Litigation Services Handbook: The Role of the Financial Expert

by Roman L. Weil, Daniel G. Lentz, Elizabeth A. Evans

Overview

This indispensable reference is the result of a joint project between Price Waterhouse and top experts in the field. Covers all aspects of litigation services including current environments, the process itself, different types of cases, proving damages and practical considerations of court appearances. In addition to addressing important developments affecting the accounting practice, it examines issues raised when calculating both prejudgment and postjudgment interest on damage awards. Provides the latest information on relevant statutes and interest rates on damages.

Product Details

ISBN-13:	9781119363187
Publisher:	Wiley
Publication date:	04/05/2017
Sold by:	JOHN WILEY & SONS
Format:	eBook
Pages:	1440
File size:	31 MB
Note:	This product may take a few minutes to download.

About the Author

Roman L. Weil, PHD, CMA, CPA, is V. Duane Rath Professor of Accounting at the Graduate School of Business of the University of Chicago. He received his BA in Economics and Mathematics from Yale University in 1962. He received his BA in Economics and Mathematics from Yale University in 1962. He received his MS in Industrial Administration in 1965 and his PHD in Economics in 1966, both from Carnegie-Mellon University. He joined the faculty at the University of Chicago in 1965, where he has held positions in Mathematical Economics, Management and Information Sciences, Accounting, and in the law School. He cofounded and now codirects the Chicago/Stanford/Wharton Directors' Consortium, which trains corporate board member to do their jobs better; his own specialty in that training focuses on financial literacy of audit committees. He has been a CPA in Illinois since 1973 and a CMA since 1974. He has served on the faculties of the Georgia University in its Graduate School of Business, Economics Department, and Law School. At Stanford, he has, since its inception, organized the sessions at Directors' College on Audit Committee duties. He has served on the Board of Academic Advisors of the U.S. Business School in Prague and has taught there. He has served on the accrediting committee of the American Association of Collegiate Schools of Business.
He has served as editor or associate editor of The Accounting Review, Communications of the Association for Computing Machinery, Management Science, Journal of Accounting and Economics, and the Financial Analysts Journal.
He has coedited four professional reference books for McGraw-Hill, Simon & Schuster, Prentice Hall, and John Wiley & Sons. He has coauthored a dozen text-books for Holt, Rinehart and Winston, The Dryden Press, Harcourt Brace Jovanovich, and Thomson-Southwestern. His articles have appeared in Barron's and the Wall Street Journal. He has published over 80 articles in academic and professional journals. He has served as the principal investigator on various research projects of the National Science Foundation.
He served on the Securities and Exchange Commission Advisory Committee on Replacement Cost Accounting. At the Financial Accounting Standards Board, he has served on two task forces-one on consolidations and the other on interest methods-and on the Financial Accounting Standards Advisory Council. He is a founding member of the Independent Directors' Council of the Investment Company Institute. He is a member of the American Accounting Association, the American Economics Association, the American Institute of Certified Public Accountants (AICPA), the American Law and Economics Association, the American Economics Association, the American Institute of Certified Public Accountants (AICPA), the American Law and Economics Association, the Illinois Society of Certified Public Accountants, and the Institute of Management Sciences.
Mr. Weil has consulted to governmental agencies, including the U.S. Treasury Department and the Securities and Exchange Commission. He has testified as expert witness or consultant in a variety of litigation matters involving accounting principles, business valuation, damages estimation, regulatory issues, and taxes.

