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The director as expert witness: here is what a corporate director needs to know about becoming an expert witness. There are benefits--and perils--for those who want to take on this role.

WHILE LEGISLATION such as Sarbanes--Oxley has intensified the focus on corporate governance practices, it has also made many of the very people responsible for overseeing them--corporate directors--experts on these very practices. As a result, directors are sometimes called to testify as expert witnesses in disputes on alleged lapses in governance. And, perhaps because being an expert witness can be intellectually and financially rewarding while also providing a public service to the judicial system, more sitting and former directors are thinking about becoming expert witnesses.

But while the desire to serve as an expert witness can be strong, a director must first learn what he or she will be getting into. There are benefits and perils. Specifically, as a potential expert witness you must learn how to avoid certain risks, prepare for an appearance in court, get word out that you are available to serve, and even know what compensation you can ask for and expect. The learning process is not insurmountable, but without going through it properly, the career of a director as an expert witness may be short-lived.

Caveat director

A director who is considering becoming an expert witness needs to know of and understand the reputational risk involved. Most people do not realize that the inquiry process for an expert is exceptionally rigorous. For example, when testifying on corporate governance practices, a director will probably be asked about those practices at his or her company. The question might be, "Does your company's board do A, B, C, and D?" If it does not, then the director could have a credibility problem if his opinions are inconsistent with what his company does or has done in practice.

Under no circumstances should a director give the impression that he or she will say whatever needs to be said to make a client "happy." Some potential experts believe that the easy way to be hired as an expert is to do, and say, what they think the client wants. But if you will say anything to make the client happy, you may find that your career as an expert witness will be over before it has barely begun. You must be independent, objective, and able to tell lawyers that you do not agree with the way they are approaching a case. If you can't do that, you are saying that the lawyers, not you, are the expert.

Absolutely and always check for conflicts. Will the work that you will do in any way conflict with the business that you are in? Our firm does thousands of conflict checks to see whether we are working adverse to a client on the same case, or if other work that we are doing might be in conflict with the work we will do for the new client. If you are a member of a sitting board, it is recommended that you do not perform expert services unless the chairman, CEO, or general counsel of the company is aware of it and does not object. This is extremely important. Being a former board member avoids some of these issues.

Prepare for the inquiry

Given that you will have to respond to some very demanding questions--and that the other side of a case will have done its due diligence on you--you can do two things to prepare:

* Review how your company operates: its style, protocols, oversight, even practices relating to decisions on acquisitions and valuations. These activities will most likely be scrutinized. Make sure that what you have said and written is exactly what you believe and exactly what you will say if asked. A director must assume that, whatever the subject of their testimony, his or her views and experience on current or previous board(s) will be discussed.

* Take courses and read books by authorities who will help you understand your role as an expert, how to present yourself for a trial, what a deposition is and how to prepare for one. While it is not the lawyer's prerogative to tell you your opinion, it is not unusual for counsel to discuss the preparation of your report and make sure it is in a format appropriate for submittal to a court. Still, taking a course or reading a few books will be extremely helpful. Two books--one on being a witness, one on how to develop an expert witness practice--that I would specifically recommend are:

-- Expert Testimony: A Guide for Expert Witnesses and the Lawyers Who Examine Them by Steven Lubet and Elizabeth Boals (2009).

-- The Expert Witness Marketing Book: How to Promote Your Forensic Practice in a Professional and Cost-Effective Manner by Rosalie Hamilton (2003).

Get the word out

If you want to provide expert witness services, first let people know you are available. But you do not just announce, "Hi, world, I'm an expert, and here's my phone number." It does not work like that.

You can consult some very good expert witness websites. For example, Thomson Reuters has a search function where you can sign up as an expert. They may submit your resume if a law firm submits an inquiry about a case for which your credentials are relevant. There are also a number of other sites that have directories of expert witnesses (see sidebar). You can get listed in them for a relatively nominal fee.

If you are a director, you probably deal with lawyers already. Maybe it is the firm's outside counsel, in which case you can tell them that you are available and your area of knowledge. You can say something like, "If any of your partners ever needs anybody with my expertise, please let me know." In other words, you do not talk to somebody and then get a case the next day. Becoming an expert witness does not happen overnight.

How do you build your practice and resume? You speak on the subject of your expertise, ideally in front of lawyers. Just talking to people, even other board members, is not necessarily productive. Whenever there is a conference on corporate issues for boards of directors, many people who go are lawyers because they want to meet these board members.

A presentation on your area of expertise in front of an industry legal group is another effective way to let the legal community know that you are available to provide expert testimony. For example, if you are a director in the oil and gas industry, you want to talk to lawyers who hire people with expertise in that industry. That is your goal. It may be that you will be asked to testify on what good corporate practice should be on issues related to the oil and gas industry, and what board members should do when confronted with those issues.

To sum up, identify the groups and markets that you want to get in front of that would benefit from your expertise and decide how to connect with them in the most meaningful way.

Fees

The majority of expert witnesses base their fees on an hourly rate times the number of hours worked. You may agree on occasion to a fixed fee in advance. The rates for someone at the director level can run from $500 to $1,500 an hour. One other important thing is that you can't take a matter on a contingency basis; that is, your fee cannot be based on the outcome of the case. You must have a fee arrangement, not a contingency.

The system needs you

To sum up, to the extent that someone likes a challenge and is willing to put their expertise and reputation on the line, many people find providing expert services in litigation a rewarding and exhilarating experience. It may sound trite, but they are also doing the justice system a service. Why do people hire experts? Because their expertise is needed for a jury or judge to understand the issues and reach a decision in a case. Given the complexity of our economy and the issues that arise in litigation, the justice system simply cannot work without experts who are willing to share their expertise.

The author can be contacted at mtenenbaum@brg-expert.com.

RELATED ARTICLE: Get listed, get known

There are a good number of resources where directors can list their names and expertise, and ... wait for the phone to ring (that is, after you have spoken at a few conferences). Most charge a modest listing fee, and many offer webinars and resource centers that enable a listed member to keep up to date on developments in the field. The following list contains a selection of expert witness websites:

* www.roundtablegroup.com -- Round Table Group (Thomson Reuters Expert Witness Services)

* www.cecon.com -- The CECON Group Inc. (science and engineering specialty)

* www.expertpages.com -- Expert Pages (an online directory of expert witnesses)

* http://jurispro.com -- JurisPro Expert Witness Directory ("where attorneys look to find experts" is their marketing slogan)

* http://experts.com -- Experts.com (its expert witness list includes over 1,200 areas of expertise)

* www.almexperts.com -- a Law.com website (a "source for experts, consultants and litigation support services")

* www.tasanet.com -- The Tasa Group Inc. (a "proprietary database of expert witness profiles")

--Marvin Tenenbaum

Marvin Tenenbaum is vice president and general counsel of Berkeley Research Group LLC (www.brg-expert.com). He previously served as the chief legal officer and general counsel of LECG Corporation, general counsel of operations of Navigant Consulting/Metzler Group, and general counsel of Peterson Consulting.
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Title Annotation:DIRECTOR ROLES
Author:Tenenbaum, Marvin
Publication:Directors & Boards
Date:Mar 22, 2013
Words:1577
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