Bond solon 2016 by Federation of Forensic and Expert Witnesses

Forensic & Expert Witness E Mag

Special issue focus on

Bond Solon Conference Friday 4 November 2016 At The Church House Conference Centre, Westminster, London, SW1P 3NZ

Forensic Accounting & Mediation Expert....

Dr Trent

interviewed inside this issue

INSIDE Interviews with

Inside:

MPS Chris Makin Chris Makin RSW Medico Legal

BOND SOLON TRAINED EXPERTS, ADVICE & NEWS

FORENSIC&EXPERTWITNESSEMAG.COM www.forensicseuropeexpo.com

Chris Makin

‘Forensic Accountancy Expert Witness’ Chris Makin qualified as a chartered accountant 40 years ago, and practised in the “boring” areas – accounts, audit, tax, business advice – for 15 years. In 1988 he was asked to help defend the chairman of Barlow Clowes, which had collapsed with debts of £150million; this was the first big infamous Ponzi scheme. With a team of 6 assistants he had to assess van-loads of evidence from the Serious Fraud Office, and his report of 43 ringbinders was agreed by the Prosecution, leading to the chairman’s “Not Guilty” verdicts on all charges. Chris was hooked, and he has practised full-time as a forensic accountant, expert witness, mediator and expert determiner ever since. He loves the courtroom, having given expert evidence about 100 times, and he has conducted a similar number of mediations, with an 80% settlement rate. Chris has vast experience in all manner of legal cases, including professional negligence, director disqualification, shareholder and partnership disputes, insurance claims, product liability, family, personal injury, fatal accidents and crime, as well as lecturing and training. He is a much respected author of legal papers. Versatility is key to the role of a forensic accountant. Chris offers a wide range of dispute resolution methods as an accredited forensic accountant, accredited expert witness, accredited mediator and accredited expert determiner. He finds mediation particularly satisfying, when he can help others to settle their differences in their own way, and avoid the horrors and expense of a trial.

Dedicated to helping others, Chris is an active fellow of the Academy of Experts - of which, there are only sixty worldwide - and sits on the Academy's investigation committee. He is an examiner in mediation and expert determination. At ICAEW (Institute of Chartered Accountants in England and Wales) he sat for many years on the Forensic committee and the Support Member steering group, and continues as a member of the Ethics Advisory committee. He acts as a Support Member, or honorary counsellor, for chartered accountants facing disciplinary and other ethical problems. A highly experienced and respected chartered accountant, Chris understands business; he wrote a chapter for Kemp & Kemp The Quantum of Damages to explain business, financial accounts and how to quantify losses in a style which “even” barristers and judges could understand! Chris offers a professional, objective and independent opinion on cases where the common factor is that money or valuable assets are involved. This Award-winning chartered accountant has also been instructed to work on many ‘structured collar’ cases, involving the big banks of the UK and smaller businesses. 'Structured collars' are interest hedging agreements sold to SMEs, as “protection” against interest rises. The FSA/FCA have ruled that they were mis-sold in 90% of cases, and that compensation must be paid.

Some 30,000 SMEs are entitled to compensation, and Chris’s task is to quantify the loss of profits and other costs and losses arising from the damage caused to a business where £250,000 a year or more has been paid to the banks under these mis-sold contracts. His findings are typically that compensation of £1-3million should be paid. Over the last 25 years Chris has acted in hundreds of personal injury and fatal accident cases, both large and small. He acted for the dependents of 5 of those killed in the Selby rail crash, for example, and he currently has several mesothelioma cases. The pattern is 50% for claimants, 30% for defendants and 20% as Single Joint Expert. When acting for claimants, his figures are mostly accepted even after detailed review from the other side, but when acting for defendants he has made significant savings. And with so many appearances in court as an expert witness, judges are used to relying on his opinions, too. Chris has a vast experience in matrimonial cases. With business and share valuations being a large part in these cases, Chris can advise on a taxefficient way to withdraw assets from the marriage. Criminal cases have involved money laundering, drug trafficking and taxation offences. The main attraction in using Chris as a forensic accountant and expert witness is that it costs nothing to find out if he can add value to your case. He provides an initial review with no obligation to instruct him. If the case doesn’t proceed any further than the initial review, there is no charge and all paperwork is destroyed. If the matter does proceed the time spent on the initial review is included in the fee quoted, and only when terms are agreed is a contractual relationship established. When it comes to hiring a forensic accountant,. Chris Makin certainly has the experience required. As well as offering his valuable no obligation review, the work completed will be to an impeccable standard and hard to beat. Forensic Industry E Magazine is proud to make this most deserving award.

