In this short video, I’m going to share 14 points for you to consider implementing in your forensic consulting engagement letters. You may be familiar with some of the points, but I assure you that one or two of them will be new to you and implementing them will enhance your practice.
All of the pointers are my opinions and they are based on my forty years of practice as a forensic economist, retained in probably 3,000 cases… not all of which went to deposition or trial, of course.
Understand that I am not offering legal advice, only strategic advice for drafting an engagement agreement that will serve you and your clients well.
The engagement letter is the contractual agreement between the forensic consultant and the client. We all know that.
The engagement agreement has two consequences that the retained expert should be mindful of, one intended and the other unintended.
First, it is a contract that establishes the duties and responsibilities of each party to the agreement.
And, second, and unfortunately, it will also serve as a road map to the expert’s cross-examination in both deposition and trial.
Both of these purposes must be considered when drafting an artful expert witness engagement letter.
Sound principles of contract law dictate that any contract should be specific as to its terms.
Point #1: the discoverability of the expert witness’s engagement letter in litigation cases requires a different spin on the tight application of contract principles.
Discoverability by the opposition means the engagement letter can be used as a guide to the intricacies of the analysis conducted by the expert, as well as the details of the business relationship between the parties.
Consequently, you should sacrifice a detailed description of the steps of the analysis to be undertaken in favor of a more general description of the expected assignment. Consider that point #1.
Next point (#2):… who is the forensic consultant’s client in a litigation services matter? Is it the lawyer? The lawyer’s client? Or both? And, in most cases, does it really matter who the client is?
In my view, in most cases, it doesn’t matter, with one exception. If the forensic consultant is a consulting expert only, meaning she will not be designated as an expert witness, the engagement letter should be addressed to the attorney, not the ultimate client.
As I discuss in the legal privileges video in this series, the consulting expert works within the attorney’s work-product rule and, therefore, the lawyer should be identified as the client in a consulting expert engagement letter.
For a consultant who will be a designated expert witness,…“who is the client?”: well, at the very least, the lawyer is the agent of the ultimate client and, even if the lawyer retains the expert, the ultimate client is the principal in the relationship.
It is logical to conclude that the forensic consultant has responsibilities to both, regardless of the precise identification of the “client” in the engagement letter.
In situations in which the consultant will be a designated expert witness, I have adopted the practice of addressing my engagement letter directly to the client’s lawyer and identifying the retention agreement to him or her… “as to the assignment.”
Because I (almost) never expect the lawyer to be responsible for my professional fees, I make that fact clear in my engagement letter, and state that the ultimate client is to pay for my services.
My rationale for having the lawyer be the retaining party “as to the assignment” is my general belief that the lawyer is the more sophisticated person to understand the subtleties of my expert witness services, as opposed to the client’s understanding of them.
The lawyer understands the “lack of privilege,” and the strategies of the expert in depositions, and other subtleties of the retention… so, I think the lawyer should hire me “as to the assignment” and the client should be signed on to pay my fees. This doesn’t mean that I don’t have responsibilities to both of them, but I like to have them signed up that way.
Next point (#3): make sure the engagement letter references the case name and case number so the present assignment is clearly limited to the pending litigation matter, and not a general consulting agreement for professional services.
And, include a sentence (somewhere) that restricts the use of your work to the present matter. You want to limit the use of your work as much as possible, and the engagement letter is the place to start. I also recommend a “restriction of use” statement in any written reports that you issue.
Point #4: if there are any limitations or exclusions from the assignment, they should be specifically identified in the engagement letter.
Sometimes there are related areas of work that are not precisely within the expert’s agreed-on scope of work, and the client may have some expectation that these other areas will be handled by you.
In my other videos, I discuss the importance of an expert witness staying narrowly within his area of expertise. Sometimes lawyers and clients expect you to be a generalized expert, opining on areas that are only somewhat related to your main area. Make sure your engagement letter limits the things you will be addressing, especially if there are areas that are clearly outside your specialty.
Examples of this point are issues like a real estate appraiser being asked to review the reasonableness of the client’s estimated costs of construction, or a construction defect expert being asked to address lost rental income during a construction period, or a medical expert being asked to opine on other aspects of a client’s health condition or life expectancy.
Limit your work as much as is reasonably possible.
Point #5: documents requested… it is certainly reasonable to provide a document request list in an engagement letter (or as an attachment to the letter).
It is important not to state that the requested documents are “necessary” or “required” to perform the expert analysis. Requested documents should simply be identified as “helpful” to assist in your analysis of your substantive area.
Why…?? Well, if documents are “required” and not every document is provided (which will often occur), the logical extension of that request is that you couldn’t have competently completed the analysis without receiving all of the “required” documents. Don’t hand that easy cross-exam question to the opposition.
Point #6: dealing with the time period for production of documents…..The expert should consider two types of deadlines in an engagement letter: one for the date by which documents should be provided, and another to clearly point out that the forensic consultant needs a minimum amount of time between document production and report preparation (or expert testimony).
You may not have the power to require that documents be provided by a certain date, so the language can be adjusted accordingly, but some date should be included to at least establish an expectation as to when documents will be provided, and how long you will need to do your work.
Point #7: fee provisions
I have a few points to make about professional fees here. And, I discuss fee issues in more depth in the video on practice management in this series.
First, a minor point…. Is it tactfully wise to have your fee provisions be the first paragraphs in your engagement letter?? You can have any opinion about fees that you want, but I think there are seemingly more important issues to talk about initially in your contract of engagement. Completely your choice, but I suggest you talk about other things first.
