Know What You're Paying For: 4 Helpful Questions about a Financial Forensics Expert’s Fees
The litigation process is more often than not expensive. If you’re engaging a financial forensics expert to assist in the matter, it can be helpful to ask that expert the following questions about their potential fees.
1. Ask For An Estimate Of Total Fees
Providing a precise and accurate estimate of total fees to be incurred by a financial forensics expert is difficult and more often than not, impossible. There are many unknowns in litigation such as the volume of information that will be provided, how much of that information will be relevant, the quality of that information, whether new issues will arise through discovery, the complexity of the analyses required, whether a rebuttal report will be needed, etc. This doesn’t even include preparation for and testimony at deposition and trial.
Even the most seasoned of financial forensics experts cannot pinpoint what the total hours expended will be in any matter. However, most experienced experts have been around the block enough to generally estimate the foundational hours that will be required, be aware of potential issues that may arise, and estimate the hours that may be required for such issues. Although you may receive a range of fees subject to X, Y and Z, ask for an estimate of the total fees that may be incurred.
2. Billing Twice For Duplicative Work
Oftentimes it is the case that an expert has staff who also work on a matter in which the expert is engaged. A staff member may be delegated tasks such as reviewing and summarizing information provided, working on the analysis, writing the report, preparing demonstrative exhibits, etc. That staff member may review and summarize a deposition transcript and log the time expended doing such as billable. The expert may also review the same deposition transcript prior to issuing a report or testifying at trial, and also log that time reviewing the transcript as billable. Find out whether or not you or your client will be billed twice for duplicative work.
3. Varying Hourly Rates
Most financial forensics experts charge an hourly rate for work performed on the engagement. Some charge varying hourly rates for different types of work performed throughout the engagement. For example, an expert may charge $X per hour for review of records, analysis, and report preparation, $Y per hour for travel, and $Z for deposition and trial testimony. Although this information will likely be detailed in the engagement agreement, it is helpful to know before you get to the step of preparing, reviewing and executing any engagement agreement. Ask for a fee schedule detailing the hourly rates.
4. Minimums And Flat Fees For Parts Of The Engagement
Some experts charge minimums and flat fees for different parts of the engagement. An example of an expert who charges a minimum fee is one who charges a minimum of 8 hours per day for trial testimony regardless of how many hours they actually spend testifying that day. An example of an expert who charges a flat fee for a part of the engagement is one who charge $X to setup up the file for the engagement. Similar to the varying hourly rates, these types of fee structures should be disclosed in the engagement agreement. However, ensure that you’re aware of such fees.