process)

A

Focus of trial is to resolve outstanding factual and legal disputes that were not resolved during discovery and interlocutory motions.

The plaintiff will present evidence of fact to prove their claim.

The defendant may introduce evidence intended to disprove or diminish the plaintiffs claims.

All facts not admitted by opposing parties before hand must be established at trail by witnesses testimony and/or documentary evidence.

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13
Q

Judgement (Step 6 of litigation process)

A

Just will render their judgement following trial, and will typically issue written reasons for their decision. If the plaintiff is successful, they will be awarded damages in a specified amount, which may include interest on damages and costs (including expert costs).

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14
Q

Appeals (Step 7 of litigation process)

A

The party may appeal a judgement to the court of appeal of the province in which the action was commenced.

Appellate courts do not typically overturn findings of original court, unless the original judge made a “palpable and overriding error in assessing the facts”.

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15
Q

Who is the burden of proof on?

A

Burden of prrof falls on the plaintiff to prove the damages were caused by the defendants wrongful actions and to prove the quantum of damages it claims was caused by defendant’s wrongdoing.

Facts can be proven in a number of ways, including:

1) admissions in pleadings
2) oral testimony
3) documents
4) circumstantial evidence (suggestive evidence, like a fingerprint implying someone was at the scene)
5) demonstrative evidence (factual material, such as an x-ray, video tape, sound recording)

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16
Q

What is an Alternative Dispute Resolution, the three classes of ADR and 5 types that can be used.

A

Due to the time and cost of going through tranditional court system, most cases are solved through ADRs. Some jurisdictions require that parties go through mediation process prior to making claim through the courts.

1) Informative - parties rely on third party to seek out information and bring it back to them for consideration (valuation of a business by a neutral expert)
2) Consensual (mediation) - use of a third party to come to a conclusion, for which the parties have the right to accept or reject an outcome.
3) Adjudicative (arbitration) - parties delegate decision-making power to a mutually agreeable third party and agree in advance to accept the decision as the resolution of their dispute.

Types of common ADRs:

1) Negotiations
2) Mediation
3) Mini-trial
4) Arbitration
5) Neutral Case Evaluation

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17
Q

ADR: Negotiation

A

1) Negotiation - parties try to find a resolution themselves. CBV can act as a member of one of the negotiation parties by preparing a report to aid in their argument, or, to negotiate with opposing team’s financial experts to agree on key facts, such as the quantum of damages.

18
Q

ADR: Mediation

A

2) Mediation - Third party works with the opposing parties to come to a solutions. CBVs can be involved as a neutral expert, a member of one negotiating party, or jointly retained whose job is to inform both parties and mediator.

Adv of Mediation:

  • Mediator can reduce risk associated with candid negotiations through use of confidential without prejudice discussions, allowing for parties to find common ground.
  • They can help craft creative solutions through problem solving methods.
  • Parties behave more civil and present cases more rationally when using a mediator, that than be driven by emotions.
  • Mediators are experienced and can assisted in procedural and substantive solutions for negotiations.
  • Mediators can assess the progress and recommend alternative ADR strategies, such as a neutral evaluation, mini-trail, non-binding arbitration, or binding arbitration.
  • CBVs often play a role of “Fact Finder” in mediation cases. This can include basic facts (number of customers lost to a patent infringment), or an analysis of these facts (number of customers lost to the global market for each of the fiscal years concerned). From here the CBV can issue a report offering recommendations on how the matter can be settled or what they can do to prevent it from happening again.
19
Q

ADR: Mini-trial

A

3) Mini-trail - a form of Mediation where both counsels from each side presents a summary of its case to a panel of decision-makers. This is followed by direct negotiations by the panel to come to a solution recommendation.

** A CBV may be a panel member, bringing an objective stance and expertise to the group. Or, the CBV can represent one of the parties, to clearly present specialized material to the panel.

20
Q

ADR: Arbitration

A

4) Arbitration - Arbitration is often used where there is a need for specialized knowledge to truly understand the dispute and its key facts. Very similar to court proceedings, in that the decision is in the hands of the arbitrator, not the parties. However, this is often preferred as it is much more timely, cost effective, and typically handled privately, allowing the parties to keep the dispute and the decision confidential.

To initiate the arbitration process, both parties must agree to go to arbitration (if one party does not agree, then a statement of claim must be filed by one party through the court system). Once the process has started, both parties must agree to end the process.

Common matters include Breach of Contract, Partnership dissolutions, dissenting shareholder suits, divorce proceedings, interpretation of SHA.

Arbitration panel is typially 1 or 3 people. If 1, both parties must agree. If 3, each party chooses one and the two selected arbitrators choose a third. Typically the two chosen are specialized experts (CBV, engineer, ect) and the third is someone familiar with trial process.

