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Expert Compensation and Expert Witness Fees

9.1­ Experts and attorneys should strive to agree in advance concerning the nature and scope of the services to be performed, the terms and amounts of compensation to be paid for those services, and the responsibility for payment of that compensation. Absent an agreement, disputes may arise which will require resolution by the court or an interprofessional committee.

The expert is entitled to reasonable compensation for providing services in connection with litigation. The issues of fees, costs, and scope of employment for expert services are frequent areas of disagreement. This is usually due to lack of open communication and the absence of a prior agreement between the expert and the attorney.

Therefore, whenever possible, these issues should be clarified before services are rendered and, whenever possible, confirmed by written agreement. It should be remembered that "an agreement" is not created by simply sending out a fee schedule, but is a product of negotiation and mutual consent. Failure by an attorney to object to a written fee policy may be an implied consent to abide by its terms. The agreement should be tailored to fit the specific circumstances, but it is suggested that the following be included:
(1) The scope of services to be performed by the expert;
(2) The rate of compensation to be paid for the expert's services, including whether the fee will vary depending upon the services rendered, e.g., research, review of documents, examination, dictating of report, travel, or testimony;
(3) Whether advance payments or retainers are required and, if so, under what circumstances;
(4) The handling of costs and expenses;
(5) Cancellation terms and amounts; and
(6) The person or persons responsible for payment of those costs and fees.

Experts are encouraged to develop office policies concerning involvement in legal matters, which can then be reduced to writing and provided to the attorney at the time of the initial request.

An attorney provided with such a written policy should immediately assent or object to the terms provided. It is improper for the attorney who does not object to continue to request the expert's services after being advised of the expert's policies for involvement in legal matters and then later deny that he or she agreed to the terms of those policies. However, the expert should recognize that providing the attorney with the expert's policies merely constitutes an offer and does not bind the attorney or client until they expressly or impliedly agree to those terms.

If no agreement can be reached between an expert and an attorney, the expert must recognize that he or she can still be compelled to provide necessary information and a court or interprofessional committee may be called upon to determine the amount and terms of reasonable compensation. A non-treating or consulting expert can simply refuse to participate absent an agreement with the attorney or his or her client.

9.2­ An expert is entitled to fair and reasonable compensation for providing expert testimony.

In determining what constitutes a fair and reasonable expert witness fee, some or all of the following factors should be considered:1

(1) The amount of time spent, including review, preparation, drafting reports, travel, or testimony;
(2) The degree of knowledge, learning, or skill required;
(3) The amount of effort expended;
(4) The uniqueness of the expert's qualifications;
(5) Current and reliable statistical income information of similarly situated experts;
(6) The amounts charged by similarly situated experts for similar services;
(7) The amount of other professional fees lost; and
(8) The impact, if any, on the expert's practice because of scheduling difficulties, other commitments, or other problems.

An expert should also be aware that some statutes, such as those governing workers' compensation claims, set reasonable medical fee schedules and provide that it is unlawful, void, and unenforceable as a debt for any health care provider to charge a claimant in excess of the scheduled fee. See C.R.S. §8-42-101(3).

The use of itemized billing by the expert to the attorney should be encouraged and will often expedite payment.

9.3­ An expert is never justified in charging excessive fees so as to capitalize on the client or patient's legal problem, or so as to discourage requests for information. At the same time, an expert cannot be expected to lose money or suffer financially as a result of participation in the litigation process. The expert should recognize that it is the patient or client who is ultimately responsible for payment of such litigation costs, regardless of the outcome of the case. Hence, charges for an expert's services should generally be no higher than the expert's hourly charges for other professional services.

An expert should neither gain nor lose financially as a result of his or her participation in the litigation process. An attorney should never expect the expert to sacrifice income merely because his or her patient or client is involved in litigation. The attorney should not abuse the power of the subpoena to attempt to obtain free or discounted expert testimony.

On the other hand, expert witness fees should not be so high that the fees prevent the patient or client from obtaining the expert's services, or as to create the appearance that the expert is attempting to capitalize on the patient's or client's legal problem. Experts should not seek to punish or deter attorneys, patients or clients from seeking the medical expert's services or information. This merely further victimizes the party who is compelled to seek compensation through litigation. The practice of charging fees in excess of those usually charged for other professional services to compensate for the "aggravation of litigation" is discouraged.

Even though the attorney may become obligated initially to pay the expert witness fees, the expert should always be mindful that the attorney's client is ultimately responsible for such litigation costs, regardless of the outcome of the case. Even in cases handled on a contingency fee basis, only the fee is contingent. While an attorney may advance these costs on behalf of the client, the lawyer's professional ethics require that the client remain ultimately responsible.

Therefore, fees charged for litigation-related services should be roughly equivalent to fees charged in the expert's practice for professional services.

9.4­ In contracting for the professional services of an expert, the attorney is acting as an agent for the client. It is the client who remains ultimately responsible for such fees and costs. However, an attorney may ethically obligate himself or herself to pay the expert's fees and costs and, customarily, the attorney contacting or retaining an expert on behalf of a client is personally obligated to see that the expert is paid for litigation-related services.

An attorney is only an agent for his or her client, and litigation costs and expert witness fees are contracted for by the attorney on behalf of the client. Under agency law, an agent is usually not responsible for debts contracted for or on behalf of a disclosed principal.

