How Personal Injury, Family Law, and Divorce Attorneys Utilize Forensic Accountants in their Business Practices
Forensic accountants use a combination of skills and knowledge, including accounting, auditing, and investigation, in order to examine a company’s or person’s financial statements and transactions. They can be a critical component of a legal team, particularly in the areas of personal injury, family law, and divorce. Cases in these areas of law often heavily involve financial matters and forensic accountants can provide the expertise needed to analyze, decipher, and present financial data, giving attorneys the support and information they need to best represent their clients’ interests.
Forensic accountants can help attorneys in many ways. They may investigate financial records and transactions, analyze financial data as evidence, and prepare exhibits and other presentation materials for the court. They often testify in court as expert witnesses and may provide other types of litigation support. Because forensic accountants play such a key role in legal proceedings, they must not only have a high degree of financial and accounting savvy, but they must also be intimately familiar with legal concepts, terms, and procedures.
In addition to investigatory work, forensic accountants may also perform audits in which they examine financial transactions and other data to determine whether or not they conform to regulatory and legal requirements. Some forensic accountants have also obtained their CPA license as a result of passing the Uniform CPA Exam. As a result they can play a vital role in obtaining documents necessary to support or defend against a claim and can assist attorneys with negotiations and settlement discussions. For personal injury cases, forensic accountants can help attorneys quantify the economic impact of negligence, accidents, or wrongful death. For divorce or family law cases, they can identify and trace property and other assets that should be awarded or shared as part of a divorce settlement, child support, or child custody arrangement.
By having a forensic accountant on staff, attorneys can potentially attract more clientele and larger cases, which increases revenue for both the accountant and or firm. They can also involve the accountant earlier in a case in order to make the best use of their skills and input. They can also reduce the amount of time involved in gathering, analyzing, and preparing financial data. Time formerly spent on locating an available forensic accountant and arranging meeting times and resolving scheduling issues with an external resource can be spent finding or serving clients instead.
Although having a forensic accountant on staff does have an impact on payroll, the benefits of having them on staff more than pays for their salary. According to the U.S. Bureau of Labor Statistics, the average annual salary for accountants and auditors in 2011 was just under $63,000, varying with factors like experience, specialization and geographical area. Accounting consultants can be hired on a case-by-case basis as well and often invoice their services by the hour. As with most professions, hiring a CPA or forensic accountant on a case by case basis is usually much more expensive than having a dedicated in-house resource.
In the end, the cost of not hiring a forensic accountant may be higher than the cost of hiring one. Consider the possibility that a client may receive a much smaller compensation, settlement, or support amount if assets or financial records remain undiscovered. This could result in significant damage to a firm’s reputation and potential loss of clientele. An on-staff resource gives clients easier access to specialized service from an expert, which in turn can lead to client referrals and new business. It also helps position the firm as full-service, with every necessary resource available in-house, giving clients confidence that they can rely on the firm to give them the best result possible. For accountants that have not yet obtained their CPA credential and are interested in becoming a forensic accountant in the future, we can help.