Litigation Support - Family Law

Article Dean Dorton

Recently, Dean Dorton hosted its 2020 Forensic Accounting for Attorneys webinar. The purpose of the event was to teach pertinent fundamental tools and practical tips that attorneys can use to help their clients achieve favorable financial outcomes in a variety of settings. The webinar covered a variety of topics including the impacts of COVID-19 on business valuation, IT management and cybersecurity, and a panel discussion on best practices for working with financial experts.

As the year 2020 begins to wind down, here are a few takeaways for law firms planning for 2021 and beyond:

  1. COVID-19 and Business Valuation – Economic and Industry Considerations – COVID-19 had a clear impact on the economy which ultimately affects business valuation. Consumers have reacted to COVID-19 and related shutdowns with decreased activity and more online purchasing. This consumer behavior has caused many businesses to try to adjust to new patterns. National analysts are projecting it may take a several years to fully recover from the coronavirus pandemic and related shutdowns. However, that impact is not universally downward. Many industries such as groceries and technology have boomed while others such as restaurants, hospitality, and entertainment have struggled. Careful consideration of the facts and circumstances of each business are required as many rules of thumb have been upended and market prices quickly become outdated in business valuation calculations. Continue reading to find out what this means for business valuation calculations and the business valuation income approach.
  1. COVID-19 and Business Valuation – Income Approach to Valuation Considerations – Prior to COVID-19, many valuations under the income approach were completed using capitalized earnings (one period) models. Due to the nature of the economic and industry impacts discussed above, valuation experts have to consider the need to address changes in Company cash flows that might occur over the next few years. Where historical results were stable and could be used as an indicator of the future, COVID-19 has changed that assumption for most businesses. The past may not be as strong of an indicator of future cash flows. This has created the need for the use of a discounted cash flow model, which relies on company projections to address changes in future cash flows over a multiple year analysis. Some valuation professionals are creating multiple scenarios, weighted by probabilities, when forecasting future cash flows. This allows the valuation analyst to consider the different impacts the virus may have on the economy and the specific company in the future. We recommend working with a certified business valuation professional in order to provide your clients with the most accurate data.
  1. IT Management and Cybersecurity – IT management and cybersecurity are crucial to keeping your law firm running but have you done enough? The quickly evolving industry of data protection makes it unwise to assume that your data and information (both your law firm’s information and your client’s information) are protected from a cyber-attack. As technology continues to advance at a rapid pace, it is ever more important for businesses to secure their sensitive information. Standards are quickly becoming stricter with client expectations rising and many states adopting strict reporting standards, especially for law firms working with those in an insurance-related capacity. It is pertinent to make cybersecurity a top priority. Doing so does not mean you have to spend six-figures on cybersecurity. Prioritizing budget money for cybersecurity means utilizing tools like Dean Dorton’s cybersecurity assessment and scorecard to determine where you have cyber security weaknesses. This will help you identify your greatest areas of risk, and allow you best address them within your budget and timeframe.
  1. Expert Testimony – Three of our Dean Dorton expert witnesses, Elizabeth Woodward, John Herring, and Missy DeArk, have been busy throughout the year despite the impacts of COVID-19 on the legal system. The rapid change to virtual communication and testimony led to some advantages, including convenience and decreased travel time/expenses. Disadvantages noted by our team members include potentially longer trial times, exhibit presentation challenges, and issues with technology not working. Some tips for using expert witnesses in virtual testimony moving forward based on our team members’ experiences include:
  • Having a practice session between the attorney and the expert witness
  • Familiarizing yourselves with various video conferencing systems such as the popular Zoom and Cisco Webex platforms
  • Investing in the necessary tools to deliver a high quality experience

As your law firm continues its planning for 2021, it is worth your time to consider the items listed above and how they will impact your clients and your firm.

For more information about our litigation support services, follow the link below.

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Have questions? Email us at insights@deandorton.com

Article Dean Dorton

We do not want to see any company go through the bankruptcy process but there are instances in hard times where bankruptcy is the best option. Often times, bankruptcy is viewed as “your company failed” but the bankruptcy process exists in order to give companies a second chance and potentially right the wrongs of what was done that got them there in the first place.