Now, when you do cover fees in the engagement letter, the provisions should include:
A clear statement of who is responsible for payment (and who isn’t—perhaps the lawyer??—they like to see that in writing!);
Then, a clear statement that your fees are hourly and not contingent on the outcome of the matter, and a statement of your hourly rate;
Next, within the fee issue…. The terms of required ongoing payment of fees (for example, statements will be sent monthly and outstanding balances are payable within 30 days, or similar language…);
And, importantly, there are points during the process at which all outstanding balances must be cleared (for example, prior to report delivery, or expert testimony in either deposition or trial);
Another admonition I consider important is this: that you can’t predict with any degree of certainty the total amount of fees that will be incurred in the case … because of … (the unforeseen complexities of litigation, the difficulties raised by the other side, the degree to which your analysis and opinions will be challenged, etc.). Professional fees in litigation matters often get out of hand – and not within your control – and that problem shouldn’t be your responsibility;
I insist on a retainer….. (if you can’t get a retainer, what is your first clue?);
Another provision…. If the fees are not paid as agreed, you have the right to withdraw from the case;
And, although it’s not directly a fee issue, consider including a provision that if the client changes lawyers, you have the right to withdraw from the case.
I have learned over the years that the more demanding you are about your professional fees, the more commanding is your reputation.
Fees are only a problem if you let them be a problem. There’s no point working for free, and you don’t want to do it.
Point #8: before I leave the subject of fees, I’ll strongly suggest that you not charge a premium hourly rate for expert testimony. In my opinion, this is a foolish practice.
Yes, we all know that expert testimony is tough, it’s combat, but it’s all in a day’s work for a forensic consultant, number one.
I believe there are two other specific reasons not to charge more for expert testimony: first, the number of hours a year that you are actually testifying is relatively few in relation to your overall chargeability, so a premium hourly rate is an immaterial amount of money in the grand scheme of things.
Even more importantly, we all charge astronomical hourly rates for our services in relation to a juror’s earnings – that’s difficult enough to defend – so why give the other side additional ammunition against you on the witness stand. “so, professor smith, you are charging an additional $100 an hour for your testimony in front of this jury today, right?”
Your regular hourly rate is high enough to cover your expert testimony. Don’t give the other side an easy cross-examination question.
Here are some other points you should incorporate into your engagement letters.
Point # 9: Consider a limitation of liability…
Some forensic experts include a provision to attempt to hold them harmless from liability resulting from their involvement in the case. Such a provision is probably worthy of consideration, although its enforceability may be questionable. Consider including it: it’s a good start, at least.
I have examples of these provisions in my expert testimony book, but I’m not going to burden this short video with them.
Point #10: you should consider a provision that allows you to withdraw from, and terminate, the engagement if certain things happen…
It’s possible that facts may be uncovered that lead you to conclusions adverse to the client party’s position. It is also possible that the client or attorney may exert unreasonable pressure for you to provide an opinion with which you strongly disagree.; or, you’re not being paid for your work…. Consider a sentence that covers these possibilities and provides for your withdrawal from the assignment.
Point #11:
Many experts include an arbitration provision in the engagement letter. An arbitration clause is a clause in a contract that requires the parties to resolve any dispute under the contract through the arbitration process as opposed to a judicial process. States have different requirements for arbitration clauses to have enforceability, so you must be aware of your state’s laws to determine the enforceability of this provision in your engagement letter.
Point #12:
I have always been concerned that I would have an immovable scheduling conflict with a required expert testimony, but it hasn’t happened to me in forty years. I sometimes have included a “substitution of expert” clause in my engagement letters, allowing a partner to show up in my place. Now, a substitution is easier to talk about than to actually accomplish, but it is possible to arrange it. And, it simply puts your client on notice that there may possibly be a scheduling problem.
Point #13: joint retention engagements require careful consideration because they raise issues that are very different from unilateral retentions.
Many forensic consultants provide services jointly to both sides of a dispute. The practice is common for accountants and appraisers trying to help parties resolve their financial disputes.
Joint retentions require special attention to the… contract of engagement,…, client communications,… production of documents, report preparation,… and expert testimony.
I will just make a few general points about joint retentions here:
If you choose to render services jointly to clients on opposing sides of a dispute, you should consider requiring a court appointment as opposed to a simple contractual stipulation between the parties as the basis for your retention.
Performing services by order of a court probably provides an additional layer of insulation from being directly liable to the clients for the performance of your services.
Joint retentions require more complicated case management considerations….
So, there are issues of confidentiality of information being shared with the consultant,… transparency of communications, and possible required sharing of information provided to the consultant.
The handling of these issues should be discussed and understood by all parties to the retention agreement.
Fee issues are particularly sensitive in joint retentions because one side may advance its one-half of the fees when the other side doesn’t.
Be very careful with joint retentions….
Point #14: be sure to have a time limitation on the client’s acceptance of the engagement letter. You don’t want a potential client to hang you out for an extended period of time without formally engaging you. Also, your fee structure often changes once or twice a year and you want the current rates to be part of the engagement contract.
In summary,
Every engagement should have a contract memorializing the rights and responsibilities of the forensic consultant and the client.
In most cases, the engagement letter will be initially signed, then filed and forgotten.
But, if something goes wrong in a case, the expert will fall back on the provisions of the engagement agreement as the guideline for the resolution of the problem.
Don’t be caught in a difficult situation without a clear understanding of what the expert’s and the client’s respective responsibilities are, but don’t let it be so detailed that it will be used against you in cross-examination.