10 Tips for Landing and performing work as an expert witness appraiser
Litigation consulting and expert witness
work is a rewarding area of practice
for many appraisers. The work often is
intellectually stimulating and well-compensated
— indeed, the hourly rates for highly
regarded expert witness appraisers regularly
top the rates charged by the attorneys with
whom they work. Appraisers interested in
pursuing this type of work and those looking to
enhance existing skills should find the following
10 tips, pointers and suggestions helpful.
PART ONE - Getting the Work
1Speak, write, teach and develop a content driven website.
When lawyers need expert witness appraisers,
they - just like everyone else in the modern
world - start their search on the Internet. If
lawyers need an expert witness to testify about
the value of a Minnesota grain storage facility,
they probably will use key words similar to "real estate appraiser grain storage Minnesota."
Appraisers with a particular expertise
(say, grain storage facilities) who publish a
few articles - really, it only takes a few - can
position themselves at the top of the search
results. When an attorney sees your name pop
up, it creates a strong first impression.
Other ways to promote your expertise: make presentations
to various groups and organizations aligned with your field
(Appraisal Institute chapters can be very hospitable forums),
offer continuing education seminars and maintain a professional
website with original, useful content that features your
articles and presentations. Lawyers need to believe in your
expertise, so if you're targeting work as an expert in divorce
cases, write original content along the lines of "10 Tips for
Family Law Attorneys in Challenging Residential Appraisals."
Take it one step further and mail that article to 50 divorce
lawyers in your community.
2Attend attorney seminars and continuing legal education sessions.
Appraisers can connect with lawyers by
attending - or even speaking at - legal seminars
and continuing education sessions; it's
not unusual for groups to invite appraisers
to make presentations. County bar associations
and regional chapters of national lawyer
organizations often have specialty groups that
address such industry practice areas as real
estate litigation, property insurance claims,
environmental contamination, family law and
estates/trusts. Seek out events near you and
start networking. For example, one recent seminar presented at a section meeting of the American Bar
Association was titled "Condemnation 101, Discovery - Taking
the Deposition of the Opposing Appraiser and How Compensation
is Determined When the Highest and Best Uses or Per
Unit Values Are Not Uniform throughout the Property." Aside
from meeting attorneys who hire appraisers, you will see the
legal profession’s perspective on depositions and highest and
best use in condemnation cases.
3When responding to inquiries for expert work, be mindful of conflict issues.
Appraisers contemplating litigation work need
to be aware of conflict traps. Attorney-client
communications and attorney work product
(i.e., private materials or information
containing an attorney's theories, research,
impressions or analysis) are highly protected
by law. It’s not uncommon, however, for an
attorney to share confidential information
during the process of interviewing or hiring an
expert, such as an appraiser, because the attorney
assumes it will stay confidential. Problems
can arise when counsel on the other side of
the case then reaches out to the appraiser for
possible engagement (unaware the appraiser had been communicating
with opposing counsel). The legal concern is that the
appraiser - intentionally or not - may share confidential
information learned from the first attorney. Situations like
this sometimes lead to the disqualification of either the attorney
or the expert - or both - from further work on the case.
How can you avoid such
a scenario? If an attorney is
considering hiring you as an
expert, before any detailed
discussions about the case
take place, first ask for a list
with the names of the parties
and attorneys on all sides
and a caption page to ensure
there’s no conflict. The caption
page typically is the first
page of a lawsuit pleading document
that lists the names of
the parties and the court; however, the caption doesn’t always
show all parties, which is why you also need the list. Use this
information to make sure that you have not been engaged by or
received confidential information (even without being hired)
from any other parties in the current case or their counsel. You
also need to make sure you don’t have confidential information
relevant to the case that belongs to one of the other parties,
which you may have received as the result of prior work.
Start keeping a database of the cases and the identities of
the parties with which you’ve been involved; you can make a
very good impression on attorneys seeking to hire you when
they see how thoroughly you understand the importance of
conflict issues. Failing to show attorneys that you’re cognizant of conflicts can make them uncomfortable about hiring you.
