United States: Drawing The Line On Excessive Expert Witness Fees

Lawyers involved with expert-intensive cases, such as products liability, personal injury or malpractice actions, can attest to the fact that in the last decade expert fees have risen dramatically. The sky has really become the limit. For example, in some cases medical experts are now demanding hourly rates of $700, $800, or even $1,000 or more per hour for deposition testimony. Although such fees are usually excessive, sometimes these rates are paid, thereby perpetuating the notion that it is the expert, and not the judicial system, that controls such fees

More often than not, excessive fees go unchallenged for two reasons: First, on the eve of trial there is little extra time available in which to prepare pleadings and conduct hearings to challenge these fees, so the fees just get paid. Second, the cost of challenging excessive fees can, in some instances, be greater than simply paying the fee in the first place. So again, the fees get paid

This is not the way it should be.

When parties fail to contest unreasonable and excessive expert witness fees they encourage experts to charge similar fees in other cases. This ultimately works to the detriment of all the litigants. For plaintiffs in civil cases, defense experts who charge exorbitant fees make it harder to prosecute good cases. For defense counsel and the clients and carriers they represent, excessive fees paid in one case virtually guarantees the same fees in similar cases down the road. Clients and carriers pay more now -- and they will also pay more later

The purpose of this article is to provide counsel with practical guidelines in evaluating the reasonableness of expert witness fees and, if applicable, challenging such fees in court in a meaningful and cost-effective manner

The reasonableness of an expert’s fee is governed by Code of Civil Procedure section 2034(i)(4). That section makes clear that the burden of proof rests with the party–-and expert--demanding the fee

Prior to the filing of a motion under this section, the party or expert demanding the fee must provide opposing counsel with (1) proof that the requested fee has been charged and received by that expert for similar services before, (2) the total number of times the fee has ever been charged and received, and (3) the frequency and regularity with which the demanded fee has been received within two years preceding any hearing on the motion. Thus, with a simple phone call, or better yet a letter, counsel concerned about a potentially excessive fee must be provided with examples that the fee has been charged –- and paid -- on a regular basis in the past

However, this is not the end of the inquiry. The reasonableness of an expert witness’s hourly fee for purposes of section 2034 does not mean whatever that expert "customarily" has charged in the past. Marsh v. Mountain Zephyr, Inc., supra, 43 Cal.App.4th at 304. Rather, an expert’s customary fee is simply one factor in the determination of whether his or her fee is reasonable pursuant to section 2034(i)

Marsh was a building defect case arising out of the construction of a private residence. In Marsh’s expert declaration, an architect was designated as an expert witness who would testify regarding the nature and extent of construction defects, the proper method of repair, the cost of design work for the repairs and the standard of care employed in the design of the home. Marsh’s expert demanded an hourly fee for depositions of $360.00 per hour. Marsh v. Mountain Zephyr, Inc. 43 Cal.App.4th at 293

The Marsh action was brought in San Diego County. Many counties in California have no local rules dealing with expert fees. However, in San Diego County, local rules provided guidelines which the courts were allowed to consider in evaluating the reasonableness of a particular expert’s fee. Those guidelines set forth that in the court’s determination the ordinary and customary fees charged by architects or engineers were $200.00 per hour. Relying on the local rule, and on section 2034(i), counsel representing the defendant in Marsh challenged the architect’s fee of $360.00 per hour. Marsh v. Mountain Zephyr, Inc., supra, 43 Cal.App.4th at 294

In opposition to the defendant’s motion, and relying on section 2034(i), Marsh’s expert provided the court with a declaration stating that he routinely charged $360 per hour for testimony in all cases coming into his office and that he had charged that fee on 124 separate occasions, including 86 depositions, 12 trials, 17 mediations, and nine arbitrations. Nevertheless, held the trial court, the demanded fee of $360.00 per hour in this particular case was unreasonable. Observed the court:

Marsh v. Mountain Zephyr, Inc., supra, Cal.App.4th 294-295

On appeal, the 4^th District agreed, observing that even though "market value" (as determined by what the expert had been paid in the past) is some indication of "reasonableness," the two terms are not synonymous. The ordinary or customary fees charged by any expert are only one factor, held the court, in determining the overall question as to whether opposing parties must pay such fees in a legal action:

Marsh v. Mountain Zephyr, Inc., supra, 43 Cal.App.4th at 304

Thus, under 2034(i) and Marsh, the trial court must be concerned with more than what one expert has been able to "get away with" or charge in the past, when setting fees. If there are local rules in your jurisdiction regarding fees, use them. If not, do not cave in to the other side simply because their expert provides examples of similar rates in the past

There is no mathematical formula to help attorneys -- especially new lawyers -- spot excessive expert fees. More often than not it is based on experience and, to borrow phrase, "knowing it when you see it."

If you are concerned as to whether a given fee is excessive, there are several ways to confirm your suspicion. First, ask around. If you are fortunate enough to have contacts with experienced attorneys practicing in your particular field, call them. Chances are, they will be able to provide you with guidance and advice as to whether a given fee is excessive or not. Do some digging: By using publications such as Jury Verdicts Weekly, you can locate other experts who have testified in the same specialty. Call their office and find out what their fees are. The office staff of most experts are accustomed to receiving calls from attorneys requesting their fee arrangements. In most situations, with a minimal amount of work, you should be able to get a feel for whether a given rate is excessive or not.

