Proof of damages in complex litigation has increasingly become a battle of the experts. Testimony from multiple experts, sometimes overlapping on accounting, economics, statistics, appraisal, or prudent investment (to name just a few) is required to present a comprehensive damages case in complex litigation. The challenge for litigation counsel in complex damages cases often is to present a compelling damages case through the testimony of several expert witnesses in different fields, each of whom (like the blind men and the elephant) approach the case from a different perspective. This article offers four tips on how to prepare your damages experts to effectively present this testimony at trial.
1. Make Sure the Expert’s Testimony Is Admissible under Federal Rule 702 or Comparable State Rules of Evidence
Early in the case, counsel should carefully consider the type of opinion testimony required to prove the damages he or she hopes to recover and the type of expert required to prove those damages. Does the plaintiff seek only out-of-pocket damages evidenced by bills and canceled checks, an estimate of lost profits based on business history, overpayment due to monopolistic practices or price-fixing, or anticipated wage and personal losses resulting from toxic substance exposure? And what evidence of damages is required to certify a Rule 23 class or to establish an element of the liability case?
Rule 702 of the Federal Rules of Evidence sets forth the standard for admissibility of expert opinion testimony in federal court. That rule provides that a witness who is qualified by “knowledge, skill, experience, training, or education” may testify in the form of an opinion if (1) “the expert’s scientific, technical, or other specialized knowledge will help the trier of fact to understand the evidence or to determine a fact in issue”; (2) “the testimony is based on sufficient facts or data”; (3) “the testimony is the product of reliable principles and methods”; and (4) “the expert has reliably applied the principles and methods to the facts of the case.” Fed. R. Evid. 702. A “district court judge, acting as a gatekeeper, may exclude evidence if it is based upon unreliable principles or methods, or legally insufficient facts or data.” Apple Inc. v. Motorola, Inc., 757 F.3d 1286, 1314 (Fed. Cir. 2014), overruled on other grounds by Williamson v. Citrix Online, LLC, 792 F.3d 1339 (Fed. Cir. 2015).
In addition to meeting the minimum qualifications of admissibility, trial counsel will want to assess the expert’s willingness and availability to diligently study the case to prepare a thoughtful damages opinion, as well as how effective the witness will be in convincing a judge or jury of the expert’s analysis and conclusions. Trial lawyers differ on whether they prefer an expert who has never testified (and thus never faced cross-examination) or a warhorse who testifies regularly and can be attacked as a “professional expert.” In a complex case, tried-and-true may be preferable—depending on the individual’s qualities and qualifications—because the stakes may be too high and the issues sufficiently complicated that it is not worth adding the risk of having someone implode or even just stumble on cross-examination.
2. Retain Your Expert Early in the Case
While trial may seem a long way off, complex cases require extensive, detailed preparation. Counsel benefits by identifying and retaining experts, including damages experts, as early as possible. These experts can then assist counsel in gathering documentary evidence, deposing witnesses, and analyzing the facts bearing on proof of damages. Given the oceans of data and documents stored in different locations and using myriad different formats, platforms, and jargon that can be industry-specific, the expert can often help counsel to phrase the discovery request to target information the expert needs to prepare an opinion on damages, and help to avoid the cost of wading through endless swamps of useless documents and data. Experts retained late in the litigation may lack the data and facts that would have strengthened their conclusions had they just been retained earlier.
To preserve the work-product privilege, counsel should initially retain the expert as a consultant to the legal team and make no decision on whether that expert will ultimately testify. The agreement might read: “You are retained as a consultant to [name of lawyer] in the field of [type of expertise] to assist in the case of [name of case].” Remaining silent in the retention agreement as to trial testimony provides further protection over the discoverability of documents and information exchanged with or prepared by the consultant. See Fed. R. Civ. P. 26(b)(4)(C) (allowing discovery of certain communications with testifying experts, including facts or data considered and assumptions); United States v. Sierra Pac. Indus., No. CIV S-09-2445 KJM EF, 2011 WL 2119078, at *12 (E.D. Cal. May 26, 2011) (noting that Rule 26 of the Federal Rules of Civil Procedure protects communications between and information provided to non-testifying expert and counsel retaining the expert).
In addition to maximizing later assertions of the work-product protection, retaining an expert as a consultant in the first instance allows counsel to evaluate the witness’s demeanor and the strength and quality of his or her conclusions before committing to a trial expert, only to regret it as the trial date approaches. Naturally, trial counsel must decide at some point, but early retention gives him or her the chance to work with the expert, see how the expert approaches the case, and change witnesses before it is too late if the expert turns out not to be what the case requires. Time enough to engage the person as an expert at trial after counsel knows his or her opinion and has evaluated whether the individual will make a convincing witness.
3. Clearly Define the Expert Witness’s Assignment in Writing
Once counsel has decided to present a particular expert at trial, counsel should consider carefully defining the expert’s assignment in a letter. The letter also can give the expert clear instruction on what is expected, including deadlines, and reaffirm rates. This letter should
- state the expert’s specific assignment, such as “You are to prepare an expert report as required by FRCP 26 providing your opinion on the damages, if any, resulting from . . .” or “an accounting of all out-of-pocket expenses incurred as a result of the breach of contract”;
- provide deadlines for submitting draft and final expert reports; and
- state dates for deposition, trial preparation, and trial testimony (to the extent those dates are known), so the expert can be available when needed.
The portion of the letter setting forth the assignment can be incorporated later into the witness’s expert report as the “assignment” that the expert was given.
4. Communicate Throughout the Engagement
As the evidence and data develop, counsel should communicate regularly with the expert witness to make sure the expert is on track, to understand if the expert needs more information and frame additional discovery requests if that is required, to continue to evaluate him or her for trial, and to understand the nature and strength of the opinions to be proffered. At the same time, counsel must be careful not to influence or guide the expert in forming an opinion, as this could backfire if the adverse party can characterize the opinion as that of the lawyer and not the expert. Counsel should view the early stages of this process as an opportunity to understand the expert’s analytic process and to decide, before disclosure must be made or expert reports exchanged, whether the individual can provide the expert opinion required at trial—or whether counsel should switch to a different expert before the applicable deadline.
Working closely with a damages expert, from an early point in case preparation, will pay huge dividends when trial counsel puts the expert on the stand to testify, drawing on a history of working together and mutual respect for the importance of presenting a strong, cogent, and thoughtful damages case.
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