Finally, before having detailed discussions with attorneys
about the possibility of being hired, you need to make it clear
that they should not discuss confidential information with you
until you actually are hired. If they do so and then don’t hire
you, you may be disqualified from being hired by opposing
counsel. It’s good practice to follow up initial inquiries with a
friendly but professional email confirming that no confidential
information was discussed.
4Don’t let the attorney who hired you be surprised in the middle of a case. One surefire way to displease an attorney
with your services as an expert is to have
previously undisclosed information come
out during litigation. Negative information or
matters that call your objectivity into question
usually will come out in discovery. The time to
disclose this information is when an attorney
is first considering your retention, not during
your deposition by opposing counsel. Topics
that need to be discussed include business or
personal relationships with any of the parties,
disciplinary matters, lawsuits relating to
your professional work and other work you've
performed concerning the property or very similar properties.
(Make sure you obtain authorization from prior clients if
confidential information is an issue, pursuant to the Uniform
Standards of Professional Appraisal Practice).
PART TWO - Doing the Work
5Don’t take things personally. The nature of litigation means that both you
and your expert witness work will be challenged.
It can be unpleasant, but any appraiser
doing this type of work should accept that it
comes with the territory. Still, we see appraisers
hired as experts who can't let things go
and file retaliatory complaints against other
appraisers with state appraiser regulators.
Needless to say, the practice is not a good one;
an expert needs to deliver viable theories in
court to help their clients, not grumble later to the state.
Further, your client likely will not be happy that you made
their legal issues part of another matter outside of court.
6Understand the "discoverability" of information in your workfile.
Attorneys and expert witness appraisers need
to pay close attention to whether or not draft
materials and other preliminary content in
their workfiles will be available to the other
side in discovery. In federal court, the discoverability
of draft reports is pretty clear: under
the revised version of Rule 26 of the Federal
Rules of Civil Procedure that took effect in
2010, draft reports and communications with
the attorney who retained the expert are not
subject to regular discovery by the other side.
However, there's a catch: Many states have rules of civil procedure
that do not follow the federal rule, which means that if
you are a testifying expert in a state court case in, say, California,
any draft reports you’ve created and your correspondence
with the attorney may be fully discoverable by opposing
counsel. Accordingly, in California and states with similar
laws, attorneys generally do not want their testifying experts
to create drafts until their likely opinions and underpinnings
to them are established. (See state laws on the discoverability
of draft reports at www.appraiserlawblog.com/2016/01/appraiser-expert-witness-issue.html.)
The bottom line for appraisers hired as experts with
respect to draft reports and written communications with the
attorney? Get the attorney’s specific direction on this matter
at the beginning of the engagement (different attorneys will
have different points of view) and maintain your workfile as if
everyone in the case - including the opposing side - will see it.
7Take extra time to do it right.On your first assignments as an expert witness,
expect to spend more time on your work than
what you actually bill for. Take time to properly
understand the cases, the problems, the
properties and the comparables - regardless
of whether or not you’re getting paid for the
extra time. Efficiency comes with experience.
8Avoid boilerplate language and forms. For most expert witness work, the most
appropriate and persuasive type of report
will be a narrative report, not a pre-printed
form. Be cautious about using generic statements
that may be commonplace in lending
assignments because they can diminish your
credibility in litigation. Read every word that
you use to make sure it can’t be misconstrued
or twisted.
9Carefully consider your assumptions. Your appraisal report assumptions, which can
run the gamut from "general" to "extraordinary,"
can leave your opinions vulnerable to
challenges from opposing counsel; extraordinary
assumptions are especially vulnerable
to attack on cross-examination or by another
appraiser performing a review. Exclude truly
unnecessary assumptions and then do the
work or research necessary to eliminate the
need for other assumptions. Be prepared to
vigorously explain and defend any assumptions that remain.
10Overreaching almost never works. Inexperienced expert witnesses often
overreach in their opinions, ending up with
unsupportable conclusions in an effort to
please a client. As you can imagine, this plan
usually backfires and opens the door for cross
examination that erodes your credibility.
When overreaching leads to absurdity, the
court could entirely disregard an appraiser’s
opinions, as occurred in a 2011 Tax Court trial.