For further information, please call Chris Makin, Forensic Accountant on 01924 495888 or email enquiries to: chris@chrismakin.co.uk

How do you find a business valuer?

chris@chrismakin.co.uk www.chrismakin.co.uk

by Chris Makin

henever a client asks “What’s my business worth?” the reply should be “To whom, and for what purpose?” As with any commodity, supply and demand come into play, but with a business it’s far more complicated. Supply and demand of capital, general economic conditions, even fashion – why was so much paid for dot.com companies, Amazon, twitter, which had never made a profit? And why does their value disappear when the bubble bursts? And what about the special purchaser?

To take an extreme example, in one of my family cases I was expert adviser to the wife’s legal team led by the then Nicholas Mostyn QC. The husband had an IT company in London which had but one product, a program for international currency dealing. It was in a desperate state: losing £1million a year, rent arrears of £½million, and the Revenue had a walking possession order for PAYE arrears of £¼million; yet the husband was in negotiation with a US company which had a whole suite of software for international banking but for this particular program. They needed it to complete their suite, and the husband negotiated a multi-million $ sale of the company and a very well paid position for himself. My task was to advise the lady’s lawyers on the parameters of the husband’s negotiations without spoiling her position – she was a 50% shareholder – and the tax consequences. The outcome was highly satisfactory for all concerned. One would have expected the value of the company to be £nil, but with the ultimate special purchaser a very high value was achieved.

Let’s talk about more mundane matters. Your client is getting divorced, and the family business forms a significant part of the matrimonial estate. Or your client is a director of a company and has been excluded from management decisions, probably coupled with a claim for constructive dismissal. Or your client (or you?) has for many years been a partner in a professional firm, is coming up to retirement, and suspects that the continuing partners are not prepared to pay his entitlement. What do you do? In all such cases, and others, the value of the business, and your client’s part of it, must be determined. I have acted frequently as a mediator and as an expert determiner in such matters, but today we are concerned with my work as expert valuer.

n family cases the expert is usually instructed to value each spouse’s shareholding, estimate the tax which would be payable on disposal of the shares, and say how much cash may be extracted from the company to aid a settlement. Traditionally there would be separate experts on each side, and I remember many happy experiences with Hildebrand documents and the like! These days, with judges’ preference for the SJE (so that they don’t have to strike a balance between opposing experts’ opinions of £15million as against £nil!) family valuations are less exciting, but no less worthwhile. And there are always the big cases where party experts are needed. A few months ago I was appointed expert by the husband to value his businesses in property development and construction services. Another expert, in my view bending all the rules for the benefit of the wife, had valued the enterprises at about £1million. My view was that, with negative equity in the properties and a slippery customer list, the value was £nil. Because of the husband’s strained finances my instructing solicitor was taking monthly fees on an IOU, and would not be responsible for my fees, so I had to do the same. During the hearing, the husband said he was applying for an IVA. It failed, and he went bankrupt. Good news: I was right with a value of nil. Bad news: I didn’t get paid! In the commercial field, so often one of the founders of a company is elbowed out by others, and has to mount a claim under Section 994 of the Companies Act for unfair prejudice. Normally a “fair” value is required, but what is fair? Is there for example a quasi partnership per Ebrahimi –v- Westbourne Galleries? Such matters need an experienced valuer.

There are two essential requirements for your choice of valuer: a person who has experience and a deep understanding of business, and a person who has in effect a second profession as expert; for there is no point in choosing someone who knows about business, but who doesn’t know CPR or FPR, who can’t write an expert report in acceptable format, and who can’t survive cross-examination at trial. On the first requirement, I have been managing partner in a series of firms, starting as a sole practitioner and eventually becoming head of litigation in a national firm. When in general practice I acted for a huge range of clients, from market traders to PLCs. And my chapter on Loss of Profits for the Self-employed, which appeared for many years in Kemp & Kemp, is available to you on request. I do understand business. On the second requirement, I was one of the first to be accredited as a forensic accountant and expert witness by the ICAEW, and I am fellow at The Academy of Experts, one of only 60 world-wide. And with over 100 court appearances, the witness box is a very familiar place! In this article I have said nothing about valuation techniques; about assets basis, dividend yield basis, earnings basis, P/Es, and so on. There isn’t space, and I wouldn’t want my readers to go glassy-eyed. I have just written a helpsheet on business valuations for the ICAEW Forensic Group, and the basic checklist of information needed runs to five pages! Can we just take it that after many, many such assignments I do understand how to do a valuation, and that we can share some of these matters if time allows and if you are really interested? In the meantime, please bear in mind that for your expert assignment, valuation or other, my terms include an initial review of any case, with no charge if the matter does not proceed. So it costs you nothing to find out if I can help you unravel some of these mysteries.

Chris Makin Forensic Accountant & Mediator

Gerroff moy land! Land in the UK is a finite commodity – except on the East Coast for example, where either through natural erosion or a policy of abandoning land to the sea, our small island is growing even smaller – so it is little wonder that arguments over who owns which part of our precious Albion are emotive. 'Could you provide brief examples of cases that you have instructed on?'

