Will your case benefit from a damages expert?
By Gerald D. Martin, Ph.D.
Plaintiff’s counsel: There is little question that an economist will enhance your damages when liability is clear and damages are large. And you are unlikely to have any other witnesses who can speak as experts on the issue, particularly with the rules of evidence requiring that a damage claim must be based on historical knowledge, forecasts of events to come, discounting to present value, adjusting for consumption, and tax refinements.
When liability is marginal and damages are not large, you may elect to let the jury decide the value of the case. To do this, you will need a witness, perhaps the plaintiff or his employer, to testify as to the earnings of the plaintiff, his job security, potential for promotion, benefits paid, and the usual age at which workers leave the job. If you do retain an economist in these cases, consider if he can add enough to cover his cost.
Lastly, consider the damage expert’s value during settlement negotiations. While he or she will probably not be present at the settlement conference, defense knows your economist is in the background and ready to offer an opinion to the jury.
Defense counsel: The decision to use an economist is tougher for you than for the plaintiff. You always face the possibility that your economist will arrive at a loss value not significantly different from that of plaintiff’s economist. Even when there is a large difference in estimates of the loss, the jury may simply decide to split the difference.
Your best use of an economist comes when the plaintiff’s expert is known to work almost ¬exclusively for plaintiff firms, and that his or her methods are those that virtually always lead to the largest ¬possible loss estimate. For example, if you know plaintiff’s economist always uses a real rates approach and that he has testified many times that the real growth in earnings is greater than the real interest rate, and uses a differential between the two, get your own economist and let the plaintiff know that you are using one. This should help to make plaintiff’s economist a bit more careful and conservative in his evaluation.
Many defendants elect to retain an economist as a consultant rather than designate him as an expert witness. By doing this, the expert’s work is seldom discoverable. As a consultant, he will critique plaintiff’s report, prepare a set of questions to be asked at the deposition, assist you in preparing for the cross examination, and sit in at the trial to advise you of any weaknesses in the testimony and how to capitalize on them. Since he is not a witness, he cannot be excluded from the courtroom. Should the occasion arise when you can use a rebuttal witness who has not been previously designated, and if you anticipate this possibility, keep your consultant out of the courtroom.
Most experienced economists will have a file on other economists in the area and can provide you with reports and depositions from previous cases. Often, these can lead to impeachment when you find plaintiff’s expert changing methods to get to a higher number.
Even when you designate an economist as an expert, you do not have to call him to testify. Your economist will usually be one of the last witnesses you would call to testify, and plaintiff rarely will have the time to subpoena him. So, if you believe that you have adequately discredited, or cast strong doubt on the estimate of plaintiff’s economist, don’t glorify his role by calling another economist to the stand.