Dispute Advisory Services

In today’s global business environment, corporations are faced with an increasing number of litigation and complex business disputes. Skill and litigation experience are required to prevail in this environment.

If you are involved in litigation

Corporations are faced with an ever increasing amount of litigation and complex business disputes. Skill and litigation experience are required to prevail in this environment. It’s common for enterprises to engage accounting and financial professionals to support lawyers for financial analysis or damage quantification. Japanese companies are increasingly required to adopt similar strategies.

Technological innovation and globalization force organizations to cope with increasingly complex business disputes and frauds. Deloitte Forensic Service Team supports its clients in the various stages of dispute and litigation by leveraging its global network and coordinating with counsel and relevant authorities.

Our dispute consulting team is made up of specialists in valuation, financial analysis, damage quantification, intellectual property, forensic accounting, and computer forensics, all with significant experience assisting clients with contentious matters. Our team includes native English and Japanese-speakers, many of whom have international professional experience. To provide tailored services that meets the diverse needs of our clients, we draw upon the world-wide expertise and participation of approximately 200,000 professionals in more than 150 countries in the Deloitte network of member firms. 

E-discovery Readiness

The threats and complexities of fraud and cybercrime are urgent. Deloitte proactively helps its clients to develop forensic data preparedness capabilities so they can be ready to collect reliable digital evidence and help minimize the cost of forensic investigations.

• A financial institution in Japan, while responding to audit findings on information security, realized it would take a lot of time to extract data from various systems and devices in the event of a cybercrime. Deloitte's expert analysis, information systems review, and business process planning helped the client strengthen controls around data and information to assist and streamline potential E-discovery tasks. 

E-discovery Service

E-discovery procedures are required to address regulatory authority investigations or global risks including cross-border disputes or international litigation. E-discovery follows the Electronic Discovery Reference Model (EDRM),utilizing the appropriate language(s) and software. This often requires the processing of high data volumes at a time, and requires special expertise to ensure an effective investigation.

As cross-border regulatory investigations become more prevalent, global response capability is a critical factor when selecting the experts.
Our professionals provide a range of value to our clients, including their capabilities as experts, advice tailored to client’s situation, and consulting on litigation readiness. Our geographically-dispersed laboratories and data centers provide comprehensive services within the country under investigation. We have experienced project managers and engineers who appropriately process data according to the language and software, especially for Asia CJK (Chinese Japanese Korean) characters that often present significant challenges.

• Deloitte performed e-discovery services for a Japanese company that faced a class-action lawsuit in the US. Leveraging its global network, Deloitte collected data from Japan and subsidiaries in Asia, North America, and Europe, and efficiently processed them according to the language used in each country. 

Document Review

Versatile project management skills, multi-lingual capabilities, and close coordination with clients and lawyers are needed when large volumes of electronic data (e-mails, documents, spreadsheets, and other files in PCs and on servers) need to be reviewed during the E-discovery process.
Deloitte is equipped to process and analyze hundreds of thousands, or millions, of files, records, and documents with its international team of professionals, experts, and leading-edge processes and technology.

• In a cartel investigation, Deloitte reviewed approximately 300,000 files, classified them by level of importance and product, omitted irrelevant documents, and helped lawyers to conduct an efficient review. Secondary documents were also reviewed to ensure completeness of the review.  

Computer Forensic

Deloitte supports computer forensic-based digital investigations in a variety of fraud cases including fraudulent accounting, information leakage, and unauthorized access.
Our forensic technology laboratory is equipped with high-end workstations and a data center, exclusively used for investigations. This gives us the capability to effectively collect and analyze legally defensible evidence.
Our professionals have a range of expertise including investigation in enforcement authorities, large-scale accounting frauds and unauthorized access incidents.

• As part of a fraud investigation, Deloitte collected electronic data including e-mail messages of 20 employees suspected of misconduct. Deloitte recovered and analyzed deleted data, revealing the role and level of involvement of each person in the fraud. 

Data Analytics

Our professionals apply advanced economic, finance, and quantitative techniques to business and legal challenges for government agencies, legal counsel, and corporations. We developed economic and statistical models, drawing upon advanced tools and “big data” analytical methods, to uncover patterns and correlations in complex data. We use that to define assumptions and provide forecasts.

• Deloitte supported a financial institution client in developing a collection rate analysis model for defaulted credit-card debt. 

Non-Testifying Consulting (including Damage Quantification)

Deloitte offers valuable financial insight and clarity during each stage of the engagement, from case theory development and discovery to expert witness testimony. We assist with analysis and providing information regarding potential damages, strengths, and weaknesses of an opponent’s damages position; settlement offers; and cost/benefit analyses to help clients effectively manage their case strategies.

Also, we help perform market and competitive analysis, cost determinations, lost-profit analyses, economic studies, statistical analyses, and industry reviews in a variety of business dispute situations. Our insight and experience helps develop credible damages theories and models appropriate to the issues of a case, and we capably assist with the critique of the adversary’s position.

