Tips for Deposing Financial Experts

The following is practical advice with the benefit of hundreds of depositions.

First, a question

What is your strategy for this deposition?  Will you use this deposition to prepare for trial, or are you instead pursing settlement?  Either choice will involve tradeoffs.  If you are preparing for trial and wish to keep your cards close to your chest, then limit questions to the basis of their expert opinion.  Opposing counsel will likely remain unaware of the weaknesses in their expert, and their case as a result.  The tradeoff is you will not likely get any of the valuable concessions from the deposition.  On the other hand, if you are aiming to strengthen your position for settlement negotiations, aggressively pursue questions in the deposition instead.  You will have tipped your hand and given the opposing side time to get their story straight by the time this goes to trial, but you may extract valuable admissions that may be useful in settlement negotiations. 

Reduce questions on the expert’s background

Most depositions spend too much time on the expert’s qualifications.  Unless the expert is both unexperienced and has not been prepared regarding the issues in the case, questions on an expert’s education, training, credentials, etc. are not going to yield valuable admissions.  Sure, the expert may not have addressed the exact issue and instruct multiple times, but this will not overcome an opposing expert’s analysis that is logical and well-communicated.  An expert witness with any meaningful experience will know how to answer the questions, having done so multiple times in the past.  If there is something unusual about their expert’s background, briefly ask questions about it. But you are more likely to get meaningful information by using that time asking questions pertaining to the limitations and assumption in the opposing expert’s work.

A deposition is an endurance contest between the expert witness and opposing counsel.  Whomever gets tired first losses.  Spending significant time in a deposition on the expert’s background allows this portion of the contest be at a leisurely stroll for the expert witness.

That does not mean that the expert’s background is meaningless.  Consider instances where the expert’s current testimony is impeached by (i) the expert’s testimony in other matters, (ii) texts the expert references in his testimony, and (iii) subjects about which the expert has written, lectured or spoken.

Ask open-ended questions

Most lawyers avoid open-ended questions to control the deposition and instead insist on asking questions that demand a yes or no answer.  Yes or no questions can be useful, but should be limited to areas that require clarification regarding the expert’s conclusions.  When properly directed, open-ended questions can be much more effective tools.

Open-ended questions can be used to get an expert to explain their work and the rationale behind it.  The deposition if your chance to learn.  Ask questions that you wouldn’t get to ask during trial.  Questions that begin with “who”, “when”, “where”, “why” and “how” will elicit more information from an expert than questions that demand a yes or no answer.  For many of these questions, there is no answer that cannot be useful.  For example:

  • What assumption did you make?  – Circumstances are rare for the answer to (correctly) be “None.”  Most calculations by financial expert witnesses involve at least some basic assumptions.  For example, any analysis of historical financials to infer future damages assumes that information can be used to reasonably predict future performance.
  • “What other circumstances could explain what you observed?  – Another questions where the answer cannot (correctly) be “None.”  People and businesses do not exist in a vacuum.  At a minimum, factors like the economy, current events, broad industry trends could influence events of the litigation.
  • What concerns do you have regarding your conclusions?  – A question where any answer is helpful.  Either the expert highlights their own shortcomings, or they declare their calculation is perfect any beyond reproach.  In instance of the latter, any identified shortcomings, either from your own expert or that come out in deposition, will serve to their discredit.
  • What other work or analysis would you have liked to perform?  – Experts are rarely given free rein to run down every possible avenue of investigation, to leave no stone unturned.  Fee, time, or scope limitations will often prevent the expert’s work from being completely thorough.
  • What records did you request but did not receive?  What information would you have liked to review but did not?  – Ditto, though be mindful where the reason the information and/or documents were not available is because the opposing side (i.e., you) refused to provide them.

Open ended questions do offer an opposing exert witness license to spend more time answering the questions; however, the benefits from answers to the above questions are generally worth the time.  Plus, most experts love the sound of their own voice, and rambling answers lend themselves to inadvertent admissions.

Ask hypothetical questions

Hypothetical questions serve two useful functions in a deposition. 

First, hypothetical questions can serve to turn an opposing expert into your witness.  Getting admissions from hypothetical questions can mean their testimony now supports your position.  It is important that your question be a complete hypothetical.

For example, consider where the profitability of a company is a key issue (e.g., a business valuation or a calculation of lost profits or disgorgement).  Step one: get the expert witness agrees to the hypothetical that damages would be significantly change in favor of your client if the subject company were operating with fewer profits.  Step two: other evidence, including fact witness testimony, indicate the subject company had significantly understated expenses, and correcting this caused the company to operate with less profits.

Second, hypothetical questions can serve to throw off the expert witness from their potentially rehearsed script. 

Avoid lectures and meanness

I doubt many lawyers will think this pertains to them, but I am always amazed at the venom that rises when the deposition answers are not going the way the questioner would like.  Perhaps the  lack of civility is done to show your client how tough you are, or perhaps it just makes you feel better.  But if you are examining an experienced expert witness, you are not going to be successful in changing the answers or intimidating the opposing expert.  Do it once to see if the expert is malleable, but such conduct will harm your effectiveness if it continues unsuccessfully.  You should be persistent in ensuring that valid questions are answered.  But if your persistence is accomplished by making a record that shows you are disrespectful, then the resulting deposition transcript will be less useful to you.