In this episode… 

Our guest, Michael LeRoy, shares his insight as an expert with us. He points out that whether in front of the SEC, state court, or even an ex-judge arbitrator, it is important to be ready for the varied styles you might encounter from judges. Prepare, so you are not thrown off by particularly aggressive or lay judges.  

Check out the entire episode for our discussion about working in arbitration and the importance of solid visual aids.

Note: Transcript has been lightly edited for clarity. 

Host: Noah Bolmer, Round Table Group 

Guest: Michael LeRoy, President, Crown Capital Advisors, LLC 

Noah Bolmer: Welcome to Discussions at the Round Table. I’m your host, Noah Bolmer, and today I’m excited to welcome Michael Leroy to the show. Mr. Leroy is the President of Crown Capital Advisors LLC, an investment banking and financial consulting firm. His specialties include but are not related to corporate governance, damage calculations, mergers and acquisitions, and a lot more. Mr. Leroy holds an MBA in finance from the University of Southern California. Mr. Leroy, thank you for joining me here today at the Round Table. 

Michael LeRoy: Thank you for having me. 

Noah Bolmer: Of course, let’s jump into it. You have decades of experience in finance, including a 20-year tenure as a partner at Price Waterhouse. How did you become involved in expert witnessing? 

Michael LeRoy: I’ll make it a short story. While I was at Price Waterhouse, Price Waterhouse was the first big accounting firm to start doing litigation support for law firms. They got into it with all the IBM antitrust litigation and IBM was our largest client at the time. Then all the other firms followed. Back in those days, lawyers didn’t know how to use accountants as experts. They would use first-year associates or interns to come in and try to figure stuff out. Of course, having never had a business or accounting class they were clueless, and it was a mess for them. [Law firms] were excited about getting people who had some business and accounting background to help them sort through documents, stand back, look at the case, see where they should dive in, and where they should just forget it and go away. It made them more efficient. We got busy as a firm and occasionally I would be asked to step in and help on some of the litigation support projects that Price Waterhouse was working on. I found it fascinating, I found it fun and different from [the] normal consulting work and audit work I did for the firm. I enjoyed doing it because you could be a little more creative than you could in other aspects of a large international accounting firm. 

Noah Bolmer: What was it like back then? How has being an expert witness changed throughout the years? 

Michael LeRoy: Back then we were doing a lot of what I would call detail work and then they discovered accountants who, like me, had MBAs, some had JDs, and [even] some had Ph.D.s and were savvy, smart characters who ought to be used for more than busy work and sorting through boxes and boxes of documents. It expanded from a busy work job with IBM antitrust litigation to a higher-level consulting job. You still have the details and the grunt work that had to be done, but it evolved to a much higher level. 

Noah Bolmer: As part of that evolution, have you noticed any future trends? Are there any newer developments? Has technology played a role or changed things a bit? 

Michael LeRoy: For some of the old geezers and some of the younger upstarts who have been at small local accounting firms with less than 10 people doing a majority of tax work, the problem is that for these experts technology is making it tougher to figure out how to analyze business records and detail, make use of it, and not do it all manually. AI can help with the big firms particularly. I’ve noticed that Deloitte and Price Waterhouse, in particular, have teams of people working on how to integrate AI into their consulting, audit work and analysis they do when they go into a company. The smaller guys don’t see that. I’m fortunate, I sit on several public boards and am always the audit committee chairman. I’ve also been chairman of a couple large companies, so I need to keep up. That experience [allows] me to see what’s going on at a more technical and higher level than the guy sitting in Bakersfield, CA trying to figure out which end is up. 

Noah Bolmer: Do you think that leveraging AI is going to become bigger as we proceed into the future and is that for the better or worse for expert witnesses in general? 

Michael LeRoy: I think what it basically can do, it can be a check on your decisions and your conclusions. If you have a good AI system that’s working, it may come up with something you haven’t thought about. I’ve had that happen before. It can make you more efficient. Which reminds me back in the old days, when I started in public accounting out of graduate school, we didn’t have personal computers. We had mainframes and we were doing our programming on Fortran Four. Then we got into BASIC and then COBOL. You had to be a techno jerk to get into that stuff. Personal computers made it much easier for the normal guy or gal to generate and sort through volumes and volumes of data to [find] an answer. When I first started out, we had a situation where an unnamed gentleman, who was a famous lawyer for the mob, stole- well, borrowed some money from a union headquarters in Las Vegas, NV. He used the money for other things and didn’t pay back the loan. There were thousands and thousands of transactions with roughly a hundred different companies he’d formed. It was a mess. The attorneys didn’t know which end was up or how it happened, so we did it using a computer and with PC’s it made it much easier to program, sort, and get through boxes and boxes of documents or computer data to figure out where the money went, how it got there, and what happened to it. 

