Reminder: Expert reports still discoverable in Tax Court

The long-awaited amendments to Rule 26 of the Federal Rules of Civil Procedure, made effective at the beginning of this year, have largely been “great,” according to attorney Edward M. Robbins (Hochman Salkin Rettig Toscher & Perez, P.C.), who presented in last week’s “Lawyers Roundtable,” part 2 of BVR’s 2011 Tax Summit, moderated by Jay Fishman (Financial Research Associates). Prior to the amendments, which specifically exempt draft expert reports from discovery in federal court proceedings, “you wasted a lot of time trying to ‘get behind’ the reports—and frankly, by the end of the day, it wasn’t worth your time,” Robbins conceded. “But you did it anyway because everybody did.” Under the amended rule, an expert’s compensation is still discoverable, along with any facts or assumptions the attorney may have provided the expert to form his or her opinion. But the bottom line: In federal court, “‘collaboration’ is no longer a bad word,” Robbins said, and attorneys and experts no longer have to “walk on eggshells” every time they communicate.

But not in Tax Court: Roughly 80% of the tax valuations that appraisers perform are related to federal tax cases, Stephanie Loomis-Price (Winstead PC) reminded listeners—and the U.S. Tax Court has not yet adopted an analogous rule to the amended Rule 26. As a result, “we still struggle with what we can say to our experts, what we can get from them, whether we can edit or even comment on their drafts,” Loomis-Price said. When an attorney writes on a draft report, the comments are protected under the work product privilege—but as soon as the expert receives the draft, the protection disappears. This means that tax experts should still “assume everything you do, say, or write will be discoverable to the other side,” Robbins said. Hopefully, the Tax Court will “see the light,” he added, and Loomis-Price agreed: Members of the tax bar as well as appraisal associations “ought to be pestering the Tax Court,” she said, to amend its rules.