At Round Table Group we believe there is more to getting retained as an expert witness than competitive expert witness billing rates, discipline expertise, stunning resumes, and sterling references. There is also the critically important expert-client agreement (or retention letter) that defines the scope and expectations of the expert-client relationship. This document describes issues such as deadlines, communication preferences, invoicing processes, and the very important topic of confidentiality.

Experts are a critical asset in winning cases, we know that. But as Gregory P. Joseph points out, the issues of confidentiality and discovery pose a challenging hazard to experts that they must be aware of. However, with just a little foresight and preemptive precautions both experts and clients can avoid this potential pitfall.

Joseph's article,  titled "Engaging Experts" nicely explores the issue of protecting confidential information. And while he is writing for an audience of lawyers, his point on confidentiality and protecting the case, and the parties involved with the case (including experts), is very well taken, and could be adopted by experts as well.

I have suggested in CLE presentations that "thorough and clear pre-retention communication, leading to carefully defined and agreed on terms of cooperation and expected outcomes" are critical to a healthy and successful expert-client relationship. Mr. Joseph's article parallels that idea.

With his permission, I have included two paragraphs he suggests as a model for client-expert retention agreements.

The heart of the form retainer letter consists of the following two paragraphs, which are analyzed in depth below:

    [1] It is understood that (i) you will make a reasonable effort to be available upon reasonable advance notice; (ii) you will keep confidential all information obtained, or analysis developed, in connection with this litigation or any related litigation with respect to which we may seek your advice and counsel; (iii) you will use such confidential information solely in connection with your engagement by us on our client's behalf; (iv) you will preserve any written materials, including e-mails, generated or received by you in connection with this engagement, as such materials are potentially discoverable in litigation; (v) you will not in the future consult for, or otherwise represent, any other person or entity with an interest adverse to our client's interests in or concerning the pending litigation, or the events or occurrences out of which the pending litigation arises; and (vi) you will keep confidential your retention by this firm on behalf of our client, unless and until you are identified in court papers as a testifying expert or we otherwise authorize you to breach this confidentiality.

    [2] It is specifically understood that, if you are later designated a testifying expert, all documents that you create may become discoverable, including drafts and notes prepared prior to the time that your opinion or report is finalized. In our experience, opposing counsel who obtain such documents in discovery often seek to use them in an unfair and misleading way -- for example, to suggest that a change from an earlier draft to a later version has some sinister explanation. This is particularly unfair because you will be learning the case over time, and you may not know all relevant information prior to the time that you finalize your opinion and report. In addition, the preparation of draft opinions and reports is expensive and should not be undertaken prematurely. Therefore, you agree that: (i) you will not prepare any draft opinion or report without our consent (regardless of whether the draft is for internal purposes or to share with others); (ii) you will not share any draft opinion or report, or any notes, with any other person without our consent; (iii) every draft opinion or report will bear the following legend: ‛THIS IS A PRELIMINARY DRAFT. IT HAS BEEN PREPARED BASED ON PRELIMINARY INFORMATION AND ON ASSUMPTIONS. NO ONE MAY RELY ON THIS DRAFT. IT IS SUBJECT TO CHANGE AS ADDITIONAL INFORMATION BECOMES AVAILABLE OR IS CLARIFIED"; and (iv) all notebooks or individual pages of notes will bear the following legend: ‛THESE NOTES ARE INCOMPLETE AND HAVE BEEN PREPARED FOR PERSONAL USE ONLY. NO ONE MAY RELY ON THEM FOR ANY PURPOSE. ALL VIEWS ARE SUBJECT TO CHANGE AS ADDITIONAL INFORMATION BECOMES AVAILABLE OR IS CLARIFIED"

At Round Table Group, we work hard to assist our experts in every phase of getting retained, and ensuring a smooth, positive, and profitable experience.

If you have any questions about retention agreements, or any matter, please contact one of our expert services coordinators.

Don Coker, the author, is a banking, management and economic consultant with over 20 years of experience, and a long time member of the Round Table Group expert witness network.


A Primer on the Valuation of Intellectual Property, Intellectual Capital, and Intangible Assets

By Don Coker


    The most common types of Intellectual Property, Intellectual Capital, and Intangible Assets that need valuation are:

●    Patents - Single patents or groups of patents that refer to a common technology.

●    Software.

●    Trademarks - This includes recognizable logos, brand names, etc.

●    Copyrighted assets such as written works, art works, music works, etc.

●    Favorable factors such as favorable supplier contracts that offer an advantage over what a competitor would have to pay for the same materials.

●    Customer relationship assets such as a core customer base, etc.

●    Customer-centered assets such as customer lists, existing customer orders, etc.