8:36 Noah Bolmer: Do you think that AI is revolutionary in the same way that the personal computer was, at least in this industry? 

Michael LeRoy: I think it can be. I’m not sure it’s quite as revolutionary, but it certainly is revolutionary, it can be helpful. It is very useful in making- drawing conclusions, helps you draw conclusions and help you find things that aren’t necessarily black and white. In the old days, you could use decision tree type analysis and it was either this way or that way. There was nothing in between. With AI it’s kind of like the fuzzy logic you have in your car that runs your car seats and has the memory to tell you where your seat should be when you get in and out. That kind of simple stuff is the fuzzy logic, and that’s what AI brings to the table that your old decision tree, yes or no, black or white, doesn’t bring. 

Noah Bolmer: How do you keep track of all the things you’ve said to ensure that you still agree with something you said 30 years ago? That you aren’t impeached on the stand for something that you said a long time ago and the general knowledge has changed. How do you keep track of your history and how do you prepare yourself for those sorts of eventualities? 

Michael LeRoy: Well, here again because of the diverse caseload that I carry, if you wanted to go back to an opinion or some testimony that I did 20 years ago, you’d be hard to find the same case or the same problem in a case you’re looking at. They are so different and there are few things that are cookie cutter. Now, I know there are physicians because I see physician reports. Sometimes, I see construction engineering reports and many times they are pretty cookie cutter, but if you’re a financial expert like I am it’s a broad area of course. From soup to nuts and there is not a lot of cookie cutter going on. 

Noah Bolmer: One interesting thing that I noticed is that you have worked across a wide variety of venues, including before the SEC district courts at least half a dozen state courts. Are there important differences that expert witnesses should be prepared for when taking an engagement in an unfamiliar venue? 

Michael LeRoy: Absolutely. My experience is that let’s start with not even going to deal with courts but dealing with arbitrators. For example, you have individual small arbitrators and you don’t know what you’re going to get a lot of times – it’s from soup to nuts. You can have good ones that are sharp as a tack, and you can have some that are as dull as a hoe. You have to be prepared to deal with that kind of person and modify what you’re going to say. Your report has been written. That’s done. You can’t change that, but you can change your tack when you’re testifying with that arbitrator, depending on their background, but then you can’t find that out until right before you’re ready to testify. I find when you go to court, at least in the State of California, where I do state court, and in other states like North Carolina, Tennessee, Nevada, and Arizona, the state court judges are like the 80/20 rule. There are 20% of judges who are sharp and good. The other 80% are just okay. There may be another 20% at the bottom that are awful. You have to be ready for surprises and you have to be ready to deal with [whatever] type of judge they are, and he or she could be a nose to the grindstone, hardnosed type of person or they could be wishy-washy. You must judge your testimony and how you’re going to interact with not only the lawyers, but the judge, because the judge is listening to everything. Adjust yourself accordingly. I find though that Federal judges are the best. They’re top rung, cream of the crop. They’re all sharp. I have not run into one that isn’t. They’re all very busy, they’re all overworked. They try to be efficient and get things done and I like that. Dealing with the SEC is a whole different ball of wax. When you’re dealing with SEC and go to trial, you’re dealing with federal judges, which is good, but when you’re dealing with the SEC attorneys, most of those guys and gals are full time career attorneys and accountants, in some cases, for the SEC. And here again it’s a hodgepodge.  

Noah Bolmer: Are there any preparation strategies or specific things that you can do to prepare yourself for whatever type of arbitrator or judge you might get? Are there things that that your attorney can be doing to better prepare expert witnesses for their venue?  

Michael LeRoy: You have a bit of lead time to figure out who you’re appearing before and who your expert report has gone to. You try and find out as much as you can about that person, and it depends on what you conclude. In a lot of cases I find that visual aids can help a lot, particularly in complicated business cases, bad antitrust deals, situations where a company gave out rights and warrants to people before they went public. Then everybody tries to figure out what that all means, what the value is, and somebody left two days before it went public. They wanted their money, too, and it got complicated. Here again most lawyers and judges haven’t been educated in that area I’ll use simple explanations using little numbers like 1, 2, 3 [and] 4 rather than millions and billions to try and explain how it works and use diagrams and big charts. Because a lot of people are- in fact most people are better with visual than they are with listening. If you have PowerPoint slides that are very simple, and kind of map out and outline your point you’re trying to get across, it makes it a lot easier for a judge, particularly when you have a jury trial. In a jury trial it’s important to dumb down the presentation of your data and how you came to your conclusions.  