“Many of the cases are due to initial reports proving incorrect with the passage of time, usually in that a prognosis has not been agreed by the claimant. The initial General Practitioner report is something we have all come to know but realistically in all but the most minor cases their value is very limited,” he explained.

“However, the telephone only rehabilitation report is worse than useless,” he continued. “The time used to assess the case during these interviews is inadequate to make an assessment and diagnosis

and treatment recommendations are not always correct. Many of these reports are completed in only a few minutes although some GP experts will give up to twenty. The report being written without medical notes means that it is almost entirely a claimant account, which is not always found to be correct at more detailed examination. As a result, at a later stage, their only value is in reducing the need to remember what happened, but what was said at these interviews can cause a considerable difficulty for the claimant if it is contradicted by the notes.”

The most interesting cases, from Mr. Scott-Watson's experience, are multiple injuries and those with inter-acting disability which may or may not have come from the accident.

“The person on crutches long term, such as an above knee amputee who cannot have a prosthesis, will gain considerably more mobility disability from a broken wrist than those with no initial disability.” he explained. “Equally that person may gain little disability in activities of daily living as their disability in these activities was already so high that it could not really be increased. Such arguments are vital to assess a case fairly for both parties.” “People often present with areas previously injured that they have now re-injured or have sustained a new injury in the same area. This is common with hands in particular,” Mr. Scott-Watson explained. “Assessing the total disability in these cases is essential but these things add together strangely. The final disability is not just the sum of the parts, nor is it in other circumstances. Where the two disabilities interact there is both the individual disability plus the interaction, so one of the few cases where it is possible to say that two plus two really does equal five as you have to add the extra one for the interaction!”

“Equally, where someone is left with a permanent disability, there is the potential interaction with the ravages of the ageing process,” he went on to say. “As above, anything that limits the ability to use crutches will disproportionately affect someone who later needs them for a hip or knee condition. This could be someone with a shoulder soft tissue injury that still reacts to repetitive movements but otherwise works normally. This is a common problem that joints are said to have returned to normal range of movement but the claimant’s report of inability to perform repetitive movements is not fully taken into consideration – a common problem here is left arm injuries and changing gear or left foot injuries and operating the clutch of a manual car.” “In such circumstances there may be a good medical reason for advice about an automatic vehicle. An elbow that no longer fully straightens from a minor

fracture can produce similar arguments and cause disability that can easily seem out of proportion to the original injury, but that is because it is.”

Providing further examples, Mr. Scott Watson continued: “Then there is the case of the joint that is damaged and will wear abnormally in the future. The most frustrating for the lawyers is the fortunately rare dislocated hip. The problem with these is that it is known that they can suddenly deteriorate at five years post injury so cases cannot be settled until that date, unless the deterioration occurs earlier. The difficulty is that the deterioration is the head of the femur disintegrating (from avascular necrosis) and the other problem is that these claimants are young so need a hip replacement at an early age that will inevitably need replacing again. The difference to the claimant and the difference in value between having no complications and having this complication is very significant.”

“Cases where one remaining disability can lead to another injury are not uncommon,” he explained. “This is particularly the case with abnormal gait. It can be difficult to make a reasonable estimate as to when deterioration will occur if insufficient time has been allowed to determine what is most likely.”

“The expert who examines the notes is also there to see how the claim medically fits together.” “Common scenarios are initial report claims of severe disability but when the notes are examined the claimant either did not attend a medical practitioner after the event or attended only once, with subsequent attendances about other matters, making no reference to continuing symptoms.”

Some land of course is well worth fighting over: the narrow strip which would allow access to a huge building site worth millions, for example. But what can cause just as much concern is the dispute between neighbours over where exactly a border runs between their properties. Such disputes can last for years at huge expense, and emotionally they can be a nightmare. Take the case of neighbours in rural Lancashire, reported in the Daily Telegraph a little time ago. A dispute over the exact placing of a fence had gone to the High Court, which ruled in favour of Mr Jeffrey Grundy, a businessman. His neighbour Miss June Iddon, a 72-year old spinster, didn’t accept the court’s decision. When Mr Grundy and his contractor began moving the fence, Miss Iddon, in a rage, seized a spade and swung it at Mr Grundy, breaking his arm. She was sent to prison for 12 weeks, and was dragged down to the cells, protesting her innocence. So not only would it have cost her a fortune in legal fees when she lost at the High Court, not only does she now have a criminal record, but when she is released (for good behaviour?!) she will have to go on living next door to the person she hates. There has to be a better way of solving such cases, and indeed there is. District Judge Stephen Oliver-Jones QC, designated DJ for the West Midlands, is so aware of such problems that he insists, on first learning of a boundary dispute in his area, that all parties and their lawyers attend his chambers, where he warns them of the expense, delay and emotion of continuing with the litigation, and forcefully urges them have a skilled mediator help them to settle the matter. Of course mediation is not the answer to every situation – Halsey –v- Milton Keynes General NHS Trust [2004] EWCA Civ 576 gives a checklist – but it is remarkably effective in many cases, and the going rate for reaching a settlement is reckoned to be over 70%, even including those parties who agreed to mediate only after judicial “encouragement”.

