The Cost of an Expert Witness

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Numerous judicial commentators have noted that expert witnesses are one of the key factors in enhancing the cost and duration of legal disputes.[1] This can occur due to parties calling multiple expert witnesses, which slows down the dispute resolution process and increases complexity and cost.

In 2007, the National Australia Bank expended $23 million on expert witness reports for a single dispute against Idoport Pty Ltd.[2] While not all cases chalk up expert witness fees of this proportion, it is common for such fees to run into the tens and hundreds thousands of dollars. For small scale litigants, such high costs are unattainable, resulting in an uphill battle when squaring off against large corporate defendants with the budgets to engage multiple expert witnesses.

In this blog we will explore numerous aspects concerning the issue of expert witness fees including fee arrangements for expert witnesses, the use of joint conferences to reduce expert witness fees, and court appointed expert witnesses.

Fee arrangements for expert witnesses

One possible method of making expert witness evidence more accessible is the implementation of fee arrangements between expert witnesses and legal counsels. Such arrangements include no-win, no-fee style arrangements whereby the expert receives their fee only if the party they are providing evidence for is successful at trial. Other arrangements include those where the expert receives a bonus upon a successful outcome or receives a fringe benefit subject to the outcome of the case.

However, such arrangements produce an obvious conflict of interest, with the expert inherently motivated to ensure that the party by which they are engaged succeeds. For the opposing party, this style of arrangement is an obvious factor to target when attacking the expert’s credibility and impartiality. As such, while the arrangements may seem lucrative from a cost-saving perspective, they come with the inherent danger that the weight of the expert’s evidence may be diminished.

In the US, numerous states including Colorado, California, Pennsylvania, and Tennessee prohibit expert testimony which stems from a fee arrangement in which the expert’s compensation is conditional on the outcome of the case.[3]

In Ireland, the Irish law reform commission has announced that they will publish a report during 2016 which recommends a ban on fee arrangements between legal counsel and expert witnesses which are conditional on the result of the case.[4] The reasoning behind this is that such arrangements are likely to interfere with the neutrality of the expert witness.[5]

In NSW, the Uniform Civil Procedure Rules 2005 (NSW) takes a more flexible approach to the use of expert witness fee arrangements. Expert witnesses must provide information to the Court concerning any arrangements under which:

  • The fees to be earned by the expert witness are contingent on the result of the proceedings; or
  • There are any deferred fees in relation to the provision of expert evidence.[6]

The Court has the discretion to disclose the terms of the engagement.[7] However, as noted in Fuller-Lyons v New South Wales (No. 2)[8], this provision does not expressly entitle the Court to exclude a report based on a failure to comply with this provision.

The rationale behind this approach is based on the theory that a strict ban on fee arrangements would preclude worthy cases utilising the option and furthermore, would be difficult to enforce. The NSW Law Reform Commission noted the following in relation to the disclosure approach:

“Rather than prohibition, a more constructive approach for the law to take would be to ensure, as far as possible, that the terms on which experts are engaged are made known to the other parties and to the court. This would make it possible for a party to cross-examine the expert (and perhaps other witnesses) in order to bring out the funding arrangements and their potential implications. Submissions could then be made as to the effect of the funding arrangements on the objectivity of the expert. It would be open to a party to submit that, in all the circumstances, the funding arrangements should lead the court to attach little weight to the expert’s evidence, or even, perhaps, disregard it entirely.”[9]

Expert witness conclaves impact on reducing costs

As we discussed in our previous blog concerning expert witness joint conferences, the increased use of expert witness conclaves may assist in reducing expert witness costs. This is because experts are required, prior to trial, to prepare a joint expert witness report setting out issues which have been agreed upon by the experts and those which are still disputed (together with reasons for such disagreement). Expert witness conclaves may even eliminate the need for experts to attend court to give evidence, reducing costs and delays even further.

Court appointed expert witnesses (as used in a civil trial)

Another solution for reducing the cost of expert witnesses is to utilise one court appointed witness, the costs of which are split between each party. Under the Uniform Civil Procedure Rules 2005 (NSW), courts have the power to appoint an expert witness in relation to a specific issue which has arisen in a case.

The key issue which arises when a court appointed expert is utilised is the inability to question whether or not their conclusions are true. When each party engages their own expert witness, the conclusions made by each can be used to test and question the other; when a court-appointed expert is used such questioning is not possible.

Conclusion

It is undisputed that expert witness fees represent a considerable drain on the resource pool of litigants. With fees reaching into the tens and hundreds of thousands, and at times into the millions, of dollars, the luxury of expert witness evidence is often restricted to the most affluent of litigants. As discussed above, there are numerous options which can be utilised to make expert witnesses more accessible. However, each option comes with a cost to the effectiveness of the legal system. The legal system is yet to settle on an expert witness framework which simultaneously reduces costs, ensures neutrality, and enables adequate questioning of an expert witness views. This is an issue that the Australian legal system will need to consider in the coming years, especially as disputes become more complex and hinge increasingly on expert witness testimony.

[1] For example Justice Spigelman noted, in his 2004 interview with the Herald, that expert witness fees are the single largest dispute related cost after legal fees (Jonathan Pearlman, Courts Rebel on Paid Evidence, Sydney Morning Herald,6 September 2004).

[2] Elisabeth Sexton, High costs of justice for companies, Sydney Morning Herald (2 June 2007).

[3] John F. Kuppens , Jessica Peters Goodfellow,  Money Talks: Exposing Bias Using Expert Witness Fee Arrangements, Defence Counsel Journal (2012).

[4] Law of Evidence, Law Reform Commission, http://www.lawreform.ie/welcome/law-of-evidence.380.html

[5] Law of Evidence, Law Reform Commission, http://www.lawreform.ie/welcome/law-of-evidence.380.html

[6] Reg 31.22(a).

[7] Reg 31.22(b).

[8] [2013] NSWSC 455

[9] New South Wales Law Reform Commission, Expert Witnesses, Report No 109 (2005

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