Expert Witness Fees: What is Reasonable?

C. Pierce Campbell, Esquire*

Byron P. David**

Turner, Padget, Graham & Laney

Florence, South Carolina

Today, a case can be won or lost based on expert testimony. As litigation has become increasingly sophisticated and technical, the specialized knowledge that experts provide has become increasingly important to the process. But, as any lawyer will tell you, this expertise does not come without a price. The cost of expert testimony can be substantial, particularly in discovery.

Recognizing both the importance and cost of expert testimony, the Federal Rules of Civil Procedure shift the burden of compensating experts for certain pretrial discovery matters to the opposing party. Under Fed. R. Civ. Proc. 26(b)(4)(C)(i), "unless manifest injustice would result," the court “shall require” that the party seeking to depose the other side’s testifying expert pay the expert a “reasonable fee for time spent in responding to discovery.” Similarly, absent “manifest injustice,” the party seeking discovery from the other side’s non-testifying expert shall pay the other party a “fair portion of the fees and expenses reasonably incurred by the latter party in obtaining facts and opinions from the expert.” Fed. R. Civ. Proc. 26(b)(4)(C)(ii) (emphasis supplied).

These rules are intended to ensure quality, efficiency, and fairness. Thus, Rule 26(b)(4)(C) was enacted “so that plaintiffs will not be hampered in efforts to hire quality experts, while defendants will not be burdened by unfairly high fees preventing feasible discovery.”[i] In effect, this rule seeks to “fairly compensate experts for their time participating in litigation [while] prevent[ing] one party from unfairly obtaining the benefit of the opposing party’s expert

work free from cost.”[ii] And by requiring the party seeking discovery to pay the expert’s fees, the rule also tends to restrain the scope of discovery; if a party subjects the other side’s expert to broad-ranging and costly discovery, that party will have to pay for it.

But the rule is silent as to what constitutes a “reasonable fee.” Courts around the country have struggled with how to apply this standard, and have come to different conclusions, some of them irreconcilable. This article examines some of the different factors that courts have considered in determining the appropriate level of expert compensation. Attorneys should keep these factors in mind when seeking discovery from the other side’s expert, challenging requests for compensation, or retaining their own expert.

What is the Test for Reasonableness?

As previously discussed, Rule 26(b)(4)(C) does not define what constitutes a “reasonable fee.” Absent statutory guidance, courts have employed multi-factor tests to determine the reasonableness of an expert’s fees.

The seminal case in this area is Jochims v. Isuzu Motors, Ltd.,[iii] which articulated seven factors for courts to consider in determining whether an expert’s fee was reasonable.[iv] They include:

(1) the witness’s area of expertise; (2) the education and training that is required to provide the expert insight which is sought; (3) the prevailing rates of other comparably respected available experts; (4) the nature, quality and complexity of the discovery responses provided; (5) the fee actually being charged to the party who retained the expert; (6) fees traditionally charged by the expert on related matters; (7) any other factor likely to be of assistance to the court in balancing the interest implicated by Rule 26.[v]

None of these factors is necessarily more important than the other, and the weight these factors should be given depends on the specific facts of a case.[vi]

            Applying these seven factors and focusing on the expertise, education, and training of the witness, as well as the fees the expert charged the litigant who retained him, the Jochims court held that a proposed fee of $500 an hour was “grossly excessive” and “astronomical.”[vii] In Jochims, the plaintiffs engineering expert only charged the plaintiff $150-250 per hour, but sought to charge the defendant a drastically higher rate because the nature of the deposition was, according to the expert, “critically important” and “highly technical.”[viii] The court determined that $250 was the upper limit that the expert could charge the defendant because that was the highest rate charged the plaintiff.[ix]

Courts in a number of jurisdictions have adopted the seven-factor test promulgated in Jochims, while others have adopted their own formulation derived from the Jochims standard.[x] This breadth of acceptance may be partly attributable to the similarity between the Jochims factors and those used in determining reasonable attorneys’ fees under the Model Rules of Professional Conduct.[xi]  Rule 1.5 delineates eight factors to be considered in determining the reasonableness of a fee, including the time required, the difficulty of the questions, the fee customarily charged, and the experience and ability of the attorney.[xii]  Given this overlap, authorities interpreting Rule 1.5 may be useful precedent when determining the reasonableness of expert fees.

The Trouble with Flat Rates

When an opposing expert charges a flat rate to perform certain tasks, the lawyer is faced with an interesting dilemma. A lawyer can have a difficult time determining whether to challenge the fee because he or she cannot be certain how much time the expert actually has invested in the project.  In considering whether to challenge a flat rate, a lawyer should attempt to break the fee down into more manageable increments to derive an effective hourly rate. The attorney can then ask a court to apply the traditional reasonableness factors from Jochims to determine whether this hypothetical hourly rate is acceptable.

For example, in Massoit v. Tomeny, plaintiffs argued that the flat fee of $2,000 charged by defendant’s expert for having his deposition taken was exorbitant.[xiii]   Plaintiffs argued that the defendant’s expert witness fees were not “reasonable” as required by Fed. R. Civ. Proc. 26(b)(4)(C)(i). The court agreed, finding that such a high flat fee raised a “red flag” with respect to reasonableness, and required close scrutiny.[xiv]  The court noted that depositions can range from a few minutes to seven hours under Fed. R. Civ. P. 30(d)(2). The court reasoned that, since the length of depositions varies substantially, a flat rate is often unreasonable. In this case, plaintiffs only asked 2-3 hours of questioning, which amounted to an effective rate of over $600 per hour; the court found this fee to be unreasonable and in violation of Rule 26.[xv]

As Massoit illustrates, attorneys may be wise to retain experts that charge by the hour, instead of by a flat rate. A flat rate raises a “red flag” that triggers more exacting scrutiny by courts and the corresponding risk of a reduced fee award. Indeed, even a low flat fee poses risks to the expert, who might be under-compensated if she or he is subjected to a protracted deposition.

