September 02, 2006 BY Brian Moore
Expert Fees: Case Law Reform May Help Reduce Litigation Costs
A recent opinion from the U.S. DistrictCourt for the Northern District of Illinois is the latest in a series of federaljudicial decisions narrowing the range of recoverable expert fees and denying aparty reimbursement of excessive “expert related” expenses.
In Abrams, Plaintiff’s counsel soughtreimbursement for $427,000 in expert witness fees in connection with a consolidatedclass action against Van Kampen Funds, Inc. over valuation practices.
1. Alack of sufficient evidence to support the reasonableness of rates; and
2. Animproper characterization of certain defense costs as expert fees.
Specifically, the experts in question werefinance professors purported to be authorities on damages and liability in thesecurities field. The expert fees rangedfrom $375 to $625 per hour, with the experts’ associates ranging from $75 to$350 per hour. Although the court didnot find any cases involving comparable experts, a survey of recent federaldecisions showed that it was "unusual to allow expert fees greater than$350 per hour." Seee.g.Profile Products, LLC v. Soil Management Tech, Inc., 155 F.Supp.2d 880(N.D. Ill. 2001).
In Profile Products, the court foundit "impossible to believe" that an "ordinary simple damagescomputation in an ordinary contract case required anything like the amount ofpreparation that the plaintiff claims." Thus, the expert’s rate was reduced to $250 per hour and reimbursementfor the associate’s time was refused altogether.
However, the Abrams court wentfurther. In Abrams, the courtsuggested a $350 ceiling should be applied to expert rates, even when theexpert is widely recognized. Insuggesting the limitation, the Court specifically cited the 2003 decision of Federickv. Columbia, in which the Southern District of New York was unable toconclude that an established and well regarded toxicologist expert “warrantedthe exorbitant fees requested." Accordingly, the New York District Court reduced the expert's rate of$975 per hour to $375. See alsoCabana v. Forcier, wherein a nationally recognized toxicologist expertfee of $1,181 per hour was reduced to $375 per hour by a Massachusetts DistrictCourt in 2001.
Following these cases, the Abramscourt held that in the absence of sufficient evidence supporting the hourlyexpert rates proposed by Plaintiff's counsel, a maximum hourly rate of $350would replace the highest proposed rate of $625, with all other fees proportionatelyadjusted downward. The Abramscourt also held that expert fees would not be reimbursed when the fees were"actually for work more properly characterized as work that should becharged as attorney's fees".
As a majority of cases now utilize expertservices, these considerations should be discussed when deciding on expert feearrangements and may be used to potentially reduce your overall litigationcosts. In addition, this emerging trendprovides insight into the “reasonableness” of expert fees and guidance as towhether a situation warrants the expense and time of a formal challenge inCourt.
The Journal is a publication for the clients of Drew Eckl & Farnham, LLP. It is written in a general format and is not intended to be legal advice to any specific circumstance. Legal Opinions may vary when based upon subtle factual differences. All rights reserved.
H. Michael Bagley