IN THE same way that many lay people do not recognise the various expertise among lawyers, many lawyers do not understand the work that accountants do or, more importantly, how expert accountants might help.
We hear all sorts of descriptions used for expert accountants in legal matters: forensic accountants, expert witness accountants, accountants in litigation support or accountants offering dispute resolution services. With the exception of accountants who might be trained in other disciplines, such as arbitration and mediation, the main area where legal disputes will need the services of the accountant expert are in matters of money.
So in what way might the accountant help? 1 Commercial disputes – Here, there are two potential areas of expertise which the accountant might bring. Firstly, there may be an investigative role in establishing what may or may not have happened within a financial trail, and potentially discovering where assets might have gone or been misused.
Secondly, there is the calculation of fiscal loss (quantum) both past and future. Commercial disputes may arise from contracts, deliberate fraud, employment issues, consequential loss claims, professional negligence, etc. 2 Personal injury – The accountant’s skill here is used to establish the quantum of any claim and to present a rationale. Many cases are simple, and past losses, expenses and future losses are easily obtainable, but the accountancy skills are required in more complex cases, particularly when the party may have been self-employed or central to an entrepreneurial business.
In these cases, the skills of the accountant are needed to establish the probability of income ranges or capital appreciation and the impact that any incident may have had on the probability.
3 Matrimonial – The most common use of accountants in this area is in valuing private businesses and business interest and also in advising on cash availability and future expectations. In some instances the investigative skills are required to establish possibilities of suppression of business values and possibilities.
4 Criminal – This generally has the need of more investigative skills, and falls into two principal, though not exclusive, sectors: fraud or proceeds of crime.
While the first is obviously part of the second, it has a tendency to be looked at in a different light. Financial fraud – the classic whitecollar crime – has long been looked at as a ‘victimless’ crime – a bit like insurance fraud. Here, the use of ‘forensic’ accountants is obvious as they usually will be engaged in establishing (a) how the fraud was done; (b) who must have been involved, as collusion is not uncommon; and (c) how much was lost.
Many fraud cases do not enter the criminal system and are dealt with in the civil courts because in most instances the victim is looking for financial restitution, not a criminal conviction.
The Proceeds of Crime Act has highlighted the use of accountants in criminal cases but is not that new. The accountant here is establishing the income and wealth created by activities that have not been reported to the authorities, but thenthe police may consider those activities criminal or, conversely if criminal activity has been proved, seek to recover the profits of those crimes.
In all cases, any expert accountant who is used must be well versed in the requirements of the Civil and Criminal Court Procedures and must well understand the duties imposed by them when producing any report.
The expert, as in all cases, may be party appointed (acting for one party or the other) or appointed jointly. The single joint expert is becoming increasingly common in establishing the ranges of quantum.
As with the appointment of many experts, early consultation with an expert accountant may reduce unnecessary enquiries and hence costs.