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Texas Family Law Insiders
Greg Beane | Understanding How to Direct and Cross Expert Witnesses
00:47:49
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- [00:00]
A
What those cases and what the statute or the rule of evidence says is that you can have expert testimony, you can have somebody that gives an opinion on certain issues in a case, even the ultimate issue, as long as they're qualified to do so, as long as they have the knowledge of that, that area, as long as it's helpful to the court or to the jury, the fact, the fact finder, and as long as there's the proper foundation. You're listening to the Texas Family Law Insiders podcast, your source for the latest news and trends in family law in the state of Texas. Now here's your host attorney, Holly Draper.
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B
Today I'm very excited to welcome Greg Bean to the Texas Family Law Insiders podcast. Greg is an attorney at Webb Family Law in Dallas, Texas. He's board certified in family law and has been practicing since 2006. With a background in accounting and finance, Greg leads clients through one of the most significant financial transactions of their lives while protecting and preserving their assets for the future. His logical and compassionate approach helps clients through the emotional turmoil of custody cases while giving them the peace of mind to confidently make decisions that are in their children's best interests. Greg is a member of the American Academy of Matrimonial Lawyers, the Texas Academy of Family Law Specialists, and the Texas Family Law foundation, among many others. Way too many to list. And he's also active in the legislative process for family law issues. Thank you so much for joining us today, Charlie.
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A
Thanks for having me. I'm honored to be here. I was looking on YouTube at the people you've had on here before, and I'm just honored to be in part of all this.
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B
So why don't you start and tell us a little bit about yourself?
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A
Oh, okay. Yeah. I've been practicing, as you said, since 2006. In the beginning, I kind of did everything. I was practicing in a small town in East Texas of a couple of thousand people. And so out there, basically, you take what comes in the door. I mean, I was doing criminal, I was doing civil, was doing real estate, probate, represented water districts, represented school boards, anything you can think of. And that's kind of where I fell into family law, as you said. I had a background in accounting and finance, undergrad in accounting, and then went to do my MBA in finance and then decided I didn't want to do either of those. So law school. So then I, as I said, went out to East Texas, was there for three years, came back to Dallas in 2009, and have specialized in family law ever since.
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B
So how would you describe your career practice?
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A
Well, our firm is eight attorneys and all we do is family law. You know, obviously the big part of that is divorce cases, but we also do lots of child custody cases, lots of premarital agreements, you know, even some adoptions every now and then, things of that nature. But I would say the majority of it is divorce, child custody and premarital agreements.
- [03:02]
B
So today I'm hurting on to talk about something that I think a lot of particularly younger lawyers struggle with or may not know a whole lot about because it's a little bit more of an advanced topic and that is expert testimony. And you know how we're going to prepare for, direct, prepare for cross those types of things. So, so starting at the beginning, for anyone who might need a refresher, can you explain a little bit, you know, the Daubert Robinson factors and how that plays into expert testimony?
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A
Well, sure. It comes in under Texas rule of evidence 702, which is based on the federal rule about expert testimony and that we've had a couple of Supreme Court decisions have gone into a little more depth about it as, as you said, Dbear and Robinson. But anyway, what those cases and what the statute or the rule of evidence says is that you can have expert testimony, you can have somebody that gives an opinion on certain issues in a case, even the ultimate issue, as long as they're qualified to do so, as long as they have the knowledge of that, that area, as long as it's helpful to the court or to the jury, the fact, the fact finder, and as long as there's the proper foundation. In other words, as long as they've reviewed accurate information, as long as, as long as not necessarily the information is admissible, but as long as it's accurate. In other words, as long as they're, everybody's kind of looking at the same underlying data, for example, that's the four part test. Some people say that's just three parts because some of them overlap and all this. But anyway, the, the big picture is that you can have an expert that gives an opinion that helps the court or the jury understand the issue.
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B
So let's break down the elements of that test that you just described more generally. So starting with the qualifications test, what exactly is that and what would we need to prove if we're trying to put on an expert?