Peter B. Frank recently retired as executive vice president of Daymon Worldwide Inc., in Stamford Connecticut, which he joined after retiring from PricewaterhouseCoopers LLP, PwC. As a partner in PwC, he served as a member of global leadership and as its Global Risk Management Partner. Prior to the Merger with Coopers & Lybrand, Mr. Frank was a Vice Chairman of Price Waterhouse. Mr. Frank spent the bulk of his professional career leading the Price Waterhouse dispute analysis, bankruptcy, and business turnaround practice. He served on that firm' Policy Board (Board of Directors) and its Management Committee. For more than 30 years, Mr. Frank acted as a management consultant and expert witness for litigation, government, and industrial clients.
Mr. Frank is a retired Certified Public Accountant. he chaired the AICPA Subcommittee on Litigation Services (1990-1994) and served on the Management Advisory Services (MAS) Executive Committee (1989-1994) and the Professional Ethics Executive Committee (1995-1996) of the AICPA.
Mr.Frank's consulting expertise has been applied to engagement involving analyses of economic, liability, and the damages issues in connection with expert testimony. He was consultant to the Christopher Commission's study of the Los Angeles Police Department and the Alleged Excessive use of force and also acted as special consultant for the Los Angeles Police Commission study (the Webster Commission), organized to assess the city agencies' response following the riots in Los Angeles.
Mr. Frank received his BS in Economics from the University of Pennsylvania. He obtained his MS in Accounting from the Wharton School of the University of Pennsylvania., graduating at the top of his class in both programs.
Mr. Frank has coauthored, in addition to this text, Bernacchi on Computer Law: A Gide to the Legal and Management Aspects of Computer technology (Little, Brown, 1986; Annual Suppl. 1989-1999) and AICPA Consulting Services Practice Aid 93-4: Providing Litigation Services (with Michael J. Wagner), 1993. He is a contributing author to the American Bar Association publication Punitive Damages and Business Torts: A Practitioner's Handbook (1998) and Financial Valuation: Businesses and Business Interests, edited by James H. Zukin (Maxwell Macmillan, 1990).

Christian W. Hughes, CPA, CMA, CFA, CFE, is a partner in PricewaterhouseCoopers LLP in its Boston office. As Northeast Regional Advisory leader, he is responsible for eh operations of the firm's consulting practices in New England and upstate New York. He is an elected member of the firm's U.S. Board of Partne3rs and Principals and sits on three of its committees, including the Human Resources Committee, which he chairs. he has previously held responsibility for the firm's Dispute Analysis and Investigations practice on the U.S. East Coast.
Mr. Hughes has been associated with PricewaterhouseCoopers 9including one of its predecessors, Coopers & Lybrand) since 1989, becoming a partner in 1992. From that time through the present, he has practiced in the areas of dispute analysis, expert testimony, fraud investigation, merger and acquisitions, bankruptcy, and insurance claims,, as well as providing consulting assistance to the firm's audit practice. He has testified in state and federal courts, before arbitration panels, and in public oversight and regulatory matters on approximately 30 occasions and at deposition or by expert report in another 30. He has additionally participaters involving reporting fraud, investor deception, employee misconduct, and similar matters.
He has also acted in support of disputants or as neutral arbitrator in a large number of postmerger purchase price adjustment disputes and assisted in the preparation, analysis and settlement of over two billion dollars worth of property and business interruption insurance claims across a diverse range of industries and event types.
Mr. Hughes earned a BSB in accounting at Babson College. He is a member of numerous professional organizations.

Michael J. Wagner earned his undergraduate degree in engineering from the University of Santa Clara in 1969, his MBA from the University of California at Los Angeles in 1971, and his JD from Loyola University at Los Angeles in 1975. He is a licensed attorney and CPA in the sate of California.
A senior advisor at CRA International in their Palo Alto office, Mr. Wagner is the author of over 25 other publications dealing with the litigation services field. He has participated as an expert or consultant in more than 400 litigations and has testified over 97 times in court and over 229 times in deposition. His primary areas businesses. He has also testified a number of times on the subject of alter ego.
Mr. Wagner has testified 27 times in alternative dispute resolution forums and has acted as an arbitrator in a number of commercial arbitrations based on his extensive business consulting experience and his legal training. He was an arbitrator for the American Arbitration Association. He has served on the Litigation Services Committee, the Litigation Services Conferences Steering Committee, the MAS Practice Standards Committee, and the Business Valuation Standards Task Force for the AICPA. He is also a member of numerous professional organization.
Mr. Wagner is married to Jolon Wagner and has four adult children. He lives in Los Altos Hills, California.

Read an Excerpt

Financial experts increasingly offer litigation services to lawyers. These professionals need a comprehensive reference book such as this Handbook. The first and second editions of this Handbook appeared in 1990 and 1995, respectively, and we've enjoyed both their sales and professional recognition.

This third edition of the Litigation Services Handbook contains 46 chapters (19 new to this edition), all written by experts in their fields. We have enlisted economists and lawyers to write many of the new chapters and have asked all authors to expand and update the case law discussion. We asked authors also to discuss how rapidly developing technology has changed their practice.