The court threw out the appraisal testimony
supporting a taxpayer’s outlandish valuation of a conservation
easement, stating:
In most cases, as in this one, there is no dispute about the qualifications
of the appraisers. The problem is created by their
willingness to use their résumés and their skills to advocate
the position of the party who employs them without regard
to objective and relevant facts, contrary to their professional
obligations ... justice is frequently portrayed as blindfolded to
symbolize impartiality, but we need not blindly admit absurd
expert opinions. Boltar, L.L.C. v Commissioner, 136 T.C.
No. 14 (April 5, 2011).
Remember, great appraiser expert witnesses aren’t advocates,
and must remain impartial appraisers.
Rebuild Tore Appraiser Expert Down
Some appraisers seem to think that expert work doesn’t expose them to the risk of a professional liability claim in the same way as other areas of work. Our claims show otherwise. Clients and non-clients sue appraisers over their expert witness services too.
In a California claim situation, homeowners whose lavish home had burned to the ground were not satisfied with the offer made to them by their fire insurance company to fund the rebuilding of their home. On the advice of their counsel, the homeowners accepted approximately $3 million from their insurance company offered as the "full replacement cost" but then filed suit against the insurance company alleging that they were underpaid for the loss by $1 million.
The homeowners-plaintiffs' attorney hired an appraiser to act as the expert for the plaintiffs in their case against the insurance company. The appraiser opined that the home had been constructed with the highest quality materials and was meticulously maintained prior to its destruction. It was his opinion that the cost to rebuild the home was $4 million.
The insurance company hired its own expert appraiser. He admitted that the plaintiffs' home was a beautiful, custom dwelling; however, he estimated the full replacement cost was no more than $3 million. He added that the plaintiffs were seeking to "upgrade" many of the features in the rebuild and that the "upgrade" accounted for the $1 million difference of opinion.
Efforts to settle were unsuccessful and the case went to trial. At trial, the jury decided the insurance company's offer of $3 million to the plaintiffs was reasonable and represented the full replacement cost. The jury not only found for the insurance company and against the homeowners, but also awarded the insurance company approximately $200,000 in fees and costs.
The plaintiffs did not accept the decision and hired new counsel. The new attorney filed a lawsuit for the homeowners against their trial attorney, their expert witness appraiser and also the insurance company's expert witness appraiser. In the new lawsuit, the homeowners argued that their former counsel had not properly evaluated the merits of their claims against the insurance company. In essence, they said their counsel should have talked them out of filing suit since he should have known their case would not succeed. They claimed their expert appraiser was negligent in rendering his $4 million loss opinion and should have realized that the value of $3 million was reasonable. Had the prior lawyer and their expert appraiser done their work properly, the homeowners contended they would not have sued their insurer, lost at trial, and now be obligated to pay their former counsel and the insurance company.
The claims against the opposing appraisal expert were also unique. The plaintiffs claimed that the opposing expert owed them a duty to testify truthfully but instead had lied about them and about their "upgrade" motives. They claimed he had disparaged them by saying they were trying to rebuild a far better home and fraudulently force the insurance company to pay for this expense. By testifying falsely, the opposing expert "poisoned" the minds of the judge and jury and was partly responsible for the adverse verdict rendered at the trial. The court granted the opposing expert’s motion to dismiss stating he owed no duty to the plaintiffs and there was no evidence he had committed perjury when testifying.
The case against the homeowners' own appraiser expert was harder to defend. Defense counsel had to maintain that the appraiser's expert opinion, rendered on behalf of the plaintiffs, was both credible and reasonable, even though it was adjudged to be otherwise. When the two expert opinions were weighed by the judge and jury, they had determined that the insured's opinion was not as credible as the opinion that had been offered by the appraiser hired by the insurance company. Defense counsel laid some of the blame at the feet of the plaintiffs and their former trial counsel. He argued that the jury was influenced by their perception that the plaintiffs were overreaching and trying to get money to which they were not entitled.
In a case already laden with expert appraisers, yet another one had to be hired to assist with the defense. This expert had to opine on behalf of the original expert whose trial opinions were now being questioned. He looked at the insured's cost figures and was able to say that the cost of high end building materials fluctuated. After carefully breaking down all of the cost categories, he was able to show that the $4 million replacement cost opinion was a "matter of opinion" and therefore, credible.