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A
Well, you would need to prove that that expert has the, has the background, has the qualifications to give that opinion. You can't just have anybody off the street basically give an opinion as to an issue in the case. So is the person qualified, for example, as attorneys? I testify as an expert on attorneys fees in cases for family law issues, but that doesn't mean that I'm qualified to give an expert opinion on car repair or accounting or psychology or any of those type of things. So you have to have a person with the specialized knowledge and qualifications. You look at what grease the person has, how much experience they have, how many other cases they testified in, things of that nature to determine whether or not they're qualified to do so. Sometimes that's a little subjective, but in cases, in family law cases, I'm sure we're going to talk about this in a little bit, but custody evaluations, for example, Family code has a specific list of qualifications that a custody evaluator has to have in order to give that opinion.
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B
Yeah, I think one thing family lawyers need to be especially cognizant of, whether it's your expert or you're trying to attack the expert, is is there kind of a niche within their specialty and do they have that knowledge? You know, just because someone is a mental health professional doesn't mean they necessarily have the skill set or background qualifications to testify about, say, an eating disorder. So you want to make sure you're niching down as far as you need to to show that your expert is or is not, depending on what side you're on, qualify.
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A
Yeah, absolutely. And in the case of a financial expert, for example, if you're trying to value a business, yeah, you need somebody probably with a CPA. Not necessarily, but a lot of them do have CPAs. But that doesn't mean person who does your taxes is qualified to give a business valuation. So yeah, you're right. You got to drill down within the specialty. You want somebody who's accredited as a business evaluator, for example, in order to give that opinion, not just somebody with the generalized knowledge.
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B
So speaking of knowledge, the next prong of this test was the knowledge test. Can you dig deep, dive a little bit on that and tell us what we need to know there?
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A
Yeah, sure. And what I said a minute ago with this, some people think it's a three part test, some four parts because it overlaps. This is kind of one that does the qualifications and knowledge because along with, I would say the qualification is do you have the letters after your name? Right. And the knowledge is do you actually know it? And a lot of that is, you know, a lot of the professions have continuing education requirements. For example, we as lawyers do accountants, do you know, mental health professionals do they all have to attend a certain number of hours. But also it's just having that specialized knowledge. So the first part is having the qualification. Second of all is how do you use it?
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B
Then the next prong we have would be the helpfulness test. What falls under that?
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A
Well, the helpfulness test is it, does it help the court? Is this an issue in which we need expert testimony that would help the jury or help a court make a ruling in this, in a family law type case. So you know, if we're talking about say a mental health professional like we were a moment ago, if you brought in someone to do a psychological evaluation of one of the parties, is it relevant? Is that person's psychological functioning relevant? Let's say there are no kids involved, then maybe not. But if there are kids involved and there's issues regarding that parent's functioning, then a psychological evaluation may be helpful.
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B
And I would think, I mean, I would hope, know that you're not going to try and put on an expert if whatever they have to say is not helpful to the court. So. So it probably comes more into play when someone's trying to keep your expert out of them. Trying to get creative ways of saying this is really not going to be helpful to the court under these particular circumstances.
- [09:31]
A
Yeah, absolutely. And I think it all kind of works together too. But that one would be more applicable, I think, if you're trying to keep out somebody as opposed to get somebody in to testify. So yeah, you just have to make sure that a court or a jury needs to hear this in order to make a decision.
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B
So one of the things that we deal with very frequently in at least the courts that you and I practice in is severe time restrictions. So if you have a, it could take a long time to lay the foundation for your expert. Do you have any tips for how to get that accomplished when you are placed under severe time restrictions?
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A
Yeah, a lot of times when I'm in a case with a severe time restriction, say Collin county, the 20 minute temporary orders hearing. Right. I'll get the expert CV and just have them just put it in front of them. Do you recognize this as your cv? Is this an accurate summary of your qualifications to be able to testify as an expert in this case? And you put the CV in as a summary of their qualifications. So hopefully that document shows enough qualifications for them to meet this four part test or at least probably the first two without having to go through each individual item on their cv. Now I will say there are times when you want to go through everything that's on there, especially if you're in front of a jury. I think if your expert is, you know, top notch and Noon is one of the best out there and has just an immaculate cv. Yeah. You want to go through all of it with them to, you know, to put that in front of the jury and let the jury know how smart your expert is and, you know, how well renowned they are and all of those things which now if you're on the other side of that, you may just stipulate to the qualifications and just say, I agree that this person has, has the qualifications and the knowledge to be able to testify on this topic. So. And you know, another way to kind of bypass all that is if you're offering the expert, and this expert is somebody that is well known and somebody that testifies in the courts a lot, you may just ask opposing counsel if you'll stipulate to the qualifications as an expert.
