Tales From the Trenches Episode No. 2—Who Wrote the Report?

In a very contentious litigation, I was called to testify as to the reasonable compensation for a receiver. A limestone quarry company had been involved in a family dispute over ownership, and the court had appointed a receiver to operate the company and conduct a sale of the company. The successful buyer was one of the family members. Even though a contract for the employment of the receiver provided for an hourly rate, the receiver believed that he should receive a “sales commission” for successfully selling the company.

My client, the buyer and new owner, was adamant that no sale commission should be paid to the receiver. The positions of the two parties led, not surprisingly, to a heated litigation. The case boiled down to the reasonableness of the “compensation” for the services the receiver rendered. I was asked to give an opinion as to the reasonableness of the compensation the receiver got considering the contract he signed and the services rendered. 

The receiver engaged a “compensation expert” PwC employed. The PwC expert submitted a report that concluded that the receiver should have been paid a “sales commission” for his efforts in selling the business. (It should be noted that the buyer, a family member and the defendant in the suit, was a ready buyer and the receiver provided no service in finding this “willing buyer.”)

When the PwC witness was called to the stand, the attorney for the defendant (with whom I was working) presented the witness with a “draft” copy of his report with numerous and significant changes in the handwriting of the opposing counsel. The witness wilted under the cross-examination and admitted that the witness adopted the changes. The judge in this bench trial awarded no additional compensation to the receiver.

Takeaway:

While you might think I would warn against an expert allowing such a document to exist, that is not the issue here. The issue was that an expert’s report should not be governed by what the attorney wants but by what is a true opinion of the expert. That is what we are engaged to do, i.e., to give our honest opinion. It is OK for an attorney to review your report and offer suggestions but not to suggest or insist on changes to the report that actually change the expert’s opinion. That is what happened here. The changes were significant and material and actually changed the opinion of the supposed expert. When I first started as a testifier, I would see a lot of situations where the opposing experts were simply hired hacks. That happens less today, but just make sure that it does not happen to you.