Please allow me to describe a couple of mediations I have done on this topic, all identifying features changed to preserve confidentiality.

usiness neighbours had not spoken for ten years when I was asked to mediate their dispute. At the start they even refused to sit in the same room. The dispute was over a yard between two Victorian warehouses. On the low side was a motor panel beater who had traded there for many years; on the other a new architects’ practice. The latter had constructed a mezzanine floor and modern staircases inside, and completed the facelift by laying tarmac in the yard. Trouble was, the yard had been muddy with natural drainage. Now every time it rained the water ran down the slope into the panel beater’s workshop. He couldn’t spray cars over a wet floor, and had to waste time mopping out. Worse, the architects had marked out the yard with parking spaces, blocking a public right of way, a fire escape, and access to the workshop. The panel beater had produced an expert accountant’s report on loss of profit of £100,000. It was grossly inflated, and was really just a cry for help. I took the parties out to the yard on a damp November afternoon, got them to measure up the access points and blocked markings, and eventually the architect agreed to repaint the parking spaces freeing up the right of way and access, and agreed to have a new drain constructed to take the water away. With a modest payment to the panel beater for his inconvenience, the dispute of ten years was settled in a day.

As Lord Justice May said in Egan –v- Motor Services (Bath) Ltd [2007] EWCA Civ 1002:

“Try it more often.”

Chris Makin Forensic Accountant & Mediator

he other example concerned a row of detached houses, “little boxes on the hillside made of ticky tacky”. Looking from left to right there was Mr Left’s house and a drive, then Mr Right’s service strip and house with a drive to its right, and so on up the hill. Mr Left wanted to construct a garage at the side of his house with a bedroom above, and there was doubt about where exactly the border lay between his drive and the service strip. Mr Left asked Mr Right for the benefit of the doubt, to construct his extension up to the edge of the service strip rather than taking the mid-point of the low dividing wall. Mr Right adamantly refused; but when he was on holiday, Mr Left had the extension built nevertheless. During the mediation, I knew we were in trouble when Mr Right produce a photograph of his house, showing where he believed the boundary lay. Interestingly, there was a bedsheet draped out of the bedroom window, painted with a Union Jack and “Welcome Home, Gary”. To be friendly, I asked “Who’s Gary?” to be told that he was his now dead, a soldier killed in the first Gulf War, and Mr Left had encroached on the “sacred” land where he had played with Gary as a child. After fierce negotiations, Mr Left agreed to pull down the extension – it was only a brickwork shell – and rebuild it two inches narrower. That would have been a good result, except that Mr Right said that he must have been Right (!) all along, so he wanted his costs. Mr Left had no money. The mediation failed, and no doubt the dispute rumbled on, with huge legal costs and destroyed relationships; but we got so close. Litigation destroys relationships; mediation can rebuild them. Litigation is hugely expensive; the cost of mediation can be modest. Litigation can last for many years; mediation is usually over in a day. And mediation is such a powerful process that even a mediator such as myself, a mere chartered accountant, can bring warring parties together.

chris@chrismakin.co.uk www.chrismakin.co.uk

The accumulated accounts for the Premier League (excluding Portsmouth, which is in administration)

Does the Premier League have a future?

was e l c 0. r ti s A in 201 anged i (Th itten ve ch wr ay ha n, ) e uch m h t m s ng since ot by Thi n bly a b pro but

I know nothing about football.

Exceptions: my Dad took me to see Huddersfield Town twice – the pork pies were interesting, but the match wasn’t. And I’ve played at Leeds Road and Elland Road, but only in a brass band for Royal visits. And I was expert for the defence, South Yorkshire Police, when the officers who were traumatised at the Leppings Lane end at Hillsborough claimed loss of earnings and pension; but the trial settled on the first day, so I didn’t learn much about football even then. All of which made me the obvious choice, when the BBC wanted an accountant who knows nothing about football, to review the accounts of the 20 Premier League clubs, and give an interview for “The Report” on BBC Radio 4, on whether these clubs have a viable business model. So if what follows contains any bloomers, I apologise in advance; I repeat, I know nothing about football. I reviewed the latest filed accounts at the time of the interview in April, when most of the accounts on file were for years ending in May to July 2009. All were filed on time, except for Liverpool, who had only just filed their July 2008 accounts, for obvious reasons: their banking facility of £350m was due to expire on 26 July 2009, and when the accounts were signed on 26 February 2009 that problem had not been resolved. KPMG qualified the audit report for “a material uncertainty which may cast significant doubt on the Group’s and the Parent’s ability to continue as a going concern.”

