One of the hot new things in the area of divorce, especially for high net worth clients, is using a law firm that has forensic accountants on staff. Sometimes the divorce attorneys themselves have credentials in the area of forensic accounting, such as a CPA license, CFE (Certified Fraud Examiner) credential, or CFF (Certified in Financial Forensics) credential.
These law firms tout a number of advantages of retaining them:
- Expertise in financial matters, including business valuations, tax law, and forensic accounting
- Ability to investigate the value of financial assets
- Skills necessary to perform a lifestyle analysis
While these skills and abilities certainly can’t hurt the divorcing client, using your divorce lawyers to fill your forensic accounting needs also has some big disadvantages. As I discuss in my upcoming book Lifestyle Analysis in Divorce Cases: Investigating Spending and Finding Hidden Income and Assets (being published by the American Bar Association), using an outside forensic accountant is preferable for the following reasons:
- Experience in financial investigations means the work can be completed quicker and more efficiently. The results are often presented better since experts present their results in court and are used to making things understandable for non-accountants.
- An outside expert can testify, whereas law firm personnel cannot. Even though the family lawyer might not intend for the case to go to trial, it is always a possibility; therefore, it pays to have a financial professional who could testify if necessary.
- An outside expert is generally perceived as more objective. Ethical forensic accountants attempt to be independent and objective in their opinions, which bolsters the credibility of the calculations.
- Forensic accountants have experience finding red flags and issues. Their analysis is often more thorough, and their ability to spot problems is often more developed. This can be invaluable for finding issues that were previously unknown.
If the client uses law firm personnel to fill the forensic accounting role, and later needs an outside expert for the case, he or she ends up paying twice for forensic accounting services. It is often more cost effective and efficient to use an independent forensic accountant from the start.