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B
Yeah, that certainly saves a lot of time if the other side will do that. When I'm on a severe time restriction, I don't know that I want to stipulate because I would like for the other side to have to waste their time going through.
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A
Absolutely. Yeah. Sometimes people are nice though.
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B
Okay, so next we have the issue of when we're talking about dollar drawments and factors, we are looking at the reliability of the opinion of that expert's opinion. And do we have any means of trying to kick it out? Can you talk a little bit about those factors and why the reliability of the opinion matters?
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A
Well, yeah, the reliability opinion obviously is about the most important thing. It's is your expert and is this opinion reliable? Is that something that a court would rely on in making a decision or a jury for that matter? When it comes to especially what we call the soft sciences. Right. And mental health, for example, we talked about a moment ago, psychological evaluations, for example, things of that nature. It's a little more subjective. The courts look for what they call an analytical gap, make sure that their opinion isn't too far off from what other experts look at and what the other experts methodology is and any analytical gap between the opinion and the underlying data. I mean, even in a psychological evaluation, some of those are based on actual tests, you know, the MMPI test, the multiple choice, those kind of things. But even then those can be, those can be interpreted a few different ways. Different experts may interpret them different ways. And it's based on some of the other data that they, that they obtain. Whether that's through interviewing collateral sources, interviewing the Parties interviewing the kids, interviewing friends of those people and getting collateral data. So courts look at that and look at that methodology to make sure that you don't have an opinion over here with all the other data way over here. That comes from the GAML case, by the way, a Texas Supreme Court case, I believe. But you want to make sure again, when you're dealing with the soft sciences that it's still relevant, that it's still reliable.
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B
So how, when it's your expert and you are trying to show that other experts are in line with this, you know, that we're not out in left field with our expert. Can you walk us through how do you perform that analysis? Are you contacting other experts? Are you just relying on your expert to tell you? How do you bridge that gap?
- [14:43]
A
In the beginning, when I first started practicing, it was a lot of relying on my expert. And I was fortunate to work with several good experts when I was a young attorney who would help teach me because, for example, mental health psychology, I didn't know any of that. Yeah, I never took a psychology class in college, much less in, in MBA school or in law school. So it's something I kind of had to learn on my own. And it's, you know, from going to cles and, and learning that stuff. But in the beginning, you just have to learn the field and you need to learn what types of questions to ask and what type of methodology those folks use. I've been doing this a while now where I've seen a lot of it and kind of know, you know, the, the typical things that you would ask on cross examination where there's subjective opinions versus objective. For example, on financial experts, it's just knowing the basics and knowing where, where the points may be on cross examination. You know, most of those, most of the experts issue an opinion, issue a report, and, you know, you look for inconsistencies in the reports. If it's my expert, I go through it with them and have them explain everything. A lot of times in prep, I want my expert to just tell me everything, and then if we're working on questions, I'll stop and say, if they give me something really good. Now hold on. What question do I need to ask you to, for you to give that answer? Yeah, what do I need to say to, to get you there? And so, you know, a lot of times you see people at the courthouse and they have an expert on the stand, and it's clear they've never talked to this person. Even if the expert is against me, I'M going to do my best to talk to them. Sometimes they won't return phone calls, but because I do want to hear what they have to say. You have to take a deposition. Take a deposition. So a lot of this dealing with experts is preparation.
- [16:40]
B
So when the other side is hired an expert, let's say they hired a forensic accountant or they have a psyche psychological evaluation done, do you go through the lawyer on the other side to try to arrange to talk to that, or you just call that expert up on your own to see what information you can get?
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A
Well, it depends on whether or not they're retained by the other side. For example, if we're talking about a therapist, I'm going to have to go through opposing counsel to try to get a HIPAA release. But if there is already one, then I can just call the person. Now if they're retained by the other side or something like that, I probably have to go through them to do it. And that may be taking a deposition if I can't talk to them informally.
