Overview
Challenges to financial expert testimony represent a minority of total challenges, with frequency and success dependent on key variables.
In 1993, the US Supreme Court’s opinion in Daubert v. Merrell Dow Pharmaceuticals, Inc. addressed the admissibility of expert scientific testimony in federal courts. The US Supreme Court ruled that judges should act as gatekeepers and determine the reliability and relevance of testimony to the case at hand. The decision established four criteria for evaluating whether the reasoning or methodology underlying the testimony is scientifically valid:
- The theory or technique on which testimony is based should be founded upon a testable hypothesis
- The theory or technique should have been subjected to peer review and publication
- The actual or potential error rate should be known
- The method should be generally accepted by the relevant scientific community
In 1999, the court’s decision in Kumho Tire Co. v. Carmichael clarified that the Daubert criteria were applicable to all types of evidence, not merely those relating to traditional science. Subsequently, the criteria have been applied to testimony by non-scientific experts as well—for instance, to financial experts who use their expertise in accounting, economic analysis, auditing, and valuation to assist in disputes regarding damage quantification or related liability issues.
This paper provides insight into the post–Kumho Tire challenges of financial expert witnesses, based on observable trends in the frequency and success of challenges in federal and state courts.
Publications Search Page
