Congress is expected to approve one of the most significant changes to expert witness discovery provisions under the Federal Rules of Civil Procedure. These changes, which are expected to become effective Dec. 1, 2010, will affect those of you who are preparing an expert report for presentation in federal court, testifying as an expert in federal court, or giving expert advice to attorneys, or testifying experts who are preparing for a case in federal court.
WHY THE CHANGE?
The changes are the result of discovery and litigation issues relating to expert testimony, expert reports, and the work of non-testifying experts. The Judicial Conference Report from the Standing Committee on Rules of Practice and Procedure, which is responsible for reviewing all proposed rules changes, found that under the current version of Rule 26, “lawyers and experts take elaborate steps to avoid creating any discoverable record and at the same time take elaborate steps to attempt to discover the other side’s drafts and communications."1One reason for these elaborate steps is that the current version of Rule 26, as amended in 1993, requires complete disclosure of materials considered by testifying experts. Before the 1993 amendments, parties were limited to using traditional methods of discovery to obtain information about testifying experts from opposing parties. But the 1993 amendments were interpreted to allow discovery of draft expert reports and communications between counsel and testifying experts. Thus, in 1993, the work product protection previously afforded to testifying experts, which prevented compelled disclosure of tangible materials that have been prepared in anticipation of litigation, was removed, and almost everything discussed between legal counsel and a testifying expert – including CFEs – became discoverable.2In response to the 1993 Rule, lawyers and experts began taking intricate actions to avoid creating a discoverable record. These practices included lawyers hiring two sets of experts:
- One to provide testimony in court and prepare an expert report, e.g. testifying expert.
- One for consultation, who would not testify at trial and would not “take any notes, make any record of preliminary analyses or opinions, or produce any draft report,”3 e.g. non-testifying expert.
The Standing Rules Committee found that the result of this two-tiered system “result[ed] in inefficient, costly, and wasteful litigation behavior [and] experience has also shown that extensive, time-consuming, and costly efforts to discover every change in draft reports by experts and every communication between experts and retaining counsel rarely produces information that bears on the strengths or weaknesses of the expert’s opinion.”4The committee further observed that “[m]any experienced lawyers routinely stipulate that they will not seek to discover draft reports from each other’s experts or communications between the experts and retaining lawyers” and noted that this development “indicates problems and the need for amendment.”5
SOLUTION: AMENDMENT TO RULE 26
The Advisory Committee on Rules of Civil Procedure, the subcommittee of the U.S. Judicial Conference that assists the Standing Committee, made the proposed amendments to Rule 26 available for public comment in August 2008. The Judicial Conference adopted these proposals last fall, the Supreme Court submitted them to Congress for approval in April of 2010, and they are expected to become effective on Dec. 1, 2010, as approved by Congress.6 The proposed changes to Rule 26 have received overwhelming support by many lawyers, many legal societies, and the U.S. Department of Justice.7
COMPARING RULE 26(b)(4) TO RULE 26(a)(2)
The proposed amendments would affect Rules 26(a)(2) and 26(b)(4). Under the current law, Rule 26(b)(4)(A) authorizes expert depositions, and Rule 26(a)(2) requires the disclosure of expert testimony, including a written report.
The report must contain a statement of the witness’ opinion and its basis, all information the expert considered in forming his or her opinion, a description of the witness’ qualifications and publications, a list of cases in which the witness has testified as an expert, and a statement regarding the witness’ compensation. And under these rules, the majority of courts permit discovery of a testifying expert’s draft reports.
Moreover, Rule 26(b)(4)(A) authorizes the deposition of “any person who has been identified as an expert whose opinions may be presented at trial,” but there is no limit on the right of an opposing party to inquire into the preliminary opinions of such an expert witness.
The proposed amendments, however, make several changes to the existing provisions. First, under the proposed amendments, the work-product doctrine would protect the draft reports and disclosures of an expert required to report under Rule 26(a)(2)(B). As a result, under the proposed amendments, a CFE identified as an expert whose opinions may be presented during trial will be protected from having to be deposed on his draft reports. There are, however, some exceptions to this rule.
Second, the proposed amendments would, with three exceptions, extend work-product protection to the discovery of communications between a party’s attorney and an expert witness who is required to provide a report under Rule 26(b)(2)(B), “regardless of the form in which the draft is recorded.”8 As a result, work-product protection is afforded to all forms of communications – oral, written, electronic, or other.
This rule helps eliminate the pre-trial tactic of attempting to discover preliminary opinions about the case at issue. However, the proposed rules will allow discovery of communications between a lawyer and a testifying expert about the compensation for the expert’s study or testimony, the facts or data provided by the lawyer that the expert considered in forming his opinions, and the assumptions provided by the lawyer that the expert relied upon to form his opinions.
The advisory committee’s notes suggest that bias stemming from an expert’s compensation is of concern to the committee. Thus, direct compensation, indirect compensation, or benefits directly or indirectly to the expert or the expert’s staff and or organization, or future employment of future contracts, is fully discoverable.
