Fixed fee engagements are beneficial for both the client and the expert witness. The client knows in advance what the final deliverable will be and how much it will cost. For the expert witness, it is easier to bill and collect when compared to billing hourly rates, preparing a detailed bill, then wait for review and approval from the client. Under a fixed fee, the expert provides their deliverable and gets paid.
If fixed fee engagements are good for both parties, why are expert witness engagements not more commonly run as a fixed fee? Because the steps needed for an successful fixed fee engagement have not been fulfilled. A fixed fee engagement, a successful one, requires all five of the following:
A deliverable that can be described to a reasonable degree of specificity. For example:
- “Provide a valuation of a 15% ownership interest in a subject company.”
- “Calculate the plaintiff’s lost earnings as a result of an accident.”
- “Analyze the conclusions of plaintiff’s expert witness report and provide an expert witness rebuttal report.”
A thorough understanding of the records needed to support the conclusions of the expert witness. This would need to be discussed in the context of the desired conclusions. The more rifle-shot the documents your expert witness is provided, the less time needs to be spent on document review.
A written understanding of the background information and assumptions upon which the expert witness’ work will be based. This is generally related to the availability (or lack thereof) of documented information.
A reporting format that has a clear ending. This can be an informal phone conversation to a FRCP Rule 26(a)(2) report with depositions and trial testimony to follow.
The degree of involvement from the client. Client involvement is generally needed, but an expert witness has no ability to control costs if they are unexpectedly called into frequent conference calls with the client.
All five are required for a successful fixed fee engagement, yet most clients avoid this crucial planning step. If an element is missing, it is likely that the assignment has not been well-defined, there will not be a meeting of the minds regarding what underlies the fixed fee, and either the expert witness or the client will be unhappy with the engagement. These elements not being in place may not be the fault of the client or due to a lack of planning. The requisite information may simply be unavailable at that point in time. But in those instances, a fixed fee engagement would not be appropriate because too much about the scope of the project remains unknown.
All five elements are also needed for accurate fee estimates. Clients often request fee estimates before the above items have been sufficiently addressed. Well-meaning clients often provide assurance these fee estimates are non-binding. However, if a client is not relying on the fee estimates, no meaningful information will have been given, so why provide them? Without the five elements fully addressed, any estimate would be useless. Clients should not be making decisions based on useless information.
It is also worth noting that a prospective expert witness who provides fee estimates under these circumstances is either (i) inexperienced, or (ii) is low-balling the estimate to sell the engagement, and then planning to bill more once the project gets started. In either case, the client is better served by not working with these experts, despite how tempting the low estimate might appear.