Noah Bolmer: How do you go about procuring these visual aids? Do you produce them yourself or do you go to an outside company? 

Michael LeRoy: Depending on the size of the case, if it’s a small case, I can do it myself. I’m good at PowerPoint. If you’re not good at PowerPoint, there are plenty of young people around who grew up with iPhones and PC’s that can do it in their sleep, like my grandchildren or children. If it’s a large case and you’re going to have a lot of slides and you want it to look professional there are plenty of people out there who do that for a living. You’ll have to take the time to make sure they understand the visual you want. You need to have an idea in the back of your mind of the slides you want and the information you want to show. Sometimes, they’ll come up with great ideas that you haven’t thought of to present it. 

Noah Bolmer: It’s about knowing your audience, in other words, and being able to get complex topics across for laypersons, which makes a lot of sense. Is that also in your reports or is that something for jury trials or depositions? When do you best use these visual aids? 

Michael LeRoy: I’m different from a lot of people. I’ve seen a few other expert reports where they use graphs and charts. But I’m a very graph and charts person. Here again, I think the visual tells the story. I’ll put it in writing, but underneath the writing I’ll have a bar chart, line graph, or a simple table. Not too complicated. The complicated tables and the big data stuff goes in the back with exhibits but even with judges and lawyers on the other side of the fence, a lot of times they won’t really get through it all. Won’t focus on it and understand it. You need to have a couple of pages that say it in simple terms with a couple of simple graphs. Then you can go into more detail in the body of your report. 

Noah Bolmer: You mentioned arbitration. How is alternative dispute resolution different than a jury trial? For instance, for an expert witness, how is the job different? We’ve never done any alternative dispute resolution. 

Michael LeRoy: As I said before, you’ve got arbitrators who are individuals who were lawyers. It’s hard, at least in the State of California, to become an arbitrator if you don’t have a law degree. But there are some, very few. The other arbitrators are these groups, and they generally have, not only high-powered lawyers, but the bulk of them, I’d say based on my history, or my experience, 90% or 95% of them are all ex-judges. Generally, at the state level. There are a few at the federal level. They’re very expensive, but they’re still less money than having to go to trial, fee-wise. That’s how companies in large disputes view it. Now, if you’re going to one of those- if you’re appearing before one of those large groups, there’ll be a specific ex-judge assigned to your case that ex-judge has assistants and people who work for him, just like when he was a real judge and they have mock courtrooms, so to speak, set up in their offices. You get up and sit on the stand just like you would in a courtroom. It’s a little bit less formal than a federal or state courtroom, but not much. It’s very much the same. If you’re dealing with a single arbitrator, he or she may have you meet in their office at a conference table. It’s much more casual, and it wouldn’t make you as nervous if it’s your first few times doing it as going into a courtroom-type scene. 

Noah Bolmer: Have you worked on extensive trial teams with multiple expert witnesses, and if so, to what degree do you collaborate with the other experts? 

Michael LeRoy: Recently, I did a fairly large antitrust case in a federal court in Nevada. It was in the technology world, so we had experts on our side, and they had experts on their side. Not only from a financial standpoint, I was the financial expert, but we had technology experts. We also had experts that were experts specific to the business or industry that we were dealing with. Not necessarily financial experts for that industry but experts who had worked in it and had run companies in it for years. [They] knew the industry, knew the players, and knew what was going on. We had four or five different experts on this case, and yes, you have to make sure that you’re all copacetic. You can’t have one expert saying something slightly different than what you say, even though you’re in supposedly different fields of expertise. You read their draft reports when they come out, and you also have conversations with them, but you have to have those conversations with the attorneys present so that it’s not discoverable.  

Noah Bolmer: Right. 

Michael LeRoy: So, it’s a bit of a logistical hassle to do that, but it’s very important. A lot of times you can sort out the questions you have, or they have, and help the lawyers get there too in their deliberations by just having Zoom calls or telephone conference calls and discussing things.  

Noah Bolmer: How does that affect the report writing when you have a number of different experts? 

Michael LeRoy: Well, you try- the lawyers will always try [to make] reports look fairly similar. They don’t want one report to have some legal complaint-looking cover sheet and somebody else just have a report. They’d like to have your introduction, you conclusions, and your bodies organized the same way as far as the format goes. They’ll generally dictate that format to you so that you don’t have four different reports that look like they were written by four different people from four different countries [who] never talk to [each other.] 

Noah Bolmer: In general, each expert is turning in their own report rather than one collaborative report. 

