Richard Skurnik’s Tips on Class Actions and Expert Witnesses

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As the leading provider of expert witnesses in Australasia, ExpertsDirect has sourced experts for some of the most prominent class action matters in Australia and abroad. ExpertsDirect’s Founder and CEO Richard Skurnik shares his advice on working with expert witnesses on class action matters.

What tips do you have for fellow practitioners when it comes to selecting the right expert witness or managing the expert evidence process in class actions?

The typical criteria for selecting an expert include years of experience, academic qualifications, independence, location, price, communication style, and past expert witness experience.

In an ideal world, an expert will have a combination of all these criteria but unfortunately, it’s not always that simple and oftentimes there is a trade-off.  From almost 10 years of working with solicitors who brief experts in class actions, I have found that most common trade-off is specialist expertise with past expert witness experience.

Most lawyers place a large emphasis on the need for past expert witness experience – which is no surprise as engaging an expert with no prior expert witness experience which, in theory, can be a risky endeavour. However, when deciding whether to prioritise past expert witness experience over specific expertise, it is my view that class actions lawyers should preference the latter. Particularly in class actions, where questions put to experts are detailed and parties frequently challenge evidence on its technicalities, the expert with deeper and stronger knowledge of the subject matter will be more persuasive. Naturally, they should be a good communicator which can be ascertained by asking pointed questions in preliminary teleconferences and asking them to send you examples of published materials.

In shareholder class actions, for instance, while it can be tempting to engage a generalist equity analyst with past expert witness experience, it is far more advantageous to engage an equity analyst with limited court exposure but with specialised knowledge within the sector of the stock. Given enough time to understand court process and cross-examination, experts with the most specialised knowledge are more likely to succeed in court. In addition, past expert witness experience does not guarantee that the expert will communicate effectively in cross-examination. Some experts have appeared multiple times in court with a poor track record, and even notoriety.

This assumes that an “equity analyst” is the right expert for that particular task – there is often a choice made between a “quantitative” expert (such as a forensic economist) and a “qualitative” expert (such as an analyst). The choice usually depends on how well covered the stock is by external analysts. The greater the coverage, the more likely that a forensic economist will be able to undertake the analysis to demonstrate a correlation between information and share price drop (called an “event study” analysis). This just highlights the need to choose the right expert with specialised knowledge. In some cases, an analyst is preferred because of a lack of external coverage (where it is a small cap stock).

Of course, this trade-off exists in circumstances where lawyers must choose between experts with prior experience and experts with more detailed and specific expertise on the subject matter. Preferably, the selected expert would possess both prior cross-examination experience as well as the most detailed and specific expertise on the subject matter. Moreover, with any expert for class actions, the usual standards of expected professionalism should always apply – experts should be effective communicators (both verbally and in writing), with a good temperament for professional cooperation, and be able to withstand robust discussion and disagreement about their evidence and professional opinions.

Ultimately, you can educate experts on the process of being an expert witness but not their expertise.

My second bit of advice concerns the critical place of assumptions in class actions litigation.

Allowing experts to rely on assumptions that can be disproved later is like building a house on a foundation of sand. Especially in class actions where the facts and technical phenomena involved in producing an expert opinion are complex, parties are liable to dispute the assumptions that should underly the reports of experts. Experts frequently need to produce additional reports to respond to the shifting bases of their evidence rather than merely tweak their existing opinion. Requiring an expert to provide a separate report on an alternative set of assumptions adds significant time and costs to proceedings – not to mention undermines the court’s sense of the expert’s clarity about the matter.

There are three main ways I’ve seen parties avoid this mishap in class actions:

  1. Joint agreement on assumptions: In some class actions, I have seen the judge make orders for a joint agreement on the assumptions which saves a significant amount of time and avoids the ‘ships in the night’ scenario where experts express completely incomparable opinions (because their opinions rely on significantly different assumptions). It is even commonplace now for judges to “settle” the questions to be put to the experts at a Case Management Hearing. A recent example of this is the Count Financial Class Action being case managed by Justice Halley which settled questions to financial advice experts. We also saw the same procedure adopted some years ago by Justice Le Mier in the Parkerville Bushfire Class Action.

  2. Detailed reporting: if experts rely on their own assumptions, they should support these assumptions with reasoning and empirical data where possible. There is a chance in that circumstance that you can allow the assumptions to stick by justifying them.

  3. The Dirty Expert: When the stakes are as high as they often are in class actions, it often makes sense to bring in a dirty expert to test the assumptions and reasoning provided by your clean expert. Although the name “dirty” has a pejorative connotation, the work of a dirty expert is often just to help the lawyers understand what the case is about. Class actions can be extremely technical (especially in, for example, the sphere of competition law) so it is helpful to have an expert on call who can distil complex propositions to simple ones. Although expertise is essential, given that they are not the testifying expert more emphasis should be placed on the user experience with a dirty expert.

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