Friday 03 May 2013 by Thayne Forbes
The main rationale for using a single joint expert (SJE) is to reduce the costs and delays associated with using expert witnesses on behalf of each of the parties in litigation. This has been in place for a number of years, but experience of SJE appointments confirms that new issues are raised and can actually lead to increased costs and delays.
In an adversarial system it is commonplace to see highly opposed legal arguments, and conflicting evidence, submitted on behalf of the parties. Experts, who give evidence of opinion, are often appointed individually for each party. There can be a tension between this and an expert's overriding duty to the court, and the use of experts for each party has contributed to perceptions that the English litigation system can be too expensive and time consuming for practical dispute resolution.
The use of SJEs is now widespread, and experience shows that this in itself poses new problems. This is particularly the case where expert opinions would be affected substantially by the specific instructions given or there is a potentially wide range of legitimate expert opinion. In this article I consider these problems in the context of my experience as an expert valuer of intellectual property (IP).
Instructions affecting an expert opinion
Expert opinions on IP valuation are susceptible to the specific nature of the instructions. Normally an IP valuation should be expressed precisely, in particular: for an identified purpose; on a specific basis; and at a point in time. So, where a SJE in IP valuation is appointed, it needs to be appreciated that the opinion given will be significantly affected if the precise instructions vary.
For example an IP valuation could be on the basis of 'fair value' or 'market value'. There might be no difference in practice between these two bases, or there might be a significant difference. It will depend on the circumstances. There might also be differing interpretations of these bases which would significantly affect an opinion. For example, 'market value' could be on the assumption that: 1) there is no undue compulsion to sell; or 2) on a forced sale basis, that it must be sold by auction within three months. Both of these situations occur on the market and so both could be 'market value'.
Costs and delays
Therefore, with an IP valuation SJE, the lawyers will realise that the specific nature of the instructions (and their interpretation) would potentially have a significant effect on the evidence. It would naturally follow that a way of dealing with this would be for expert IP valuation advisers to be instructed on behalf of each party to assist them in maximising their position. So the number of experts involved could multiply to three or more, and only one of those would have an overriding duty to the court. So the potential for cost and delay associated with these circumstances can increase rather than decrease.
Factual assumptions affecting the expert opinion
An expert does not decide the facts. But the expert opinion is likely to be based on assumptions as to fact, and the expert has a role in investigating facts relevant to the expert opinion. So an expert does play a role in ascertaining the relevant facts. Therefore the factual basis for an expert to base his or her opinion could become another battleground for a SJE, as well as the related required disclosure.
Let's take the example of a dispute over lost profits as a result of website downtime. In this example, the claimant proposes the following assumptions:
The defendant does not agree with these facts, both as to what happened, and other relevant facts:
The impact of these factual disputes on an expert quantification of lost profits would be difficult to assess and would vary according to the circumstances. For example would Amazon suffer greater losses if this had happened to its website than Smirnoff would suffer if its domain was was similarly affected?
So this whole factual issue may be highly significant or it may have little significance. If relevant it would need to be addressed; if irrelevant it would be wasted time and cost. Again, a logical step would be to instruct further experts to advise on how best to present the facts to the SJE.
The direct ability to instruct experts is lost
For complex matters of expert opinion the input of an expert is often needed to ensure that the opinion can be properly given. This can be an iterative process as the expert skills are adapted to a litigation process. This is often impractical with an SJE. Again this leads to the prospect of three experts rather than two.
SJEs may be inappropriate in subjective situations
An expert IP valuation is likely to be difficult and subjective. It may not be appropriate for an expert to have too much influence in such circumstances. SJEs can get it wrong, but in practical terms a challenge to SJE evidence is difficult.
There are several issues which arise if SJE appointment is proposed. It is worth valuating these carefully because of the real risk that the main benefit, reduced cost and delay, is not the consequence. In practice it can increase costs, delays and risks associated with litigation.
Thayne Forbes is joint managing director of independent brand valuation consultancy Intangible Business