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Joint Expert Meetings – Banking Litigation, An Experts Opinion

Special Reports

by Andrew Kasapis - Director, Disputes/Investigations Duff & Phelps Ltd. - www.duffandphelps.com

 

As a banking expert witness, I have been involved in many joint expert meetings. In most cases I have been the sole expert for one side, against a sole expert on the other side. On some occasions, in larger cases with multiple issues, I have been part of a group of experts working for the same side. In this article, I am going to focus on the one-on-one expert situation.

As is probably well understood by readers of EWJ, the joint expert meeting usually takes place after both experts have each written their own report and close to the dates for evidence to be heard. The two experts agree to meet to have a discussion on any technical matters specific to the case within each expert’s area of knowledge. They discuss their individual opinions on these issues with the aim to deliver a joint expert report.

Based on my experience of joint expert meetings, I believe that there should be open and frank exchanges between experts with respect to the technical facts of the case. Joint expert meetings should be a fluid exchange of opinion and the primary objective of the meeting should be to reduce the areas of disagreement and clarify the remaining issues to make it easier for the judge to reach a decision. Joint meetings can therefore be beneficial to both parties at the same time as to the court.

It’s usual for the experts to take notes throughout the meeting on issues both agreed upon and disagreed upon, to create a simple record of the meeting. It has been suggested by some lawyers that there should be a more formal process of recording the meeting. I personally like the less formal recording process as I believe that the detail of discussion around technical issues between experts should stay frank and open. I believe a formal recording process would make the experience more stilted and more guarded.

The record of the meeting serves to help the expert nominated to provide the initial draft of the joint expert report. In my experience, it is not unusual for the drafter to only consider (or, perhaps recall) what they wanted to hear, as opposed to what was actually said. This is a downside of a more informal recording process. The joint expert report should usually list issues in two groups; those issues where the experts agree and those where the experts do not agree. In my experience, the joint expert report is, correctly, leaner and more focused on the most pivotal issues than the individual expert reports, which generally take a more detailed approach with supporting material across a wider range of issues. The joint expert report becomes a guide for the judge to navigate the more complex individual reports.

In my experience, the joint expert meeting and report should cover:

(i) The list of pivotal issues of the case (using individual reports as reference); and

(ii) those issues that are agreed on, allowing the parties to set these aside; and

(iii) a discussion of the issues not agreed upon.

An expert can have a degree of flexibility in their opinion, as long as the opinion can be supported by experience, evidence and common sense. It is uncommon to be presented with completely new evidence at the point where the opposing experts are due to meet and discuss the issues at hand. I have changed my opinion where I felt it was necessary, based on any additional evidence, although this is rare. I have on occasion toned down or qualified my opinion due to a more rounded understanding of events and issues. This is, of course, one of the objectives of the process.

Therefore, there are times when my first report may be slightly out of step with the more evolved joint expert report. It is important in these situations to go immediately on record to qualify any change in the opinion presented to the court.

Overall, in my opinion, joint expert meetings can be very productive. The expert for the other side is generally an experienced professional and the meetings have produced succinct opinions. I would like to think that the joint reports created for these cases have helped judges to make an informed decision, as far as the technical issues of each case were concerned.

I would expect two opposing experts that have relevant and similar experience not to differ significantly across the spectrum of case issues. Although in my experience, it is rare to find two experts with the exact same experience and it is even rarer to find two experts that agree outside of the most fundamental technical points.

In my experience, experts will differ on a few key pivotal points, but in some rare occasions entrenched viewpoints or lack of expertise can create disagreement on a point that shouldn’t be in debate. With the addition of ego and where an expert takes it upon themselves to litigate the case, you can end up with an unhelpful and unproductive expert meeting.

The result of such a meeting is that more of the issues can cause disagreement and the issues can become more complicated. Thus, the joint expert report created from this meeting may not help the judge in any meaningful way.

Another sign of a bad joint expert meeting is where the expert who drafted the joint report believes that there shouldn’t be any changes to their first draft. One expert’s memory and understanding of a meeting will not always match the other expert’s take when the joint report is written, hence changes to the initial draft of the joint report are usual and to be welcomed, as they typically make the final draft clearer and a more useful summary for the judge.

The drafting of a coherent joint expert report can become complicated in cases where there are multiple experts on both sides. This can be the case where experts are retained for different areas of expertise but where those areas of expertise sometimes overlap. This happens occasionally in banking litigation matters. Logistically, handling multiple expert meetings and the production of an agreed useful joint expert report or reports can become very complicated. Where areas of overlapping expertise are not just from experts on opposing sides, but also between experts on the same side, it can become very difficult logistically to reach an agreed position before the deadline given by the court, which is often soon after the set date for the meeting. To avoid this danger in cases within the finance litigation sector, some lawyers hire experts with expertise that is very broad to save money. In my experience, although I recognize that sometimes finding the right expert with specific expertise can be time-consuming, this will cause more overlaps and confusion.

A banking market risk expert is different to a banking credit risk expert and very different to an interest rate derivatives trader. One expert could have overlap across these three categories and differences of opinion within each category.

If, for example, the case concerns the trading of credit default swaps (CDS) and the associated market in 2008 and both experts have traded the same product at the same point in time, it would be expected that there will be much in common between the experts. The reality can be quite different. For example, an emerging market credit hedge fund trader and investment grade CDS market maker at a bank would have different opinions on the issues presented, as the market maker would see a wider array of information than the hedge fund trader. In addition, emerging markets are completely different to investment grade markets. Emerging CDS markets are much more volatile and less liquid than investment grade CDS markets which mean that these two experts are likely to have faced different issues and thus have differing perspectives on the CDS market in 2008.

In my opinion, where a case requires multiple experts, lawyers should hire experts with relevant experience to the specific case issues and attempt to avoid overlap in expertise. This can be hard to do in practice (and expensive), as a market practitioner’s expertise is not necessarily clearly defined. The emphasis should be on the experts to be honest and clear at all points in the process. Right from the outset, i.e. in discussing the potential instruction, it is incumbent on the experts to declare exactly what their expertise is and not stray outside it.

A consequence of reading many case documents and being immersed in a huge amount of case details is that an expert can appear to have tunnel vision, where they may focus completely on a single or limited objective or view. This occasionally is also as a result of having very defined and narrow instructions. I believe the other expert’s report can be beneficial to read in fact I believe it is necessary as it can provide a completely different perspective of the key events. This can only be a good thing, whether or not it challenges or reinforces my own views

In a joint expert meeting, there may be areas that one expert considers important but, that the other sides’ expert may deliberately avoid, believing that there is no issue to discuss or being unwilling to have the issue addressed in the joint report. As an independent unbiased expert with a duty to the court, it is not the expert’s job to formulate these views within any strategic litigation plan. My advice is to politely but firmly reiterate that the point requires discussion. Circulating an agenda or list of issues that each expert wishes to discuss in advance of the first meeting can assist with this.

I try to ensure that counsel receive a detailed brief concerning the result of the joint expert meeting, keeping to the technical issues discussed and observing the without prejudice nature of the meetings. Counsel can then determine their own strategy independently. My job as the expert witness is to present unbiased opinions based on evidence presented to me within the context of my experience and understanding of the market.

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