Expert Witness Or Fact Witness? (part two)
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Claim Alert Part 2: Expert Witness
Fact Witness:
- Compelled to testify by subpoena, must appear;
- Appraiser may be paid fee (not guaranteed)
- The appraiser who completed the appraisal involved in the case;
- Has personal knowledge of the property involved in case;
- Is asked factual questions (who, why, what, etc.)
Expert Witness:
- Hired to testify for a fee;
- Did not perform the appraisal involved in the case;
- Has no previous knowledge of the property involved in case;
- Provides their opinion on topic in dispute;
- Cannot be forced to be an expert witness
An “expert” witness typically has no personal knowledge of the dispute in question, but does offer opinions. In many cases, the expert witness is needed to explain what might be considered “technical” issues or appraiser jargon to a judge or jury. For example, an expert witness appraiser might be asked to explain the differences between the property inspection done by an appraiser versus the much more in-depth inspection done by a home inspector.
To be an expert, you must be qualified and be prepared to explain the specialized knowledge and experience you have in a particular field. To be qualified as an expert, the witness should be able to explain their training and experience. They should know the market in which the subject property is located, and they should have experience in appraising properties similar to the subject.
It is also important for the expert witness to remain objective; it is not the job of the witness to be an advocate, which is the role of the attorney. The expert should not show bias. If their opinions seem to be over-reaching, they could lose credibility in the eyes of the judge and the jury.
No one can be “forced” to be an expert witness. The original appraiser may be forced (pursuant to a subpoena) to testify as a fact witness if he or she has knowledge that might be relevant to a case. They could be “forced” to answer factual questions, under oath. A fact witness is court-ordered, while a fact expert can turn the assignment down.
It is up to the appraiser to make sure they understand, clearly, under what category of witness they would be. Remember, testifying as a fact witness means you answer the who, what, where, how questions…not opinions.
The expert witness must make sure they clearly understand what services are expected of them, such as
- Provide an opinion of value (If so, as of what date?)
- Prepare a complete written appraisal report
- Review someone else’s appraisal
- Prepare a full appraisal review
- Testify about the standard of care
- Opine as to anything other than value
Taking on an expert witness assignment requires specialized knowledge and experience. Expert witnesses can charge whatever fee they wish in return for performing the desired services. It is recommended that any expert witness assignments be confirmed, in writing. The engagement agreement must specifically set forth what information must be provided to the expert witness before the work can commence.
The expert witness must get detailed information about all the parties involved in a case to ensure they have no conflicts. Make sure the information is requested before any work is done. If a conflict is later discovered, the expert witness might not be paid for the work that was done and the parties involved will not be pleased.
The issue of expert witness fees must also be clearly defined before work begins. Disputes about fees can sour a relationship, so payment issues must be worked out early. Will the expert witness seek a retainer? If there is to be periodic billing what would be the billing intervals, and when is payment to be expected? Can the expert witness demand that all billings be paid in full as a prerequisite to testifying at a deposition or a trial?
Claim examples
Tempers Swell, Cooler Head Prevail
An appraiser in Illinois was asked to prepare an appraisal for a local attorney representing a wife in a divorce case. She was named as the intended user in the report. The insured quoted a fee of $500, which was paid by the client. The appraiser also made it clear in the engagement letter that the $500 fee was for the preparation of a report only. If the client wanted any additional work to be done, the appraiser would proceed based upon an agreed hourly rate of $250 per hour.
The appraiser submitted the report and received payment. He called the attorney to follow up and to make sure the report was acceptable, but the attorney never returned the call.
About 8 months later, the appraiser got a call from the lawyer’s assistant asking about availability for a deposition. The assistant also related that the lawyer wanted to meet with him before the deposition to go over a “few things.”
The appraiser was confused. He spoke with the lawyer and was assured that the deposition would be “no big deal” and that it would only take a couple of hours. When the appraiser asked about getting paid for his time, he was told the husband’s attorney had not agreed to that “yet.”
