Damage experts in business and real estate.

Business litigation today rarely progresses without the use of a variety of experts, whether as a proactive or reactive measure. Categories of experts include those possessing specialized technical knowledge as well as those with both industry and financial expertise who will serve as damages experts, provide summary testimony that ties together the testimony of technical experts, and attach a price tag on the resulting damages.

Below I have compiled a few suggestions for attorneys in their use of experts in business and real estate litigation.

Bring In the Experts Early

Consider retaining them initially as consultants only with the option of designating them later or selecting another testifying expert if deemed appropriate. Many key actions and events occur early in the litigation process that can set the tone for all that follows, frequently locking one into a strategy that may ultimately not be the optimum. Examples of assistance that experts can provide in the early stages of a case include discovery assistance (do you want financial statements only, or do you need to get the general ledger, too? How about accountants' working papers?).

Often the early involvement of a damages expert can alter the entire direction of your case: many times consultants are brought into a case in which the nature and components of damages are set in stone, but after an initial review the consultants point out issues that completely change the thinking of counsel and client. A recent example of this was a case involving our client AT&T in which a software developer had entered into a joint development contract with AT&T calling for a minimum payment of $600,000 and the right to terminate by either party without further obligation. AT&T exercised this right, terminated the agreement, and the software developer demanded arbitration, claiming AT&T had not acted in good faith in pursuing the potential marketing opportunities for the product. An initial arbitration awarded a moderate sum to the plaintiff, but they later refiled, claiming that the original arbitration had neglected key provisions of the agreement. The plaintiff hired an economic consulting firm, who p roceeded to create a damage scenario under which the plaintiff suffered $5.8 billion (yes, billion!) in lost profits.

Defense counsel's planned strategy was to attack the damage claim, but after retaining experts at an early stage that strategy was revised to focus on the completeness of AT&T's actions under the agreement. Counsel and experts demonstrated at arbitration that AT&T had performed all of its duties under the contract and that previous payments to the plaintiff had more than compensated them for all amounts due. The arbitrators found in AT&T's favor, awarding nothing to the plaintiff.

Bring Your Expert to Opposing Deposition

Having your expert attend the opposing expert's deposition can serve three important purposes: first, by consulting with counsel during breaks, your expert can help assure that you get the information you need without leaving any critical questions unasked; second, any new or unexpected testimony presented at deposition can be dealt with "on the fly," again without leaving any important avenues unpursued; third, it shows the other side that you are serious and thorough in your preparation and will serve to keep the opposing expert on his or her toes. A recent successful example of this involves a commercial landlord v. major tenant matter in which experts attended the opposing expert's deposition, pointing out two calculation errors and one erroneous assumption. The net effect was to bring both experts' numbers into line; the case settled shortly thereafter.

Maximize the Use of Visual Aids 

It is an old axiom but quite true in litigation: Tell me and I will forget, show me and I may remember, involve me and I will remember. This means that, in general, anything that can be converted to graphic form probably will be more effectively communicated by doing so. Examples of such categories include:

* Presentation of damage categories and amounts

* Flow of funds or transactions

* Organization charts and relationships among parties or entities

* Timeline of key events and dates

A caveat - try not to over-graphic the trier of fact. Too many graphics can dilute their effectiveness; similarly showing something in graphic form when it can be simply explained without graphs can be counterproductive.

Perform Due Diligence on Your Own Expert

The other side will surely do this. Ask for and check references. Look up prior testimony and ask the expert directly whether any prior testimony might be used to demonstrate a conflict with the opinion he is expressing in the current matter. Also, it can't hurt to ask whether anything on his Curriculum Vitae can be challenged as inaccurate or embellished.

Don't Overreach on Damages

Or claim the other side's damages are completely bogus - unless they are. Many a party's legitimate case has been destroyed due to a tendency to push an outrageous monetary claim for damages in the hope that a larger award will result (or, in the defendant's case, recalculating the plaintiff's claim to zero or below). Juries are smarter than this, and will react negatively to such obvious overreaching. A well-supported and fact-based damage presentation is much more likely to lead to the desired result.

Don't Make it Personal

Litigants, and sometimes their counsel, can turn a business dispute into a personal one, much to their detriment. An ego battle between the parties or their attorneys benefits no one, and often results in legitimate opportunities to resolve the matter going unexplored.

These pointers are not rocket science, nor do they represent an exhaustive list. However, keeping these simple approaches in mind during. the pursuit of litigated, arbitrated or even mediated matters will usually result in the client being better and more effectively served.

Karl Schulze of Schulze Haynes & Co., a professional consulting firm, is a Certified Public Accountant, a Certified Valuation Analyst, and a Certified Fraud Examiner.