Academic journal article Defense Counsel Journal

Use of Forensic Economists in Commercial Litigation: A Defense Perspective

Academic journal article Defense Counsel Journal

Use of Forensic Economists in Commercial Litigation: A Defense Perspective

Article excerpt

Forensic economic experts are essential in some business litigation, and the sooner defense counsel retain a qualified expert, the better for the case

FORENSIC economists apply the general theories and methodologies of economics and statistics to the proof of liability and the measurement of damages in civil litigation.(1) Traditionally, their use in commercial litigation has been in two areas--causation and the calculation of damages. Although forensic economists have been involved in commercial litigation since before the 20th century, only in the past several decades have they recognized their profession as a unique discipline, forming their own associations and debating their regulatory needs.

In 1985, the National Association of Forensic Economics (NAFE) was founded. It publishes the Journal of Forensic Economics and Litigation Economics Digest, conducts national and regional meetings, serves as a forum for professional development and has adopted a code of ethical standards. Other associations are the American College of Forensic Examiners and the American Academy of Economic and Financial Experts, which publishes of the Journal of Legal Economics.

Although forensic economics can be a highly technical discipline, anyone, regardless of education or training, may promote himself or herself as a forensic economist. Professional associations such as NAFE and AAEFE neither regulate nor certify those wishing to practice in this field.(2) The lack of regulation raises ethical concerns for attorneys and for the experts themselves.

A 1988 survey by Steven T. Riley found that most forensic economists (92 percent) held a Ph.D. degree and were affiliated with a university (71 percent). Practices were confined to their local area or state (86 percent), and they derived nearly half (42 percent) of their income from consulting. The average forensic economist spent most on time in personal injury/wrongful death litigation (68 percent), averaged 40 cases a year, did little advertising (81 percent reported no advertising), and relied on repeat business (67 percent).(3)

A follow-up study by Michael Brookshire and Frank Slesnick in 1990 confirmed these trends and concluded that the ratio of plaintiff to defense work income for the "typical" forensic economist was 2:1.(4)

DEFENSE EMPLOYMENT

A. Decision to Use

The defense decision to use a forensic economist is critical in terms of the potential impact on a jury's verdict. A solid, well-reasoned analysis from a forensic economist can be the saber that strikes the fatal blow to a plaintiff's damage claim. An untested analysis based primarily on theory and assumption from a forensic economist can be the express elevator to a substantial plaintiff's verdict.

In view of the impact the analysis of a forensic economist may have on a jury's verdict, the ultimate decision to employ a forensic economist and the selection of that person are often the most important strategic decisions defense counsel makes in a commercial damages case. At least from the consulting standpoint, an economic expert should be employed in each case involving sizable commercial losses in order to evaluate the potential of the claims and to make appropriate recommendations.

But the mere employment of an economic expert by the plaintiff's counsel does not mean that defense counsel should rush out and grab one. A determination must be made initially as to the best approach to counter the plaintiff's expert. If the plaintiff's economic expert's analysis is absurd and should not be considered by the jury as credible evidence, testimony by a defense economic expert may not be advisable because of the possibility that the defense expert may assist the plaintiff's case. In most cases where substantial damages are involved, however, the defense will need to employ the forensic economist as a trial expert to neutralize the plaintiff's expert' s testimony. …

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