November 03, 2014
Expert witnesses spend years acquiring the knowledge, expertise, and skills that make them experts in their fields. As such, it is not surprising that expert witnesses expect to be compensated for their time and knowledge. Some expert witnesses request a retainer or an upfront monetary deposit (sometimes non-refundable) in order to secure their services.
For litigations, a party may obtain discovery by demanding that all parties exchange information about each other’s expert witnesses after the parties in a case set the initial trial date. Designation is essentially naming the expert witness by the retaining party in the case. But, what happens if the case settles shortly after paying the retainer and before the expert has done any work? Is it appropriate for the expert to ask for a designation fee? Is it appropriate to request such fee in the first place? What are the standard practices related to designation fees? Following is an analysis of the pro’s and con’s of expert witness designation fees, as well as a brief overview of common practices related to these fees.
Why Charge A Designation Fee?
There are a number of solid reasons for an expert witness to request a designation fee. A designation fee is a one-time fee for an attorney to designate an individual as an expert witness. Some believe that it compensates an expert for the use of his or her name, because the expert’s name can gain leverage for the client and allows the case to settle more quickly. Having the right expert can sometimes intimidate the opposing parties into a resolution. There is obviously value to this benefit; it seems appropriate that the expert should be compensated for use of his or her reputation if the expert designation helps settle the case.
Similarly, the fee compensates the expert for agreeing to be on standby for the case. By doing so, regardless of the course of events in the case, the expert witness is potentially foregoing other gainful employment and business opportunities in order to remain available when needed for the lawsuit. The expert witness may actually incur expenses, like having to cancel travel plans. Some expert witnesses do not like the uncertainty of agreeing to sign on as a witness, and not knowing whether or not the case will settle before they have time to bill.
The best instance in which to charge a designation fee is when the expert is specialized in a hard-to-find discipline or the number of experts in that field/location is very low. Just as in economics, scarcity often creates value, and this gives exceptional experts an advantage when negotiating designation fees.
Reasons for Not Charging A Designation Fee
There are a number of reasons why an expert witness does not want to collect an upfront designation fee. Many expert witnesses feel that if no work is done, then it’s fair that the client doesn’t have to pay. Certain attorneys may feel put off by a designation fee because if no work is done by the expert before the case settles, the client will have effectively paid for nothing, especially if the case settles for reasons other than the expert’s reputation.
Another reason an expert witness chooses to not request for a designation fee is to be competitive in their fees. When presented with two similarly qualified expert witnesses, an attorney will choose the one who does not charge a designation fee. Not collecting a designation fee can serve as a way for expert witnesses to get cases under their belt.
Common Practices for Designation Fee
If an expert witness decides to charge a designation fee, it will need to be stated clearly on the retention agreement. There are some common practices that may be wise to observe. Designation fees are often included as part of the initial retainer. Some experts will deduct the designation fee from the retainer if the case settles and they will have to refund the remainder of the retainer back to the attorney. Others ask for a non-refundable retainer and use that as a designation fee. If the case proceeds and work is required, many experts will waive the designation fee. The designation fee is sometimes based on a multiple of the expert’s hourly rates and the number of hours. In some cases, this could be as little as one hour, or as high as eight (a full day’s work). Most seem to fall in the middle – around two to four hours. In other instances, the fee is more arbitrary and simply a fixed rate, for example, $500 or $1000.
The choice to charge a designation fee or not is ultimately the expert’s preference in most cases. While the expert witness’ professional organization or other governing bodies may occasionally suggest certain deposits and fees, this is exception, not the rule. An expert’s choice of whether to charge a designation fee, and how much that fee should be, may have certain pro’s and con’s, so it is important for the expert witness and anyone evaluating an expert, to determine whether that individual is sufficiently qualified, experienced, and well-known to warrant charging such a fee and how much a reasonable amount is. Naturally, most experts are willing to work with an attorney to figure out the best approach that will be fair to both the witness and the client, but understanding the expert’s relative value and scarcity in the marketplace can give each side additional leverage in any resulting negotiation.
By Christopher Eri, Attorney at Law