Almost 10 years after the plaintiffs' home had been destroyed in the fire, the lawsuit went to mediation. The insurance company agreed to take only $100,000 of the $200,000 it was awarded against the homeowners. The additional remaining $100,000 was paid by the attorney’s E&O carrier and by the appraiser's E&O carrier to put an end to the litigation – and avoid risk of a worse outcome.
After almost 10 years of litigation, the plaintiffs walked away with about $50,000, but they did not have to pay the insurance company, their former trial attorney, their second attorney or the expert appraiser. The expert appraiser never collected fees for the worked he completed, almost $50,000. His E&O insurance company paid over $200,000 in defense fees and settlement to end the lawsuit filed against him by his former clients.
While this case might be an extreme example, it certainly gives insight into the various quagmires that could come about as a result of accepting certain "expert" assignments. One of the lessons is to evaluate your prospective clients carefully as an expert – when you are an expert witness, you are working for clients already in a fight, and they may be the type of people more predisposed to sue you.
Be Wary of the Blame Game
Another claim situation involving an expert witness appraiser reinforces the importance of evaluating the client and the case before accepting an engagement. It also illustrates the importance of making sure that you have enough time – and that the client can pay you for enough time – to handle an expert witness engagement properly.
In this case, the expert witness appraiser agreed to act as an expert for another appraiser who was facing a disciplinary hearing before an administrative law judge. That appraiser had been licensed for about 10 years, and the licensing board had reviewed numerous appraisals prepared by him in response to a complaint. Those reports had a variety of alleged USPAP violations, but the appraiser blamed others for his mistakes. He stated he received incomplete and inappropriate training from his first mentor and was critical of the "limited oversight and instruction" provided by several of his AMC clients. He further claimed in his defense that the appraisal industry had become a "fast-paced, free for all" and that he was just doing what was expected of him by the AMCs.
The appraiser had prior discipline and many of the errors found in recent reports indicated the appraiser did not take his past discipline to heart. The appraiser took no responsibility for his actions, showed no remorse, was evasive with the investigator, and showed disrespect and disregard for the board's reviewer. He said he wasn’t being paid enough to produce work meeting the standards imposed by board.
If the expert had looked into the appraiser's history she might have declined to help him but didn’t do so because she was short on time. The expert had crossed paths with this appraiser because he attended some classes she taught over the years. She had never worked with him and had no basis to judge his work. She simply thought he seemed like a nice young man.
The appraiser told the expert that he was being unjustly pursued by the board and needed her help. She agreed to act as his expert before even asking to look at any of his work, or any of the reports in question. Due to her own workload, along with a failure of the appraiser's attorney to provide documents, the insured got documents to review only 3 days before the hearing.
The expert was provided with 29 appraisal reports, work files and reviews, and picked 3 random reports to look over. She did not perform a formal appraisal review of any of the 3 reports, due to time and budget constraints.
When questioned at the hearing, the expert admitted to having spent a total of 6 hours preparing for her testimony. Her testimony was not a ringing endorsement of the appraiser's work - she did not find any egregious errors, the appraiser did an adequate job, and he "discussed things that needed discussing". She also said that his work demonstrated improvement but was unable to explain or show any examples of improvements.
The administrative law judge issued a 25 page Opinion and Order. He ordered that the appraiser's license be revoked and that he pay $15,000 in costs. The judge then went on to write in his opinion that, "...cause also exists to impose discipline upon respondent’s real estate appraiser 'expert'." Accordingly, the expert received a letter from the licensing board weeks later stating that she was now being investigated relating to her work in the matter.
The information in this Claim Alert is not legal advice and should not be relied upon in making legal decisions, including, but not limited to, deciding whether or when to file any legal action. You should consult with your own attorney with regard to any legal decisions. The information is also not to be construed as an admission of fact or law and is offered without prejudice to any legal position or defense of any party.
The above article was written by Peter Christensen and Michael Brunson SRA, MNAA and originally appeared in, and is reprinted from, the Appraisal
Institute’s Valuation (4th Quarter, 2015). © 2015 by the Appraisal Institute, Chicago, Illinois. Archives of Valuation magazine, including Peter’s past
articles, are available at http://www.appraisalinstitute.org/publications/valuation-magazine/
Copyright 2016. LIA Administrators and Insurance Services. All rights reserved.