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B
All right, so let's break it down into different types of experts that we commonly see in family law cases and talk a little bit about how to prep for both direct and cross of those witnesses. So let's start out on the child custody side and what probably the most common expert that any of us deal with would be a child custody evaluator. My first tip to anybody, especially a agro attorney, don't trust the list that the court put together that that expert is going to be qualified. Because I had a case where the person was on the court approved list, they did a custody evaluation and it was complete and they came out for my client. And in the end the other side determined that, you know, so they weren't qualified and they were stricken. So just because the court appoints someone or they're on the court appliance list, be sure you check all those qualifications yourself to make sure they line up with what the family code requires. So that being said, talk to us about how you prep for direct of the child custody evaluator.
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A
Yeah, sure. And also to piggyback off your point, you're exactly right on the court appointed list. Not all the time. They meet the qualifications, especially since the qualifications changed just a couple of years ago. Some of those people have been on the list for a while and may not have kept their certification up or something like that. So yeah, look at that early. And if you discover it early, file your motion to disqualify them early. I wouldn't wait till Final trial. Because qualifications is one of those, you either have it or you don't. So the sooner you find out about it, the sooner you, you know, you save your client a whole lot of money. But anyway, if I'm preparing for a direct of the custody evaluator, you know, the first thing I would do is obviously read the report and go, go through the individual points you want to hit with them, get the CV like I talked about earlier, see if the other side will stipulate to their qualifications. If you're in front of a jury, then drag it out a little bit more and hit on those qualifications to make it sound like this person is the greatest thing since sliced bread. But in, in your typical bench trial, the, the court will know that person the majority of the time. If we're in Dallas county, for example, there's a good chance there with family court services and they testify all the time. But you know, I basically have just a few set questions. Just you know, first of all, you go through the background. Ben, it's what were you hired to do in this case? Well, I was hired to do a custody evaluation. Okay, and how many of those have you done? And they'll tell me that, so what methodology did you use? And they'll go through what they did. Make sure you have chapter 107 of the family code in front of you with everything that they're supposed to do. If you have time, ask on each individual element. Did you perform this? Did you meet with the parties, did you go to the house, did you meet with the children at all of it? Just to make sure that's all in there. And then especially if I know the expert well and I know they're good at testifying, ask the open ended questions, what is your recommendation for who should be the parent with the right to designate the primary residence? And they'll hopefully say my compliant. And then why do you think that? And this is again where it's helpful to talk to the expert beforehand to know exactly what they would say. But a lot of the custody evaluators have been there a while and they know that they're very good at testifying. So it's knowing when to ask the open ended questions. If you have somebody that's a little less experienced, maybe lead a little bit more. But yeah, just ask them their recommendations and why you have those recommendations and let them tell the story of, of everything they've discovered and then what concerns do you have about the other side? And you know, let them start talking about that and that way, the other side will have to defend against it.
- [21:31]
B
So when you are prepping to direct the court appointed custody evaluator, are you having a private conversation with that expert or are you coordinating a call with opposing counsel so that everyone is going to hear the same conversation, especially if.
- [21:47]
A
They'Re going to testify? For me, I would love to have a private conversation with them. Not all of them will and I respect that. A lot of them will only talk to you if, if the other side is present, and that's perfectly fine. Again, I like for the other side not to know when I'm going to ask if that's at all possible. So. And some of them won't return your phone calls at all. So that makes it a little more challenging in those cases. I tend to go straight off the report and we'll have the report and I'll say, Look, on page 37, line 8, you said you believe dad has an alcohol problem. What makes you think dad has an alcohol problem? And then, you know, just kind of stick to the report a little bit more.
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B
Do you typically admit the report into evidence?