If a determination is made that the fee is excessive, call opposing counsel. Section 2034 requires an informal meet and confer. Express your concerns in a forthright, reasonable and, if possible, non-antagonistic manner

Over the years in my own practice handling medical cases, I have found that more often than not, counsel on the other side is just as unhappy with the excessive fees as I am. For example, I recently had a case in which an opposing anesthesiologist demanded $1,000.00 per hour to testify at his deposition. When I called opposing counsel, he could not agree fast enough that the fee was indeed excessive. But that’s actually his rate, counsel told me, what can we do? Well, I suggested, rather than my office filing a motion that opposing counsel would have to fight -- and perhaps lose -- I suggested that counsel simply pick up the "excess" or unreasonable amount of the deposition fee and my client would pay the balance. Counsel agreed, and we were able to forego the filing of a motion while at the same time reducing the fee by several hundred dollars per hour to take that expert’s deposition

In some cases, the opposing expert may not be aware as to how far out of line their fees have become. This may be because their fees are never challenged. When the retaining attorney calls his or her expert back and explains your complaints and the requirements of the Code of Civil Procedure, some experts may revise their fees accordingly

The same process also applies to situations where experts are demanding what appears to be a reasonable rate but are insisting upon minimums of two to three hours for their deposition appearance. If an expert charges $400.00 per hour for his deposition but demands that he be paid a minimum of two hours -- and the actual time you will spend with the expert is closer to an hour -- then obviously you are being gouged. The fee may sound good at first, but it really amounts to $800.00 per hour. Although there appear to be no published cases on point regulating minimum rates, the Code requires you to pay only for the time you take to depose the witness. If the expert wants a minimum, the balance should come from the party who hired him and not from your clients

All counsel should also keep in mind the old saying of "what goes around, comes around." If you are hiring experts, do not wait for your opponent to question your expert’s fees. If your expert quotes you a fee that is excessive, explain your concern to the expert: Let the expert know what 2034(i) requires and advise the expert that he may be required to make a showing in court as to the reasonableness of his fee. Does that expert want to spend additional time preparing a declaration or attending a hearing? -– Probably not. If your expert insists on the excessive fee, consider looking around for another expert witness. Remember, this expert may be testifying for you today, and against you tomorrow, in another case. Once you have agreed to such fees, you may be hard-pressed to convince a judge later that the same fee is excessive

If the matter cannot be resolved informally, then file your motion. The motion must be accompanied by a declaration stating facts showing that a reasonable and good faith attempt at an informal resolution has taken place. Also, be sure that you send notice to the expert as well. That expert must be given notice and opportunity to be heard when the court makes a determination as to whether the fee is reasonable or not, and it is required by 2034(i)

Although technically the burden of proving reasonableness is on the party for whom the expert has been retained, the moving party must come prepared, too. If you have brought the motion, be prepared to offer examples of fees in the same or similar areas of expertise that are lower than those fees being demanded in your case. If the problem with the fee is that there is a minimum time request, be prepared to tell the court you do not expect to reach the minimum, but if you do, you will certainly pay for the time. As the moving party, it will be your job to offer the judge guidance by providing examples of rates that clearly illustrate the fees in your case are excessive

Finally, do not reinvent the wheel. Keep track of expert fees charged not only by your own experts, but by experts on the other side. By keeping a log in your office of expert fees and updating that log periodically, you will have quick access to facts that will help you prepare your motion and will allow a judge to rule confidently in your favor

Most clients want their attorney to do the best job possible, for the least amount of money possible. So it may be difficult to convince a client to challenge excessive fees when the cost of the challenge is equal to, or greater than the expert’s fee. For institutional clients such as large corporations or insurance carriers, it makes good economic sense to challenge excessive fees early –- and perhaps even pay more in a case or two for the cost of a challenge –- to help defray the cost of similar excessive fees paid down the line

But for smaller clients, or those who did not expect to be back in court again (or often), challenging excessive fees may not make a lot of economic sense, particularly if the challenge costs more than the fee.

Fortunately, section 2034(i) provides that to the victor in these challenges, goes the spoils. If the court makes a determination that the fee demanded by the expert is unreasonable, the court will set the fee of the expert providing testimony. In addition, the court "shall impose a monetary sanction under section 2023 against any party, person, or attorney who unsuccessfully makes or opposes a motion to set the expert witness fee, unless it finds that the one subject of the sanction acted with substantial justification where the other circumstances make the imposition of the sanction unjust." C.C.P. § 2034(i)(4)

Counsel should advise clients who are wary of filing such motions that sanctions are available. Although this is not a guarantee that your client will recover his or her costs for the filing of the motion, it may assist clients in determining whether they want to take that chance or not. Furthermore, at the time of the hearing counsel should advise the court as to the cost of the motion in his or her moving papers. If you have brought the motion to set fees, be sure to include in your argument the fact that if sanctions are not imposed then the court has, as a practical matter, imposed upon your client the unreasonable cost of the deposition that should be borne by the party whose expert started the problem in the first place

Excessive expert witness fees that go unchallenged impair litigants on both sides of the bar. Whether you are representing a plaintiff or an insurance carrier, it is imperative that you carefully consider the fees of all the experts, whether they are retained by you or your opponent. By reigning in excessive fees, either with the use of section 2034 or through negotiation, counsel for all sides can help curb an abuse that is unfortunately becoming far too commonplace in California’s litigation practice