November 2011 Lost profits are typically understood to yield higher damages than reasonably royalties, but this is not always the case. Higher reasonable royalty damages most frequently occurs when the patent holder (inventor) is not in a position to exploit the invention by manufacturing the product himself. In such event, (i) the inventor cannot make [...]
November 2011 The District Court appointed an independent expert on the issue of damages pursuant to Rule 706 of the Federal Rules of Evidence. The public may learn about the Court-appointed damage expert’s conclusion as early as this week, since the independent expert’s report is due on November 14, 2011. No doubt, the District [...]
November 2011 When a minority interest in a privately-held company is transferred, a discount from the value of the entire company is calculated to reflect the lack of marketability of such an interest. These marketability discounts are important in many estate plans and related transfers. These discounts for lack of marketability (DLOM) should be calculated [...]
October 2011 In early September 2011, a trial court ordered a new trial involving a jury verdict in which Oracle obtained a $1.3 billion verdict from SAP. By all accounts, Oracle’s verdict is the largest ever awarded for copyright infringement. In lieu of a new damages trial, Oracle can accept a remitter of $272 million [...]
October 2011 On October 9, 2011, Governor Brown signed into law Senate Bill 459 regarding independent contractors. The law significantly increases the risks and penalties for misclassifying workers as independent contractors by imposing significant penalties on employers found to have engaged in a misclassification, as well as on non-lawyer advisors (like accountants) who advise an [...]
October 2011 Many small businesses attempt to save taxes and employee benefit cost by classifying their workers as independent contractors. When business owners classify workers as independent contractors they do not pay the employer’s share of Social Security and Medicare costs, state employer taxes, state unemployment insurance taxes, and workers’ compensation insurance premiums. Independent contractors [...]
September 2011 In September 2011, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update 2011-08, entitled “Testing Goodwill for Impairment”. This amends guidance in Generally Accepted Accounting Principles (GAAP) Topic 350 involving goodwill and other intangible assets. Because early adoption is allowed, and the new guidance significantly simplifies the current procedures, expect the new [...]
September 2011 Undocumented workers in the United States received refundable tax credits totaling $4.2 billion in 2010, an amount which is dramatically higher than occurred previously. An audit by the Treasury Inspector General for Tax Administration recommended changes in how these payments are made. The IRS dismissed the recommendations, saying (without support) that they did [...]
Intellectual Property licensing is big business, and is getting bigger. But most licensors do not earn as much as they should because they fail to perform royalty audits allowed under their license agreements. The remedy is obvious, but is often not done for fear of the audit's cost or concern over disrupting the licensee [...]
Intellectual property (including patents, trademarks, copyrights, trade secrets, software, entertainment assets, customer lists, in-process research, etc.) is a large portion of the value of most business enterprises. When entering into any transaction involving intellectual property, you need to properly value these assets. This is easier said than done. This article cannot provide a complete "how-to" [...]
Because of the current recession and related bear market, practically every company will need to pay greater attention to its annual goodwill impairment test required under Financial Accounting Standard 142 ("SFAS 142"). Many companies performing an updated goodwill impairment analysis will find that impairment has occurred. In addition, earlier goodwill assessments probably need to be [...]
Appraisal disciplines have a confusing array of credentials. This occurs because: There are numerous asset types (e.g. real estate, businesses, machinery, fine arts, jewelry), with each asset type having its own sponsoring organizations, and There are numerous appraisal and other organizations that sponsor appraisal certifications, with wide variance in the standards employed. This is important [...]
On October 17, 2007, the Securities and Exchange Commission (SEC) published its approval of amended Rule 2290 in the Federal Register. The new rule 2290 involves disclosures and procedures related to the issuance of “independent” fairness opinions included in proxy statements. Specifically, any proxy statement that includes a fairness opinion will soon need to disclose: [...]
May 2011 The Ninth Circuit took a narrow reading of the whistleblower protections provided under Sarbanes-Oxley, and thereby eliminated the applicability of any whistleblower protection. The would-be whistleblowers were two internal auditors at Boeing. Based on the Court’s description: “In January 2007, plaintiffs Matthew Neumann and Nicholas Tides began working as auditors in Boeing’s IT [...]
June 2011 The Dodd-Frank Act, which was signed by President Obama on July 21, 2010, includes (in Section 922) a whistleblower program sponsored by the Securities and Exchange Commission (SEC). This law (i) makes significant changes in the existing whistleblower provisions of the Sarbanes-Oxley Act of 2002, and (ii) authorizes the SEC to pay between [...]
Published in Los Angeles Lawyer, April 2003 Expert witnesses are more important than ever. Most complicated cases do not settle until after the experts have issued comprehensive reports or had their depositions taken. This trend will increase because education had not kept pace with the continuing increase in knowledge, causing an ever-widening gap between [...]
July 2011 A former tech highflier in the 1990s, Nortel at its peak had more than 95,000 employees and a market capitalization of nearly $300 billion. Nortel grew too quickly and overpaid for acquisitions. Nortel filed for bankruptcy protection in January 2009 and has since been selling its assets. Nortel's patent portfolio was recently auctioned. [...]
