Lawyers, Judges, and Experts
Their Changing Roles and Responsibilities
The Frye and Daubert decisions shook the legal world and the standards enunciated also shook the valuation world. In this article, the author shares some recent Maryland developments and surmises that there may be more changes coming that will affect the role of lawyers, judges and experts.
In my 30 years as a Judge on three different Maryland Trial Courts and the last 16 years as a Senior Judge serving on two of those Trial Courts and one appellate Court conducting ADR, I have observed and experienced the changing roles of lawyers, judges, and experts in trials by jury, trials by a judge without a jury, arbitrations with three arbitrators, and arbitrations with one arbitrator. I have also participated in mediations in which experts were involved, and when experts did not participate but had their opinions described out of their presence sometimes almost comically or tragically if you prefer, inaccurately. I have learned a lot and still am adapting to what I have learned.
The latest lesson I have learned results from my own state of Maryland, comparatively recently, adopting the â€śDaubert Standardâ€ť for admitting expert testimony. In doing so, the highest court in our state altered what heretofore had been the methodology used by state trial judges to decide whether to admit expert testimony known as the â€śFrye-Reed Standard.â€ť In doing so, the then Court of Appeals newly named by the voters, The Supreme Court of Maryland, sent a clear message to trial judges that they must directly engage with and test the expert opinions that are presented to their courts and not simply defer to well-credentialed experts with arguably relevant subject matter expertise.
That message was delivered to federal trial judges almost 30 years ago when the U.S. Supreme Court in the 1993 Daubert decision held that federal trial judges had erred by applying The Frye Cases â€śGeneral-Acceptance Testâ€ť and then only to a comparatively small subset of expert opinions, i.e., those that were dubbed both â€śnovelâ€ť and â€śscientific.â€ť Even to that small sample of expert opinions, the Courtâ€™s inquiry was limited to whether the opinion or method utilized by the expert was â€śgenerally acceptedâ€ť in the â€śrelevant scientific community.â€ť Generally accepted opinions were admissible. Opinions not generally accepted were inadmissible. Most important to note, however, was that the only issues the judge decided was who or what was the relevant scientific community, whether the opinion of the particular expert before the judge was generally accepted by that community, and, occasionally, whether an opinion was truly novel or scientific.
The basic 20th century premise for this approach was because judges are not scientists, they reasonably could not and therefore should not be expected to analyze novel scientific opinions for analytical gaps, methodological errors, or undue speculation. On the contrary, the conventional wisdom by judges who were viewed as limited by their presumed lack of aptitude for science and math could fairly be asked only to verify whether an opinion or methodology was generally accepted in the relevant scientific community.
The flaws in this arguably antique logic were recognized. But the legal profession and in particular the judiciary implicitly by failing to expressly question it for over 20 years valued its simplicity over its lack of logic. Ironically, this lack of confidence in the intellectual capacity of judges has served as its foundational doctrine. Daubert changed that forever in the federal courts.
Since then, the states have been following that lead in spurts, and adopting the Daubert standards. The Daubert case and the state cases that have followed it, including the one in Maryland, Rochkind v Stevenson, in a nutshell, stand for the now empirically proven principle that direct inquiry by the trial judge into the reliability of an expert opinion is superior to an indirect inquiry merely into whether the opinion is generally accepted. It may not be quicker, and it certainly is not easier, particularly for the trial judge whose attention and analysis are required to be focused and rigorous, and the expert whose opinion and methodology is being much more heavily scrutinized than before. Bottom line: expert opinions are no longer treated as beyond a legally trained judgeâ€™s ability to comprehend.
What that means for trial judges, is that they will have more â€śDaubert Hearingsâ€ť (in Maryland, they are called â€śRochkind Hearingsâ€ť) and those hearings will last longer and require the trial judge to no longer simply determine whether the expert before the judge is â€śqualifiedâ€ť as a result of his or her education, training and experience, and/or whether the expertâ€™s opinion is novel and/or scientific as a means of limiting the time and nature of the judgeâ€™s inquiry necessary to determine the opinionâ€™s admissibility. Instead, the Trial judge will be required to dig much deeper into a challenged opinion and to understand how that opinion was developed both methodologically and factually.
What that means to the lawyer in the world of the NACVA expert, the â€śHiring Counsel,â€ť is that the lawyer can no longer expect to be able to withstand a challenge to you, an expert, the lawyer hired, by citing or submitting a series of supportive scientific and/or professional literature, studies, etc., documenting your opinions acceptance generally and then arguing that the judge should admit your expert opinion and let the fact-finder be it jury, judge, or arbitrator decide its merits, because the methodology, and your opinion itself is too fact-intensive for the judge to decide. Instead, the lawyer must prepare questions for you to answer which explain your methodology and the facts that you relied on reaching your opinion.
Most importantly, what this means to you NACVA members as financial experts and business valuators is that you will need to recognize that the world has changed as described above. You will need to assume that currently, at best, it is unclear to some trial judges newly laboring under Daubert and Rochkind which expert opinions must be examined, and which do not in light of the Supreme Courtâ€™s clear declaration that any expert opinion is susceptible to challenge, not just those that are novel and scientific. This means your opinions on valuation and other financial issues are fair game. In turn, you must prepare your hiring counsel with information talking points and even questions for you to answer and establish the admissibility of your â€śExpert Opinion.â€ť
Those talking points are set forth in The Daubert case. The Rochkind case in Maryland adopted the Daubert test. Since then, the federal courts have added additional factors depending on the type of expert testimony proffered. Rochkind reflects this expansion of factors queued to the type of expert testimony offered.
The five original Daubert factors are:
- Whether a theory or technique has been tested
- Whether particular methodology has a known potential rate of error
- General acceptance of opinion (now just one of the factors)
- Has opinion been subjected to peer review and publication
- Existence of standards and controls
Some of the additional factors that both federal and state courts are applying which can very easily apply to opinions on valuation issues include:
- Does your opinion grow naturally out of research conducted independently or litigation or was your opinion developed expressly for the purpose of testifying?
- Has expertâ€™s opinion unjustifiably and/or illogically been extrapolated from an accepted premise not intended to apply to the facts of the case?
- Has the expert applied the same care and integrity to his or her research in the litigation as he/she has in the expertsâ€™?
- Whether the expertâ€™s field of expertise encompasses the opinions being proffered.
Finally, looking forward, what should you, as Experts, expect? I cannot find my crystal ball at the moment. However, I think it is safe to assume that all courts, but particularly state courts and for sure, in Maryland, based on my personal observations, judges and Court Administrators will be seeking some limiting principle to prevent every trial from being preceded by days or even weeks of Daubert/Rochkind Hearings. That search could benefit directly from the expertise of NACVA and the respect it enjoys now and in the future. In providing that assistance, you can immeasurably contribute to, as the narrator of the Superman television show used to say, â€śOur search for truth, justice, and the American way!â€ť
Senior Maryland Circuit Court Judge Steven I. Platt has served in the Maryland Judiciary for over 35 years. He is the acknowledged architect of the Maryland Business & Technology Case Management Program. Currently, he is recalled as a judge in all circuits in Maryland and is the Founder of and Managing Member of a Private ADR Group found on the Web at www.theplattgroup.com.
Judge Platt (Ret.) may be contacted at (301) 780-8858 or by e-mail to firstname.lastname@example.org.