The valuation expert wrote it in his engagement letter: if testimony is required, the calculation of value would need to be upgraded to a formal conclusion of value. He repeated the disclaimer in the report itself. At trial, when Wife’s counsel asked him on voir dire whether he’d be willing to testify to a calculation of value, he confirmed what he’d already said in writing — no. The family court excluded his testimony entirely.
And then the Arizona Court of Appeals reversed. In Larchick v. Pollock (2021 Ariz. App.) the court held that a calculation of value is “not automatically inadmissible” under Rule 702 — even when the expert himself says he wouldn’t testify to it. The court remanded for a proper evaluation of whether the calculation met the evidentiary standard. A year later, in Mikalacki v. Rubezic (2022 Ariz. App.), a different Arizona court went further: it affirmed the trial court’s acceptance of a calculation of value as the basis for dividing a law firm in a divorce, calling it “not the gold standard” but “not unacceptable.”
For family law attorneys and valuation professionals, these two cases answer a question that comes up at the start of every litigation engagement: is a calculation of value enough, or do we need to upgrade to a full conclusion? The answer is more nuanced than the professional standards suggest — and getting the engagement scoping wrong at the front end can cost your client the case.
The Distinction That Matters
Under AICPA’s Statement on Standards for Valuation Services (SSVS) and NACVA’s professional standards, valuation engagements produce two fundamentally different work products:
A conclusion of value is a full valuation engagement. The appraiser considers all relevant approaches (income, market, asset-based), selects and applies the most appropriate methods, performs due diligence on the company’s financials and operations, and renders an opinion on value with full documentation and rationale. This is the “gold standard” — the work product designed to withstand cross-examination and serve as the basis for expert testimony.
A calculation of value is a more limited engagement. The appraiser and client agree in advance on the specific approaches or methods to be used. The appraiser applies those methods to the available data and produces a calculated value. The scope is narrower, the due diligence may be less extensive, the documentation is less detailed, and the professional standards explicitly contemplate that the result may not be suitable for all purposes — including, potentially, testimony.
The calculation is cheaper and faster. It’s widely used for internal planning, buy-sell agreement triggers, preliminary assessments, and situations where both parties agree on the methodology and just need the numbers run. The question Larchick raised is what happens when a calculation of value walks into a courtroom where it wasn’t designed to go.
What Happened in Larchick
Robert Pollock and Wendy Larchick married in October 2016. Before the marriage, Wife had started a real estate business. Ten months later, Wife filed for dissolution. The central valuation question was whether the business increased in value during the short marriage — and if so, by how much.
Husband retained Bays, a valuation expert, to determine the increase in value. Bays produced a calculation of value. His engagement letter was explicit: this was a calculation engagement, and “in the event that testimony is required, either at a deposition or trial, we require the calculation schedules be upgraded to a formal summary valuation report with a conclusion of value.” He repeated the same disclaimer in the report itself.
At the second trial, Wife objected to Bays’ testimony under Arizona Rule of Evidence 702. On voir dire, Bays confirmed that he had told Husband from the outset that a calculation of value would not be sufficient for testimony. The family court sustained the objection and excluded Bays’ testimony entirely, ruling that his valuation was inadmissible because he had not used “all possible methods that an expert should be using, all reliable methodology.”
With Bays excluded, Husband had no valuation evidence. Wife moved for a directed verdict. The court granted it. Husband appealed.
The Appellate Court’s Correction
The Arizona Court of Appeals reversed on the admissibility ruling. The court’s reasoning matters for practitioners because it draws a line between two different questions:
Is a calculation of value automatically inadmissible? No. The appellate court held that a calculation of value is not per se inadmissible under Rule 702. The trial court erred by treating the label — “calculation” versus “conclusion” — as dispositive. Under Rule 702, the question is whether the expert’s specialized knowledge will help the trier of fact understand the evidence. The format of the report doesn’t answer that question. A calculation “may well have been questionable and, even if admissible, vulnerable to effective cross-examination, but it was not automatically inadmissible.”
What about the expert’s own disclaimer? Here the court drew a critical distinction. Bays said he wouldn’t testify to a calculation of value. The trial court treated that self-assessment as controlling. The appellate court disagreed: the court — not the expert — determines what is admissible. The expert’s opinion about the adequacy of his own work goes to credibility and weight, not to admissibility. The factual findings that might undermine the expert’s testimony are for the cross-examiner to expose and the fact-finder to evaluate.
The case was remanded for the trial court to evaluate Bays’ testimony under Rule 702 on the merits — not to exclude it categorically because it was a calculation rather than a conclusion.
