In 1998 the staff of the Federal Judicial Center conducted a survey of judges and attorneys on various aspects of expert evidence. The survey included 328 cases and responses from 303 judges and 302 attorneys. The cases covered expert information on medical, business law, financial, engineering, safety and scientific matters.  While this survey may seem somewhat dated, more recent discussions and articles show its results continue to provide valuable insight and timely reminders on the value of expert reports and important credibility issues surrounding expert testimony.

Expert Reports

In the area of expert reports, the survey indicated that the primary impact of expert  reports was in the following areas:

1. 83% of judges and 76% of attorneys indicated that an exchange of expert reports permits more informed deposition and cross examination of experts.
2. 63% of judges said expert reports help them to focus on key issues to address during testimony.
3. 58% of judges indicated the reports helped them to determine if expert testimony should be admitted.
4. Judges claimed that reports help the parties to reach stipulation on certain key issues, 40%, limit the need for some additional discovery, 46%, or discourage testimony by experts that is outside of their area expertise, 45%. By comparison, attorneys perceive that expert reports prompt stipulations in only 12% of the cases.

In summary, expert reports provide valuable technical or scientific information that greatly facilitates resolutions in the litigation process. And that points to the need to give adequate consideration to the presentation of expert reports, above and beyond the quality of the information presented.  

Daubert and the Federal Rules of Civil Procedure set the standards and requirements for expert reports. For example, Rule 26(a)(2) indicates that a report should contain a complete statement of all opinions to be offered by the expert witness, the reasoning supporting the opinions, and the information considered by the expert witness in forming his or her opinion. However from a practical perspective, today’s judges and attorneys pay much more attention to expert evidence and are very sophisticated in the handling of expert evidence and the application of the standards set by the Rules and the various decisions. This sophistication is evident in the increase in pretrial hearings on evidence and by increased discretion on the admissibility of expert evidence. 

Preparation of Expert Reports

Expert reports need to be objective and unbiased.  They need to be based upon valid assumptions and incorporate verifiable data.  They need to provide clear conclusions and adhere to all of the other standards currently in place for expert reports. However, the survey results indicate that how the report is written and presented is as important as the quality and accuracy of the expert evidence. Some of the key aspects of the presentation of the report include how the issues are prioritized, how they are stated and how the conclusions are written.  It is extremely important that the report appears to be objective and that it does not appear to strictly “advocate” for the represented party.  

These considerations come into play in the forensic accounting, business valuation, financial damages other reports that are prepared by the litigation services department of Margolis & Co. As a CPA firm, we are governed by many different auditing, financial reporting, accounting, and other standards. These standards govern and help ensure the accuracy and validity of our expert reports. The differentiating factor and value added in forensic accounting reports comes from being able to present the information in a context and manner that clearly identifies the key issues as they relate to the litigation in hand.

Expert Testimony

In the area of expert testimony, the survey identified the reasons that judges cite for excluding testimony before trial.  The top three reasons were:

1. The testimony was not relevant, 47%
2. The expert witness was not qualified, 42% and
3. The proffered testimony would not assist the trier of fact, 40%.

Other reasons for exclusion included the following:

1. The expert’s testimony was based upon unreliable facts or data, 22%
2. The prejudicial nature of the testimony outweighed its probative value, 21% and
3. The principles and methods underlying the expert’s testimony were not reliable, 18%.

In the post-Daubert era, the most common problem that arose with expert testimony as reported by judges and attorneys is that the expert abandons objectivity and becomes an advocate for their party.   

Thus, in the area of expert testimony, the survey indicates that while the quality and validity of the expert evidence is important to its admissibility, how information is  presented by the testifying expert is potentially a larger issue than simply the quality of the evidence itself.

Qualities of Expert Witnesses

The survey clearly indicates that outside experts need to have a number of very important skills and traits in addition to their expertise and their ability to prepare and present expert information. The additional qualities that are required of outside expertise include the following:

.Subject Matter Expertise.  Experts must have extensive experience with the subject of the  litigation and the specific issues at hand.  This experience provides the basis for being able to present the issues from the proper perspective.

Litigation Experience.  Given the skills of today’s attorney’s and the frequent use of experts, an expert witness must have previous litigation experience.  This experience provides the basis for understanding traps and pitfalls of testifying. 

Perceptiveness and flexibility. Depositions and trial testimony can be complex, confusing and fast paced environments.  Experts need to have a perceptiveness and presence which allows them to understand what is happening at any given moment, the direction the testimony is going in, and ability to avoid the wrong direction.

The litigation support services department of Margolis & Co. provides business valuation forensic accounting, financial analysis, and financial reporting services in support of business interruption claims, business fraud investigations, shareholders and partners in business ownership disputes, matrimonial disputes, business economic losses, criminal investigations and professional negligence situations.

Joseph R. Barbagallo, CPA, CVA, CFFA, CFD, CFS, CFI, ABV has over thirty years of experience providing forensic accounting and litigation support services. Joe can be reached at jbarbagallo@marg.com.