Do Smarter Experts Deserve More?

Attorneys and judges must also consider whether an expert’s credentials or specialized knowledge automatically entitle him or her to a fee beyond the $40 statutory per diem witness fee found in 28 U.S.C. § 1821. Rule 26(b)(4)(C) does not distinguish between witnesses who, while possessing expert qualifications, actually provide fact testimony in the course of the litigation process, and those who were retained for the sole purpose of providing expert testimony. Courts have been unable to agree on how to compensate experts who act, at least in part, as percipient witnesses.

For instance, treating physicians have been considered differently than other professionals by some courts. These physicians are much more likely to be called as witnesses than accountants, attorneys, and engineers. And, even though physicians have specialized knowledge, much of their testimony may involve summarizing facts relating to a certain condition or illness.

Consequently, some courts have deemed treating physicians as fact witnesses for purposes of compensation, and have refused to award them fees beyond the $40 statutory rate. These courts have held that the specialized services provided by these physicians and their lost income are insufficient reasons to compensate beyond the statutory allotment.[xvi]

Other courts, recognizing professionals’ knowledge and invaluable contribution to litigation, have held that a treating physician is due his or her usual billing rate for time spent in discovery, pursuant to Rule 26.[xvii]  These courts reason that when the physician testifies about specialized medical knowledge used to form opinions based on the facts of the case, he or she should be considered an expert under Fed. R. Evid. 702 and be paid a reasonable fee under Rule 26(b)(4)(C)(i).  Still other courts recognize that “the critical factor in determining whether a witness is entitled to a reasonable fee is the substance of the testimony,” not the titles retained by the person giving the testimony.[xviii]

The courts have not spoken with one voice. They differ on whether professionals should be compensated as expert witnesses when serving as fact witnesses, and to what extent. A witness who testifies as both a fact witness and an expert witness may be compensated separately, and for differing amounts, depending upon the type of work being compensated. A litigant also would likely disagree with paying an opposing fact witness a fee above the statutory per diem when the witness happens to have expert credentials.

Preparation Compensation

Expert witnesses are required to study case files, review documents, prepare summaries and reports, and meet with attorneys to prepare for depositions. This work can be quite time-consuming, often lasting longer than the deposition itself. Experts expect to be paid for their time.  Unfortunately for experts, some courts have not looked favorably upon requests for fees incurred in preparing for depositions.

Although Rule 26(b)(4)(C) does not offer any specific guidance with respect to deposition preparation time, it does allow experts to be compensated for “time spent in responding to discovery.” Absent clear statutory guidance, courts must determine whether preparation time should be included in an expert witness’ reasonable fee. Some courts have concluded that a plain reading of Rule 26 allows compensation for preparation time.[xix]   A district court in the Northern District of Texas adopted this line of reasoning when it held that “the Rule allows ‘compensation for time spent in responding to discovery, and not just time spent at the deposition.’”[xx]  However, other courts have denied compensation for preparation time except in compelling circumstances, such as “complex cases where there has been a considerable lapse of time between an expert’s work on a case and the date of his actual deposition.”[xxi]

The possibility of not getting paid for deposition preparation time could greatly affect the work of experts, who may be hesitant to prepare for depositions. As all lawyers know, an expert who is not prepared could easily destroy a case at deposition. To avoid this potential problem, it is important to assure experts that they will be compensated for their preparation time, if the retaining attorney is planning on shifting expert costs to the opposing litigant. Such assurances can only be given if the attorney is familiar with the current law of the jurisdiction where the case is to be heard. Otherwise, the expert will require that the retaining attorney guarantee payment.  Such a burden on the retaining attorney could cause problems for a litigant without much money to spend on costs and an attorney unwilling to advance costs for his or her client.

Conclusion

The reasonableness of experts’ fees continues to be debated in courtrooms and attorneys’ offices across the country. As highlighted in this article, Fed. R. Civ. Proc. 26(b)(4)(C) and subsequent case law provide sometimes conflicting guidance for courts and litigants. Attorneys need to discuss with their experts potential problems that could arise regarding fees. Experts should strive to keep their fees in line with the relevant community, and should charge the same fees to opposing parties as the expert charges the party that retained him. Also, experts should avoid flat fees if at all possible.

      Once again, there are few bright-line rules in this area, and every jurisdiction is different. Lawyers must pay close attention to the governing law so that they can properly advise their experts and avoid costly battles over the reasonableness of expert fees.

*    Mr. Campbell is an associate at Turner, Padget, Graham, & Laney, P.A. in Florence, South

Carolina whose practice focuses on the areas of commercial, real property, and probate litigation.  Turner Padget provides comprehensive legal services from offices in Columbia, Florence, Charleston and Greenville, South Carolina to business, individual, and governmental clients from South Carolina and across the nation.  Mr. Campbell can be contacted at 843-662-9008 or pcampbell@turnerpadget.com.

* *  Mr. David is a third year student at the University of South Carolina School of Law.