*** CBVs can be members of the panel or be engaged by the panel or one of the parties to present a report to the panel.

Adv of Arbitration

  • Both parties select arbitrator, making it technically fair and unbiased.
  • Less time and much less expensive.
  • Because the panel should be experts, less chance of unfair or extreme result. Unlike trial, where judge may not have the technical ability needed for an accurate decision.
  • Can be kept confidential.
21
Q

Procedure of accepting an Arbitration Assignment

A

1) Obtain a statement of the matter in dispute, the amount of money involved, and the remedy sought.
2) make all necessary fee arrangements (retainer, advance, estimate, etc.) and ensure that payment is inline with CICBV standards to ensure independence.
3) Following the initial meeting, CBV is to disclose any circumstances that may affect his/her impartiality, including and bias. Following this, the parties will determine if the proposal and use of the CBV is acceptable or not.
4) if yes, collect the deposit and begin the process.

22
Q

Neutral Case Evaluation

A

NCE is when a CBV provides a valuation report on the value of a business at a predetermined fate in a dispute between a buyer and a seller of a business. It is not intended to make a determine of price, but rather to aid in the deliberations. If the dispute escalates to arbitration or trial, the valuation report may be filed.

23
Q

Three requirements of the Judicial system with regards to an Expert

A

1) the proceeding be conducted in an impartial manner.
- the expert must not become an advocate

2) the proceeding be conducted fairly
- Adjudicator will ensure the expert’s influence over the proceedings is limited by the boundaries of fairness in weighing the experts evidence against the evidence of all other witnesses. Findings may even be re-worked by the adjudicator in order to arrive at fair outcome.

3) The expert’s experience and knowledge
- expert’s are to be used when the material at hand is outside of the experience and knowledge of a judge or jury.

24
Q

Difference between fact witnesses and opinion witnesses.

A

Fact witness: someone who is eligible to provide evidence who had direct involvement with the matter at hand (ie. victim of a theft). They cannot speak to anything except their direct experience (not able to say what they heard from others, ect).

Opinion witness: are witnesses that have no direct involvement with the matter at hand and must be independent. This have the ability to draw on non-directly involved facts from the matter at hand, such as statistical information from third parties, comparable situations from other companies (comparable market transactions), and they are able to simply provide an opinion based on their expertise.

25
Q

What is the Engagement Process of a CBV in a Litigation Case?

A

1) Internal Procedures before acceptance
2) Setting of Fees and Contingency Fees
3) Engagement Letter
4) Gathering and Analyzing Information
5) Report Writing

26
Q

Internal Procedures Before Acceptance in a Litigation Case

A

Before accepting an engagement, CBV must determine if he/she should accept the case. Things to consider include:

  • are they independent and free of conflicts
  • do they have knowledge of the business / industry
  • what are the nature of the tasks
  • what are the merits of the case
  • what is the CBV’s available of time and competent staff
  • what other risks are associated with taking project

In no to any of the below, CBV should pass due to conflict:

  • Is the CBV currently providing services to the potential client?
  • Is the CBV currently providing services to the opposing party?
  • Has the CBV provided services to the client or the opposing party in the past?
  • Is the CBV in conflict of interest with either of the parties?
  • Is the CBV in conflict of interest because of information he/she obtained in the past, e.g., during an initial interview, even though the CBV was not ultimately retained?
  • Could services or testimony destroy a potential business relationship with the opposition or those aligned with this party? Could it lead to future litigation?
  • Is there any reason the CBV cannot ethically accept and defend the position or claims of the client?
  • Is there a foreseeable risk that the potential engagement would place the CBV in a position of breach of the Code of Ethics with regards to independence?
  • Has the CBV published articles, or taken positions conflicting with the position to be advanced in the case at hand?
27
Q

Setting of Fees and Contingency Fees in a litigation case

A

Typically set up on an hourly basis. Must ensure that payment is not based on contingency of a specific result, which would create a bias.

Common payment structure is to be fully paid for pre-trial work before the trial, as well as received a retainer for the estimated costs of work to be done at trial before the trial begins, so that that there is no risk that someone will claim the payment provided following trial was the result of the outcome influence by the CBV.

28
Q

Engagement Letter in a Litigation Case

A

CBVs therefore must protect themselves with a well-drafted engagement letter that includes restrictions in legal liability and meets the professional standards of the CICBV. Also, the engagement letter should be written in a way to ensure that the opposing counsel cannot discredit the CBV on the basis of the letter. CBV should take care in writing the letter and allowing flexibility in its interpretation.

