A question of ethics
28 April 1998
23 April 2014
28 October 2013
25 June 2014
5 March 2014
6 February 2014
Objectivity should be the mantra of all experts, whatever the system used to appoint and pay them, says Emile Woolf. Emile Woolf is head of litigation and forensic services at accountancy firm Kingston Smith. The reforms proposed by Lord Woolf are bound to affect experts brought in to assist the court on technical and other specialist issues.
Critics of the status quo cite as wasteful the engagement of two experts, one by each side, in the present adversarial system. They also ridicule the notion that the stance adopted by respective experts can be consistent with their primary duty to the court, and their professed impartiality and independence, when they are engaged and remunerated by one side only.
There are undoubtedly lapses when experts fall short of such lofty standards and adopt unduly partisan positions. Such abuse of the system brings discredit on them and their professions and certainly does no favours to those who engage them. But the idea of the court appointing a single expert witness will not, of itself, solve this problem.
Court-appointed experts are just as likely to favour the arguments advanced by one of the litigating parties and their evidence may then tend to usurp the judge's role, or at least in-fluence it unduly, whereas presently the judge can assess for himself the relevance, credibility and integrity of the evidence provided by experts.
The advocates of conditional fees should be under no illusions about the adverse consequences this method of charging will have on expert witnesses. The concept of payment by results is incompatible with the experts' duty under the justice system.
I support the ethical stance on this issue of the major professional accountancy bodies and of the Academy of Experts. The former proscribe outright conditional fee arrangements for expert witness work, and the latter recommends that members of the academy should include in their reports a declaration that their remuneration arrangements are entirely uninfluenced by the outcome of the litigation.
Solicitors with responsibility for experts' fees will, if they themselves are subject to conditional fees, simply have to take account of the experts' fees as part of the cost structure of the action, or encourage experts to enter into a contractual relationship with clients directly.
Accountants are in particular demand as expert witnesses due to the wide range of litigated matters involving some form of quantum assessment. Matrimonial disputes, for example, may well require share valuations as well as capital statements and income measurement. Most insurance-related matters, such as personal injury, business interruption, material damage and almost all consequential loss of earnings claims, require accountants' expertise for quantum measurement.
A number of my appointments in recent years have also involved partnerships and trusts in circumstances where the accounting treatment of assets, notably properties, is critical in establishing the entitlements of partners and beneficiaries.
An increasing number of assignments relate to disciplinary and regulatory matters, all involving reports on the conduct of individuals or firms.
Failure by auditors to detect fraud or accounting irregularities perpetrated by senior employees continues to generate a high level of claims. The legal and professional responsibilities of auditors in this area remain ill-understood, no doubt due to continuing developments in accounting and auditing standards and new case law governing duty of care and causation.
Inevitably, the demand for expert accountancy and auditing witnesses has generated something of a bandwagon on which firms or individuals with no credible track record seek to climb. Being an accountant and acting as an expert witness are, however, two very different propositions, and it is in the witness box that this difference will become obvious. Those who have faced cross-examination by a practised barrister, whose sole purpose seems to be to discredit your evidence, will no doubt agree.
Although the ability to maintain concentration, composure and control in the box is crucial, most matters settle before the arguments are tested at trial, and the value which an expert accountant can add to the litigation process is greater the earlier he or she is brought in.
Delaying the appointment of an expert accountant until later in the proceedings can therefore be a false economy. An early instruction to provide, for example, a preliminary opinion on liability will generally entail a brief survey of financial statements, accounting records and key documents, and attendance at a meeting with the client and instructing solicitor.
This should be sufficient to enable the expert to provide a succinct summary of any significant weaknesses which will emerge at trial and their likely impact on the outcome of the case. The legal members of the team can then proceed with the technical issues clearly defined and report on an informed basis to the client and, where applicable, the insurers, which may be funding the defence.
Whether or not the matter proceeds to full trial is for others to determine. The experts' role, by contrast, is to assist by maintaining strict objectivity and acting at all times on the assumption that the case will go all the way.