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Contingent-fee experts?

It is generally accepted that it is inappropriate for expert witnesses to be compensated based on the success of the case because of the fiction that these witnesses are neutral arbiters who just happened to be hired by the attorneys to help the jury. If nothing else, the fact that the expert has a financial stake in the case would affect his or her credibility with the jury. (Of course, many professional experts effectively have financial stakes in the litigation in that they know that they are auditioning for future fees in future cases based on their performance in this case.)

So it is a bit of a scandal, as David Nieporent reports at Overlawyered, that a New Jersey law firm attempted to stiff its witness in a losing case out of his fee, and indicated that the loss was the reason he should not be paid. (Howard Erichson also expresses dismay.)

There was an interesting accidental disclosure in the comments section to David's post by an anti-reform writer: "In my stint at a personal injury law firm, I saw several expert witnessess cut their fees when a case was lost or settled for less than was expected. But I *never* saw one raise his or her fees in case of a win."

Of course, a standard rebate of the fee for a losing expert witness is economically indistinguishable from a bonus for a winning expert witness: there is no economic difference in incentive between a $200/hour expert who agrees to halve his fee in the case of a loss and a $100/hour expert who gets a $100/hour contingent bonus in the case of a win. What Justinian Lane is describing is a violation of Michigan* Rule 3.4(b) (as per the official commentary), and apparently a violation so commonplace at the plaintiffs' firm he worked at that no one thought to tell the paralegals that there could be adverse repercussions from talking about it.

As a practice matter, it would seem to behoove attorneys on both sides of the aisle taking depositions of experts to ask the expert whether he or she has ever received a bonus or offered a rebate for expert testimony and whether such arrangements or expectations are in place in the current case.

*(Correction, 8:20 PM: Justinian writes that the law firm where he worked as a paralegal was in Texas, not Michigan. Texas ethics law is not materially different on this question; the section number, 3.04, is even the same. I regret the geographic error, which does not change the analysis of this post.)



Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.