Getting the best support from your economic expert

Economic experts have the unusual dual role of being consultants to two parties – the attorney who retained them, and the jury to which they provide expert testimony. Economic expert Philip Saunders, Jr., Ph.D., argues that making full use of the economist’s expertise requires an understanding of these two roles in his article ‘Getting the most from an economic expert’.

He explores how attorneys can maximize the service and quality of analysis from an economic expert by focusing on the expert’s support role outside of the courtroom. This begins with initial assessment and case strategy; in Saunders view an attorney should meet with an economist as early as possible.

“There may be more than one approach or line of argument that can be taken in estimating damages, and the economist can advise the attorney what the options are and the pros and cons of each.”

A plaintiff attorney may wish to have an economist provide a preliminary damage estimate before drafting the complaint, and a defense attorney may find an early evaluation of damages useful before beginning negotiations. Learning that there are little or no damages is just as important at an early stage of a case as discovering substantial claims for damages.

Estimating the earning capacity of an individual can rely on a tremendous amount of data, including information specific to the individual, and broader data about the industry and job positions relevant to the case. This may include information about:

• Life expectancy
• Health
• Ability to work
• Training and qualifications
• Education
• Work history
• Earnings history
• Employment outlook
• Industry outlook
• Wage and salary growth rates

Some economic experts, such as Dr. Dwight Steward, provide attorneys with checklists to help them provide the most complete and useful data, to support a reliable analysis. When an attorney has provided an economist with the case information and documents, it is up to him or her to determine what public data to incorporate into their analysis. Saunders makes the important distinction that while the use of published government data is convenient and reliable, some cases deviate from the data averages.

An economist analyzing business losses will follow similar economic principles as estimating damages for an individual, but published data plays less of an important role. Business information needed for an analysis of damages may include industry information, business plans, organizational structure, information on competitors, and earnings history.

Even when complete and reliable data is available for the economist to unitize in his or her analysis, a number of assumptions must be made. An attorney may request that the economist produce multiple estimates relying on varied assumptions to demonstrate that damages are (or are not) relevant in multiple scenarios. Saunders suggests that attorneys and economists communicate about what variables and assumptions heavily impact damages and which do not.

Economic damages are converted by an expert into present day value by discounting future losses at the relevant interest rate, and compounding losses at an appropriate interest rate. The amount of damages can swing dramatically based on the interest rate chosen. When selecting the rates, an economist should keep two principles in mind: the rate should reflect the underlying financial instruments which would be appropriate investments for the funds in question; and the rates should be consistent with the data used in the damage analysis.

Of course it is important that a damage analysis be performed correctly, but it is also important that the economic evidence is presented in a clear and believable way at trial. One way to help an economic expert prepare for providing testimony is to explore what the ‘other side’ would find in a critique of his or her analysis. Identifying the strengths and weaknesses of one’s analysis will prepare the economist for cross-examination.

It is common for an economic expert to be tasked with critiquing the report and evaluating the qualifications of the opposing economic expert. This critique may take the formal form of a report, of an informal advisory role to the attorney to help him or her prepare deposition questions.

The key to attorneys getting the best support from an expert witness is to fully understand the different facets of the economist’s role, staying in communication from early on in a case, and collecting and providing the expert with the accurate and complete, relevant documents.