In this latest article from our Disputes, Investigations and Valuations team, Jessie King, Senior Manager, and Kate Hart, Managing Director, discuss joint statements and highlight how their experiences differ depending on the cooperation of the other expert.

Over the past year, we have collaborated with a number of other experts to prepare joint statements. The differences in our experiences have been vast, with some processes being smooth sailing and others being an uphill struggle. 

The purpose of a joint statement (of accountants) is to allow the experts to narrow the issues in a financial dispute, usually following the preparation of their own respective reports, presenting the court with a clear list of points on which they agree and disagree. Often the process allows the experts to identify where they have been provided with and relied upon different information and explanations. The experts have the opportunity to assess how these alternative explanations may impact their conclusions (if at all and if considered appropriate). 

In this article we take a look at some examples of our recent experiences in three shareholder disputes and how we believe the process and cooperation of the experts impacted the overall output – the joint statement.

The good

It probably helped that at the outset the experts were not too polar in their opinions. In fact, the experts had both considered various valuation approaches and on one of these bases had broadly come to the same conclusion.  The meeting of experts and preparation of the joint statement therefore largely focused on the extent to which different approaches, based on differing explanations and information provided by the two disputing parties, were reasonable. The process ran smoothly as both experts were forthcoming with the different information that they had relied upon and were willing to consider the impact of alternative information and assumptions on their opinions. 

In another case involving valuation the opposing expert readily acknowledged that we had undertaken more research into some areas of the valuation and accepted our conclusions were more robust and defensible.  This sort of flexibility represents an openness of approach and willingness to assist the court which is refreshing and ultimately consistent with our role as an expert witness.  The problems come when the joint statement becomes a point scoring exercise fuelled by a large ego.

The bad

By contrast, a recent bad experience saw the opposing expert use the joint statement as an opportunity to repeat large chunks of their original report, resulting in an unnecessarily lengthy joint statement that failed to focus the readers’ attention on the key points which were at risk of being buried in the volume of unnecessarily repetitious text. 

At least in this example we were able to (mostly) stick to our guns and restrict our input to what we considered to be absolutely necessary – hopefully the court did not tarnish us with the same brush as the other expert and could see that we had at least been concise even if the joint statement was not. 

The ugly

And finally…
In one of the most unproductive joint statement processes we have been involved in, the opposing expert simply refused to engage in the process. That’s not to say the expert was silent in the meeting of experts, or did not have any input into the joint statement, but had a ‘my way or the high way’ approach, reiterating the position set out in the expert report and refusing to comment on matters on which we had received different instructions, even where these were within the remit of accounting  expertise.  Even though we were able to point out a number of errors in the opposing expert’s report, the individual declined to amend their conclusions for these and failed to address the criticisms raised.

The outcome of the process was what we openly admitted to our instructing solicitors was the most unhelpful joint statement we have been involved in. Acknowledging this point, however, does not help the court, which has to work with whatever the experts provide. 

The take home message

Joint statements are just that – joint – and even with the best intentions one expert cannot keep themselves unmarked by the other.  The number of drafts prepared for each joint statement frequently runs into the teens so there is a lot of wrangling that goes on behind closed doors.  As the entire process is without prejudice, and the courts have made it abundantly clear in recent years that legal interference in the process is unwelcome, the struggle for the expert is to remain faithful to their duty to the court, adhere to the timetable set and produce output which assists the court in focusing on the areas of agreement and disagreement.

The fact that many cases settle after the joint statement has been produced is a positive sign that the process does achieve its aims.  But in some of the ‘ugly’ cases no doubt things could be improved for all concerned if both experts behaved on a more collaborative (and less adversarial) way.