According to the Journal of Accountancy’s article Red Flags During the Bankruptcy Process, it is best to seek a professional’s advice quickly when signs of potential bankruptcy start to appear. Sometimes a bankruptcy attorney can help work out payment arrangements so that actually filing bankruptcy can be avoided. If a bankruptcy filing is pursued, the attorney can help the company get its financial records in order to facilitate a successful bankruptcy process.

The article gives an example surrounding messy or misleading financial records indicating, “When filing for bankruptcy, misleading income or financial statements can put individuals and organizations of all sizes at risk of being charged with fraud. For example, in the case of an individual filing for bankruptcy, the failure to disclose income from freelance work could be considered fraudulent.”

Another example includes recent transfers of cash or high-value assets. “Sometimes debtors will try to transfer property to friends or family, to protect it,” said Elizabeth Woodward, CPA/CFF, the director of Forensic Accounting and litigation support at Kentucky-based firm Dean Dorton and chair of the AICPA Forensic and Litigation Services (FLS) Committee. “They may not know they are committing fraud.”

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Article Dean Dorton


Assessing your business to be ready for a comeback.

I don’t want to be the guy who is always trying to make lemonade when life throws a lemon. I also do not want to minimize the severity of the COVID-19 pandemic. However, I do have to point out that the COVID-19 pandemic presents many businesses a unique opportunity to restart in a stronger position than they were in prior to the pandemic. The business environment that will exist once the effects of COVID-19 are diminished and social restrictions are lifted may be different from what you were accustomed to. Businesses need to start preparing to capitalize on new opportunities to grow and strengthen their operations. Businesses that have the self-awareness, proper team, and clear focus can position themselves to thrive as the world finds a new normal. Here are ten ideas to make your business better.

10 Ways to Make Your Business Better PDF
1. Be honest about your business strategic strengths and weaknesses

Where does your business thrive? In what areas should your business deliver world class / best-in-class service? Where is your business only average, or below average? Were staple revenue streams showing some signs of decline?  What pain points have you felt for years but have never dealt with (those will still be there post-pandemic)? Are there additional revenue streams, products/services that need to become a focal point? Is your overall business being handicapped by under performing segments? If operations have been idled due to the pandemic, consider the possibility that some segments of your operations should be closed indefinitely. Businesses should use this economic slowdown to understand the points of leverage they have over their competitors and those that will be differentiators post-pandemic.

2. Understand the business environment and what has changed

The post-pandemic business environment may look very different from the pre-pandemic business environment. The world made a very rapid adjustment to social distancing. Millions of workers have been logged into their workspace from home for weeks now, many for the first time ever, and many are surprised to find they like it. Flights have been grounded forcing the sales-force and consultants to interact with their clients and teams virtually. The one-on-one interaction that many businesses were accustomed to has been replaced by telecommuting. Businesses may find that they no longer need the corporate office space that was once idolized, nor do they need the robust retail space to serve customers that have grown even more accustomed to online retail.

Businesses reliant upon gathering of individuals (hospitality, entertainment, travel, food service, sports to name a few) need to be aware that social distancing has forced customers into their homes for significant amounts of time, with limited trips of any kind, and an inward focus on natural community to meet many needs. Also, the realization that many basic goods and services can be met online (think telehealth, religious services from the family living room, Google Classroom and food delivery) has fostered a consumer “cocooning” effect. Consumers have accepted being restricted to their home. Also, expected post-pandemic health anxiety (avoidance of handshaking, large groups, unnecessary business travel), as seen in post-pandemic China, further adds complexity to the consumer environment businesses will face.

3. Understand your opportunities – customers/services

After doing a thorough analysis of your business (pre-pandemic) and giving consideration towards what the post-pandemic business environment will look like, businesses need to carefully examine their opportunities. How can they re-engage with both existing and new customers? Businesses seeking to enhance their value and market share need to align their obtainable strengths (the differentiators that set them apart from competitors) with the opportunities that will be in high demand post-pandemic. Understanding opportunities in the post-pandemic economic may mean:

  • Shifting from physical presence to an online retail presence
  • Reassigning team members to emphasize new or different services or products
  • Recruiting people to the business with skill sets that have never been required
  • New strategic alliances to protect the supply chain, secure access to capital
  • A marketing shift to create a new public persona

Businesses must also consider that the economy may re-open in stages. Each stage may have its own opportunities and life cycle. Businesses must consider its timing as it pursues post-pandemic opportunities and plan accordingly.

