Cross-Examination of The Economic Expert

Excerpt from Chapter 11: Economic Damages at Trial

Economic/Hedonic Damages: The Practice Book for Plaintiff and Defense Attorneys
by Michael L. Brookshire and Stan V. Smith

General

Many general tactics are available in cross-examination.

The defense attorney may ask no questions and ignore the expert, especially if liability is in serious doubt.

Or he may attempt to make the calculations seem so complex or absurd as to be unbelievable — especially when inflation has been left in the analysis and very high annual wage estimates result.

Or he may attack assumptions, techniques, or outright errors, and past chapters have suggested such possible lines of assault.

Checklist of Possible Questions

Checklist 2 provides a checklist of possible questions — or lines of inquiry — in the cross-examination of the plaintiff’s economist.

Some comments on the checklist may be helpful. Items #1 and #2, for example, will probably be of value only if there is some flaw in the qualifications of the expert, or if he can somehow be embarrassed.

For example, a vocational expert may be holding himself out as an economist, or vice versa. As another example, did he use his college’s computer to perform the calculations without reimbursing the college for this private work?

Item #3 emphasizes the key role of assumptions which could be incorrect.

In one case, we saw the report of a plaintiff’s economist in which he assumed that 8 percent inflation would be the bare minimum for future years. Unfortunately for him, the first three years of his projection were “Reagan years” and inflation averaged considerably below 8 percent.

Moreover, economists will sometimes make assumptions for a plaintiff’s attorney but warn him that the assumptions, and there the loss estimates, cannot be defended at trial. Therefore, Item #4 should always be asked — surprisingly, it seldom is.

Item #5, like the previous question, may only be useful 10 percent of the time, but a “score” on either of these questions can be devastating. In this case, the economist may have changed his assumptions and perhaps his techniques until he produced a “bottom line” acceptable to the plaintiff’s attorney.

The next two questions (or lines of attack), are most appropriate if the defense feels that wage-growth rates are too high or interest (discount) rates are too low. If inflation has not been removed from wage growth, wage-loss numbers in future years will be so large that the entire estimate can be made to appear ludicrous to a typical juror.

Moreover, the “best defense question,” outlined in the above section on direct examination, may be asked here, saved to the end of cross-examination, or held for closing argument. Even when this question has already been addressed in direct examination, the defense may ask the question anyway.

At first blush, it does make a lump sum estimate of loss appear to be too large.

CHECKLIST 2

FOR CROSS-EXAMINATION OF ECONOMIC EXPERT

Attack qualifications of expert: Relevance of education, teaching, etc., to estimates; depth of experience, etc.
Attack integrity/credibility: Past work predominantly for plaintiff? Past, similar cases with differing methods used? Per diem and annual earnings from this type of work? Use of college resources? Has he advertised his services to attorneys?
Emphasize the importance of the many necessary assumptions and attack questionable assumptions. If early estimates, how well do assumptions match economic variables thereafter?
Do you agree with the assumptions used?
Have you considered, or produced, estimates in this case other than those which show up in your final report? If so, why were they not a part of your final report?
Wage earnings base and growth: Projections on earnings history or statistical person? Realistic wage rates times realistic annual hours of work? Wage growth rate too high? Are annual wage earnings in future years unbelievably high?
Discounting: Is discount rate unrealistically low? Possibly ask “the best defense question.”
Work-life: Are “non-LPE” techniques used which result in unrealistically high estimates because of unrealistic assumptions? What if at early age, the deceased/injured would have died, become disabled, lost his job or relevant job skills? Did the person smoke? For any reason, was he “below average” in L, P, or E characteristics?
Household services: Are assumed hours of service too high? Does the U.S. government value such hours at all in estimating Gross National Product?
Medical or institutional care costs: Attack any high medical inflation rates because of public policy pressures to slow past escalations in cost.
Personal consumption: Is the percentage-of-wages deduction unrealistically low, especially for single persons?
Income taxes: Perhaps ask expert to explain the extremely complex calculations. Or, make it seem silly that the consideration of income taxes would make the estimates increase.
Hedonic damages: Ask if the cited studies valuing safety were primarily designed for valuing life in court cases. Attack any attempt to translate a range of total life values into some “average” value of an unknown life. Ask why the economist has testified so little about hedonic damages versus other damages. Ask if the deceased enjoyed his life less than the average person.

A comment on the household services item (#9) is that the defense may attack the assumed hours of weekly services, especially if they are greater than suggested in the annual Cornell University studies discussed in Chapter 5.

The defense should also ask if even the government tries to value household services in the calculation of Gross National Product. The answer is “no,” and the implication may be that the government either does not think it has value or cannot properly value it.

The same question may be asked in regard to hedonic loss values — although many government agencies, in one way or another, have calculated total life values.

Other Tactics

A well-prepared defense attorney will have reviewed past analyses and testimony in similar cases. Consistency in assumptions and technique is a virtue, and inconsistencies are generally grounds for attack.

This is true for virtually every element of the work of the economist, which is specifically covered in the above checklist of questions. An inconsistency is grounds for attack, especially when it appears that the “new” assumptions or techniques in the case make the loss estimates significantly higher.

We have also seen defense attorneys (as another approach), appear incredulous that the economist was needed. They might show the jury that a similar estimate is obtained by multiplying wages and/or fringes in the first loss year times the remaining years of work-life expectancy.

This is an attempt to “take the magic” out of what the economist has done or said. It may well backfire, as the defense has reiterated the “bottom line” number in a simplistic manner.

Finally, the defense attorney in some instances may be wise to ask nothing in cross-examination and perhaps to discuss the “best defense question” in closing arguments. This may be true if the plaintiff’s economist has been very conservative in his assumptions and techniques.

It may also be true if the forensic economist has a reputation for winning more points in cross-examination than he or she loses.

After all, the defense attorney is taking on the economist in matters of economics, not matters of law.

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