We imagined this book to be useful to financial experts engaged in litigation services, the lawyers who engage them, and the litigants who ultimately benefit from the efforts of both groups. We selected the authors for their expertise and asked them to provide our readers with the benefits of their institutional knowledge, experience, and techniques. These experts have not withheld their secrets.

Organization and Writing. This Handbook comprises six major parts, each addressing a different practice area or set of functional tools.

Part I. The Litigation Environment (four chapters) discusses the civil court system, alternative dispute resolution, laws governing expert witness testimony, and how CPAs and economists function within that environment.

Part II. Damages Techniques (ten chapters) addresses the components of damages calculations with new chapters on lost profit calculation, damages to new businesses, punitive damages from an economist's perspective, and tax treatment of damages awards.

Part III. Litigation Tools (two new chapters) discusses communicating with a jury through visual aids and litigation analysis databases.

Part IV. Civil Litigation (23 chapters) addresses specific kinds of commercial cases, categorized in the following subsections:

1.Securities Litigation (four chapters; new chapters on event studies and corporate governance)

2. Intellectual Property (five chapters; new chapters on copyright infringement and royalty audits)

3. Antitrust/ Business Combinations (two chapters)

4. Bankruptcy (two chapters)

5. Construction and Environmental Disputes (three chapters; new chapter on estimating environmental damages)

6. Other Civil Litigation (seven chapters; new chapters on accountant's liability, federally insured banks, and international trade litigation)

Part V. Marital Dissolution (five chapters) includes a new chapter on valuation and division of property.

Part VI. Criminal Cases (two chapters) includes a new chapter on internal corporate fraud.

Also included, and new to this edition, is a Glossary, which includes both business and legal terms.

Common writing practice often uses the word gender instead of the word sex in sentences such as: The law often finds employment discrimination by sex illegal. As language purists, we prefer to restrict the word gender to its technically correct meaning as a classification of a word, from two or more choices, to determine its agreement with referents, modifiers, and grammatical forms. We intend no offense to those who think writers should use the word gender to distinguish male from female human beings and other species. Sometimes we have changed an author's use of the word gender to the word sex. This does not mean that all authors of chapters in this book eschew the word gender to mean sex of a human being; some of them prefer that usage.

Annual Supplement.As with the previous two editions, the publisher plans to produce an annual supplement which will update material in the Handbook that becomes obsolete and which will contain entirely new chapters. As this edition goes to press, we already plan new chapters on revenue estimation, class action, biotechnology, and Internet damages. We invite readers to let us know what new materials they would like to see. Send suggestions to Roman L. Weil at the Graduate School of Business, University of Chicago, 1101 East 58th Street, Chicago, IL, 60637, or by e-mail: roman. weil@ gsb. uchicago. edu.

Relation between Authors and Editors.We acknowledge the cooperation and patience our contributing authors have shown. We do not agree with everything they say. We prefer to have experts giving their own opinions, even when controversial, rather than less specific guidance—like bland committee reports—we can all agree on. Although we tried to define the chapters to avoid duplicate coverage, some duplication remains because we think we better serve the reader by making presentations self-contained.

Acknowledgments.Think of us as traffic cops. We do nothing but point hither and yon every so often. Others do all the heavy lifting. We could not have done this Handbook without Debbie Asakawa, whom we plucked from the unheralded life of a soccer mom, bread baker, and tennis player of modest note. Without her, the editors could not have handled three weddings, two graduations, and two arriving grandchildren during the time critical to this Handbook's production. We paid Debbie enough to take her family to Moscow (Russia, not Idaho) this summer. We didn't give her enough time to enjoy it. Thank you; thank you; thank you.

We also acknowledge Cherie Weil's continued excellent work on developing the index and co-authoring the glossary. Philip Upton provided assistance in the early stages of this edition without which we could not have constructed even the table of contents of this Handbook.

We also thank the following individuals who reviewed chapters from the previous edition and offered suggestions for changes and improvement. They selflessly gave their time and expertise to strengthen the work of others: Christopher Gerardi, Don Glenn, Cate Elsten, Kevin Bandoian, Ted Martens, James Chalmers, Dale Jensen, David S. Williams, Bob Lindquist, Donald Rocen, Mike Urban, Ruth Perez, Mark Moscarello, Jeff Kinrich, Douglas Coppi, and Lester Lowenstein.

