EWJ FEB 59 2025 web - Flipbook - Page 47
Such situations where this approach may be
employed, are where an accounting issue does not
necessarily stem from a disagreement between the
parties, but instead where there are problems requiring technical accounting knowledge, in order to
progress a claim. A typical example may be investigating and resolving accounting irregularities.
Single joint expert in a litigated commercial dispute
Whilst not particularly widely used in transaction
disputes, on occasions, the parties may agree that a
single joint expert be appointed, responding to instructions agreed jointly by the parties. A single joint
expert acts for both parties, with everyone involved
having full visibility of all communications, information exchanges and reports produced.
Pros
Cons
• Likely cheaper as the costs of one expert are shared
between the parties.
• The claimant / defendant has less control over who is
appointed as expert, as the parties will have to reach a
compromise.
• Likely quicker, as the expert normally only produces
one report, with each side given the opportunity to ask
questions.
• The parties can sometimes find it difficult to agree
the expert’s instructions.
• Usually provides more clarity of a likely outcome,
as there is only one expert’s opinion for the Court to
consider.
• The expert will not be able to advise as to the
strengths and weaknesses of the accounting evidence
under legal privilege, to either party.
As with a single joint expert, one expert is jointly
appointed by the parties (this appointment can be undertaken independently by the Institute of Chartered
Accountants in England and Wales if the parties
cannot agree), with both parties being given the opportunity to present their position and submit
evidence to the appointed expert determiner. The expert considers the evidence presented to them and
makes their determination, which is final and binding
to the parties, absent fraud or manifest error.
Expert determination under provisions within a
Share Purchase Agreement
Expert determinations are common in transaction
disputes, particularly when it comes to agreeing a set
of completion or earn-out accounts, as share purchase
agreements will often stipulate that this is the required
method of dispute resolution. It is also a useful mechanism to utilise, when the area in dispute relates
wholly to accountancy matters.
Pros
Cons
• Likely cheaper, as the costs of one expert are shared
between the parties and there are usually less legal
costs.
• The claimant / defendant may have no control over
the expert selected, if they are unable to agree between
themselves.
• Likely the quickest, as the share purchase agreement
or expert determiner dictates the timetable.
• There is no appeal process.
• Provides absolute clarity on the outcome, as the
expert determination is final and binding.
• Additional costs may be incurred if a party needs the
assistance of a shadow expert to assist preparing their
submissions to the expert determiner.
.
About the author
Neil Rudd
Senior Manager, Forensic Services at Crowe U.K. LLP
E: Neil.Rudd@crowe.co.uk
T+44(0)7435 770421
Final thoughts
Forensic accounting experts can be utilised in a
variety of ways by claimants and defendants in M&A
transaction disputes. Choosing either party appointed
expert, single joint expert or expert determiner
comes with differing benefits and drawbacks, usually
relating to cost, speed and clarity of outcome. The
‘best’ option will vary from dispute to dispute, but
from the perspective of the forensic accounting
expert, they should be equally adept performing any
of the roles required.
EXPERT WITNESS JOURNAL
Having specialised in forensic accountancy since 2016,
Neil is a Fellow of the Association of Chartered
Certified Accountants and a Chartered Public Finance
Accountant. He supports forensic experts across a
range of technical accounting areas in civil, family and
criminal matters as well as investigations into fraud
and accounting irregularity. He is also adept with regard to contentious and non-contentious valuations.
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