Should include:

  • Formalize the arrangement between the CBV and the client.
  • State the relevant facts.
  • Communicate the scope of analysis.
  • Communicate the scope of deliverables.
  • Indicate any limitation in the CBV’s responsibility and liability.
  • Provide a legally enforceable arrangement between the contracting parties, with commercially acceptable terms and conditions.
  • Indicate any particular arrangement concerning access to information.
  • Indicate the fees contemplated or the manner in which the fees and the disbursements will be calculated and billed.
29
Q

Gathering and Analyzing Info in a Litigation case

A

Includes but not limited to the following sources:

• Reviewing the pleadings.
• Discussions and correspondence with counsel and client. Counsel is in a position
to identify the relevant law, the type of damages involved and the nature of the proof (support) needed. An expert must obtain clear and precise instructions as to what the quantum issues are from a legal standpoint and should seek guidance as to the heads of damages.
• Reviewing the transcripts of examinations for discovery.
• Reviewing other expert reports (where applicable).
• Site visits, tour of premises, etc.
- gain a thorough understanding of the business and industry to allow for proper assumptions to be used in the valuation process. Assumptions receive the most scrutiny in the litigation process and will often be challenged, so this requires the CBV to ensure they are based on presentable information.
- cbv my also help the lawyer to identify areas of damages or considerations that the lawyer did not have the expertise to identify. As well as point out areas that may be used against them in trial by opposing counsel that the lawyer also did not consider.

30
Q

Report Writing in a Litigation Case

A

The types of reports that may be used in a litigation proceeding include:

1) Standard 210 - Advisory Report
2) Standard 310 - Expert Report
3) Standard 410 - Limited Critique Report

Weight of the CBV’s findings will be dimished if the users are unable to understand the findings. Thus, a report should generally include:

• Action being litigated
• Information used by the CBV
• Assumptions relied upon by the CBV
• Background of the business or individual who suffered an economic loss, based on assumed facts provided by counsel
• Restrictions on the uses of the report
• Explanation of the methodology employed and appendices highlighting the results of quantification
• Conclusion as to the quantum of losses suffered (this applies to the Expert Report and not the Limited Critique Report)
In addition, the report should generally indicate:
• Who retained the expert.
• Date of its issue.
• What services the expert was retained to perform.
• Nature and background of the dispute.
• Scope of the review (documents and information reviewed).
• A glossary of terms (if it is necessary to use financial or other technical terminology in the report).
• A description of all methodologies used.
• A description of the approach followed and procedures performed.
• If useful, an explanation of the differences between the CBV’s report and the opposing expert’s report.
• Specifics of evidence obtained.
• Conclusion, opinion and details of the findings.
• Restrictions.
• Schedules and appendices, which should be clearly set out and explained.
• Details of calculations made.
• Explanation of calculations.

Expert should also have the following attributes:

  • Realistic — It must respect elements such as size of the market, capacity of production, delays to complete a task, etc.
  • Complete — No short cut should be used. A report must be understood on its own, without the assistance of the expert.
  • Authoritative — It must be based on a strong foundation, legal principles, generally accepted accounting principles and economic theories and relevant industry data.
  • Focused — It is not a novel so it should go straight to the point.
  • It must be understandable.
  • It must clearly disclose reliance on another expert, if any (e.g., an engineer); and
  • It must be objective.
31
Q

5 step process post-conflict

A

1) Identify the conflicts and potential conflicts
2) Assess the conflicts
- can they be effectively managed? not likely but potentially.
3) Develop a conflict approach
- if manageable, use of systems can be used to ensure conflict is managed, for example, Chinese walls, use of code names, limited access to files, ect.
4) Assess the effectiveness of the plan
- After developing a plan, it should be assessed to determine if it will be effective in mitigating the conflict. If not, the case should be declined.
5) Conflict Search
- process should be reiterated across all clients to ensure that changes in circumstances have not created a new conflict without their knowledge. Example, if Harvey takes on internet Giant as client, Lewis may be at a conflict if one of his existing clients expands into internet space in direct competition.

32
Q

Differences between Litigation Consultant and Expert Witness

A

An expert witness is required to exercise independence and may be called on in court and provide their analysis, which will be scrutinized.

The consultant is not considered an independent and will not be called as a witness. Instead, they are used to provide client and their counsel with advice on strategy, cross examinations, and help through each stage of the dispute.

33
Q

Process to prepare for Court as an Expert Witness

A

1) Meet with Counsel
- to gain an understanding of the questions that will be asked by the client’s lawyer and the opposing counsel. Objective is for the Expert Witness to be prepared to present his report effectively in a way that is understood by judge and jury. However, it is important to not be over rehersed, as it may hurt the expert’s credibility if the jury thinks the answers have been coached.

2) Review of Expert Report
- Prior to trial, the report being submitted should be reviewed to ensure accuracy. If there are corrections or clarifications that need to be made, a letter can be submitted with the changes or the Expert can state such changes at the outset of his/her testimony. This can add credibility, as it may look as though they have nothing to hide.