However, different rules apply to expert witnesses in the litigation setting. An attorney is ethically obligated to compensate the expert directly for professional services he or she has requested. The attorney may also ethically advance or guarantee such litigation costs and expert witness fees, so long as the client remains ultimately responsible for payment.

Customarily, the attorney advances fees for expert witnesses he or she contacts on behalf of the client, even if the attorney is not obligated to do so. This is because the attorney is in a better position to assess the client's ability to pay and to collect such advanced costs from the client.

The attorney's obligation, however, is generally limited to those fees relating to the expert's services as a witness, and does not extend to payment for treatment or services rendered directly to the client or patient.

9.5­ Compensation of an expert witness may never be contingent upon the outcome or the content of the expert's testimony, or the court's acceptance of the witness as an expert witness.

An expert's compensation should never be conditioned upon, or measured by, the amount of the recovery in damages in the litigation. Any contingent witness fee naturally compromises the integrity of the testimony of that witness. The expert is entitled to reasonable compensation regardless of the outcome of the case.

It goes without saying that the attorney cannot condition compensation upon the content of the expert's testimony and thereby seek to purchase favorable testimony. This is clearly improper conduct on the part of the attorney.

Because the attorney should be familiar with court rules governing competency of expert testimony and has a duty to inquire concerning the qualifications of his or her tendered expert, it is also inappropriate to condition the expert's compensation upon the court's acceptance of the witness as an expert.

9.6 ­An expert witness fee is owed if the subject of the testimony arises out of the individual's role or status as an expert and cannot be conditioned upon the eliciting of expert "opinions."

The premise that an expert witness fee is due only if an expert opinion is elicited from the witness is not a valid assumption. An expert who comes into possession of facts or information solely because of his or her position as a professional person is entitled to receive compensation as an expert when he or she testifies to those facts in a deposition or in court. The expert's position and status at the time he or she comes into possession of relevant information determines whether the expert should be entitled to an expert witness fee.

However, the federal courts have held, in Colorado and elsewhere, that treating physicians may not be considered expert witnesses, unless specifically designated as such and unless expert opinions are elicited. The issue of whether a treating physician is an "expert" has been alluded to in a recent state court case, but not resolved.

9.7 ­An expert has a duty to provide information and participate in the client or patient's litigation regardless of the status of the client's or patient's bill for non-litigation related professional services.

Fees for non-litigation related professional services incurred by the party are exclusively the responsibility of the client/patient. It is unethical for the attorney to advance these costs on behalf of the party.

An expert may not condition his or her involvement in litigation (i.e., providing records, reports, depositions, or trial testimony) upon payment of the client's/patient's bill for other professional services. An expert should never feel that he or she has some financial interest in the outcome of the case, due to an unpaid bill, which might appear to taint the objectivity of expert testimony. The expert should recognize that some clients or patients are dependent upon a legal recovery to pay for past and future services. Further, public policy mandates that the expert provide necessary information and testimony to evaluate claims. However, as a professional courtesy, the attorney may make reasonable and ethical efforts to assist the expert in obtaining payment for his or her services. The attorney may urge the client to pay the expert for the services received as soon as possible regardless of the status of the lawsuit. It is not proper for the attorney to advise the client that payment for care and treatment professional services may justifiably be withheld until the lawsuit is completed. If the client has resources to make full or partial payment, the lawyer may properly urge the client to make payments due to the expert for services.

The attorney may also request permission from the client to pay the expert for such services directly out of any recovery received in the litigation. This authorization for direct disbursements to the expert can often be set forth in the attorney-client fee agreement.

9.8­ Terms concerning cancellation of testimony should be discussed and agreed upon in advance. An expert is entitled to prompt notification of cancellation of testimony. Cancellation fees should be reasonably related to the actual loss to the expert.

Cancellation of testimony is often a source of interprofessional disputes. This usually can be alleviated by prior agreement between the expert and the attorney endorsing or retaining the expert. If the expert has a reasonable cancellation policy, the opposing attorney should be advised of that policy at the time a deposition is scheduled. The opposing attorney is then subject to the terms of the cancellation policy should he or she later be responsible for the cancellation of the deposition.

If a case is settled or continued, or the expert's testimony is otherwise canceled, the attorney who scheduled that testimony should immediately notify the expert of the cancellation. This should preferably be initially done by telephone and followed by a confirming letter or facsimile transmission.

In the event of settlement, the cancellation notification should also include an inquiry concerning any outstanding fees and costs which may be withheld and paid out of the settlement. As a professional courtesy, it is often a good practice to advise the expert of the outcome of the case and the role, if any, the expert played in that resolution or recovery.

Cancellation policies should be reasonable under the circumstances. There should be agreement concerning what constitutes "reasonable notice" of cancellation such that a cancellation fee will not be charged. Two or three business days in advance is usually considered to be reasonable. Longer cancellation periods are considered on a case-by-case basis.

Cancellation fees that are charged must be reasonably related to the actual loss to the expert in terms of lost professional fees and the impact on his or her practice. If the expert can use the canceled time productively, e.g., for seeing other patients or clients, necessary administrative functions, billing, dictation of reports, reviewing professional literature, this factor should be heavily considered in determining the need for and amount of a cancellation fee. Cancellation fees that provide excessive compensation must in fairness be reduced notwithstanding any written agreement or policy.