www.chrismakin.co.uk chris@chrismakin.co.uk

Although there were exceptions, most of the accounts showed a worrying position. Directors’ reports included such phrases as: •“The acquisition of players and their related payroll costs are deemed the core activity risk…the directors are mindful of the pitfalls that are inherent in this area of the business.” •“The debt level is manageable but cannot continue to increase further.” •“The Directors are currently in discussions with lenders regarding the potential securitisation of future guaranteed broadcast revenues…” Selling one’s birthright for a mess of pottage springs to mind. •“These losses are being funded in a number of ways. Once again we are indebted to certain directors…” •“The loss for the year amounted to £6.9m wich has been transferred to reserves…” – but this club didn’t have any reserves! •“The company has received assurances from the directors of the parent company that no repayment demand will be made which would…cause the company to be technically insolvent.”

show turnover of £1,869.64million; net losses (net of net profits) of £269.115m; fixed assets £3,045.384m; net current liabilities £1,061.278m, and total liabilities (current, long term, provisions, deferred income etc) of £4,418.233m. Four and a half billion pounds! The total balance sheet worth of these clubs is £(484,275,000) – that’s half a billion negative! These are frightening figures.

So what is going on? These features emerge: •Only 5 clubs made a trading profit last year, and most were modest, ranging from £½m for Stoke to £9.35m for Manchester United, and then £35m for the star, Arsenal. •About a third of most clubs’ income is from broadcasting, but to stay in the game, clubs must win matches. •They try to do that by spending more and more on players: buying at high prices, and paying high salaries. But profit from such a plan is not guaranteed. •Stoke City is a case in point. Promoted to the Premier League during the year, its turnover went from £11m to £54m, yet its net loss of £4.3m increased to a net profit of only £0.5m. Other clubs suffered huge losses despite paying millions for players.

Chris Makin Forensic Accountant & Mediator

The most prominent feature of these accounts is the support given by directors. Most clubs have high current liabilities, which include large sums injected by directors. Manchester City shows £194.4m owed to Sheikh Mansour’s parent company; At Stoke the Coates family are converting £24m of debt into equity; at Sunderland, E Short gave £67m to the club during the year; at Wigan Athletic, the chairman David Whelan’s holding company is owed £39m, and has provided security for the club’s bank borrowings of £11m. The most extreme case of a director supporting the club is Chelsea, which Roman Abramovich has supported to the extent of over half a billion pounds. One must ask what chance such benefactors have of ever seeing their money again. So the Premier League does have a future, but only if there is a steady supply of rich benefactors, willing to loan large amounts with little prospect of repayment. And such benefactors cannot be guaranteed to renew their support; see for example Burnley, where one director’s company has loaned £3.246m. The trouble is that this company is now in administration, and of course the administrator’s duty is to the creditors, not to the football club. Burnley’s accounts do not give news of any successor to this failed benefactor. The clearest example of a club losing its benefactors is Portsmouth. The administrator’s report tells a sad tale of a benefactor withdrawing, of lengthy talks with two possible successors, and of neither of them coming up with the goods. Result: arguably no future. So, whilst football does give pleasure to millions of fans, and whilst some enthusiasts are willing to spend millions on their clubs, the financial model is dependent on this small group of benefactors, and in the real world that isn’t really a sustainable model.

I know nothing about football; my passion is classical music, but for my friends’ sake I do worry that Premier League football may not last as long as Bach, Mozart, and Beethoven.

Chris Makin qualified as a chartered accountant 40 years ago, and practised in the “boring” areas – accounts, audit, tax, business advice – for 15 years. In 1988 he was asked to help defend the chairman of Barlow Clowes, which had collapsed with debts of £150million; this was the first big infamous Ponzi scheme. With a team of 6 assistants he had to assess van-loads of evidence from the Serious Fraud Office, and his report of 43 ringbinders was agreed by the Prosecution, leading to the chairman’s “Not Guilty” verdicts on all charges. Chris was hooked, and he has practised full-time as a forensic accountant, expert witness, mediator and expert determiner ever since. He loves the courtroom, having given expert evidence about 100 times, and he has conducted a similar number of mediations, with an 80% settlement rate. Chris has vast experience in all manner of legal cases, including professional negligence, director disqualification, shareholder and partnership disputes, insurance claims, product liability, family, personal injury, fatal accidents and crime, as well as lecturing and training. He is a much respected author of legal papers. Versatility is key to the role of a forensic accountant. Chris offers a wide range of dispute resolution methods as an accredited forensic accountant, accredited expert witness, accredited mediator and accredited expert determiner. He finds mediation particularly satisfying, when he can help others to settle their differences in their own way, and avoid the horrors and expense of a trial. Dedicated to helping others, Chris is an active fellow