●    Workforce-related assets such as a trained workforce, loan origination network, established stockbroker network, established insurance agent network, etc.

●    Real Estate related assets such as leaseholds, air rights, water rights, etc.

●    Goodwill - The net present value of the excess earnings of a company (due to its superior performance) when compared to the earnings of other similar companies.

    There are many other assets that can be categorized as Intellectual Property ("IP"), Intellectual Capital, Intangible Assets, or other similar terms.  In the interest of brevity, I will refer to all of these categories as simply "IP."

    There are four key issues that need to be kept in mind when valuing, or reviewing a valuation of, IP assets:

1.    Generally, the best reflection of the value of an IP asset is the Net Present Value of the reasonable future cash flows that will be produced by the asset. This means that particular attention must be paid to the future life of the asset.

2.    Quite often, the most accurate methodology for valuing IP assets is to value them as if they were a stand-alone business.  For example, a group of patents that all relate to a better copying machine would most likely be marketed as a bundle since some of the patents may rely on other patents within the group of patents.

3.    In some cases, the value of an IP asset relates to an advantage that the asset provides over a competitor's similar asset.  For example, a favorable long-term supplier contract should be valued in terms of the net present value of the advantage in pricing produced by the contract over its life.

4.    In some other cases, the value of an IP asset relates to the cost that was expended to develop the asset compared to what a competitor would have to spend to develop a similar asset.  For example, the value of a trained workforce should be roughly equivalent to what it would take to reproduce a similar trained workforce.

    There are many other complicating factors that are present in the valuation of IP assets, just to mention a few:

●    Is the asset to be sold or licensed for some finite period?

●    If the asset is to be licensed, will there be a single licensee or multiple licensees?

●    If the asset is a patent, how many years has the patent been in use and how many years of
    patent protection remain?

●    If a patent application has been filed but a patent has not been granted yet, there is a risk that the patent application for the subject technology may be worthless.

    Keep in mind that a unique group of skills will be required in order for a valuation consultant to produce a credible Intellectual Property valuation.  Some of those skills include:

●    Knowledge of the IP creation, ownership, and transfer process.

●    Knowledgeable in many types of valuation methodologies.

●    Knowledgeable in the principles of financial mathematics.

●    Knowledgeable in corporate financing techniques.

●    Knowledgeable in how to determine and analyze market factors.

●    Knowledgeable in business organization, business systems, and business management techniques.

●    Do not think that a C.P.A. can perform a credible IP valuation. As you can see from the above cited list of skill requirements, many of them are beyond the areas of training, experience, and competence of a C.P.A.

    Keep in mind that this article only hits some of the high points of IP valuation since it is a very diverse and complex subject, reflective of the diverse and complex nature of IP assets themselves.  If you require an IP valuation for any purpose, take it seriously and make sure that you hire someone that understands the nature of the IP assets to be valued

About the Author

    The author of this article is an experienced financial professional with extensive experience in IP valuation matters, and is available to discuss your IP valuation needs.

●    The author of this article has extensive experience in the valuation of IP assets and in corporate finance.

●    He has been called on by the Internal Revenue Service seven times to value 28 IP assets with a combined value of over $21.55 billion.

●    His background in banking and finance includes employment and extensive training with Citicorp and Ford Motor Credit Co. and entities that are now Citigroup, Bank of America, JPMorgan Chase, Regions Financial, and Guaranty Bank.

●    He has personal experience with the creation, filing, and transfer of IP assets.

●    He is widely published and quoted in the media.

●    He has been engaged as an expert witness consultant for over 400 cases nationwide by attorneys for plaintiffs and defendants since 1989, and has testified over 100 times.

●    His clients have included 8 of the top 10 banks in the country, 12 of the top 45 banks in the world, and 33 of the top 250 law firms in the country.

●    He has extensive experience as a consultant to various arms of the United States government as well as numerous foreign governments.

    Call or e-mail to discuss your IP valuation needs.

A very common question we get from Expert Witnesses is "How can I get paid faster?" Indeed, right after "What are the expert witness billing rates of my colleagues?" this is the most commonly asked substantive query.

And of course, Round Table Group has some great solutions.

First, keep your clients posted on how many hours you are working. Some clients prefer weekly updates, others like to know more frequently. This can prevent delays due to 'sticker shock' when your invoice is received, causing unnecessary stress and delays while the issue is negotiated.

Second, find out when your client does their invoicing to their client. If you can coordinate your monthly invoicing with their billing cycle, delays of up to 30 days can be eliminated.

At Round Table Group we handle all that for you.

We consult with our clients on invoicing cycles and due dates, and remind our experts when that date is approaching, to ensure your invoice is swiftly processed.