What is private expertise in litigation support ?

Private expertise is a pragmatic approach aimed at providing economic and financial insights into a dispute, whether it is the subject of legal action or not.

Drawing on various fields of expertise (finance, economics, accounting, statistics, econometrics, management control), it adapts to its various missions: quantification of damages and interests, searching for evidence in accounting and financial documents, demonstrating causality, etc.

However, a proper private expertise consistently adheres to market standards, as outlined, for example, by the Paris Court of Appeal, to be admissible in court (or by the opposing party during the resolution of an amicable dispute).

We provide a brief overview of the various missions of private expertise below.

Quantification of Damages and Interests

The most common expertise missions involve the quantification of damages and interests resulting from various wrongful practices (counterfeiting, unfair competition, abuse of dominant position, breach of contract, etc. Each of these will be discussed in detail in subsequent sections).

Quantifying damages and interests must follow a precise methodology dictated by laws and jurisprudence to be admissible. Otherwise, the court may dismiss all claims of a party.

In the resolution of an amicable dispute, it is also important to present a quantification that is admissible in court to establish the credibility of the claim and support one’s position in negotiations.

Without delving into numerous specific cases, the quantification of damages and interests is essentially an estimation of the amount of restitution that the judge must grant to the victim to restore the balance destroyed by the damage and place the victim, at the expense of the responsible party, in the situation they would have been in if the harmful act had not occurred.

In practice, the private expert will calculate this amount as close as possible to the judgment date, updating it if necessary, through a differential approach between (i) a counterfactual situation in which the victim would have been in the absence of wrongful practices and (ii) the factual situation despite these practices.

 

Critique of Quantification of Damages and Interests

Like lawyers, private experts document their work in writings submitted to the opposing party (and to the judge if necessary).

An expert may also be commissioned to critique a quantification or provide a counter-quantification, whether it was conducted by another expert, a lawyer, or directly by the opposing party.

The expert will critique (i) the conformity of the quantification to major judicial principles, (ii) the relevance of the chosen methodology, (iii) mathematical accuracy, (iv) the existence and quality of supporting documentation, and (v) the sufficiency of information used in determining the damage.

As a damage is not reparable if its quantum is uncertain, the expert critique of a quantification is a formidable defense strategy.

 

Forensic

In addition to quantification missions, the expert may be assigned missions to search for evidence in accounting and financial documents.

These investigative missions—sometimes referred to as forensic—can be commissioned, among other reasons, to prove financial malpractices (money laundering, corruption, financing terrorism) or, in the context of collective proceedings, to establish mismanagement in the event of a failure (impoverishment of the company in favor of a sister company, failure to comply with obligations to manage equity, for example) and potentially justify extensions of procedures to third-party companies.

They can also be commissioned to demonstrate the economic reality of an activity (the actual place of residence in the case of divorces between very wealthy individuals, for example, where applicable legislation plays a considerable role in divorce costs).

To a lesser extent—since the expert is not intended to replace the work of the Competition Authority or the European Commission—economic investigations can be commissioned to analyze the competitive state of a market to demonstrate dominance and collect additional evidence of possible anticompetitive practices.

Moreover, the expert may intervene in partial elements of fault characterization in very specific cases (for example, demonstrating the stable nature of a commercial relationship and a situation of economic dependence in the context of an abrupt termination of established commercial relationships or analyzing market ratios in the case of non-compliance with a contractual clause referring to them).

Rarely, economic investigations can be commissioned to prove the non-compliance of contractual clauses set against a market standard.

In any case, these missions involve the analysis of accounting and financial documents or economic situations and the identification of possible evidence.

Ultimately, the legal qualification of the fault is not within the purview of the expert but the lawyer.

 

Establishment of Causation

Finally, much less frequently, the expert may be tasked with establishing a causation link between a fault and a prejudice (only the damage caused by a fault is reparable).

For this purpose, the private expert will use various statistical tools (Pearson/Spearman correlation coefficient, simple and double differences), econometric models (regression or simulation models), or scientific models (Neyman-Rubin causal model). The challenge is to go beyond the simple correlation between fault and prejudice to establish a true causality from one to the other.

In practice, this mission is often carried out in the context of conducting damage quantification work.

In a nutshell:

At Outmatch, we engage in all these private expertise missions to strengthen the cases of our clients and partner lawyers (especially before courts of appeal or cassation and arbitration chambers).

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