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At the Round Table with Economics Expert, Dr. Charles Parekh

May 10, 2024

The best engagements require that everyone is on the same page before getting started, which is why our guest, Dr. Charles Parekh, recommends carefully crafting engagement contracts. He cautions against working on contingencies, which can put experts in a financially tenuous position, as well as indemnity clauses, which may show a lack of good faith.

Check out the entire episode for our discussion on the changing expert witness landscape, working in trial teams, and academia vs experience.

Note:    Transcript has been lightly edited for clarity.

Host:    Noah Bolmer, Round Table Group

Guest   Dr. Charles Parekh, Managing Director at NERA Economic Consulting

Noah Bolmer: Welcome to Discussions at the Round Table. I’m your host, Noah Bolmer, and today’s guest is Dr. Charles Parekh, the Managing Director of NERA Economic Consulting. He lends his experience in economics, statistics, high-stakes litigation, arbitration, and regulatory settings. He has over 20 years of experience as an expert witness and a Ph.D. in public finance from New York University. Dr. Parekh, thank you for joining me here today at the Round Table.

Dr. Charles Parekh: Thanks for having me on.

Noah Bolmer: Of course. Let’s jump into it. You have an extensive background as an economist and a statistician. How did you first become involved in expert witnessing?

Dr. Charles Parekh: It’s a funny story. I didn’t know it was a job, but I was graduating from school in the middle of the tech boom where you got jobs thrown at you. A professor of mine that I liked who was an economist at the University of Chicago, where I did a master’s degree, said, “I work for a consulting firm. Do you want to come join?” I said, “Sure.” I showed up on day one and I said, “What do we do?” It turns out they did expert testimony work for the US Postal Service and every time the postal service wanted to raise their rates, they had to justify it in front of the Postal Rate Commission [now known as Postal Regulatory Commission]. We were the testifying experts on behalf of the US Postal Service. It was an ongoing annual contract. I decided that while I liked expert testimony work, I didn’t necessarily want to pigeonhole myself into postal work, although I did for years. That’s how I discovered expert testimony work, and I’ve been in the industry ever since.

Noah Bolmer: Tell me about some of those first phone calls. What was it like when you, as you said, didn’t know that it was a career? Many people don’t know that it’s either side work or a career to be an expert witness. What were those initial phone calls like when you were first talking to the attorney and deciding if you were right for the case? Walk me through the process.

Dr. Charles Parekh: When you’re young there is a deep drive to try and make sure that you win the work because it’s competitive. One of the first things I learned early in my career is you can’t take the job if you don’t know what you’re talking about. I think those first phone calls were feeling out if I knew enough. It is one thing to say, “I’m an economist who studied this in graduate school at the Ph.D. level” -and sometimes that’s enough, especially for technical things. In reality, you can pigeonhole yourself into an industry or two and you spend a lot of time talking about whether you’re going to get called out or exposed. Those initial phone calls were looking to see if I could do it, and if not, who did I know that could do it?

Noah Bolmer: Is that a process where you must question the potential engaging attorney? Do you have to ask them some questions to determine if you’re the right person or is it in their hands to let you know?

Dr. Charles Parekh: No, you have to offer them guidance on that. The types of clients that I work for are the top attorneys in the field. They’re amazing, they know what they’re doing, and they are experienced. They’re not desperate to hire somebody, they are desperate to hire the right somebody. They’re open to a lot of questions and are experienced. They may say, “We want you to look at these data sets and come to this conclusion because that’s what we want in our case.” Then, I’ll say, “That makes sense. Let me sign a non-disclosure agreement (NDA) and look at this and I’ll tell you what I think.’” or “No, I don’t agree with that.” These clients are typically experienced enough that they’re happy to take that answer and not hold it against you. There may be some back and forth- “But we think you can do this.” “No, I can’t” or after talking about it, “We can.”

Noah Bolmer: Do you feel that you have a good handle on it once those initial phone calls are done or do you occasionally find yourself in a situation where you thought you had the right experience and knowledge to make a good neutral determination as you’re required to do? Then, once you start working on the case, it doesn’t work out that way. Has that ever happened to you?

Dr. Charles Parekh: There are different ways that can happen. The first one is the proper and healthy way, and as you get more experienced, this happens less and less. You have some preliminary thoughts on what I think I can do, and what I think I can say. Then you delve into the data, and the data doesn’t support your argument. That tends to be a fine conversation to have because they want to know this because we may have to pivot and say, “All right, what can you say. Let’s change our argument.” Or they may just say, “We can’t put your testimony forward.” That’s okay, because what you don’t want to happen is have them think they’re telling one story, and the opposing expert rips it to shreds. Now there’s also an unhealthy way this can happen and has happened to me and it’s unfortunate when it happens. It’s when the attorneys don’t tell you everything, and then over time more information comes to light, or the facts of the case were communicated incorrectly or honestly misunderstood. It changes the baseline from which you’re working and that sometimes doesn’t work out. Typically, when that happens, you don’t have to say, “I’m going to give you a different answer.” You may just give a much narrower answer.