4. Know your team

Most businesses are only as good as the team they employ. To maximize identified strengths or potential strengths, to navigate the post-pandemic business environment and to capitalize on upcoming opportunities businesses must have a strong cadre of team members to support the mission. Businesses must identify the key roles that will be crucial for their success, identify the skills required for those roles, and do an inventory of their organizational structure to identify any roles or skills that are lacking. Businesses also need to consider opportunities to shift pre-pandemic responsibilities between team members to capitalize on under-utilized skills or abilities. Businesses may need to consider outsourcing non-essential activities such as accounting, human resources, and marketing to free internal resources and gain access to external resources. Lastly, businesses need to consider their succession plan.  Do you have a plan in place to transition key roles and responsibilities if needed? Is your business protected from the unexpected loss of a key team member?

5. Know your needs – Evaluate your supply chain

Consumers have benefited from the global economy since the Reagan presidency. The global economy brought global supply chains which emphasized efficiency above all else. The COVID-19 pandemic has revealed the risks assumed by over dependence on global supply chains. Businesses will likely reconsider the emphasis on efficiency and explore options for supply chain reliability and control through domestic options. This may lead to re-shoring of international manufacturing as losses in the short term are outweighed by the risk of efficiency. This creates opportunities for local industries that have been impacted by the import economy but will require businesses reliant on international suppliers to manage costs and supply chain relationships.

6. Know your community – Key relationships

To be stronger in the post-pandemic economy, businesses need to identify those external relationships that will be key in helping the business succeed. This includes financing relationships, key stakeholders, significant vendors, legal counsel, tax/accounting, human resources, real estate and on and on. Businesses should be proactive in communicating any strategic initiatives with its key relationships to ensure alignment. This may include replacing some relationships with new participants, adding new types of relationships, and having difficult conversations with a relationship that needs to bring more value.

7. Prioritize your marketing plan

Most business’ marketing and sales funnels have been smudged, if not erased. Marketing efforts will need to be rebooted. Businesses should not assume customers will automatically return. Businesses should not assume prospective customers are exactly where they were in the sales cycle pre-pandemic.  Marketing efforts need to be tailored to a new business landscape sensitive to an economy that has been quarantined for many weeks. In some cases, businesses will need to work to re-build awareness of its services and products, especially new services or products. As always, the timing of the marketing strategy will be essential.

8. Plan for next time

The medical community has identified an unsettling trend. From 1900 to 2000, the World Health Organization identified 4 pandemics (including AIDS/HIV, which is ongoing). Since 2002, the World Health Organization has identified 5 pandemics (excluding AIDS/HIV, including COVID-19 which is ongoing). Businesses need to be prepared for future situations such as the COVID-19 pandemic. Factors to consider when building such a contingency plan:

  • Team member safety
  • Access to cash or capital
  • Continuity of services
  • Communication protocols
  • Inventory / supply stockpile
  • IT infrastructure integrity/security
  • Data availability

9. Establish the vision for what the business will be

It may be hard to see beyond the imminent threat of the COVID-19 pandemic, but successful businesses see beyond the dark horizon and envision what can become in the long term. This vision will serve as a guiding star as short and mid-term challenges are navigated. The world is changing more rapidly than it ever has. Future growth and opportunities come from seeds that are planted today. All business analogies ultimately point towards Apple, so consider Apple 20 years ago. The dotcom bubble was crashing and the Apple computer business was failing. While the traditional Apple business was in a pinch, the leadership of Apple was envisioning the iPod and iPhone, which would go on to alter life as we know. If you struggle to cast a vision for your business, start with a perspective of gratitude for the fact that your business is surviving and build your vision from there.

