Freakonomics introduction to forensic economics and controversial industry leader
A number of years ago, Steven Dubner, half of the economic powerhouse driving the Freakonomics franchise, commented on the niche career of economic experts. He noted that American universities produce plenty of economists, and introduced the field of forensic economics as a viable career option. Dubner also introduced a controversial industry leader among expert witnesses.
He explored the career of David Teece, a Berkeley professor who has had a prolific career as an economic expert witness. He co-founded the research group ‘Law and Economics Consulting Group’ (LECG), which had over a thousand employees at one point.
Teece has testified in numerous high profile cases, including suits involving Apple, Oracle and Philip Morris. In 2000, record companies retained Teece to provide an expert report in support of their request to have Napster shut down. The Court cited his analysis a number of times in the ruling.
Dubner states that Teece earned close to $3 million for his legal work in 2005. In 2007, he signed a retention agreement with LECG which guaranteed him $10 million, and he earned close to $4.5 million for his expert services in 2008. Teece was quoted by the Wall Street Journal as saying “we’ve given economists the chance to earn investment bankers’ incomes…if you’re successful with us, it isn’t hard to make half a million dollars a year.”
A year after Dubner’s coverage of Teece, the IRS claimed Teece owed $12 million in taxes, related to using illegal tax dodges. Forbes Magazine writer Janet Novack commented that “[a]n adverse outcome in the cases could hurt Teece’s credibility as a highly paid witness and provide fodder for hostile cross-examiners.” In 2009, Teece was terminated by the company he co-founded, LECG.
Teece’s experience and reputation as an expert witness not only survived the tax controversy, but his career has continued to thrive. In February 2010, Teece founded Berkeley Research Group, which now has dozens of offices in the US as well as a number of international locations. Counter to Novack’s suggestion that his credibility on the stand would be diminished, Teece has continued to provide critical testimony in high profile cases, including the 2012 suit between Apple and Samsung.
