Don't Get Burned By Your Own Ammunition

Within the recent past, at least two clients have come to me armed with the “ammunition” they believed showed that a business partner had violated various legal obligations to them, both claiming substantial damages as a result of breach of the underlying legal obligations. The “smoking gun” was, according to each client, set forth in written reports by experts in the area, both of whom were accountants.

Unfortunately, the work by these experts, while valuable and illuminating of the underlying issues, was not prepared in conjunction with any legal strategy, and were not quite aligned with client’s legal strategy once that strategy was developed. The result was that each client had an “expert report” that was not quite consistent with the realities of the clients’ legal positions, and, at the end of the day, contradicted that position.

An example might put some flesh on these bones. Let’s assume that you are owed money under a demand promissory note, but the note dates back some time, and the interest calculations are complicated, including because there is confusion as to whether the interest should be compounded and when it should be calculated based on the demand, as the demand date triggers a default rate of interest. Before hiring legal counsel, your expert runs some numbers you and determines the amount of interest owed under the note, but substantially less than what your attorney’s ultimately believe you can recover in court based on the law applicable to the underlying promissory note. In short, your accountant calculates the amount due at a simple rate of interest, without using a correct date to recover default interest leaving you a couple hundred thousand dollars short in the amounts you are due. Worse, you send out the report to your soon to be adversary, so the accountants calculations are out in the open.

Ordinarily, when a party has a claim that requires the help of an expert, and comes to counsel first, counsel has the luxury of retaining an “expert witness,” who might be someone who can testify at trial, should that need take place. Until disclosed by the party in litigation, that expert is merely a consultant, and facts or opinions (like calculations) held by “consulting experts” – those typically employed by a party in anticipation of litigation or to prepare for trial and who is not expected to be called as a witness at trial – are typically not subject to discovery. Thus, you can use the consultant without risk that preliminary calculations or other information being disclosed.

When it comes to experts who will testify at trial, things become a little more complicated in terms of what information can be discovered from those experts. Experts who will testify at trial are typically retained to do so, and work with counsel to develop opinions consistent with the lawyer’s trial strategy. This is not to say that the attorney tells the expert what opinions go give or not give, but more often asks probing questions, gives the expert facts that may change the opinions and/or shares with the expert what is often referred to as “core work product,” which may includes the legal counsel’s strategies, mental impressions and case conclusions.

The question of core attorney work product – which can include drafts of the expert’s written report – is discoverable will depend on the court house in which the underlying case is pending.

 While the law of each state will differ, somewhat, on these issues, and there is a split in the federal circuit court of appeals, the trend since the early 1990s (when certain amendments were made to the Federal Rules of Civil Procedure), is that materials provided by counsel to a testifying expert is discoverable, including core work product and draft reports.

In the final analysis, lawyers and their clients have to consider how and what information is generated and provided by and to experts, who are perceived to have the ammunition to win a big case. Clients should be careful not to obtain reports from experts, like accountants, engineers, etc. on matters that may become legal matters or disputes in court without first talking to their counsel. Significant problems can be avoided simply by having the request “run through” counsel, so that the information remains protected as information provided by a consulting expert. Care should also be exercised by clients who sometimes find their own experts, in terms of what is given to that person (to avoid the inadvertent disclosure of documents). Finally, while attorney’s and experts hired by or for the client must proceed from day one under the assumption that any communications between or among them will be discoverable (e.g., email communications), clients should be aware of this issue as well, so that the best result can be obtained and information is not inadvertently disclosed.

For those distributors interested in this topic or further information, please contact Fred Mendelsohn at fmendelsohn@burkelaw.com or 312-840-7004.