The advisory committee is also concerned about identifying facts or data that the party’s attorney may provide – or assumptions that might be provided to the expert to assist in forming the expert’s opinion. These discovery issues are centered on facts, data, and assumptions shared with the expert, and they don’t include facts, data, and assumptions that are not provided by the party’s attorney. Therefore, the CFE must be wary of related reports from legal counsel that purport and assert certain assumptions, such as previous financial statements (certified or not), previous payroll reports, minutes of the board, etc., which may or may not be valid or reliable as suggested or assumed by legal counsel.
RULE 26(a)(2): DISCLOSURE OF EXPERT TESTIMONY
Third, the proposed amendments affirm the disclosure of expert witness testimony via a written report under Rule 26(a)(2)(B), but the disclosure required would include “a complete statement of all opinions the witness will express and the basis and reasons for them [along with] the facts or data considered by the witness in forming them.”9
The amended rule is narrower than the 1993 rule that requires experts to disclose “facts or data or other information considered” in forming opinions. “The refocus of disclosure on ‘facts or data‘ is meant to limit disclosure to material of a factual nature by excluding theories or mental impressions of counsel … interpreted broadly to require disclosure of any material considered by the expert, from whatever source … [which] extends to facts or data ‘considered‘ by the expert in forming the opinions to be expressed, not only those relied upon by the expert.”10Fourth, for experts who are expected to testify, but who are not required to provide a written report under Rule 26(a)(2)(B) – those who were not specially retained and whose ordinary job duties did not involve giving expert testimony – the proposed amendments require disclosures stating “the subject matter on which the witness is expected to present evidence … and a summary of the facts and opinion to which the witness is expected to testify.”11
The advisory committee notes maintain that “a witness who is not required to provide a report … may both testify as a fact witness and also provide expert testimony. … Parties must identify such witnesses … and provide the disclosure required … [but the disclosure doesn’t need to] include facts unrelated to the expert opinions the witness will present.” As a consequence, a witness can be an employee and therefore not be required to prepare a report before he or she testifies as a “fact witness,” such as a CFE who is not retained to provide expert testimony and who does not normally give expert testimony.
Fifth, according to the committee notes, “nothing in the Rule 26 amendments affects the court’s gate-keeping responsibilities under Daubert v. Merrell Dow Pharm., Inc., 509 U.S. 579 (1993).”
According to Daubert and its progeny, federal trial judges must evaluate expert witnesses to determine whether the expert’s testimony is relevant and reliable enough to be admitted into evidence.
WHAT AFFECTS A CFE MOST
The summary of expert changes for the CFE include:
- In general, draft expert reports required under Rule 26(a)(2) are not discoverable.
- All forms of communications – written, oral, electronic, etc. – between the expert and legal counsel, are generally protected from discovery under the work product doctrine.
- Generally, for experts who are expected to testify but who are not required to provide a written report under Rule 26(a)(2), the party using the witness must provide a report that discloses the subject matter of the witness’ testimony and summarizes the facts and opinions that the witness is expected to offer.
- Cross-examinations will intensify for the CFE.
- If approved, challenges, adjustments, and illumination required by the courts to all the aforementioned rule changes will begin Dec. 1, 2010.
Warning: State court rules of civil procedure will begin to reflect the federal rules of civil procedure under Rule 26, but the CFE must not assume the Federal Rules of Civil Procedure will be universally applied to the court systems in every state. CFEs must work with legal counsel to understand the rules of civil procedure to maintain the professional standards of reporting and due diligence.
Michael Stagar, MBA, CFE, CPA, may be reached at MstagarCPA@zoominternet.net.
Nothing contained herein is to be considered the rendering of legal advice or other professional advice and is not a substitute for the advice of an attorney. The readers are responsible for obtaining such advice from the services of a competent attorney or another professional should be sought.
1 Excerpt from the Report of the Judicial Conference, Committee on Rules of Practice and Procedure, To the Chief Justice of the United States and Members of the Judicial Conference of the United States: Federal Rules of Civil Procedure, Rules Recommended for Approval and Transition 2; available at http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Supreme%20Court%202009/Excerpt-ST-CV.pdf
2 Supra note 1
3 Supra note 1, at 3
4 Standing Rules Committee, Proposed Rule Amendments of Significant Interest, Federal Rules of Civil Procedure, Civil Rule 26, Arguments in Favor, at 2; available at http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Supreme%20Court%202009/scrulessignificantinterest.pdf
5 Standing Rules Committee, Proposed Rule Amendments of Significant Interest, Federal Rules of Civil Procedure, Civil Rule 26, Arguments in Favor, at 2; available at http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Supreme%20Court%202009/scrulessignificantinterest.pdf
6 Supra note 1
7 Supra note 1, at 2
8 Fed R Civ Proc 26, Amendments to the Federal Rules of Civil Procedure (amended pending Congressional approval as of 12/01/2010); available at http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Supreme%20Court%202009/CV-Clean-Rules.pdf
10 Supra note 8, at 14
11 Committee on Rules of Practice and Procedure of the Judicial Conference of the United States, Agenda E-19 (Appendix C), September 2009, Committee Notes, page 16, http://www.uscourts.gov/uscourts/RulesAndPolicies/rules/Supreme%20Court%202009/Excerpt-CV.pdf
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