Noah Bolmer: Let’s say you’re the right person for the case, you’re going to accept it, and you are negotiating your contract, and you need a written agreement, what are the terms you use in your contract? For instance, do you prefer to take a retainer, or do you have any other specific billing considerations or concerns you like to go over and make sure that you have settled before you start?

Dr. Charles Parekh: We’re a relatively good-sized expert witness firm. That being said, most of these engagements are negotiated individually, so I have a lot of leeway in how to handle things. There are a few non-starters changes. We can’t work on contingency. We must appear unbiased, so we get paid. I get paid no matter what the outcome of my work is so that’s in there to make sure that a jury doesn’t view us as partial to a particular story. So that’s one thing. The other things that I often have in there are indemnity clauses, except in the case of gross negligence, where you can’t get indemnity anyway, we want to work in good faith with the client and make sure we’re indemnified if something were to happen. Typically, that’s not because a mistake was made, but sometimes litigation arises from another litigation, and you may get called in as a witness or must produce documents, information, and discovery which costs time and money, and we want to make sure that somebody is able to pay. You must be upfront that you will be paid no matter what the work is. You asked about a retainer and that one is a business decision. In the end the expert is responsible for doing the work, but then collecting payment. We’ll often put a retainer in if we think there is a risk of non-payment. Sometimes you have clients that if they lose, will be financially insolvent, and we can see that so we may ask for a month or two or three months of anticipated payments upfront. Then we work through it and don’t need to bill or crack out credits from the retainer. That’s typically when we do a retainer. I tend to forego the retainer if it’s a business decision when it’s a big client, an experienced client, or a long-running client because we have that relationship with them. The retainer is really a business decision.

Noah Bolmer: Is there any built-in protection against settlements which have become more common these days?

Dr. Charles Parekh: Settlement is a risk for any expert and for the lawyers. We typically bill by either the six minute or 15-minute increment and it’s hourly, which is the same model the lawyers use to build their clients. The upside of that is when we put more work in, we get paid more. The downside is when the case settles and they say, pencils down, you’re done on that matter. You get paid for all your work up through settlement and the engagement letter clearly states that, but sometimes that can be quite abrupt. We’ve had matters where we get engaged and anticipate 6 months of work and then it settles after six weeks, and we didn’t do much work. That’s just part of the risk and where it is problematic is you only have so much bandwidth. So, there are experts out there with large teams of senior people that almost allow them to take an unlimited number of matters, so they can just keep taking them on for their senior folks to run those matters and you just show up for signing the report, deposition, and maybe court testimony. That’s not most experts and it’s certainly not me. We tend not to want to take on more than two matters at a time, but to have zero or one matter at a time is less than ideal as well because you’re not earning the revenue that you want to earn. It becomes this balancing act. Now that it’s settled, I need to find another matter to fill in that gap. If it doesn’t settle, then I don’t want to take this other matter because it’s not fair to my client. I’ll be too busy. The ways that you handle that sometimes are to team up with another expert in your firm and send that third case to them. Once you establish those sorts of internal partnerships you also get work from them, and that can help backfill some of that settlement risk.

Noah Bolmer: Speaking of teams, do you frequently find yourself working on larger trial teams with several other expert witnesses?

Dr. Charles Parekh: That’s typical for what I do. Some of my background includes the Lehman Brothers bankruptcy and the Residential Capital bankruptcy, which were two huge bankruptcies, where there were many experts. The typical way that may happen is, I’m a damages expert and my testimony may often require relying on the testimony of other experts. If it’s a healthcare fraud case, a medical expert determines whether a procedure was warranted or not. A billing expert who determines if the bills were handled properly. In the case of the finance matters that I worked on, there may be a forensic accountant or some other accountant because I don’t have an accounting background and I rely on them to provide accounting figures. So, I often must work with those experts. One of the skills that you develop over time is the training of other experts, which can be useful with subject matter experts. Many times, those are not full-time expert witnesses. They have expertise in something else, and they do this on the side. Having the ability to train expert witnesses and work with them can be helpful in making the final work products happen more smoothly.

Noah Bolmer: When you talk about working on a team, to what extent is that self-directed? Do you have an attorney telling you exactly what you should be doing and what they should be doing? Do you manage that coordination amongst yourselves?

Dr. Charles Parekh: Typically, the attorneys say we need this. It may be a report, but there are this many documents, and this amount of data. I will figure out, based on my experience, what kind of team we need. On most expert witness engagements, there’s an expert there, the senior case manager on the team handles the day-to-day, and that’s important because clients don’t want the expert to see everything. They’ll go through a staff member who may look at things first, get a lay of the land, and all of that is privileged until it comes to the expert. Then you’ll determine how many staff members, more junior type analysts that you need. And after doing this for a while, you can in some ways, look at a case and say, “All right, this is what it’s going to be.” And we bill by the hour for each person but in reality, you know the cost of an expert report will be, you know the cost of the deposition` and that varies based on how much work has to go into it, but you can usually tell a client, “I’m going to put together this team and it’s going to cost you about this much a month, and we’ll get the expert report done in six weeks, or eight weeks, or 12 weeks” or whatever it may be. Hopefully, you get that number right. The important thing to do when working with teams is when that team size changes, and it will materially affect the cost of the project, to be very upfront with the client about what is happening and why.

