It is becoming more common in the valuation and forensic accounting field that professionals are engaged as joint neutral experts, especially in matrimonial litigation or shareholder disputes.  For the litigants, engaging a joint neutral expert can represent a significant financial savings, considering they need to cover the cost of only one expert, the associated document and information production requirements may be less onerous, and one avoids the possibility of dueling opinions eating up additional fees.  While I used to think representing both sides would make it easier to work on an engagement, it has turned out to be far more challenging than I expected. The joint expert must manage the expectations of both parties and their counsel, handle double the correspondence, and maintain a neutral position. Despite the challenges, however, I believe using a joint neutral expert generally expedites a settlement and allows the parties to move on with their lives more quickly.

Even when each litigant in the matter agrees to the concept of hiring a neutral expert, it can be a challenge to get them to agree on the actual expert. If the parties cannot agree on who to use, a neutral expert may be appointed by the court. In such circumstances, the clients may feel as if the expert has been forced upon them, but neither side can complain that the expert was implicitly biased against them, and it can be a good position for the expert, whose allegiance is then to the court.

Recently, I have been a neutral expert in four different matters: 1) pediatric practice valuation and income determination in a divorce, 2) medical / therapy practice valuation in a shareholder dispute, 3) surgery centers and anesthesia practices valuation in a shareholder dispute, and a 4) valuation of a family owned venture comprised of different types of businesses in a shareholder dispute. 

In addition to the cost efficiencies that should be realized, it is my opinion that a neutral expert provides value to the parties because that professional will have access to all of the information produced by the litigants, will not be motivated by competition with an opposing expert, is not biased toward either party, and strives to provide the fairest, most supportable opinion to assist in resolving the dispute.  However, there are always instances in which one of the litigants refuses to accept the opinion of the joint neutral expert. Should this occur, said litigant is free to hire their own expert, but obviously the efficiencies of time and expense reduction will be eliminated.

In very contentious cases, where the litigants are combative and even the lawyers may be argumentative, the neutral expert can provide a low key, subtle, “sanity check” to the process, and be a neutral resource for both sides. 

The neutral expert, in addition to focusing on the specific engagement, may also be able to offer assistance on other financial matters.  In one matter I was involved with, the three experts (I was the third and neutral expert) received real estate appraisals, and it was clear that one appraisal was a full appraisal that appeared to meet appraisal standards and one was not.  As my firm has a real estate appraiser on staff, I was able to advise the client as to which appraisal appeared more credible and could be relied upon.

The neutral expert must remember that he or she is serving both clients and their counselors, and cannot show favoritism or bias for or against either side.  It can be difficult to maintain this neutrality in certain matters where it may appear that one side is obviously right while the other is glaringly wrong, or where there is a clash of personalities and styles. However, it is critical that the neutral expert always remembers his joint role, advocates only for his professional opinion, and performs his role in accordance with the requisite professional standards. 

Some key considerations in being a neutral expert are as follows:

  1. Be sure to interview both sides and get each litigant’s point of view on the matter at issue, as it is the duty of the neutral expert to identify all of the facts and data that may impact the development of the opinion that is being sought.
  2. Be sure to always address both counselors in emails, so the neutral is completely above-board and transparent.  Even if the neutral expert is seeking information from only one of the parties, it is best to copy both attorneys on any correspondence, so no one has grounds to claim bias.
  3. The neutral expert should consider carefully whether to quote a fixed fee for this type of work. The neutral expert will likely be party to more correspondence, conversations, meetings, and negotiations than the typical single-party representation.  It may be wise to charge on an hourly basis to discourage the parties from abusing the neutral expert’s time and resources with phone calls and other demands that may not be critical to the matter.

It is my experience that being a neutral expert can be difficult for the expert, because you are not on one side or the other, however, you are providing a service for your clients and their legal counsel.  You can be the calm amidst the storm, and the sanity check when emotions get heightened or demands are unreasonable.  It is important to keep your distance as a professional and just perform the requested engagement as a third-party, objective professional who has no bias or feeling towards one side or the other.  I like to sell the concept of hiring a neutral expert as an efficiency to a litigation matter, and an option that also allows either side to have their own expert if they are unhappy.  Being a neutral is more challenging for the neutral expert, but it can make the process more efficient and expedite the settlement process for litigants, so they can move on with their lives.