10. Communicate… then communicate some more

If a mighty tree falls in the woods with no one to hear, does it make a sound? I have no idea. I do know that a business with a great plan but a failure to communicate it effectively has set itself up for loss. As businesses build their plan and formalize their identity for the post-pandemic era, they must communicate effectively. Key team members and strategic partners must understand your business’ intentions. Short, mid and long-term plans need to be communicated to provide guidance in the day-to-day and to provide stability over the mid and long-term time frames. Communicate how business is going to be different going forward. Communicate new cultural guardrails and expectations. Empathize with team members as they adjust to a new normal but be rational about the facts of the situation and the opportunities ahead. Instill confidence in team members by letting them be part of the long-term plan.

These are indeed interesting times, but these are times that businesses can use to add value to their future operations. Businesses that engage the new environment, are sensitive to their current and future customer needs, and that can be agile enough to deal with the challenges the restart will bring should be positioned for long term success.

We would be thrilled to talk to you about your business. If you would like to brainstorm more about how to strengthen your business for a successful post-pandemic relaunch, please contact Justin Hubbard at jhubbard@deandorton.com.

Article Dean Dorton

Very few companies are immune to the collateral economic impacts of the COVID-19 pandemic but law firms are unique in their ability to face challenges and rise to the occasion. Law firms can be significantly impacted by court closures among other things, but continuing to take disciplined and practical steps in the days, weeks, and months ahead will help put you and your management team in a better position to emerge from this with your firm intact and with a secure future ahead.

Based on our work with law firms for more than 35 years, we have some survival strategies that leaders of law firms can use to help navigate this unprecedented time:

Manage Your Cash Closely

We all know that cash is what keeps the lights on. Think strategically about how to improve your firm’s cash position, while reducing unnecessary outflows:

Revenue/Inflow:

  • Tightly manage collections/AR:
    • Schedule a weekly “check in” call with your attorneys
    • Delegate and document who will be contacting clients for collection
    • Call clients to secure commitment on when they will pay and confirm by email. Follow up with them weekly if necessary
    • Consider offering a discount (10-20%) for those who pay within 15-30 days
    • Send out bills as close to the end of the month as possible. On large matters, review prebills mid-month so changes and updates are completed.
    • Shorten your billing cycle. Identify clients who can be billed mid-month.
    • Monitor cash receipts daily
    • Review trust accounts for money that should be transferred
    • Apply all unapplied cash
  • Secure external financing
    • Draw down on your existing line(s) of credit if possible
    • Inquire with your bank about increasing your line(s)
    • If you have existing covenants that you fear defaulting on, discuss them openly with your banker (before you risk breaching them)
    • Consider alternative sources of financing and assess whether you qualify for an SBA PPP or EIDL loan – many law firms qualify. If you have not considered the SBA loans, it may be worth it to apply; Do this quickly, as funds are capped.
      • Once you receive your funds, make sure you set up everything correctly before you start spending as you want maximize the influx but also meet your bank’s forgiveness requirements (for PPP loans). Have questions about this? We are happy to analyze and assist for your specific law firm’s structure.

Expenditures/Outflow:

  • Review compensation firm-wide, if necessary
    • Reduce or suspend partner draws
    • Implement temporary salary decreases or deferrals (partners, associates, staff)
    • Modify work schedules/compensation for non-exempt employees (e.g., 80% pay/4-day workweek, 60% pay/3-day workweek, etc.)
    • Consider furloughs as an alternative to layoffs – there is an insurance benefit to the employee to being furloughed vs. being laidoff. If an employee is furloughed, they continue to have health benefit at their unfurloughed cost. So, if they normally pay $100 per pay period, they continue to have that benefit. The nuance is how the employer gets reimbursed.
    • Reevaluate pension plan matching and employer contributions and consider funding them quarterly or annually (vs. each pay period)
  • Review all vendor contracts and firmwide operating expenses
    • Audit all expenditures and classify as essential vs. non-essential
    • Eliminate all non-essential expenses; be honest about what you can live without
    • Renegotiate fees and payment terms on essential services where possible (e.g. review parking to see if it can be suspended while your firm works from home)

We recommend monitoring your cash flow daily. If you need assistance in doing so or if you need other short-term accounting and financial help, we have the tools and team that can help you.