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A
Depends on how good it is for me. So the rules say it's still subject to the rules of evidence, you know, so typically it's going to be riddled with hearsay. Most things that a collateral source tells you, for example, it's probably going to be hearsay. With that said, do they get admitted every day? So if it's, if it's good for me, I'm going to try to get it in. And typically you can get enough questions or get enough answers out of the custody evaluator, even if the report's not in, to get a feel for what the report says. You know, you just may not ask the question what did so and so tell you, but you can ask what opposing party said, you can ask the results of the psychological evaluation, you can ask their recommendations. And sometimes even if the reports against you, it's more damaging for the evaluator to just sit there and tell you what the recommendations are. If the report's not in evidence, because you can find some things that'll help you on cross examination. So it's a double edged sword. I've seen it where somebody's objected to the report coming in and the report's excluded and know based on hearsay or whatever, then that other side wants to use it in their cross and then they can't either.
- [23:52]
B
Yeah, I think I usually don't see it getting in. But you want, if you, if you're on direct you definitely want to get them to give all those opinions that you wish were getting that document.
- [24:05]
A
Absolutely, yeah. And the opinions themselves are admissible. It's just not necessarily, you know, experts can rely on hearsay, but that doesn't make the hearsay admissible.
- [24:16]
B
So shifting to cross of the child custody evaluator, when this evaluation has come out very poorly against our client and we are going to need to cross, tell us about your procedures for crossing an expert.
- [24:35]
A
Well, it's kind of just the opposite. When I'm proving up their methodology on direct, I'm attacking the methodology on cross or their qualifications. Make sure that you've gone line by line through their CV and make sure that they meet the qualifications. Make sure that they've done everything they're supposed to do under the Texas Family code under chapter 107. But also, let's assume this evaluator has all the qualifications and let's assume that their methodology is good. Then what do you do? Well, we're in custody cases. We're in family law. It's a lot of he said, she said. A line of cross that I like to use is, well, you gave this opinion about the other party because you believe what they said. Correct. And if what they said was incorrect or not true, would that change your opinion? Well, normally they would have to say yes on that if they're being fed bad information. And that goes back to the foundation test that we were talking about earlier. If they were given a bad foundation, then the opinion wouldn't be reliable. This episode of the Texas Family Law Insiders podcast is sponsored by the Draper Law Firm, providing family law litigation in Collin, Denton and Dallas counties and appeals across Texas.
- [25:56]
B
For more information, visit DraperFirm.com or call 469-715-6801. Back to Crossing child custody evaluators. So one of the things I have found the most effective, you get that child custody evaluation, and it is not good for your client and it is not good for your case. But if you hire an expert who is a custody evaluator for behind the scenes to help you learn what is wrong with this report, it can be extremely, you know, I've hired experts who are like, you need to ask this. You need to ask that. You need to, you know this, they didn't do this. Right. Or they should have done this. And that can really help you craft your cross because they have specialized knowledge about custody evaluations that we don't have without that background. So even if you don't have the time or the money to hire an expert to testify. I find that hiring one to help you attack on cross is extremely helpful. And maybe really the only chance you've got is to really crush that custody evaluator on cross.
- [27:09]
A
I agree with you 100%. I use those experts as well, and they're invaluable. And you kind of brought up a rebuttal expert, too, which now the statute's clear that you can do because it wasn't. There was some case law basically, that said you couldn't. So basically, the family code says you can't give an opinion as to conservatorship, possession and access, those type of things, unless you've done a custody evaluation. Well, for years, attorneys would hire rebuttal experts to come in and say, well, this person didn't do the custody evaluation. Right. And there were a couple of cases, one out of Austin, one out of Dallas a couple of years ago, that says you can't use rebuttal experts because those people didn't do the custody evaluation themselves and therefore can't give an opinion. Well, in the last session in 2023, the legislature came through and said, well, no, you can hire an expert, a rebuttal expert who hasn't done a custody evaluation but can attack the methodology, for example, without giving their own opinion. So if we believe that opinion is invalid because they didn't follow the proper methodology, they didn't have the qualifications, they don't have the knowledge, stuff like that, then you can have that other expert come in and say, at least try to negate the custody evaluation and say it's not worth anything. It's. It's unreliable. So that can also be a tool. It's bringing another expert in as opposed to getting it in on cross. It's more expensive. But if the person didn't do their job, then it's invaluable.
- [28:51]
B
Right. And I think the initial reaction of a lot of attorneys and clients, probably when you get that custody evaluation back and it does not go your way, is all hope is lost. I need to fold and settle. And sometimes you might need to do that, depending on situation. But there are plenty of times when you can attack a custody evaluation and have your client prevail in the end, even when the custody evaluator did not come out on your side.
