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August 15, 2017 Articles

Expert Hot Tubbing: An Opportunity for U.S. Disputes or Australian Folly?

By Patrick J. McGrath

Once you stop snickering about the slightly disturbing visual evoked by the idea of “expert hot tubbing,” you may wonder if the concept has any relevance to disputes in the United States. The colloquial term “expert hot tubbing” denotes the concurrent presentation of expert evidence. When applying this format, a judge, arbitration panel, or tribunal generally convenes the opposing experts under oath and simultaneously solicits evidence to probe areas of agreement and disagreement. The technique originated in Australia more than 20 years ago. It has been used in numerous international arbitration proceedings and increasingly in courts in the United Kingdom, but it has seen only limited use in the United States.

The technique of concurrent expert evidence (CEE) encompasses numerous variations, including usage at different stages of a dispute, the role of counsel in questioning, interactions among the parties, and other procedural nuances. The process generally involves the preparation and exchange of individual reports outlining each expert’s opinion, a conference among the experts (potentially without counsel participation) to coalesce areas of agreement and highlight points of divergence, a joint report drafted by the experts and submitted to the court or arbitration panel, and a concurrent presentation of each expert’s opinions at the hearing. Numerous other sources have outlined variations in the procedural elements and techniques used in CEE. This article does not revisit those topics in detail but instead focuses on three fundamental questions regarding the application of CEE techniques:

  1. Under what circumstances is CEE typically considered?
  2. What are the potential benefits of CEE?
  3. What risks are possible with CEE?

Typical Circumstances
Australian courts have used CEE in nonjury trials, created procedural rules regarding the practice, and embraced this technique in a variety of situations involving economic or technical experts. The United Kingdom and International Bar Association (IBA) also created specific procedural rules regarding CEE, although the implementation has been more recent and the actual adoption rate has been slower than the experience in Australia. The procedural rules in Australia, the United Kingdom, and IBA include the following:

  • New South Wales, Uniform Civil Procedure Rules (Amendment No. 12) (2006) and New South Wales Law Reform Commission Report 109, Expert Witnesses (June 2005)
  • Jackson reforms (Apr. 2013) and Civil Justice Council Working Group’s proposed amendments to PD 35.11 (July 25, 2016)
  • IBA Rules on Taking of Evidence in International Commercial Arbitrations (2010)

In general, matters addressing property valuation, construction disputes, competitive practices, product liabilities, medical negligence, and “standard of care” matters seem most suited to advancing CEE. The common thread among these various disputes is a need to resolve complex technical issues where the judge’s level of understanding becomes vital to address the key elements of the dispute. In the context of international arbitrations, CEE also creates a potential bridge to overcome diversity in nationalities or cultures with different legal customs. CEE mitigates those differences and prevents irreconcilable instructions to experts that yield ineffective or incongruent evidence.

In the United States, evidentiary rules do not directly address CEE—in fact, elements of CEE are only tacitly permitted based on the latitude judges possess regarding evidence presentation. In addition, the courts and counsel, generally unfamiliar with CEE techniques, may not recognize opportunities to pivot away from traditional adversarial approaches. Despite this challenging backdrop, CEE has seen some isolated use by judges as far back as 2003. The technique has been used in cases involving antitrust class actions, breach of contract, construction claims, Daubert hearings, Markman patent hearings, product liabilities, tax matters, and voting district delineation disputes. In recent years, U.S. Tax Court Judge David Laro has repeatedly used CEE and found the technique was “especially helpful in cases such as these, involving technical issues related to a relatively new industry.” In Green Gas Delaware Statutory Trust v. Commissioner, 147 T.C. No.1 (July 14, 2016), Judge Laro also noted that the open discussion of differences between experts brought some initially diametrically opposed views closer together and enabled the court to expedite its “decision making process by more easily separating the reliable portions of the expert reports from the unreliable.”