of the Academy of Experts - of which, there are only sixty worldwide - and sits on the Academy's investigation committee. He is an examiner in mediation and expert determination. At ICAEW (Institute of Chartered Accountants in England and Wales) he sat for many years on the Forensic committee and the Support Member steering group, and continues as a member of the Ethics Advisory committee. He acts as a Support Member, or honorary counsellor, for chartered accountants facing disciplinary and other ethical problems. A highly experienced and respected chartered accountant, Chris understands business; he wrote a chapter for Kemp & Kemp The Quantum of Damages to explain business, financial accounts and how to quantify losses in a style which “even” barristers and judges could understand! Chris offers a professional, objective and independent opinion on cases where the common factor is that money or valuable assets are involved. This Award-winning chartered accountant has also been instructed to work on many ‘structured collar’ cases, involving the big banks of the UK and smaller businesses. 'Structured collars' are interest hedging agreements sold to SMEs, as “protection” against interest rises. The FSA/FCA have ruled that they were mis-sold in 90% of cases, and that compensation must be paid. Some 30,000 SMEs are entitled to compensation, and Chris’s task is to quantify the loss of profits and other costs and losses arising from the damage caused to a business where £250,000 a year or more has been paid to the banks under these mis-sold contracts. His findings are typically that compensation of £1-3million should be paid.

Over the last 25 years Chris has acted in hundreds of personal injury and fatal accident cases, both large and small. He acted for the dependents of 5 of those killed in the Selby rail crash, for example, and he currently has several mesothelioma cases. The pattern is 50% for claimants, 30% for defendants and 20% as Single Joint Expert. When acting for claimants, his figures are mostly accepted even after detailed review from the other side, but when acting for defendants he has made significant savings. And with so many appearances in court as an expert witness, judges are used to relying on his opinions, too. Chris has a vast experience in matrimonial cases. With business and share valuations being a large part in these cases, Chris can advise on a tax-efficient way to withdraw assets from the marriage. Criminal cases have involved money laundering, drug trafficking and taxation offences. The main attraction in using Chris as a forensic accountant and expert witness is that it costs nothing to find out if he can add value to your case. He provides an initial review with no obligation to instruct him. If the case doesn’t proceed any further than the initial review, there is no charge and all paperwork is destroyed. If the matter does proceed the time spent on the initial review is included in the fee quoted, and only when terms are agreed is a contractual relationship established. When it comes to hiring a forensic accountant,. Chris Makin certainly has the experience required. As well as offering his valuable no obligation review, the work completed will be to an impeccable standard and hard to beat. For further information, please call Chris Makin, Forensic Accountant on 01924 495888 or email enquiries to: chris@chrismakin.co.uk

FORENSICS INDUSTRY

E-MAGAZINE

AWARD NEWS

The Real Value Of The Meeting Of Experts

When choosing an expert, don’t forget that he will probably have to organise and attend a meeting of experts, so choose your expert carefully.

It matters!

“It is ORDERED that the experts of like discipline shall meet, and shall discuss matters relevant to their opinions in this matter, and shall produce a Joint Statement, setting out those matters on which they are agreed, and those matters on which they have failed to agree, with a summary of their reasons for disagreeing.”

A standard step in the proceedings? Pure routine?

Yes, of course.

Absolutely not!

A meeting of experts can make or break a case, and can destroy months of lawyers’ work in an afternoon. This is where your chosen expert shows his/her true mettle, and earns his fee. If you are sharp-eyed (and which lawyer is not?) you will have noticed two things. Firstly, I am talking about meetings of experts, whereas the rules talk about discussions between experts – it isn’t necessary for a face to face meeting to occur. And secondly, the typical order above requires there only to be reasons for failure to agree. The Criminal Procedure Rules talk about reasons for agreement as well as disagreement, which is an interesting idea.