- [29:23]
A
Absolutely. And that. That certainly does happen. And some courts rely more than others on custody evaluations. Also, if you agree to a custody evaluation without the court actually ordering it, you might want to find out whether this is one of those courts that relies on them or not because sometimes you'll spend a whole lot of money and the court is going to say I'm going to make my own decision based on the other evidence. But yeah, just because the custody evaluation doesn't come out for you doesn't mean, as you said, all hope is lost. I always have the clients go through the report and write everything that's incorrect in there, write down every piece of data that the evaluator got wrong, every fact they got wrong, because that can lead to some good cross examination that goes to the foundation test that goes through. If you're working off bad data, you're going to give an unreliable opinion. So there are certainly ways to attack it. But you know, certainly worst case scenario is as you said, hold up and settle.
- [30:30]
B
Yeah. So I'm still sticking on the custody side. There are certainly other types of uly mental health professionals that we would have as experts, either court appointed or retained. Is there anything different in how you would direct across other experts in a custody case that are not custody evaluators?
- [30:57]
A
Yeah, absolutely. And the most important thing is what we just talked about a moment ago. The Family Code says unless you have performed a custody evaluation, you can't give an opinion as to conservatorship, possession and access. So a lot of times people will bring in, for example a child therapist or personal therapist or something like that to try to give that type of opinion. So in those, yeah, it definitely affects the way I cross because I'm listening for that. The other side will try to get that therapist to, to come out of their lane to the testify to something that they shouldn't. So yeah, you have to be very careful about that, listen to every question and head it off at the past. A lot of times when I hear that question coming, I'll stop and ask the court to take the witness on for dire, which is usually granted. And I'll say, Mr. So and so, isn't it true that you can't give a, an opinion on custody, possession or access and see what they say? If they say yes, I'll say, okay, well have you performed a custody evaluation? Go through the elements with them. Have you done any of this? Are you aware that chapter 107 of the Texas Family Code says you can't give this opinion? And that will usually shut it down right there because they're scared to answer anything past that. They're nervous about overstepping their bounds. And the court's aware that of what the law says too. Sometimes they'll actually had this happen recently where the Attorney persisted in trying to get out a custody recommendation. And you know, the court had already heard it by then. They couldn't. So the judge shut it down, which was great. So. But you'll see that a lot of times from therapists. I've had, you know, parenting facilitators try to give custody opinions before or possession of access recommendations. So just know that they can't do it unless they, unless they perform those elements of a custody evaluation.
- [32:59]
B
I think when it's your expert, you're the one who really wants them to give an opinion about possession. Access the buddy, you know that you can't. There's definitely an art to trying to get out the information from them that is concerning about the other parent or that is, you know, the basis for why they would have the opinion that they have without reaching the ultimate destination of an opinion about possession and access. Do you have any tips for doing that?
- [33:30]
A
Yeah. So if they haven't formed custody evaluation, let's say they're child's therapist. Let's say it's an individual therapist. And you want them to testify about the other side. Well, they can't give opinions, but they can testify as to what they've seen. If you represent dad and they've seen mom saying inappropriate things to the kids out in the lobby, they can certainly testify to that. And if you think the other side has psychological issues, personality disorder or something like that, well, maybe this person can't diagnose them because they haven't formed those specific tests, but they can testify as to what they've observed, as to the symptoms of them doing certain acts, which if you add all that up, can constitute on a personality disorder or something along those lines. As they're an expert witness for one side, doesn't mean they can't also be a fact witness to other facts as to the behavior of the parties. So they can be used as a resource for that. Even if they can't necessarily give that expert opinion.
- [34:36]
B
Can that expert who did not do a custody evaluation say they have concerns about dad or they have concerns about mom and what those concerns are?