Published in Los Angeles Lawyer, April 2005 In many respects, the cross-examination of an expert witness is the same as for other witnesses. Some basics include: Be brief…Do not quarrel with the witness…Never ask a question to which you do not already know the answer…Avoid one question too many…and so on. However, there are [...]
Published in Los Angeles Lawyer, November 2004 In the vast majority of circumstances, your deposition results can be improved by adding a few questions that usually challenge expert witnesses. Consider the following practical advice gleamed from hundreds of actual depositions. These questions should be modified slightly depending upon your deposition strategy. Before the deposition [...]
Published in Los Angeles Lawyer, April 2004 If you want to improve your chances of success, commit these ideas to stone. Then follow them religiously. 1. Keep it simple This is the greatest commandment, and the one most frequently violated. Too much information in a visual aid will confuse rather than clarify. Creativity does [...]
Published in Los Angeles Lawyer, November 2002 The following suggestions result from my experience serving as a witness, watching hundreds of other expert witnesses, and locating witnesses when servings as a confidential consultant. They are intended to help attorneys avoid common mistakes in selecting an expert witness. Be careful when your potential expert witness is [...]
Industry Description The dental industry is generally defined as the professional and licensed practice of preventing, diagnosing and treating diseases, injuries, and malformations of the teeth, jaw, and mouth. The dental industry is highly fragmented, consisting mostly of sole practitioners that practice general dentistry. Typical dental offices have one dentist, two oral hygienists and one [...]
Summary of Valuation Approaches There are four different types of valuation methods that can be used to value wholesale distribution companies, as follows: Asset-based valuation The basic formula to use for this method is: The fair market value of a company’s assets less the fair market value of its liabilities = the fair market value [...]
Summary of Valuation Approaches There are four different types of valuation methods that can be used to value gas and convenience stores, as follows: Asset-based valuation The basic formula to use for this method is: The fair market value of a company’s assets less the fair market value of its liabilities = the fair market [...]
Summary of Valuation Approaches There are four different types of valuation methods that can be used to value coin-operated laundry businesses, as follows: Asset-based valuation The basic formula to use for this method is: The fair market value of a company's assets less the fair market value of its liabilities = the fair market value [...]
Description of the Industry The dry cleaners industry (SIC 7211, 7212, and NAICS 812320) provides full service laundering and dry cleaning for consumers and commercial clients. The growth of a dry cleaning business depends on consumer spending, operating efficiency, and favorable locations. The dry cleaning industry is highly fragmented, with the 50 largest firms [...]
Summary of Valuation Approaches There are four different types of valuation methods that can be used to value retail businesses, as follows: Asset-based valuation The basic formula to use for this method is: The fair market value of a company's assets less the fair market value of its liabilities = the fair market value of [...]
Industry Description The hotel and lodging industry (SIC 7011 and NAICS 721110) includes a variety of properties that offer short-term lodging. [1] The properties range from five-star hotels to recreational vehicle parks. Within the United States, the industry includes 51,214 properties of 15 or more rooms. [2] The industry generated $137.5 billion dollars in sales [...]
Description of the Industry The fast food industry (SIC 5812, NAICS 722211) consists of eating establishments where customers pay before eating, including eat-in, take-out, drive-thru and delivery establishments. Fast food franchises, carryout restaurants, delicatessens, pizzerias, and sandwich shops all fall within this category. In general, fast food restaurants emphasize dining at a low cost with [...]
Description of the Industry The restaurant industry (SIC 5812, NAICS 722110) consists of table-service dining establishments. These establishments may also engage in the sale of alcoholic beverages, takeout services, and entertainment. In general, full service restaurants differ from fast-food or other dining places in that they (i) have a full menu of appetizers, entrees, desserts, [...]
Summary Because the starting financial statements often contain important transactions with owner/operators and other related parties, the financial statements will need to be scrutinized and probably adjusted. Once reliable adjusted financial statements are available, the following valuation methods are most commonly used to value auto repair shops: Asset-based valuation – Particularly for a company [...]
Summary The value of an auto dealership facility generally fluctuates with the strength of the auto sales market and interest rates. Although each appraisal assignment is different, the value of a healthy and profitable auto dealership is generally going to place primary reliance on the income and market approaches. A summary of public and private [...]
June 2008 Computers contain evidence useful in many human resource circumstances. Allegations of discrimination, sexual harassment, and unfair discharge are serious threats that are better understood by knowing what an employee did. Since computers are such a pervasive part of most employees’ work lives, analysis of data stored on these computers helps address these issues. [...]
March 2011 The Government Accountability Office (GAO) again reported that it “cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weakness, significant uncertainties, and other limitations.” This has occurred for years. Although each year the federal government states improvements are being made, the bottom [...]
Clients like fixed fees. My firm also likes fixed fees. Here is why my firm would prefer to work under a fixed fee arrangement: We get paid for our expertise and results. In contrast, hourly-rate work sometimes does not fairly compensate the consultant for the value delivered. No one likes to keep track of time [...]