But we must be talking here about the Civil Procedure Rules (CPR), so let us stay with CPR. So we have had exchange of witness statements, and then of expert reports, and a meeting has been ordered. What does the expert do then, poor thing? The answer is three words: preparation, preparation, preparation. For the expert this meeting is just as important as the trial. Why? Because the joint statement, setting out what has been agreed, and specifying why the experts have not agreed other issues, is intended to shorten the list of issues to be tried; if the experts are not in contention, what is the point of airing all the arguments again in open court? Yet here we have a contradiction: although the experts might agree something, and although that may shorten the trial, “Where experts reach agreement on an issue during their discussions, the agreement shall not bind the parties unless the parties expressly agree to be bound by the agreement.” CPR 35.12(5). Tricky, eh? The experts are ordered to set out in writing what they have agreed, yet the parties are not to be bound by it. Why? Because the experts can discuss matters only within their own science (Foulks –v- Chard [1783]) and must not agree something which counsel may wish to argue. They are not there to “knock up a deal”. And this is where your truly experienced expert comes into his own, with a clear idea of what he may discuss and what must be left to counsel and the court. Examples: if two opposing accountant experts disagree on the Bolam test – what the reasonably competent accountant should have done in particular circumstances – they can put into their joint statement what they believe that normal accountant should have done, but they cannot agree, or even agree to differ, on whether this particular accountant fell short. That is for the judge.

Or if there is contention about the basis on which calculations, say of lost profit after a factory fire, are based, they can agree each other’s calculations “numbers as numbers”, but must not agree the amount of lost profit. In that circumstance, the furthest they could take it would be to agree a formula for calculating lost profit, which may be applied to the figures ultimately decided by the court. But back to preparation. An agenda ought to be agreed in advance. I have a pro forma agenda which I try to send to the other expert beforehand, and agree just as an outline. The court may specify the issues it wishes the experts to discuss (CPR 35.12(2)) and instructing solicitors may do likewise if they wish, but my experience after literally thousands of expert reports and scores of expert meetings is that this never happens: expert reports have been exchanged, the areas of disagreement have become clear, and those areas go straight into the agenda. The pro forma also includes such basics as where and when we are to meet, who is to attend (lawyers? No thank you!), and who is to take the minutes. Actually, that isn’t a basic at all; it’s an important decision. I remember one very difficult expert meeting where we reached that topic, and my opponent (a notorious defence expert, thankfully now retired) produced his manager and said he would take the minutes. I agreed, provided it was accepted that he was working for us both, and provided that I received a photocopy of his notes as soon as the meeting ended.

Well, in the confusion to end a full day’s meeting, packing up the bankers’ boxes and so on, I didn’t get my photocopies. When I asked for them the next day, the manager said that he couldn’t release them until his boss had edited them (!!) and he had gone on a business trip to USA for two weeks. That two weeks took us to within 21 days of trial. And when I eventually received the minutes, the common issues and my reasons for matters not agreed ran to 8 pages, and he had inserted 27 pages of new argument and figure-work! It didn’t do his client’s case any good, but it did prevent any chance of settling the case more than 21 days before trial and saving costs. Not nice!

The Academy tell me that experts are frequently told that they must confer with their instructing solicitor before signing anything – very naughty! When preparing, the experts should consider the medium they will use for discussion:

Teleconference? Emails? Skype? The old telephone?

I usually prefer face to face – I can assess my opponent, and personalities will come into the discussion; also it is easy to recalculate something on screen there and then, and get a transcript – but costs of course must always be proportionate. One standard item in my agenda is to confirm which reports each expert has written. I have even known meetings where one or the other discovers that there are more expert reports than they knew about. More often, and again a standard item, is to agree that each expert has seen the same documents. Even though each expert report ought to list all the documents on which that expert’s opinion relies, it is surprising how often the first half hour of an expert meeting has to be spent in photocopying documents which one expert has seen and the other has not.

Experts agreed a joint statement, but there were a few typos. One expert said he would edit the statement, but he was then “persuaded” by counsel to make some amendments, which were not noticed by the other expert when the statement was signed. That expert then tried to withdraw his signature, without success. One expert typed the joint statement on a notebook belonging to the other, and Properties showed that the other had produced it, so that he had difficulty challenging its accuracy. The Academy tell me that experts are frequently told that they must confer with their instructing solicitor before signing anything – very naughty! There are problems with telephone meetings in agreeing who is to take the minutes, and how. A number of experts still seem to have difficulty in understanding the purpose of an experts’ meeting, what they must agree and what must be recorded, particularly with the different requirements of the various procedure rules.

The experts should agree to settle each issue one by one, sticking to the agenda, and not talking about everything at once and agreeing nothing – it happens! Lots of things can go wrong at an experts’ meeting. Here are some examples passed to me by The Academy of Experts, where I am a fellow:

When preparing, the experts should consider the medium they will use for discussion:

Teleconference? Emails? Skype? The old telephone?