Mikalacki Confirms the Trend
A year later, Mikalacki v. Rubezic (2022 Ariz. App.) went a step further. The case involved the dissolution of a law firm, Rubezic Law Group, owned equally by the divorcing spouses. Wife’s expert, Brendan Kennedy, produced a calculation of value at $269,000. Husband offered no competing valuation. At trial, Husband’s counsel did not meaningfully challenge Kennedy’s methodology on cross-examination. On appeal, Husband argued that the trial court should have rejected the calculation because it wasn’t a full conclusion of value.
The appellate court affirmed, citing Larchick: “Although a calculation of value was not the ‘gold standard,’ it was not unacceptable.” The fact-finder “need not discount an expert’s opinion solely because the expert did not consider every single process and procedure that would be included had he conducted a fuller valuation.” Challenges to the methodology go to the weight of the evidence, not to admissibility.
The practical consequence: in Arizona, a calculation of value can survive an admissibility challenge and serve as the basis for the court’s valuation. The opponent’s remedy is to challenge the methodology on cross-examination and present a competing valuation — not to argue that a calculation is categorically inadmissible.
The Engagement Scoping Decision
For family law attorneys and the valuation professionals who work with them, the practical lesson from Larchick and Mikalacki is about engagement scoping — the decision you make before the work begins:
Will testimony be required? If there’s any realistic possibility that the appraiser will need to testify, scope the engagement as a conclusion of value from the start. Larchick shows that a calculation can get into evidence, but it arrives damaged: the opposing counsel will cross on the limited scope, the expert’s own disclaimer will be read back to them, and the court will evaluate it knowing it falls short of the professional standard. Starting with a conclusion eliminates this vulnerability.
Does the other side have a competing valuation? Mikalacki is instructive here: the husband’s failure to present a competing valuation was decisive. When only one side has numbers — even calculation-level numbers — the court has little choice but to rely on them. If you’re the party without a valuation, even a calculation of value from the other side can carry the day. If you’re the party with the calculation, don’t assume the other side will let it go unchallenged next time.
What’s the budget constraint? A full conclusion of value costs more and takes longer than a calculation. In a divorce involving a small business where the total marital estate is modest, the difference in cost between a calculation and a conclusion can be a significant percentage of the disputed value. Larchick and Mikalacki give attorneys the option of starting with a calculation and upgrading if the matter goes to trial — provided they build the upgrade path into the engagement from the beginning.
Is the engagement letter clear about the scope? Bays’ engagement letter in Larchick was a model of clarity — it specified that the engagement was a calculation and that testimony would require an upgrade. That clarity actually hurt him on the stand (Wife’s counsel read it back on voir dire), but it’s still the right practice. The engagement letter should specify the scope, the intended use, and whether testimony is contemplated. If the matter escalates and testimony becomes necessary, the engagement should be formally upgraded with a new scope letter before the expert takes the stand.
When a Calculation Is Enough
Not every family court dispute over business value requires a full conclusion of value. A calculation may be sufficient when the parties are negotiating a settlement and need a credible range rather than a defensible point estimate, when the business is small enough that the cost of a full conclusion is disproportionate to the disputed value, when the opposing side is unlikely to retain its own expert (as in Mikalacki), or when the calculation is being used as a screening tool to determine whether a full engagement is justified before committing to the expense.
A calculation is not enough when testimony is certain, when the opposing side has retained its own expert with a full conclusion, when the business is complex enough that the limited scope will leave obvious gaps in the analysis, or when the court has signaled (through local rules, judicial preferences, or prior rulings) that it expects a full opinion. In those circumstances, the calculation is a starting point, not a deliverable.
The Practical Takeaway
Larchick and Mikalacki together establish that a calculation of value is not categorically inadmissible in Arizona courts — but it arrives in the courtroom at a disadvantage. The professional standards call it a lesser engagement. The expert’s own engagement letter may disclaim its suitability for testimony. The opposing counsel will cross-examine on every limitation the full conclusion would have addressed. A calculation can survive all of that and carry the day, as it did in Mikalacki. But the practitioner who scopes the engagement correctly from the start — conclusion of value when testimony is likely, calculation when it isn’t, with a clear upgrade path built in — avoids the fight entirely. The engagement letter is the cheapest piece of litigation insurance there is.
If you’re scoping a valuation engagement for a family court matter and need to determine whether a calculation or a full conclusion of value fits the facts, happy to talk through the options. Sometimes the engagement scoping conversation saves more time and money than the valuation itself.