Potential Benefits
A commonly expressed goal in using CEE techniques is to achieve a free-flowing discussion of ideas that lead to improved understanding of complex issues. Within the CEE construct, experts are presumably less guarded and thought to be less biased toward their own party’s view. Instead, experts are more focused on understanding the evidence and how their opinions relate to foundational elements of the case. This allows the experts and the judge overseeing the evidence to quickly establish areas of agreement and reconcile areas of divergence or disagreement. The experts are also thought to more openly debate the substance of their opinions without fear of tactical entrapment methods sometimes used by counsel during traditional cross-examination. The opportunity for each expert to directly pose questions to the opposing expert also serves to temper plausible but low-probability assumptions each expert might advance and to eliminate certain gamesmanship.

Judges achieve a better understanding of complex issues when both experts present evidence collectively at the hearing. The judge is able to evaluate all expert evidence simultaneously, rather than splicing together evidence that might be presented in snippets over a series of days, weeks, or longer. In fact, a study and survey conducted by the United Kingdom’s Civil Justice Council—Concurrent Expert Evidence and “Hot-Tubbing” in English Litigation Since the “Jackson Reforms”—found “83% of the judicial respondents considered that the quality of the expert evidence was improved, where it was given via hot-tubbing.” A judge’s improved understanding of the evidence arguably leads to better informed rulings. The technique also diminishes the potential for a judge to erroneously align a witness’s presentation effectiveness with credibility—CEE places greater focus on the substance of the opinion rather than the delivery of it.

Running parallel to improved understanding, the stakeholders consider CEE as an opportunity for increased efficiency compared with the traditional process. Often the joint report identifies numerous areas of agreement between the experts regarding fundamental methodological steps and a narrow list of divergence on certain assumptions underpinning the opinion. Armed with this information, counsel can focus energy prior to the hearing on efforts to further develop fact witnesses or other evidence that directly affects a narrowed set of issues. In addition, time spent at the actual hearing can be significantly reduced.

Possible Risks
CEE techniques pose risks connected to each of the participants in the process: judge, counsel, and experts. The judge’s enhanced role places a premium on preparation to effectively moderate the dialogue. In particular, the judge’s understanding of the experts’ agreements and disagreements is crucial in identifying potential inaccuracies and errors in expert evidence. The judge’s questioning demeanor also affects effectiveness—too superficial a demeanor limits the full understanding of complex issues; too interventionist a demeanor limits counsel’s ability to test potential flaws in the opposing expert’s opinion.

Counsel’s role in a CEE environment varies significantly from traditional proceedings. The dissimilarities may lead counsel to experience a genuine or perceived loss of control to advance relevant arguments, effectively cross-examine a witness, and put forth a cohesive narrative as the client’s advocate. Counsel also needs to manage client expectations differently. CEE requires more front-loaded costs during pre-hearing activities with savings occurring through a narrowing of issues after the experts prepare the joint report, enhanced opportunity for settlement negotiations, and reduced time spent at the hearing. These potential savings could be perceived as lost if the case settles before the hearing occurs.

In relation to experts, an incongruent level of expertise can favor the dominant expert’s opinion and overshadow a more passive or deferential expert. While this dynamic is also possible in traditional proceedings, the difference may be more readily detected in a CEE environment and limit the opportunity to properly educate the judge.

Finally, a CEE situation puts a higher premium on the preparedness of your expert and that expert’s ability to improvise or adapt to this fluid environment. An ill-prepared expert who becomes too comfortable with the informal nature of CEE may provide less guarded answers, more readily make compromises, or acquiesce a position to align with the perceived opinion of the judge or arbitrator.

The long-standing structure of sequentially advancing adversarial experts from opposing parties will likely continue to be a standard practice for most disputes in the United States. Existing evidentiary rules and stakeholders’ familiarity with those rules also create barriers to advancing alternative methods of presenting expert evidence. The stimulus for change in the United States may originate with dissatisfied judges seeking opportunities to improve the method of receiving expert evidence, motivated by their need to more fully understand complex issues. Those judges may be more prone to consider CEE as an alternative approach. If U.S. courts begin to adopt this construct, counsel with a keen understanding of the benefits and risks will be ready to provide insightful advice to their clients, evaluate important factors when selecting the expert, and effectively prepare that expert to enter the “hot tub.”

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