But of course the biggest clanger is Jones –v- Kaney [2011] UKSC 13. The Supreme Court case which saw an end to the expert witness’s immunity from suit in negligence. That was about an expert meeting, and the signing of the joint statement. Jones was a road accident victim; Kaney was a consultant clinical psychologist. A meeting of clinical psychologists was held to agree the extent to which Mr Jones’s accident had brought on PTSD. The other expert was Dr El-Assra for the defence. The discussion took place by telephone, and Dr El-Assra produced the joint statement, which was damaging to Mr Jones’s claim. Miss Kaney signed it without, she said, even reading it. She said she was under pressure to sign. Mr Jones sued her for negligence, and won; the age-old protection for expert witness was lost. Speaking personally, I am not at all concerned about my competence as an expert (and I carry negligence insurance of £5million!). Kaney performed about as badly as it is possible for an expert to perform, but we are not all like that. Moral: when choosing an expert, don’t forget that he will probably have to organise and attend a meeting of experts, so choose your expert carefully.

chris@chrismakin.co.uk

www.chrismakin.co.uk

The day of the hired gun is long gone.

How to get best value out of your expert When choosing an expert, ask about more than their fees. Do they have the right professional or technical expertise for this particular case? Are they fully familiar with CPR? Because your case may be in the small minority which go the whole way, and you can’t afford for your expert to let you down in the witness box.

Chris Makin

Forensic Accountant, Mediator & Expert Determiner I have gone on alarmingly in the legal press about forensic accountancy, mediation and even expert determination. Perhaps it is time, from an expert’s point of view, to talk about experts generally, and about how you can use them to get best value for the benefit of your clients – and your own reputation. The first point to consider is whether an expert is needed at all. That may be a surprising thing to say; is not an experienced litigator capable of deciding? Yet in a number of cases I have seen lawyers become very interested in the legal niceties of a case – liability and causation – without realising either that quantum will be so small that the case is not worth pursuing, or that the opponent is so without means that only a Pyrrhic victory can be achieved. The solution here is to have relationships with experts who will give you their free initial view. My standard terms include an initial review without charge, and with no obligation to instruct me. Many other experts offer the same terms. So why not ask early and often? We really don’t mind, because the relationship becomes commercially worthwhile when you ask us to help with the meaty cases. Don’t be nervous about discussing a case with your friendly expert. CPR Part 35 applies only when the expert is formally instructed. That may never happen; you may decide to use only a shadow expert, advising in the background, to whom CPR does not apply at all.

But a word of caution: if a single joint expert is required (and in many county court matrimonial cases, for example, the SJE is almost universal) you must not spoil the neutrality of the expert by discussing anything at all. Having said that, your friendly expert could be very useful in the background where an SJE is imposed by the court. And if their opinions are blatantly wrong, a challenge under Daniels –v- Walker [2000] 1 WLR 1382 may become necessary.

Similarly with meetings of experts, an experienced expert will know how to arrange the meeting, how to record the matters agreed and not agreed, and how to avoid any attempt by the other side to persuade your expert to settle the case or to make such concessions that your counsel’s ability to cross-examine is usurped.

When it is time to write the report, give your expert very clear written instructions, remembering that the letter of instruction is disclosable if there is any doubt about it – CPR 35.10 (4). And do not interfere with the expert; trust him to produce a clear opinion. In Whitehouse –v- Jordan [1980] UKHL 12 Lord Wilberforce said this about lawyers interfering with the opinions of experts: "While some degree of consultation between experts and legal advisers is entirely proper, it is necessary that expert evidence presented to the court should be, and should be seen to be, the independent product of the expert, uninfluenced as to form or content by the exigencies of litigation. To the extent that it is not, the evidence is likely to be not only incorrect but self defeating." The day of the hired gun is long gone. I remember an orthopaedic surgeon, who illustrated all of his lectures with a real skeleton, and who proudly proclaimed that whiplash didn’t exist; it was all in the mind of the RTA victim. For many years he was popular with motor insurers, but he was typecast, and his day has passed. An expert must give an unbiased opinion; the acid test is whether he would give the same opinion no matter which side instructs him. And an expert must not stick to an opinion which later evidence shows to be untenable; the court will give more credence to an expert who is sensible about making concessions. Turning to questions put to the expert (CPR 35.6), if you have an experienced expert, you can trust them to decide whether the questions are “for clarification”, or whether the other side are really asking the expert to rewrite their report.

chris@chrismakin.co.uk

Finally, into the box (if meetings of experts, Part 36 offers, and even mediation have failed). Here there is no substitute for experience. Expert training is invaluable – has your chosen expert done this? In a real trial, there is no substitute for an expert who addresses the judge, not examining counsel; who speaks clearly and with authority; who watches the judge’s pen so as not to rush him; who gives replies which would suit Alice (not too short, not too long, but just right); and who is not non-plussed by hypothetical questions or a series of questions leading up to an uncomfortable conclusion. I have given expert evidence over 70 times, and the ways of barristers are very familiar.

Experts can make or break a case. It is such a pity to see an inadequate expert spoil a case on which you have worked long and hard, and where your client deserves to succeed. If I have helped you avoid the pitfalls in appointing a poor expert, then I am content.