- [34:47]
A
I think so. I think it depends on what the concerns are. I don't think they can say I'm concerned that mom's bipolar if they haven't performed that the evaluation. But they can say, I've seen mom act irrationally in my lobby. Again, it goes back to factual, the facts opinion, or excuse me, factual testimony versus opinion testimony. So they can certainly testify to what they've seen that's relevant. I don't think they can frame it in terms of, you know, clinical concerns or. Or something along those lines. So it's how you ask the question. And even if it's your own expert and your own client, a lot of times we will have our own clients undergo psychological examination just from our own expert. And obviously you would love for that expert to say that your client's a great parent and that they should have primary. Well, they can't, but there's ways to ask the question. You can ask about the results of the psychological testing and what you've learned from collaterals and all this kind of stuff, and you can say, do you have any concerns about this person's ability to function as a parent? And usually they'll say, no, everything checks out. So, again, just have to be careful with the way you word it.
- [36:17]
B
Right. And I think that's just where you're walking a very fine line of you want to get. If it's your witness and you want. You really wish they could make the. Else in my conclusion, like, get as close as you can with the right types of questioning without going over that line. And if you don't accidentally go over the line, back it up and then get questions again.
- [36:38]
A
Yeah.
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B
Okay. So shifting gears a little bit to the other side of family law being property issues, and this is where we also see a lot of different kinds of experts. Generally financial experts, we could have tracing, business valuation, forensic accountant, et cetera. What is different in your approach to expert witnesses when we're talking about these types of experts on the property side?
- [37:01]
A
Well, it goes back to the analytical gap and those things we were talking about with kind of the soft sciences earlier. On the financial side, it's kind of the opposite because they're looking at the same numbers, and it will usually be supported by numbers. Now, does that mean you agree with all the numbers if you're on the other side? No, but business valuations, they're, you know, a lot of times based on financial statements, based on your income statements, your balance sheets and tax returns and all that. So there's, there's supporting data for them. But what's most important, for example, on a business valuation, is knowing the. The different methods and what method works for which type of entity you have. For example, if you're representing a lawyer who's a solo practitioner, you'll use a different method than you would somebody who is a part owner in an LLC with several other members. It's just different. You have the asset method, for example, which would probably be used for that solo practitioner I'm talking about because of things like personal goodwill. And that's going to be big in a sole proprietorship or a solo type firm where if they decide to leave and start a business next door, then everything would probably go with them. So you value the firm based on the assets. If you have a larger llc, then it's going to be less of a percentage like that. So those are kind of things you need to look at what type of entity you're dealing with and knowing the different types of methods for that valuation. And same with if you're tracing outside of property, there's lots of different methods for that and it's knowing which method works in a certain type of case. So that just comes from experience, from training, from going to the cles, from talking to your experts. And a lot of times the good ones, when they'll issue that report, will list all of the different methods and say what the results using each method might be, but why the other methods are inapplicable. So you do need to do your own research and learn the fundamentals of it and then so you know the right questions to ask that expert.
- [39:30]
B
So with direct of any of these types of financial experts, talk a little bit about the types of questions that you're going to be asking.
- [39:42]
A
Well, the, the overall outline is very similar to what I'd use with, with a custody evaluator. It's the qualifications. What were you hired to do, what methodology did you use in this case, what's your opinion and why? Now the specific questions, when it gets to the business valuations you're looking at, what statements did, what did you review in order to, to come to this conclusion? Why are those important? What did those tell you and which method did you use? Why is this method better than the other methods and have them address each one? Because that's probably where the cross is coming from. The main crosses on business valuations are going to be you use the wrong method, you calculated personal good will wrong and you calculate a discount for say, lack of marketability or lack of control. Incorrect. So you want to hit those on direct and take the sting out of it because those are probably the top four things that are subjective when, when you're dealing with business valuations. So why do you think the personal goodwill would be 30% as opposed to 10%? And let them explain. Well, because if this person left, they would probably take the majority of the business with them. Same with lack of marketability and lack of control. If the person owns less than 50% of a business, the expert's going to discount the business or that person's interest in the business because they don't have that decision making power. So get your expert to say why did you attribute whatever percentage? So basically I'm just going through that with my expert. And if you have, if your expert can do charts and, and things like that to, to aid the jury and aid the court, that's even better. I love when I have experts that'll do that. And you know, comes with talking to your expert beforehand and coming up with the visual aids to, to just simplify everything because honestly for a lot of people the financial expert testimony can be a little long and sometimes dry. I personally like it because of my accounting and finance background, but that's not the same with everyone. So those are the types of things that I talk to the expert.
