This video focuses on two areas of practice management: professional fees and conflicts of interest.
I’ll first address professional fees…
Litigation matters are inefficient and, as a result, they tend to be very expensive. Unfortunately, clients are often surprised by this fact late in the process.
But the experienced forensic consultant is aware of this reality and incorporates it into the financial management of the case.
You shouldn’t be in the business of financing your client’s litigation matter…. That’s foolish for two reasons: one, you’re simply not getting paid for your ongoing work, and two, you expose yourself to cross-examination that your large outstanding account receivable is contingent on your success as an expert witness.
You simply can’t be in the position of being a contingent fee expert.
Here are six points to incorporate into your practice management strategies, and probably include in your engagement letters:
Advise the client that your professional fees are based on hourly rates and your rate is $xx per hour. (in a moment, I will strongly advise against premium billing rates for expert witness testimony.)
You can’t predict the total amount of the fees that will be required because of the uncertainty of litigation. The facts evolve, lawyers’ strategies change, and the litigation takes unpredictable twists and turns. Those conting-encies are not your business problem.
Advise clients that you will bill them regularly for your pro-fessional services and continuing payment is required on normal business terms… 30 days, 60 days…. Whatever your policy is…
During the course of the litigation matter, all balances must be cleared before the happening of certain events, for example, the issuance of expert reports or required expert testimony in deposition or trial.
Your fees are not contingent on the outcome of the litigation matter, and in fact, they cannot be contingent. That would expose you to the claim of bias in your expert testimony.
Finally, and perhaps I should have said this first, but your services should be provided on a retainer basis. Candidly, this gets the client’s attention about the importance of this business relationship at the outset of your involvement in the case.
Now, my firm belief about premium billing rates for expert witness testimony…. They are a mistake.
Some consultants charge premium billing rates for litigation consulting services and separately, the actual rendering of expert witness testimony.
The first question is whether to use the same billing rates for your services in a litigation matter as you do in non-litigation matters.
This is a matter of professional judgment; I understand that litigation work is considered more stressful….
But, whatever you do in this regard, it is important to be prepared to explain the rationale for any billing rate differential to the opposing side of the case.
If you choose to use higher billing rates for litigation services work, the opposing side may try to draw some negative inference from this fact. I suggest you think of a reason that is other than simply “getting cross-examined.”
The second “premium rate” question relates directly to expert witness testimony…. Charging a premium billing rate when you’re in depositions or on the witness stand in trial.
The rationale for this “hazardous duty premium” may be justified, but the consequences of this policy are not worth the benefits. I strongly discourage it.
First of all, the number of hours that you spend rendering expert testimony in depositions and trials is not that great a percentage of your overall billable time, so the aggregate dollar amount of the premium charged is not that significant.
Second, when an expert charges a premium for his testimony, he will be cross-examined on that point, insinuating that the testimony is bought and paid for at an extra-high rate.
In the minds of typical jurors, the hourly rates that professionals charge are very high to begin with, so increasing an already-high retail billing rate can be made to sound greedy.
The aggregate benefit of this policy doesn’t outweigh the cost (in the form of argument,…) against the credibility of the expert.
Don’t charge a premium rate for your expert testimony.
My next point about billing is that expert witness services are generally performed for non-recurring clients. There won’t be required future services to use as leverage for unpaid, outstanding fees.
When this matter is resolved, the client will probably be gone forever. So, your best opportunity to be paid is during the course of the engagement. Take advantage of it.
In the final analysis, the best method of financial success in a litigation services case is simply applying good, basic business practices during the process.
Be clear about the terms of your retention… you are not in the business of financing a client’s litigation matter; and require fair compensation for your quality services, during the period you are providing them.
Turning to the second practice management area in this video….
Dealing with real and potential conflicts of interest is a major administrative issue in managing a forensic consulting practice.
Failure to understand the nuances of conflicts, exposes you to the unexpected removal from a case, possible liability to your client, and the requirement to return fees earned to date.
These are important considerations….
In substance, a conflict of interest exists when a professional’s ability to present an issue for a client may be impaired by current, prior, or possible future relationships with another party to the litigation.
In simple terms, a conflict almost certainly exists if the expert (or her firm) has had any prior relationship with a client who is presently adverse to the current client of the expert.
As a general proposition, the forensic consultant cannot accept an assignment adverse to a present or former client.
I want to get your attention now, before I spend a few minutes digging into the substance of conflicts by saying this:
Whether or not a conflict really exists in a case almost doesn’t matter.
Once it is asserted that there is a conflict – if there’s any remote basis to conclude that there is – you might as well forget about it. You’re probably done with your work in the case.
Successfully defending yourself from a claim of conflict of interest happens prospectively, on the front end of your retention in a case, not after the allegation of conflict is raised against you – that’s too late to defend yourself.
Here’s what sometimes happens in these cases… and I fully admit that there may not truly be a conflict of interest when this happens.
You or somebody in your firm receives a phone call about possibly being retained in a case…. Some minimal details of the case are discussed – and I mean minimal details… name, rank and serial number, so to speak. Then nothing happens…. No further contact from this lawyer or client occurs…
Many months later – or even years – , you or one of your partners is retained and does a substantial amount of work….
At the time of deposition (or other late time in the present case), the other side remembers that they had a phone call with you or one of your partners last year….