3) Consider Past Articles on the Topic
- be sure to consider previous work completed and published, as a strong opposing counsel looking to discredit the CBV may bring up old articles where the CBV leveraged different methods or advocated for different causes which may contradict facts of the current case.

34
Q

5 stages a Expert Witness must progress through in a Legal Proceeding

A

1) Preparing and serving the expert report
2) Qualifying as an Expert
3) Examination-in-chief
4) Cross-examination
5) Reply

35
Q

Stage 1 of Legal Proceedings for CBV: Preparing and Serving Report

A

Must prepare and serve report prior to a minimum timeline set out by the court (ie 90 days).

Delivery: The report must be signed and provided to opposing counsel before a specified period leading up to trial (by way of affidavit) and must state that the report constitutes the evidence the CBV will provide to the court. This allows the opposing counsel to prepare a cross examination and not have any surprises.

Contents: The report or testimony can not speak to anything outside of the pleadings.

The Expert witness is required to keep all working documents for a reasonable time following the engagement.

Draft Reports: A significant point of debate is whether the witness should provide draft reports to opposing staff, who will often scrutinize significant changes and argue that they were made to create a more favourable outcome for the client. This risk should be minimized by meeting with the client frequently for due diligence to gain information, thus reducing the need for multiple drafts with significant changes.

As of now, producing drafts is not required but can sometimes be made required in court if defence proves that the cbv is leveraging information from past reports that is not contained in final draft. To be safe, CBVs should complete working papers and draft reports under the assumption that they will be viewed in court.

Privilege: Unlike with lawyers, conversations between client and CBV are not covered by the legal doctrine of privilege.

36
Q

Stage 2 of Legal Proceedings for CBV: Qualifying as an Expert

A

The CBV must meet the following 4 criteria to be qualified for admission of expert evidence:

Having CBV may not be enough. Opposing counsel will want to know experience with case-related projects with similarities to the case.

If parties agree, the report may be entered in as evidence. If there is opposition, it may be entered at “identification purposes only”, meaning that it has temporary status until the adjudicator can review and make decision. No report = no expert witness.

The lawyer and opposing counsel will have an opportunity to ask the CBV questions about their experience, professional memberships, teachings, writings, professional involvement, ect.

Following questioning, the counsel will ask the adjudicator to accept the CBV expert and if opposing counsel does not oppose the adjudicator will make their judgement (likely to say yes but not necessarily). If opposed, still up to the adjudicator.

37
Q

Stage 3 of Legal Proceedings for CBV: Examination in Chief

A

Lawyer will ask questions about the report and findings. Questions will include:

  • What were you asked to do in respect of this matter?
  • What material did you rely on in making your determinations?
  • What are the essential conclusions you reached?
  • What methodologies did you use to reach these conclusions?

Goal is for the CBV to clearly explain their process, the amount of thorough research that was considered, their methodologies, ect without advocating or sounding rehearsed. The contents should be explained in a way that is easy for someone without a finance or valuation background to understand.

Following this questioning, the CBV and lawyer cannot communicate until the cross-examination has taken place.

38
Q

Stage 4 of Legal Proceedings for CBV: Cross-examination

A

Opposing counsel’s oppertunity to reduce impact, discredit, or deny admission of CBV’s report and testimony.

OC many obtain assistance of their own CBV to help prepare cross-examiniation questions. They will do this through leading questions and attempt to paint a picture that the expert is an advocate of the party. CBV should do their best to tied every response back to their report (“as i say in my report”), which required a very comprehensive and well-supported report.

39
Q

Stage 5 of Legal Proceedings for CBV: Reply

A

This stage gives the examining counsel an opportunity to clarify any points that were raised during cross-examination that counsel feels are worth reviewing.

As counsel and the expert are not permitted to rehearse their responses to the Reply, this stage can be somewhat risky for examining counsel, especially if the cross-examination has not really made any inroads into the examination-in-chief evidence.

40
Q

Tips and Tricks when acting as an Expert Witness

A
  • Dont stray from the facts outlined in the report or get into hypothetical situation at are not associated with the case.
  • Dont oversell conclusions or methodologies, you will look like an advocate.
  • if there are legitimate difficulties with the methodology used, explain it in court rather than hoping it doesn’t come up.
  • Dont underestimate the extent of work that the needs to go into the report, as well as the work that opposing counsel will do to disprove assumptions.

When being cross examined, some tips include:

  • focus your reply, both physically and verbally, to the judge… physically turn and address them rather than counsel.
  • Pace your testimony.. meaning are you going too fast that the judge cant keep up or too slow that your dragging the process.
  • Wait for the entire question to be asked before answering
  • Respond only to the question being asked.
  • avoid industry specific lingo.
  • make sure everything is adequately explained so that the judge understands in full.
  • ## do not answer questions you do not understand. Ask for clarification.