The Basics: Working With an Expert (Series: Valuation)

1. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Insert the cover image for this webinar on this slide entirely 1

2. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Practical and entertaining education for attorneys, accountants, business owners and executives, and investors. 2

3. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe Practical and entertaining education for attorneys, accountants, business owners and executives, and investors. 3

4. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe DISCLAIMER The material in this webinar is for informational purposes only. It should not be considered legal, financial or other professional advice. You should consult with an attorney or other appropriate professional to determine what may be best for your individual needs. While Financial Poise™ takes reasonable steps to ensure the information it publishes is accurate, Financial Poise™ makes no guaranty in this regard. 4

5. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe MEET THE FACULTY Moderator: Kathryn Nadro – Sugar Felsenthal Grais & Helsinger Panelists: John Levitske – Ankura Garth Tebay – Value Defined LLC Adam Ortega – Baker Tilly Katherine Puffer – VH Valuations 5

6. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THIS WEBINAR: The Basics – Working With an Expert This webinar is for the litigator who has not worked with an expert before or who otherwise would like some review. What’s the difference between a consulting expert and a testifying witness? How do you make sure your proposed expert will be accepted as an expert by the court? How do you protect your communications with your expert? What is an expert report and what can you do to make sure it is excellent? How do you plan your direct exam of your expert? How do you plan for redirect? This webinar addresses these topics. 6

7. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THIS SERIES: Valuation Fights in Litigation: Battle of the Experts Valuation is used by market participants to determine the price they are willing to pay or receive to transact a sale of a security, a business, or an any other asset. The same techniques are used to determine the price a party is willing to pay or receive to settle a claim or satisfy a liability. It should be no surprise then that when there is a dispute between two or more parties regarding value, the same valuation techniques and skills are necessary to resolve the dispute. Attorneys, accountants and business owners often rely on independent, third-party valuation experts to assist in the resolution of disputes or potential conflict situations. Some of the typical situations in which valuation experts are utilized include fair value financial reporting (GAAP accounting), bankruptcy, income tax reporting, property tax appeals, estate and gift tax planning and reporting, dissenting shareholder disputes, and much more. 7

8. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EPISODES IN THIS SERIES 1/31/19 Episode #1: When Do You Need One & Where Do You Get One? 2/28/19 Episode #2: The Basics – Working With an Expert 3/28/19 Episode #3: Valuing Lost Profits for Litigation Purposes 8 Dates shown are premiere dates. All webinars will be available On Demand approximately 4 weeks after they premiere.

10. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe WHAT ROLE DOES AN EXPERT PLAY IN LITIGATION? DO I NEED ONE? ⚫ Is an expert needed? ➔ If yes, what kind of expert do you need? ➔ If no, is it best practice to hire an expert anyhow?

11. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EXPERT WITNESS ⚫ Provide an objective and independent perspective before a trier of fact – at a deposition, before a court, or in arbitration ➔ An expert’s work is frequently discoverable including correspondence, notes, analyses, research, drafts, and workpapers. ➔ It is important to realize this at the outset of an engagement

12. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EXPERT CONSULTANT ⚫ Provides research, discovery, analysis, and may assist in fact finding, strategy, and identifying potential issues ➔ Does not usually provide testimony ➔ The work of a consultant is generally considered attorney work product and protected from discovery (when attorney engages the consultant) ➔ If the consultant becomes a testifying witness, all prior work is discoverable including that performed while a consultant

14. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe PRIVILEGED COMMUNICATIONS ⚫ Understand the difference between a testifying witness and a non- testifying witness and how that can impact privilege or other protections ⚫ Attorney-client privilege and work product doctrine protection apply in different circumstances

15. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe CONSULTING WITNESS ⚫ Communications with a non-testifying witness can be privileged when: ➔ Communication occurs for purposes of obtaining or dispensing legal advice ➔ Non-testifying expert is understood to be working as an agent of either the client or the attorney. See, e.g., U.S. v. Kovel, 296 F.2d 918, 922 (2nd Cir. 1961); Golden Trade v. Lee Ansrael Co., 143 F.R.D. 514, 518 (S.D.N.Y. 1992) ➔ Fed. R. Civ. P. 26(b)(4)(D) distinguishes between discoverability “facts or opinions” of testifying vs. non-testifying witnesses 1. Facts or opinions of non-testifying witnesses are only discoverable under “exceptional circumstances”

16. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe TESTIFYING WITNESS ⚫ Fed. R. Civ. P. 26(b)(4)(C) provides that “communications between the party’s attorney and any witness required to provide a report” is protected work product to the extent that the communications ➔ Relate to compensation for the expert’s study or testimony ➔ Identify facts or data that the party’s attorney provided and that the expert considered in forming the opinions to be expressed; or ➔ Identify assumptions that the party’s attorney provided and that the expert relied on in forming the opinions to be expressed

17. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EXPERT REPORTS ⚫ Fed. R. Civ. P. 26(b)(4)(B) limited discovery of draft expert reports ⚫ Reports must contain: ➔ A complete statement of all opinions the witness will express and the basis and reasons for them; ➔ The facts or data considered by the witness in forming them; ➔ Any exhibits that will be used to summarize or support them; ➔ The witness’s qualifications, including a list of all publications authored in the previous 10 years; ➔ A list of all other cases in which, during the previous 4 years, the witness testified as an expert at trial or by deposition; and ➔ A statement of the compensation to be paid for the study and testimony in the case.

18. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe HOW TO IMPROVE THE EXPERT REPORT ⚫ Ensure it has all the required elements under the law ⚫ Ensure that all documents reviewed by the expert must be recorded (usually by bates-stamping) ⚫ Doublecheck all assumptions listed in the expert report ⚫ Report should avoid absolute working and phrasing, but also avoid “hedge” words of phrases such as “somewhat” or “sort of” ⚫ Avoid argumentative language or comments on the credibility of other witnesses ⚫ The scope of the report should be defined in the expert’s engagement letter

19. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe CHALLENGES TO EXPERT TESTIMONY ⚫ Must the expert be qualified by the court? ⚫ What standards must the expert follow or meet? ⚫ What kind of work product and methodology is expected of the expert? ⚫ What methodology will the expert use? ⚫ What care/precautions should the lawyer take when preparing and working with the expert?

20. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe STANDARDS FOR EXPERT TESTIMONY ⚫ Frye – demonstrate expertise and apply methods/theories that are generally accepted ⚫ Federal Rule of Evidence 702 – a qualified expert may testify if the testimony is relevant and rests on reliable foundation ⚫ Experts are to use their “scientific, technical, or other specialized knowledge” to help the trier of fact in understanding the evidence or determining a fact in issue ⚫ Daubert – Federal Rule of Evidence 702 superseded Frye and concluded that methods do not have to be generally accepted as long as testimony is relevant and reliable

21. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe DAUBERT/FRYE CHALLENGE TO EXPERT WITNESS ⚫ The judge is the gatekeeper and considers the Daubert factors to determine admissibility of an expert’s testimony ➔ Theory or technique used can be or has been tested ➔ Theory or technique has been subjected to peer review ➔ Potential error rate is determinable, or standards exist for error rate that is acceptable, and ➔ Theory or technique enjoys widespread acceptance in the profession

22. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EXPERT QUALIFICATIONS ⚫ An expert must demonstrate: ➔ The requisite training, skill, knowledge, and/or experience in the field ➔ The facts, data, assumptions and other documentation that were relied upon in forming conclusions and opinions ➔ The basis for the conclusions and opinions, including the methodology used ⚫ Is the expert qualified to provide an opinion on possible expansions in scope?

23. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe PREPARATION FOR A DAUBERT CHALLENGE ⚫ Know and apply the standards ⚫ Know the relevant professional literature ⚫ Know the professional organizations ⚫ Use generally accepted methods ⚫ Consider multiple analytical methods

24. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe PREPARATION FOR A DAUBERT CHALLENGE (cont’d) ⚫ Synthesize your conclusion ⚫ Support your position ⚫ Disclose all analytical assumptions and variables ⚫ Subject the analysis to peer review ⚫ Test the analysis and conclusion for reasonableness

25. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe DIRECT EXAMINATION ⚫ Adequately establish the expert’s credentials ⚫ Go through the proper technical or factual background before questioning the expert about his or her conclusions ⚫ Use simply language, analogies, and/or examples ⚫ Use demonstrative evidence to illustrate the testimony ⚫ Address any credibility issues up front ⚫ Ask about the time and effort the expert put into the case ⚫ Have the expert conclude testimony by summarizing the case theory

26. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe REDIRECT EXAMINATION ⚫ Can prepare for redirect examination while preparing for cross- examination ⚫ Address weaknesses raised on cross-examination and bolster up your expert

27. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe PREPARING FOR CROSS-EXAMINATION ⚫ Builds on preparation done in vetting your expert prior to engagement ➔ Go over prior publications and any weaknesses or differences of opinion shown in there ⚫ Prepare the expert for “yes” or “no” questions ➔ Can answer by trying to provide context or say “in some circumstances” ⚫ Expert should know it is fine to answer with “I don’t know”

28. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe PREPARING FOR CROSS-EXAMINATION (cont’d) ⚫ Practice how to get in full answers when opposing counsel appears to cut you off ⚫ Practice keeping emotions in check ⚫ Do not over-prepare to avoid seeming inauthentic or rehearsed

29. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EXPERTS IN MEDIATION ⚫ Engage with the expert witness in selecting the right mediator ⚫ Budget adequate preparation time with expert witness prior to mediation ⚫ Be aware of potential waiver of any confidentiality or work product by prematurely disclosing the expert witness’s or your own work product to the opposition ➔ Label all information provided to your expert witness prior to mediation “for settlement purposes only” or similar limiting language

30. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EXPERTS IN MEDIATION ⚫ Expert witness who has been given access to the parties’ mediation statements should also understand that information contained in these memoranda may not later be used by expert witness in future reports or testimony

31. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe EXPERTS IN ARBITRATION ⚫ Opportunity to use an expert who may not qualify as an “expert witness” under Daubert standards ➔ Still useful in most circumstances to use an expert who would qualify, as he or she may be considered more reliable by the arbitrator ⚫ Reports can go through several drafts without fear of discovery under limited discovery rules

32. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe COST CONSIDERATIONS ⚫ Expert reports can get expensive, especially through trial ⚫ Consider options such as a scaled report for preliminary matters such as mediation or other settlement process, then a full-scale version for litigation

33. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe COST CONSIDERATIONS ⚫ Occasionally, your matter may allow use of a less-experienced expert, which may be less expensive ⚫ A less-experienced expert may be viewed as more credible by avoiding the appearance of being a “hired gun”

34. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY KATHRYN NADRO – knadro@sfgh.com Kathryn (“Katie”) Nadro advises clients on a diverse array of business matters, including commercial and business disputes, employment issues, and data security and privacy compliance. Katie works with individuals and businesses of all sizes to craft successful resolutions tailored to each individual matter. Katie has broad experience representing companies and individuals in contract, non-compete, discrimination, harassment, fiduciary duty, and trade secret litigation in state and federal court. With a background as both in- house and outside counsel, Katie understands that business objectives, time, and resources play an important role in reaching a favorable outcome for each client. Katie assists clients in navigating employment issues ranging from employee handbooks and FMLA policies to litigating discrimination and harassment claims, all while ensuring business needs and objectives are met. She also counsels clients on data security and privacy issues, including policy drafting and compliance with state, federal, and international law. 3 4

35. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY JOHN LEVITSKE – john.levitske@ankura.com John Levitske is a Senior Managing Director at Ankura, focused on business valuation and complex financial disputes. He has served as a senior advisor to companies, owners, executives, and legal counsel in business disputes, shareholder disputes, and M&A transactions regarding issues of valuation, finance, damages, and accounting. John is based in Chicago. With more than two decades of Big Four public accounting and international consulting experience, John is seasoned in business valuation, financial analysis, economic damage quantification, forensic accounting, retrospective solvency analysis, and post-merger & acquisition accounting calculations. He handles appraisals of healthy and distressed companies for buyouts of shareholders and creditors, transaction planning, estate and gift taxation, financial accounting, bankruptcy proceedings, and litigation disputes. To read more, go to: https://www.financialpoise.com/financialpoisewebinars/faculty/john-levitske/ 3 5

36. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY GARTH TEBAY – gtebay@valuedefined.com Mr. Tebay is a practicing Certified Public Accountant, Certified Valuation Analyst, and Certified in Mergers & Acquisitions with over 33 years of experience. He is the founder and Managing Partner of Value Defined, LLC, a business valuation and litigation support firm in Maumee, Ohio. He is also the Managing Partner of Tebay Mosley Associates, LLC, full service accounting, tax, and consulting firm in Maumee, Ohio as well as Managing Director of Source Companies Great Lakes Region, LLC (an affiliate of Source Companies, LLC in Pennsylvania) which provides value growth consulting and investment banking services to owners of medium- sized businesses. To read more, go to: https://www.financialpoise.com/financialpoisewebinars/faculty/garth-tebay/ 3 6

37. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY ADAM ORTEGA – Adam.Ortega@bakertilly.com Adam Ortega has 20 years of experience in valuation services. His experience includes valuing business enterprises, equity positions, tangible assets, financial instruments, intangible assets, stock options, and intellectual property. He has primarily served clients in the chemicals, consumer, entertainment, financial services, industrial products, oil and gas, and telecommunications industries. 3 7

38. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT THE FACULTY KATHERINE PUFFER – kpuffer@vhvaluations.com Katherine Puffer has 35 years of business and financial experience. She is a CPA and is licensed in the State of Illinois. She is accredited in Business Valuation (ABV) by the American Institute of Certified Public Accountants. She is a Certified Property and Casualty Underwriter (CPCU) and a Certified Divorce Financial Analyst (CDFA). She served as a financial officer of a Fortune 100 company for over 10 years. Katherine Puffer is experienced in preparing valuations needed for estate planning and taxes and for martial litigation. She has experience valuing business for mergers and acquisitions and for purposes of raising capital. Her firm is experienced in preparing valuations for startup firms. In addition, Katherine is experienced in calculating financial damages associated with contract disputes and shareholder disputes. She is experienced in expert testimony. Katherine Puffer’s formal education includes an MBA from the University of Chicago, the Graduate School of Banking from the University of Wisconsin as well as a BS in business from the Carlson School at the University of Minnesota. 3 8

39. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe QUESTIONS OR COMMENTS? If you have any questions about this webinar that you did not get to ask during the live premiere, or if you are watching this webinar On Demand, please do not hesitate to email us at info@financialpoise.com with any questions or comments you may have. Please include the name of the webinar in your email and we will do our best to provide a timely response. IMPORTANT NOTE: The material in this presentation is for general educational purposes only. It has been prepared primarily for attorneys and accountants for use in the pursuit of their continuing legal education and continuing professional education. 3 9

40. Copyright © 2019 by DailyDAC, LLC d/b/a Financial Poise Webinars™ Receive our free weekly newsletter at www.financialpoise.com/subscribe ABOUT FINANCIAL POISE DailyDAC LLC, d/b/a Financial Poise™ provides continuing education to attorneys, accountants, business owners and executives, and investors. Its websites, webinars, and books provide Plain English, entertaining, explanations about legal, financial, and other subjects of interest to these audiences. Visit us at www.financialpoise.com. 4 0 Our free weekly newsletter, Financial Poise Weekly, educates readers about business, business law, finance, and investing. To receive it simply add yourself by going to: https://www.financialpoise.com/newsletter/ Email addresses are never sold to or shared with third parties.

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