Joint Retainer or Two Experts?

When a separation involves a privately owned business, the parties need to decide how to obtain valuation evidence. They can consider appointing one valuator together, retaining separate experts or arranging a review of an existing report. The choice should reflect the questions in dispute and whether the proposed process will give both spouses confidence in the evidence.

Manitoba’s family proceedings rules emphasize cooperation, proportionality and resolving matters fairly without unnecessary expense. Those objectives support considering ways to avoid duplicated work, but they do not establish that one valuation arrangement suits every file. Counsel should assess the procedural requirements and any existing court directions. [1]

Independence applies to either arrangement

A joint valuator does not negotiate a middle value between the spouses’ positions. The assignment is to reach a conclusion supported by the evidence. Under CBV Institute’s standards, an independent valuation report is prepared by a valuator acting independently and objectively. [2]

The same expectation applies when only one spouse retains the valuator for an independent report. Paying the invoice does not entitle that spouse to a preferred conclusion. Ask prospective valuators about prior work for the business or either party so potential conflicts can be assessed before the engagement begins.

When a joint retainer can work well

A joint engagement can reduce repeated document requests and give both spouses the same explanation of the valuation. It is worth considering where the parties can agree on the assignment, provide access to relevant records and accept a fair process for raising questions. Agreement on the eventual value is not required at the outset.

For example, both spouses might accept the financial statements but disagree about reasonable compensation for the working owner. One valuator can examine the duties performed and the available compensation evidence. A disagreement of that kind can be investigated within a joint assignment if both parties trust the process.

The practical saving depends on how the engagement operates. Repeatedly changing instructions, withholding documents or reopening settled factual questions can consume the savings from sharing an expert. Joint appointment needs cooperation with the investigation as well as agreement on the name of the valuator.

Set the process out in writing

Practice Standard 120 requires a written engagement agreement identifying the assignment and expected scope. Its explanatory guidance includes the valuation date, intended users, fees and responsibilities of the parties. A joint engagement should make those arrangements clear for both spouses and their advisers. [3]

Agree how records will be requested and shared, how each spouse can raise concerns and who can authorize additional work. Technical interviews may require direct contact with management or the accountant; a fair process does not require everyone to attend every conversation. It does require an agreed approach to documenting and sharing material information used in the analysis.

Where one spouse manages the company and the other has little familiarity with its accounts, allow time for explanations and questions. Access to the same documents is more useful when both parties can understand how the important figures affect value.

Fees deserve specific terms, including deposits, payment responsibilities and approval of overruns. Counsel should also address confidentiality, privilege and disclosure rather than assume that a joint expert provides private advice to either spouse. The engagement should explain what happens if instructions conflict or a party wishes to withdraw.

Decide what happens after the report

Retaining an expert jointly is different from agreeing to accept the resulting value as binding. Counsel should settle that distinction expressly before the work starts. The parties should understand their opportunity to ask questions, correct factual errors or obtain advice on the completed report.

If new evidence emerges, agree a route for considering it and any resulting fees. The expert should not be left to decide legal disputes about the valuation date or the parties’ rights. Where appropriate, counsel can request alternative calculations showing the effect of competing instructions.

When separate experts may be appropriate

Separate experts deserve consideration where significant concerns about the existing analysis require independent examination, or a joint process cannot be established on workable terms. Each expert still needs reliable information and a properly defined assignment. Two retainers do not cure missing disclosure.

Two valuations are most useful when the reasons for disagreement can be identified. Different dates, ownership interests or information sets can create apparent differences that have little to do with valuation judgment. Counsel can ask the experts to reconcile those matters before commissioning extensive further work.

Where a discussion between experts is appropriate, its terms should be settled through counsel. Identifying agreed facts and the financial effect of remaining differences can narrow the dispute. An unexplained compromise between two conclusions provides less useful evidence than an examination of why they differ.

A review can be a useful intermediate step

A second full valuation is not always necessary to assess a concern. CBV Institute recognizes Limited Critique Reports, in which an independent reviewer comments on another report without providing a separate valuation conclusion. The review must disclose its scope and limitations. [4]

A focused review might examine whether an earnings adjustment has support or whether debt was deducted twice. It cannot be treated as a complete alternative valuation merely because it identifies a weakness. If a new conclusion is required, discuss the additional scope before relying on the review for that purpose.

When discussing a retainer with Acadia Hill, provide any existing report, the questions in dispute and the relevant court directions. Together with counsel, that information helps establish whether a joint valuation, separate opinion or focused review would address the matter efficiently. The arrangement should give both spouses a clear understanding of the work and how its conclusions will be used.

Peter Fast, CBV, Acadia Hill

This article provides general information and is not legal, tax or accounting advice. The appropriate scope depends on the purpose, intended users, available evidence and specific circumstances of the engagement. Family law counsel should advise on how the law applies to your situation.