Roman L. Weil
Peter B. Frank
Michael J. Wagner

April 2001

Table of Contents

Preface     vii
About the Editors     ix
About the Contributors     xiii
The Litigation Environment
The Role of the Financial Expert in Litigation Services   Peter B. Frank   Christian W. Hughes   Michael L. Wagner   Roman L. Weil     1
Causation Issues in Expert Testimony   Lawrence F. Ranallo   Diana L. Weiss     1
The Economics in Accounting for Litigation   Elizabeth A. Evans     1
Alternative Dispute Resolution   Patricia D. Tilton     1
Damages Techniques
Statistical Estimation of Incremental Cost from Accounting Data   Michael W. Maher   M. Laurentius Marais   William E. Wecker   Roman L. Weil     1
Econometric Analysis   Mohan P. Rao   Christian D. Tregillis     1
Estimating the Cost of Capital   Gaurav Jetley   R. Jeffrey Malinak   Laura B. Stamm     1
Ex Ante versus Ex Post Damages Calculations   Michael J. Wagner   Michael K. Dunbar   Roman L. Weil     1
Prejudgment Interest   Michael S. Knoll   Jeffrey M. Colon     1
The Flaw of Averages in Law and Accounting   Sam L. Savage   Marc VanAllen     1
Valuing Losses in New Businesses   Mark A. Allen   Victoria A. Lazear     1
Business Interruption Insurance Claims   Joe Anastasi     1
Business Valuation   Michael A. Crain     1
Appendix: Adjusted Present Value (APV) Method   Bonnie J. Goldsmith   Greg Hallman
Lost Earnings of Persons   Randi L. Firus   Keith R. Ugone     1
Punitive Damages   Peter A. Bicks   Martha N. Corbett   Glenn K. Jones   Gregory N. Phelps     1
Tax Treatment of Damages Awards   Merle Erickson   James K. Smith     1
Litigation Tools
Data Management   David B. Burg   Dyan A. Decker   John C. Moorman     1
Civil Litigation
Securities and Accountant Liability
Federal Securities Acts and Areas of Expert Analysis   Nicholas I. Crew   Kevin L. Gold   Marnie A. Moore     1
Accountant Liability   Christopher D. Barbee   Michael R. Young     1
Intellectual Property
Economic Analysis of Nonpatent Intellectual Property Rights and Damages Measures   Elizabeth A. Evans   Peter P. Simon     1
Intellectual Property Damages in the Entertainment Industry   Deborah K. Bothun   Ronald B. Cushey   Bronwyn Dylla   Robert S. Knudsen     1
Patent Infringement Damages   Peter B. Frank   Vincent E. O'Brien   Michael J. Wagner     1
License Compliance: Performing Royalty Examinations   Mark W. Haller   David L. Marston   Vincent Torres     1
Antitrust/ Business Combination
Antitrust   Stephen H. Kalos     1
Disputes in Merger & Acquisition Transactions   Mark W. Haller   Kevin D. Kreb   Leigh Walton     1
Construction and Real Property Disputes
Construction Claims   Stephen P. Lechner   Bilge Astarlioglu     1
Quantifying Damages in Real Estate Litigation   Thomas E. Kabat   Frank A. Voorvaart     1
Other Civil Litigation
The Troubled Business and Bankruptcy   Grant W. Newton   Gil A. Miller     1
Alter Ego   Michael J. Wagner   Bonnie J. Goldsmith     1
Employment Litigation   Ali Saad     1
Federal Contract Disputes   James W. Thomas     1
Family Law
Valuation and Division of Marital Property   Donald A. Glenn     1
Child and Spousal Support Awards   John D. Zante     1
Marital Dissolution: Professional Goodwill and Related Intangibles   Donald L. Gursey   Donald John Miod     1
Marital Dissolution: Tracing and Apportionment of Assets   Donald L. Gursey   Donald A. Glenn     1
Marital Dissolution: Tax Considerations   Donald L. Gursey   Roseanna L. Purzycki   Brandi N. Brethour     1
Criminal Cases
Tax Fraud   Edward M. Robbins, Jr.     1
Investigations
Financial Statement Investigation   Steven L. Skalak   Charles R. Hacker, Jr.   Daniel V. Dooley     1
International Investigations   Frederic R. Miller     1
Glossary
Index