Damage quantification
Among parties in a dispute, there is rarely a shared understanding of the scope of liability and the resulting amount of damages. Deloitte offers objective damage quantification incurred by clients or other companies.
When calculating damages, Deloitte includes damages incurred by the failure of parties to perform legal duties based on objective evidence, or the damages incurred by parties with causal links to the target. The focus is to clarify the controversy.
Reasonable assumptions are set for damage calculations and lost or unrealized profits. As needed, Deloitte will be engaged by both parties in a litigation to provide neutral damage quantification services.

• A client suffered damages from a recall and suspension of sales caused by deficient components manufactured by a supplier. Deloitte calculated lost profits and related damages to be claimed against the supplier.
• A client was forced to significantly delay the launch of a new product due to issues at an OEM. Deloitte calculated lost profits caused by the delay. 

Expert Witness

Deloitte provides Expert Witness Services for various commercial disputes. Our team works directly with counsel and our clients to provide independent, objective advice to assess the claims and/or to give testimony or non-testifying expert support on evidence in accounting or audit negligence liability cases. Our senior members are experienced in domestic and international litigations and disputes.

• Deloitte provided the basis for damage quantification and clarified the points of controversy in dispute-settlement negotiations.
• In a breach of contract litigation case, Deloitte provided expert opinions on the process and basis for damage calculations for the plaintiff. 

Regulatory Support (including Ability to Pay Analisys)

Deloitte supports clients when dealing with the regulatory authorities. In many cases, the amount of sanctions imposed by regulatory authorities like the U.S Department of Justice (DOJ), Securities and Exchange Commission (SEC), and the U.K. Serious Fraud Office (SFO) can be less if the company under investigation for bribery, cartel behavior, or other corruption, actively discloses information revealed during an internal investigation. If companies choose not to disclose such information the penalties or sanctions can be higher.

• A Japanese client suspected that its affiliate company in a high risk country paid bribes to government officials. Deloitte investigated and provided digital forensic services. The affiliate was controlled by the US regional headquarters and was thus subject to the FCPA.
• For an automotive parts manufacturer charged by US DOJ with cartel violations, Deloitte calculated the sales of that company’s products that were built into finished cars sold in US.

Ability to pay analysis
Japanese businesses operating globally may face regulatory scrutiny from anti-trust authorities in various jurisdictions. Where anti-competitive practices are alleged, an “ability-to-pay” analysis is often required to calculate penalties that the company can afford to pay. As a third-party expert, Deloitte helps clients prepare, document, analyze data, and support discussions with the regulators. To estimate the appropriate ranged of penalties that can be supported, tasks include cash-flow and financial strength analysis.  

Intellectual Property

Japan’s modern economy is founded on successful commercialization of intellectual property in a range of consumer and industrial applications. While the value of an entire business may be relatively easy to establish, the value of intellectual property directly attributable to individual component technologies is less straightforward.
For M&A, financial reporting, or business planning, Deloitte uses its experience in the valuation of intellectual property to assess value in early stage and developed technologies. This includes assessment of appropriate royalty rates and license inspections.

• For a client seeking to license catalyst patents and technology, Deloitte formulated a logical royalty analysis, and analyzed royalty rates to allow for a successful negotiation.
• For a client seeking to license technology to an overseas joint venture, Deloitte designed and analyzed the license revenue structure.
• There was an dispute between a Japanese client and a Taiwanese licensee with regard to amount of royalties paid in the past and they could not settle the dispute. Therefore, executing the audit right specified in the license agreement, the Japanese client asked Deloitte to conduct an inspection to see if the licensee had paid appropriate royalties in accordance with the agreement. As a result, excluded sales to certain customers in their reports were identified and the client recovered USD 900,000 in royalties and delinquency charges from the licensee. 

Joint Ventures

Many Japanese companies with overseas joint ventures are challenged by a lack of transparency. Often, only a few individuals are dispatched from Japan as managers. The local partners take charge of daily operations. Contract audit clauses govern investigations that occur due to incidents like understated profits or breach of contract.
When things fail to work out and exit or termination is an option, unbiased, well-reasoned, and understandable advice is needed, especially if there are differences of opinion on sales price or terms. Our team has experience with these issues in multi-billion dollar joint ventures, and our range of services includes valuation, structuring advice, due diligence, and accounting.

• A client suspected that locally-managed joint venture profits were improperly flowing into the partner company, and initiated an investigation. Deloitte revealed that a large amount of money was paid to the partner company through schemes using fees for “management” and “IT support.”
• A relationship between JV partners turned adverse. The price negotiation on termination was prolonged and difficult. Deloitte, as a neutral entity, conducted an equity price calculation. 

Expert Determination

Depending on the contract between the parties, appointed mediators or arbitrators are expected to render decisions that are thorough, fair, and reasonable. Our team offers the integrity and expertise to resolve complex, high-value issues in relations to, share-price, asset, and/or company valuations.

• At the request of the Court, Deloitte provided appraisal services on the fair transfer value of equity, for which shares were initially under-valued.