Now,… the other side doesn’t like your opinion and they would like get you out of the case…. They remember the phone call, they bring it up and they allege that confidential information was exchanged in the earlier call, and they say you received that information (often not specifically described), and they move to exclude you as a witness in the case.
At this point in the matter, unless you had clear procedures in your practice, and you have good documentation of this minimal earlier communication, you are essentially finished with your work in the case.
Why..??? No one wants to try to defend your continued involement against the claim that you are tainted with confidential information… your side’s lawyer doesn’t want to defend against this tangential issue; a court doesn’t want to protect you…. You’re pretty much finished.
So, how do you protect yourself from this disaster…???
Point #1.. Understand that the issue of conflicts of interest arises immediately with any communication from a potential client in the marketplace.
You must undertake management practices to protect yourself from the possible later claim of conflict of interest.
You do this by having clear procedures in place for communications with potential new clients.
And, your firm must meticulously track past and present clients, adverse parties, and co-parties to litigation matters, as well as regular clients of the firm. These conflict tracking procedures are essential to competently run a forensic consulting practice.
So, here’s my suggested handling of the “new client” phone call….
I suggest you not even accept a telephone call from a potential new client without formally clearing conflicts.
In my firm, initial calls are routinely transferred to a senior administrative person who is trained to obtain the information that is necessary to perform a conflicts check. (name of case, legal case number, all parties and their counsel, adverse parties and their counsel.)
Only after conflicts are cleared does the forensic professional communicate with the potential client.
This practice ensures that you can accept the present assignment without fear that you will later be “conflicted out” of the case because of some past communication or employment by you or other members of your firm.
The initial telephone conversation procedures merit additional discussion here.
If the expert directly receives a telephone inquiry from a potential client, the expert should immediately take control of the conversation, advise the potential client that the expert does not consider himself retained, and ask the potential client to limit this initial conversation to administrative details. (case name, parties, lawyers, and adverse parties.)
The expert’s proffered reason for deferring a substantive discussion is to “check conflicts,” and that is a true statement. At this point, the expert can’t be certain that she or her firm has not had previous conversations or performed services for the other side of the dispute; in short, a conflict may already exist, preventing the consultant from being retained by the potential client.
It is advisable to have the potential client email a pleading caption sheet so that a formal conflict check can be made.
Absolutely no substantive discussion of the facts or strategies of the case should be undertaken in this initial telephone call. Advise the potential client that you will “clear conflicts” and return the phone call as soon as possible.
If this practice management procedure is not undertaken with respect to initial telephone conversations, three problems can occur.
First, you may find yourself engaged in a substantive conversation about facts of a particular case only to learn that you or one of your partners has already been retained by the other side or performed some services for the other side. If this happens, the likely remedy will be completely withdrawing from the matter and possibly returning all fees that have been paid to date.
Second, if you engage in a substantive conversation about a case in an initial telephone call and the potential client chooses not to contact you again, you will find yourself “conflicted” from ever accepting work in this matter from the other side.
(it only takes one five-minute conversation that precludes you from a subsequent $15,000 professional fee to learn this lesson. Regrettably, I have made this mistake several times over the years.)
The third problem that arises from loosely engaging in an initial telephone conversation is that you lose control of your ability to choose the cases and clients that you want.
One of the advantages to limiting the initial conversation to a brief, non-substantive outline of the case is that it enables you to step back and consider whether you want to work for this client, this attorney, or on this matter.
By removing yourself from the initial phone conversation to “clear conflicts,” not only will you truly clear conflicts, but you will also have the opportunity to pause and consider whether you want to accept this assignment.
Your subsequent telephone call with the attorney will be much more organized and you will be managing your litigation practice proactively, not reactively.
I suggest you develop a checklist for gathering information during initial telephone calls and follow the list scrupulously.
Another practice management consideration regarding conflicts is the actual conflict management program that you implement. Any significant litigation practice will require a computer database program to manage its conflicts.
Next point: it is impossible to track conflicts informally. If your litigation services practice grows to any meaningful size (meaning more than one or two cases per year), conflicts must be tracked by a computer database management system.
The short answer to this complicated dilemma of conflicts is to implement practice management procedures within your firm. There is no way around the issue; conflicts are a serious matter in a forensic consulting practice and they must be competently dealt with.
An unfortunate final point regarding conflicts of interest is that some lawyers or clients have a practice of contacting experts at the outset of a case, simply to conflict those experts from being retained by the other side of the litigation.
Although this practice borders on unethical, it is certainly undertaken and it has happened to me more than once over the years.
Very tight initial communication procedures will help the forensic consultant defend against this improper conduct on the part of some un-scrupulous lawyers.
Finally, if you find yourself wanting to be retained in a case in which you have a conflict of interest, you can try to obtain a waiver of conflict from the opposing party.
This is a complicated legal procedure and I suggest you involve all the lawyers in the case to obtain the waiver. But, in a sense, you have little to lose by trying to get the conflict waived, because you can’t be retained otherwise. I discuss this in detail in my book.
In conclusion, the adversarial environment gives rise to practice management considerations that are unique to a litigation services practice.
Non-litigation professional practices don’t need to be concerned with conflict of interest issues, nor do they fear every aspect of their work being scrutinized by an opposing party.
Structuring the management of your expert witness practice to address these considerations will help contribute to your success as a litigation services practitioner.