Michael LeRoy: Correct. Each expert has to issue their own report. I’ve never seen different experts like an engineer, an accountant, and an intellectual property lawyer all write a report together. You can’t sit down in the room and do something like that together. Generally, the case has pieces, and there are certain points that the lawyers are trying to make, and they want to keep those separated. They don’t want them all ground up together like hamburgers. 

Noah Bolmer: Do you have any stories about cases? And obviously you don’t have to give any specifics, but that changed fundamentally or informed in some way that you go about being an expert witness, either good or bad. 

Michael LeRoy: I have one that I recollect that changed in the middle of it. It was a company in the food product business. They had a foreign owner that was Asian and the people running the U.S. group and a European group, were all relatives of the home office in Asia. It was a big international company, and they distributed their products, and their biggest geographic areas of distribution were the US, number one, Europe number two, and then everywhere else in the world. The U.S. company, for some reason, their expenses seemed too high, and their profits weren’t as good as the home office thought it should be. They were kind of suspicious of the management. How dedicated they were. How well they were doing. I was sent in as kind of a consultant, specifically looking for something from a litigation standpoint, to find out what the heck was going on. In the process of getting to know the business, how it sold and distributed, who it sold and distributed to, all the logistics of getting the product shipped over from Asia, and sales and marketing, all the aspects of the business. I was looking through some of their detailed records, and all of a sudden- after working on it for months and getting toward the end of my work, I discovered a couple of very large, unusual transactions. An investment quote, “investment” made in a company in either Hong Kong or Singapore. A consulting company. And I thought, what does this have to do with this business? I looked into it a little more and I flagged it for the lawyers, and it turned out that it was a scam. It was fraudulent. They were sucking money out of the company and putting it into this company and laundering it over in Singapore and Hong Kong. Of course, that was not in- we have a thing called the Foreign Corrupt Practices Act, which they were nailed on. All of a sudden, everything changed. The floodgates opened up. They confessed to other stuff they had been doing and all left town. That was one of the most surprising things that happened. 

I had another case that started after the financial crisis, which was in 2008 to 2010, and there was a lot of work to do because a lot of savings and loans and banks went bankrupt. There was a lot of stuff going on with the purchase, sale, and packaging of loans and mortgages. That fallout came in from the 2012 to 2015 period when all the lawsuits started getting filed. We started working on one case. It was a large bank that had a number of different divisions, like all large banks do. In the meantime, it went bankrupt while we were in the middle of it. It went from looking to see what they did, why they were failing, and why they were losing money to looking at corporate governance aspects of what management was doing as far as stock options, bonuses upon bonuses, perks and things like that to the board, and even a third aspect, a third different case on the governance- or lack of governance by the Board of Directors. It was like three different cases, all wound up into one, which was fun for an expert because it was big, it kept going, and we kept finding stuff, and it made it kind of fun. 

Noah Bolmer: Thanks for the stories. Before we wrap up, do you have any last advice for expert witnesses, particularly newer experts? 

Michael LeRoy: One of the things that I see when I’m up against other experts is you have to be- it’s pretty easy for a smart person to sit down and analyze the might of a report. That’s important and that analysis is the key. The numbers are the numbers. The same old thing. However, when you’re in a deposition being deposed or when you’re in court having to testify, it’s important that you do a good job. It’s important that you be prepared. It’s important that you know how to answer the questions and not ramble on and get into other areas. I was fortunate because I was trained by a large New York law firm in my first big case on how to take a deposition and how to testify. Sometimes lawyers are so busy that they don’t have time to spend much time with an expert telling them what they want and what they expect. Especially if you’re new, you don’t have a clue, so you need to have a lawyer, or another expert explain to you how you answer the questions. And it’s yes/no. It’s not a story. Because stories get you in trouble. The only time you want to tell a story is when you and your attorney on your side has said, “If he asks you this particular question and opens up the floodgates, you tell them all this stuff.” It’s imperative that you work with the lawyer before you do your deposition, especially before you testify at trial. Make sure that he knows how you’re going to answer the question and she has instructed you on how they want questions answered. 

Noah Bolmer: Sage advice. Thank you, Mr. Leroy, for joining me here today at the Round Table. 

Michael LeRoy: Thank you for having me. 

Noah Bolmer: And thank you to our listeners for joining me for another episode of Discussions at the Round Table. Cheers. 

Michael LeRoy, President, Crown Capital Advisors, LLC

Michael LeRoy is the President of Crown Capital Advisors, LLC, an investment banking, and financial consulting firm. His specialties include corporate governance, damage calculations, mergers, and acquisitions, and more. Mr. LeRoy holds an MBA in finance from USC.