Commercial Litigation: When to Use a Financial Expert Witness

Commercial litigation often involves complex financial questions. A dispute can turn on how much money was lost, what a business was worth or whether financial records support the claims being made.

In these situations, a financial expert witness can review the evidence, apply an appropriate financial method and explain the findings in a way that is easier for the court to understand.

What Does a Financial Expert Witness Do?

A financial expert witness can review financial statements, tax returns, contracts, forecasts, transaction records and other documents connected to the dispute. Depending on the case, the expert’s work can include calculating damages, valuing a business, tracing funds or reviewing another expert’s analysis.

Some financial professionals work only as consulting experts, while others prepare reports and provide testimony. Their role depends on the needs of the legal team and the requirements of the case.

When is a Financial Expert Witness Used?

Lost Profits and Economic Damages

A financial expert is often brought in when a business claims it lost income because of a breach of contract, business interruption or another disputed event.

The analysis can include past performance, projected revenue, operating costs, market conditions and other relevant information. The goal is to determine whether the claimed losses are supported by the available evidence.

Business Valuation Disputes

A business valuation expert can assist when the value of a company, ownership interest or business asset is in dispute.

These questions can arise in shareholder disputes, partnership disputes, transaction-related claims and breach of fiduciary duty cases.

Forensic Accounting

A forensic accountant can examine financial records, trace transactions and investigate suspected irregularities.

This type of work is often relevant in cases involving alleged fraud, misappropriation, hidden assets or accounting discrepancies.

Reviewing Another Expert's Opinion

A financial expert can also review the opposing expert’s damages calculation or valuation. This review can identify differences in assumptions, source data, calculations or methodology. Counsel can use those findings when preparing for depositions, settlement discussions or cross-examination.

When Should Counsel Retain a Financial Expert?

Counsel should consider retaining a financial expert when damages, valuation or accounting issues are likely to play an important role in the case.

Bringing an expert in earlier gives the legal team more time to identify the records needed, review the available data and determine whether the proposed financial analysis can be supported.

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