Tightly Manage Your Workflow

It’s time to utilize and allocate your human capital resources wisely and use technology and outsourcing to your advantage.

  • Review all current clients/matters
    • Make sure people are working only on those who will pay — stop working on clients that aren’t paying and alert clients accordingly
    • Implement retainer agreements where you can
  • Establish a mandatory daily timesheet submission policy for all timekeepers
    • Monitor to see where there is excess capacity and shift work to those individuals
    • Make sure everyone is working/billing as much as possible and that it is realizable time
  • Evaluate your firm’s practice areas and shift resources to those that might pick up in the current environment and away from those that might drop off
  • Monitor contingency case work (and costs) closely and/or move those clients to hourly or fixed fee pricing if possible

Re-evaluate and Re-budget

2020 is looking a lot different than you might have expected just a few short weeks ago. Right now, your focus will be on surviving the next 4-6 months, so projections and monitoring will be key.

  • Develop management reports that let you focus on the most critical issues
    • Create a detailed weekly 10-12 week rolling cash flow budget
  • Monitor cash, A/R and billable hours daily
  • Run multiple budget scenarios and monitor them weekly/monthly

Communicate – There is No Such Thing as Over-communicating Right Now

You, your team and your clients have all been adapting to a tremendous amount of personal and professional change as a result of the COVID-19 pandemic impacts. Since most people are working remotely (many for the first time) and meeting face to face is currently not an option, finding other ways to stay well-connected is critical. Dean Dorton Technology has years of experience serving as a managed service provider for law firms throughout the Southeast region and can provide any remote resource you need including remote implementation of free trials of best-in-class secure cloud-based technology:

  • Video conferencing
  • Teleworker VPN solutions
  • Cybersecurity for working remotely
  • Cloud based accounting systems
  • Team collaboration tools
  • Cloud solutions

Internal Communications:

Schedule daily or weekly team calls (via video, ideally) to check in with your people. Having a routine touch point will help them keep connected to each other, your clients and the firm itself. Eat lunch or breakfast together or hold a virtual happy hour. Ask your people for input into the format and schedule that works best for them.

Update your team on firm-wide developments. Be as transparent as you can. Hold video town hall meetings. Let team members raise questions and concerns while you keep them engaged with the firm’s essential mission of providing value to your clients.

Without a doubt, this is a uniquely challenging time and we don’t have a crystal ball to know when it will end. That is unsettling for us as humans on a fundamental level, but the better we are all able to adapt, the better position we will collectively be in when we come out on the other side.

Get the Help You Need Now; Shape Your Future

We understand you cannot do it all. It simply is impossible. Dean Dorton has the team and expertise to help you. We have short term solutions to get you through the next 4-6 weeks, but also long-term planning and management strategies to help you shape your future the future of your firm to be the absolute best law firm you can be:

Do not hesitate to reach out, even with the simplest of questions. We will get through this and be better for it, together.

For more information on how the Coronavirus is impacting businesses across multiple industries, visit our COVID-19 resource page:

COVID-19 Resources

Article Dean Dorton

The AICPA recently issued a new standard which will apply to all members of the AICPA—not just those that have specialized credentials like Certified in Financial Forensics (CFF) or Accredited in Business Valuation (ABV). The Statement on Standards for Forensic Services No. 1 (SSFS1) will be effective for all engagements that the CPA accepts on or after January 1, 2020.

SSFS1 will apply in litigation support and investigation engagements. The term “litigation” includes disputes and all forms of alternative dispute resolution, not just formal litigation. An “investigation” refers to a matter conducted in response to specific concerns of wrongdoing in which the member is engaged to perform procedures, the results of which will help stakeholders form conclusions on the merits of the concerns.

SSFS1 is a big step for the accounting profession. In the last 20 years, forensic accounting has grown and evolved to match the legal community’s expectations. SSFS1 formalizes the best practices identified by industry leaders. Elizabeth Woodward, Dean Dorton Director of Forensic Accounting, serves on the AICPA’s eight-person Forensic and Litigation Services Committee along with Dave Duffus, who is interviewed in an article that explains more.

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What does this mean for me?