- [42:07]
B
And you already hit on this a little bit. But let's circle back to when you're crossing a financial expert. Can you say again what those areas were that you hit?
- [42:18]
A
Yeah. Start with the methods, the method used and you know, you can say they use the wrong method. Maybe they should have used the asset approach instead of the income approach. Also the discounts, the lack of marketability and lack of control. If someone has less than a 50% interest in a business, chances are the expert will, will decrease the value by a certain percentage because that person's interest may not be able to be sold. There may be a company agreement where they can't sell it. Privately held company and also it can be discounted because they don't have control, they don't have that decision making ability. And those are somewhat subjective numbers in a business valuation. So that's where a good line of attack is also personal goodwill versus professional goodwill. So it's the example we talked about earlier with the lawyer that has a solo practice that may make 5 million a year, but the business wouldn't be worth that because it's based on that lawyer's goodwill. If that lawyer shut the firm down, moved next door, started it over, where's the 5 million going? Probably with that lawyer. So if you think that they didn't calculate that correctly or they used the wrong percentage, those are good, good cross examination techniques, good points to hit for.
- [43:51]
B
Anyone not familiar with it. Can you explain the difference between personal goodwill and professional goodwill?
- [43:57]
A
Yeah. So personal goodwill is attributed to that person. Right? It's the, the lawyer, it's that person goes next door and opens that jury. Now the other professional goodwill, sometimes corporate goodwill. There are other words for it, but stick with lawyers. It may be a lawyer who doesn't bring in a lot of business that works, that is partners in a big firm, but if they left, probably wouldn't take that much with them. Goodwill would be attributed to them working at that large firm. Right. Also, if it's someone that owns a big business with a, with a big name, but that person, the owner, no one knows who the owner is, but they know what the business is, that's going to be corporate goodwill. And it's typically for people that own part of a business that aren't necessarily the ones bringing in the business. The people that may run the day to day operations, but if they left, the business would continue to thrive. So if the interest in the business is attributed, what's attributed to corporate goodwill or professional goodwill, that's marital property. Personal goodwill is not. So that just goes along with the person. It's, some people say it's separate property. I think it's actually neither. It's just not property. It just goes with the person.
- [45:28]
B
Right. So that's, you know, if you use the law firm example, if you had a law firm and you grow, build it up and you have a lot of people working underneath you and you could, you're, you're out of a day to day and somebody else could slip in and it will keep functioning the way that it is. We have corporate will and it's a much more valuable asset than if that firm owner backs out and now nobody goes there anymore because all they cared about was the owner.
- [45:54]
A
Exactly.
- [45:56]
B
Okay, so we're just about out of time. But one question that I like to ask everyone that comes on the podcast is if you could give one piece of advice to young family lawyers, what would it be?
- [46:07]
A
First, is that ever be afraid to try new things? When I was young, starting out, I mean I obviously wanted to, to, to be in a courtroom and I've done that now for 18 years. I've enjoyed it. But you know, in the beginning it's nerve wracking. But get out of your comfort zone and that, that applies to life in gym too. The more you get out of your comfort zone, the more, the more you enjoy things, the, the less boring it gets. I keep trying to learn new things and want to take on new kinds of new kinds of family law cases, issues I haven't seen before. That's more fun. So yeah, never be afraid.
- [46:53]
B
Excellent. So where can our listeners go if they want to learn more about you?
- [46:58]
A
Well, you can go to webfamilylaw.com where you'll find my bio. My email is Greg greg. That's@webfamilylaw.com you can contact me there. Want to learn anything else? Have any more questions, feel free to shoot me an email.
- [47:16]
B
Perfect. Well, thank you so much for joining us today and for our listeners. If you enjoyed this podcast, please take a second to leave us a review and subscribe to enjoy future episodes.
- [47:27]
A
The Texas Family Law Insiders Podcast is.
- [47:30]
B
Sponsored by the Draper Law Firm. We we help people navigate divorce and.
- [47:34]
A
Child custody cases and handle family law appellate matters.
- [47:39]
B
For more information, visit our website at www.draperfirm.com.