The High Cost of Keeping Credibility
By Michael J. Molder, Director, Advisory Services
How often have you had this conversation:
Evie the Expert: So defendants say that their cost of capital was 5%? That seems kind of low.
Loki the Lawyer: I’m telling you, that’s what the CFO said in his deposition. I’ll send you the page.
Evie: I should probably read the whole deposition.
Loki: You don’t need the whole thing. It’s two days of transcripts and 75 exhibits. We got into a whole bunch of liability related stuff that has nothing whatsoever to do with your damages analysis. I’ll just pull the sections that you need to compute damages.
Expert witnesses hold a unique position in the adversarial environment of litigation.Typically, fact witnesses must have personally observed the events or other facts about which they are testifying.Expert witnesses, on the other hand, can testify based on facts they have personally observed, have been presented by other witnesses during the course of the trial or hearing, or, and this is the key distinction, they have become aware of from other sources (such as reviewing documents or deposition transcripts). They review the evidentiary record and bring their “scientific, technical, or other specialized knowledge” to bear to help the fact finder reach a conclusion.1 As a filter for information reaching the fact finder, the expert’s testimony will often make or break a case, and it is the power of expert testimony that can be problematic.
Due to the exigencies of litigation, counsel will often wait until the eleventh hour to bring in an expert. Sometimes, fact discovery has closed, or the deadline is close enough that it is effectively closed. At that point, counsel is immersed in the case. The attorneys know it backwards and forwards – sometimes they know the facts better than the actual parties. It’s counsel’s job to streamline the litigation toward the goal of their client prevailing in the end.Some lawyers believe that part of that job is to keep experts on a narrow path. Intentionally or subconsciously, these lawyers will sometimes focus experts to a certain understanding of the facts. Counsel has been through the documents over and over. They’ve interviewed witnesses and sat through hours of deposition. They know what happened. To them, an expert wading through thousands of pages of documents and transcripts is a needless expenditure of time and money.
So, what does an expert do when counsel tries to be the expert’s sole source of facts?
Invoke the Rules of Evidence
In 2000, the Supreme Court amended Rule 702 of the Federal Rules of Evidence (FRE) to conform to its series of decisions on admissibility of expert testimony beginning with Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579 (1993).FRE 702 permits experts to testify only if “the testimony is based on sufficient facts or data” and “the expert has reliably applied the principles and methods to the facts of the case.2
FRE 703 addresses where those facts or data come from – more specifically:3
Facts or data upon which expert opinions are based may, under the rule, be derived from three possible sources. The first is the firsthand observation of the witness, with opinions based thereon traditionally allowed. … The second source, presentation at the trial, also reflects existing practice. The technique may be the familiar hypothetical question or having the expert attend the trial and hear the testimony establishing the facts. … The third source contemplated by the rule consists of presentation of data to the expert outside of court and other than by his own perception.
In theory, an attorney’s summary of the facts might qualify as “presentation of data … outside of court.” FRE 703, however, provides that if the facts or data on which the expert has based his analysis are inadmissible, such as an attorney’s summary, it must be of the type that “experts in the particular field would reasonably rely on.” Thus in cases where counsel is feeding the facts to the expert, there is a risk that the court will disallow the expert’s testimony.For example, in In re TMI Litigation, 193 F.3d 613 (3d Cir. 1999), the appellate court affirmed the trial court’s exclusion of an expert that based her analysis on summaries of the plaintiffs’ health histories prepared by counsel. Similarly in Crowley v. Chait, 322 F.Supp.2d 530 (D.N.J. 2004), a negligence action against an accounting firm by the Vermont insurance commissioner as receiver for an insolvent insurer, the court substantially excluded an accounting expert’s testimony because he had based it on counsel prepared summaries of 8 out of 150 depositions in the case.
As these courts have ruled, counsel’s characterization of the evidence is not sufficiently reliable to form the basis of an expert’s analysis.
Remind Counsel Who Will Be Cross-examined
An expert witness lives or dies by credibility.It is universally acknowledged that passing the hurdle of admissibility is only the first step. Even if the court denies the opposing party’s motion to exclude (a source of embarrassment that can haunt an expert for years), the ultimate value of an expert at the end of the day is their credibility with the fact-finder. It is the job of the judge or jury at trial to weigh the evidence and reach a verdict. To borrow from the real estate industry mantra, it’s all about credibility, credibility, credibility.
Undoubtedly credentials are part of the credibility analysis, but even a Harvard-trained, former Secretary of the Treasury is going to look bad as opposing counsel catalogues the list of documents the expert failed to review in preparing his analysis.Things go from bad to worse when opposing counsel begins introducing facts that the expert failed to consider, but are part of the evidentiary record that retaining counsel failed to provide because they didn’t fit the case.
Certainly, every case has some facts that are in dispute – after all, without a dispute there would be no need to litigate, and there’s nothing wrong with assuming that the fact finder will ultimately agree with retaining counsel on how those facts should be viewed. But when the expert first finds out about those factual disputes on the witness stand, it can be a credibility-crushing experience.
As expert witnesses, it is incumbent upon us to make sure that counsel understands our role – which is to analyze the evidence and reach conclusions, within our areas of expertise, about the significance of that evidence. We are not a mouthpiece for counsel. Occasionally, we need to remind counsel that while some aspects of our job may seem expensive and, perhaps, not the most efficient process, it is a process nonetheless and we need the latitude to do our jobs.
This article was originally published in the August 14, 2014 issue of NACVA’s QuickRead Journal.
2 FRE 702(b) and (d), emphasis added. While the Federal Rules of Evidence govern only federal litigation, most states have similar provisions in their evidentiary codes or have adopted the Daubert standard.
3 Notes of Advisory Committee on Proposed Rules to FRE 703