If you hire, or depose, accounting experts you should read SSFS1. You will want to insure that experts you hire know about, and follow, the standard. You will also want to use deposition to make sure the opposing expert is aware of, and followed the standard. If you have questions on the new standard, or its implementation, please contact Elizabeth Woodward or any member of the Dean Dorton Forensic and Business Valuation team.

Article Dean Dorton

See original article in Louisville Business First

Missy DeArk, Dean Dorton’s Dean Dorton’s Associate Director of Litigation Support and Valuation Services Business Consulting Group, was recently listed among the 20 professionals who earned a spot on Louisville Business First’s 20 People to Know: Accounting.  

Years in current job?

10

Years in accounting?

27

What particular role do you play in your organization?

I am a part of our litigation team and owner at Dean Dorton. We are the largest litigation group in the region. We are a valuable asset to attorneys, assisting with the financial pieces of their cases and providing expert witness testimony, but also to business owners, providing valuations for strategic planning and a variety of other reasons. My focus is in family law disputes, business disputes, mergers and acquisitions, forensic accounting and business valuations. As a leader of our firm, I strive to be a well-rounded adviser to individuals and businesses, helping them maintain and grow their value.

What do you wish more people understood about the work that accounting professionals do?

Accounting is not the same thing as preparing taxes — I know, I just blew your mind. Accounting has many branches of practice, one of which, of course, is tax services. Litigation and forensic accounting is an exciting, whirlwind branch that can range from alimony calculations and forensic accounting investigations (you would be surprised how much fraud happens within companies) to disposable-income and cash-flow analysis and asset tracing.

Not many accountants like it because it is very unpredictable — it is absolutely the reason I love it. Each day is never the same for me.

What advice would you give to someone considering a career in your field?

The demand is currently high for certified public accountants (CPA) and there are numerous avenues one can take within the field, so becoming a CPA doesn’t mean you’ll be doing tax returns for your career — there are plenty of opportunities to become a true business adviser outside of performing daily tasks. With hard work, rewards of a generous pay scale and opportunity for advancement can be achieved. Take time to shadow someone in the area of accounting you may be interested in — learn more about what they do on a daily basis and see if it is a good fit for you. If you feel it is, pursue an internship.

What is the biggest challenge facing the accounting industry right now?

I would say this is two-fold: We are a service business — attracting talented and dedicated people who enjoy serving clients is always a challenge especially given perceptions about the accounting field. We aren’t all the “typical” accountant you may be picturing! Our team prefers to act as business advisers who really look at our client’s entire picture to provide a holistic approach and advice. Secondly as technology advances the accounting industry must advance along with it; from the way internal processes work to client information sharing along with the data analytics tools we now have access to, we are constantly finding new and innovative ways to provide services.

How would you solve that challenge, given the chance?

In regards to talent, I think educating students as young as high school about career fields and what opportunities exist can help solve the challenge. Someone who may think an accounting degree is only good for doing taxes may find interest in other avenues like I did and stay in the area because they know there are opportunities for them. Technology is continuously evolving so we must evaluate existing programs more regularly and be listening to what’s going on in the industry on national and international levels.

What’s the most rewarding part of your job?

I spend a significant amount of time in the family law arena. People ask “Why?” Going through a divorce is a very scary process which I can personally attest to. I enjoy being able to help families resolve their financial issues outside of the courtroom. Once your case goes to a judge, you have lost all control and judges are only able to spend a small amount of time hearing about your situation while their decision will affect the rest of your life. I like to see people control their own outcome. After the case is over, a hug and a “thank you” for assisting the client to the end is the best.

Why do you have the career that you do?

From a market perspective, financial issues and challenges tend to scare the average person. I like to help clients navigate through the difficult times and have them feel empowered when they get through the “tunnel.”

My personal success in my career has come from years of hard work and my love for learning. Prior to specializing in divorce tax and financial issues along with business valuation, I was a controller and CFO for more than 16 years which taught me to work hard for what I wanted to achieve and never stop asking “why?”

Missy DeArk can be seen presenting during the Sunday AM Workshop; “The Talk of the Town: creative strategies for cultivating collaborative practice in small communities” at the upcoming 2018 International Academy of Collaborative Professionals Forum on Sunday, October 28th in Seattle, WA.