What People are Saying About This

Lisa Doble Johnson

An exceptional compilation of resources available to those looking for financial and industrial information on the Internet. Those quite experienced with Internet research as well as those just starting out will find helpful information in this book.
—(Lisa Doble Johnson, Vice President Research Mercer Capital)

From the Publisher

An exceptional compilation of resources available to those looking for financial and industrial information on the Internet. Those quite experienced with Internet research as well as those just starting out will find helpful information in this book. —Lisa Doble Johnson, Vice President, Research Mercer Capital

"This book will save the appraiser significant time when looking for pertinent data. A great resource to increase the quality of work product and credibility of the appraiser's conclusions." —Michele G. Miles, Esquire Executive Director, Institute of Business Appraisers

This is a highly practical reference tool for any business appraiser or financial advisor. The authors are two of the best-known business valuation research professionals in the United States. —Shannon Pratt, CFA, FASA, MCBA Managing Director, Willamette Management Associates

Eva and Jan have organized an amazing breadth of resources available on the Internet. No financial professional should try to do research without reviewing this book. It will make your research more efficient and expansive if you use the sources highlighted here. —Z. Christopher Mercer, CEO, Mercer Capital

Through years of financial research and training, these two highly talented and skilled professionals have provided not only a broad listing of available sites, but also a carefully selected and thorough menu to direct the practitioner to essential data for their research engagements.... This book serves as a highly useful and practical tool for every valuation practice, helping all analysts to better understand the enormous research possibilities availed to them through the Internet. With thoughtful, quality guidance, it will help you overcome your research obstacles and maximize your valuable research time. —James L. (Butch) Williams, CPA/ABV, CVA, CBA, Chairman of the AICPA Business Valuation Subcommittee Dixon Odom PLLC

"This work of amazing breadth and depth covers the central issues that arise in financial expert testimony. It is an esential reference for counsel and practitioners in the field." —Joseph A. Grundfest, The William A. Franke, Professor of Law and Business, Stanford Law School, former Commissioner of the United States Securities and Exchange Commission.

Z. Christopher Mercer

Eva and Jan have organized an amazing breadth of resources available on the Internet. No financial professional should try to do research without reviewing this book. It will make your research more efficient and expansive if you use the sources highlighted here.
—(Z. Christopher Mercer, CEO, Mercer Capital)

Shannon Pratt

This is a highly practical reference tool for any business appraiser or financial advisor. The authors are two of the best-known business valuation research professionals in the United States.
—(Shannon Pratt, CFA, FASA, MCBA Managing Director Willamette Management Associates)

Michele G. Miles

This book will save the appraiser significant time when looking for pertinent data. A great resource to increase the quality of work product and credibility of the appraiser's conclusions.
—(Michele G. Miles, Esquire Executive Director Institute of Business Appraisers)

James L. (Butch) Williams

Through years of financial research and training, these two highly talented and skilled professionals have provided not only a broad listing of available sites, but also a carefully selected and thorough menu to direct the practitioner to essential data for their research engagements... This book serves as a highly useful and practical tool for every valuation practice, helping all analysts to better understand the enormous research possibilities availed to them through the Internet. With thoughtful, quality guidance, it will help you overcome your research obstacles and maximize your valuable research time.
—(James L. (Butch) Williams, CPA/ABV, CVA, CBA, Chairman of the AICPA Business Valuation Subcommittee Dixon Odom PLLC)

Editorial Reviews

New edition of a handbook useful to financial experts engaged in litigation services, the lawyers who engage them, and the litigants who ultimately benefit from the efforts of both groups. Weil (accounting, U. of Chicago), Peter B. Frank (accounting consultant), and attorney Michael J. Wagner present 46 contributions that discuss the litigation environment, damages techniques, litigation tools, civil litigation (securities litigation, intellectual property, antitrust/business combinations, bankruptcy, construction and environmental disputes, and other civil litigation), criminal cases, and family law, marital dissolution cases. Annotation c. Book News, Inc., Portland, OR (booknews.com)

Booknews