The appraiser asked if the husband had hired an appraiser and if he was supposed to look at that report. The lawyer said he didn’t know. Then the lawyer told the appraiser that he had not decided yet about naming the appraiser as an expert.
Now the appraiser was even more confused. The appraiser asked, “What do you mean...' you have not decided?' Don’t I get a say in this? What if I don’t want to be an expert? What if I am too busy? What if I know the appraiser who did the report for the husband and I don’t want to be averse to him?”
The lawyer got angry and said he hoped the appraiser wasn’t going to “leave him hanging” by “pulling out at the last minute.” He then threatened to make a complaint to the state licensing board. The appraiser fired back that he would make his own complaint to the State Bar...and the phone call ended.
The appraiser called to report the “claim/threat” and to seek advice. We assisted with a letter that was sent to the attorney. The appraiser stated that he apologized for his “emotional” conversation. He wanted to be clear that he had not “refused” to act as an expert. Rather, he had never been asked to do so.
He suggested that if the lawyer still wanted to work with him, he would need to review additional information about the case, and that he needed to know when his services would be required. He also noted that a different services agreement would have to be signed and that he expected to get paid for his services.
Thankfully, the lawyer sent a very prompt response to the appraiser in which he also apologized.
He thought the appraiser had already agreed to the expert assignment, but realized he was mistaken. He understood the appraiser’s concerns and admitted they were justified and provided the appraiser with some preliminary information, and said more would follow. He also asked the appraiser to submit his proposed services agreement, so that the lawyer could review it with his client.
As it turned out, an acceptable agreement was signed, the appraiser was paid for his time, and the case was settled before trial. By having both sides step back, cool down, and act professionally with each other, we were able to avoid a lengthy battle.
Expert Appraiser Saved By Expert Agreement
An appraiser in Arizona was contacted by a local attorney. She was asked to be an expert in a lawsuit filed by multiple homeowners against a builder. The homeowners claimed the builder failed to disclose that the property, on which the homes were built, was a former dump site. Once this information was discovered, the homeowners realized they would have difficulty selling their homes, and they would never recover their purchase price.
For his part, the builder claimed he had no idea that the property was a former dump site and that he could not have reasonably discovered the same.
The appraiser met with the attorney and was asked to provide appraisals that reflected the diminution in value. She was provided with all the requested information and agreed to take on the assignment. She quoted a fee of $18,000 and prepared a document that set forth the details of the assignment and all of the payment terms. The attorney signed the agreement and sent a check for the $5,000 retainer.
The appraiser commenced her work. The lawyer called her several times to discuss her findings and her progress. After a few months, the appraiser asked the lawyer to send the second payment that was noted in the services agreement. He promised to do so, but the check never came.
When she followed up, the lawyer apologized, and promised...but still no money was provided. Finally, the appraiser sent a letter saying she would do no further work until she got paid.
The lawyer responded by stating that he was changing the terms of the assignment, and only willing to pay a total of $10,000, and stated that he had already paid $7,500. The letter went on to say that once the rest of the reports were delivered to him, he would send a check for $2,500. If the appraiser refused to complete her assignment, he would assist his clients by filing a lawsuit against her, seeking damages they would incur due to her failure to provide the professional services to which she had agreed.
The appraiser was very upset when she reported this claim. Thankfully she kept excellent records and had a signed copy of her services agreement, plus an email to the attorney that was sent after she had received the only check for $5,000.
A letter was sent to the lawyer in response to his threat. The appraiser had completed work that justified an additional payment, above the $5,000 retainer. She was willing to forego that if she could put the matter behind her. In fact, it was he who was in breach of the agreement, and he had misrepresented the amount of the only payment made. The agreement provided that either side could cancel if there was a breach. The appraiser was officially terminating the agreement and she would be providing no further services.
None of the threatened action was pursued by the lawyer. The fact that this appraiser professionally handled her expert assignment, with a well-written agreement, enabled her, and the carrier, to stop that claim in its tracks.
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