Noah Bolmer: You’ve been doing this, as you were saying, for quite a long time, over 20 years. Now let’s talk a little about how the role has changed over the years. How has the work of an expert witness changed? How have attorney expectations changed the logistics? Tell me about the changing nature of expert witnessing over the last couple of decades.

Dr. Charles Parekh: I was fortunate enough to get into this game as a very Junior Analyst Economist, right after this expert witness industry had been established, which happened in the late 1980s and early 1990s. It started with professors who wanted to earn extra income. There were- when I first started, there were a lot of remnants of this, but it was a professor who relied on their vast experience of academic journals, research, and being the top name in the field who would come and opine based on what they thought and what they knew from their career. In fact, we still call these expert witness opinions because the expert would opine. As the expert world progressed, and this really happened in the late 1990s with complex commercial litigation and accounting scandals like Enron, and it became clear that you couldn’t just do this by reading a few documents, writing a report, showing up, and going on the stand. You needed to do careful study on a lot of analytics, and you needed a team of people to go through a large volume of documents and data.

You had two options if you were a professor. One was to find funding for your graduate students to do this work, but they’re not necessarily trained in doing this work, and they have their own agenda, which is to get their own graduate degrees. They’re doing work between 12:00 and 4:00 on Monday, Wednesday, and Friday may not cut it. Many of these professors went out and founded firms. That’s been the real change is the movement from this being an offshoot of academic work to a full-time professional endeavor. I have never been an academic, other than I had an adjunct role at NYU teaching economics and statistics. I was not ever a full-time research and writing academic. I’m a full-time career expert witness. I started as an analyst supporting the testifying experts and I’ve grown my career to be a testifying expert based on the things that I’ve learned throughout the course of my career. That’s been the real change. This is now a full-time profession and not an offshoot of something else. I don’t think you can credibly do it. Now, professors get involved, but it’s typically through a firm like NERA where we do all the analytics and work, and honestly help by writing the report for the professor. Then make sure they’re OK with it. Then they would testify because they’ve got a big name in the field, but even that’s getting more and more rare.

Noah Bolmer: Speaking of rare, more cases are going to settlement. I know we talked earlier about how that affects the way that you might write your contracts. How else does this movement to settlement affect the general role of the expert?

Dr. Charles Parekh: We break down litigation support, expert testimony, and expert witness work into a few categories. One is expert testimony, and that is, I’m going to be a testifying expert. I’m going to write a report, be deposed on that report, and if it goes to trial, testify in trial. Typically, we also look to do litigation consulting and that is in a simple way, I’ll be your calculator. So I’ll team up with the attorneys and work with them as a confidential, privileged expert, but not an expert witness, but an expert in the field. I can say, “Let’s try this. We need to get this data. We need to try this analysis.” And then if it does end up looking like a trial is going to happen or they retain the testifying expert. You can advise your clients and say, “All right, let’s give this data to the expert because that will help their case but let’s keep these things away from them because we don’t want them to see it. This is the analysis that is helpful, and these are the ones that could expose that expert.” And so, the nice part of that litigation consulting world is you often get hired much earlier and you work through the end of the matter. You get a longer run.

The other nice thing about it is if they have energy as a litigation consultant and then a year down the road they need an expert, they’re typically going to ask you for someone in your firm and hire that person as an expert and it’s the advantage that firms have over solo practitioners. Solo practitioners are great because you can charge low rates and win a lot of work for the right type of cases, but for large, complex commercial litigations, you may need multiple experts and or a large staff. That’s one way we hedge against the settlement risk is to try to get in early as litigation consultants.

Noah Bolmer: Sure. Is consulting expert work making up a majority of the work versus the testifying expert?

Dr. Charles Parekh: On average, it’s about 50/50, but that’s it’s not, it’s lumpy. When you have very large engagements where the client may be spending millions of dollars litigating something that tends to involve litigation consultants. If you’re talking about a more run-of-the-mill typical complex commercial litigation where you’re going to be involved for three months writing a report, then you may not hear anything for six or nine months. Then, they take your deposition, and you don’t hear anything. Then, there are motions that need a support declaration, and so on. Those tend not to have litigation consultants because of the budget, and the risk frankly is there. If you don’t have a billion dollars or more at risk, you may not want to spend millions of dollars hiring lawyers and consultants. But those smaller cases are far more frequent and while it may be 50/50 in terms of a revenue number, it’s not 50/50 in terms of the number of engagements.

Noah Bolmer: We talked a little about how the role has changed over the years. How do you see it evolving in the future? What trends do you see for expert witnessing as a career?

Dr. Charles Parekh: You’re starting to see more people who have careers in other fields who want to come over to the expert world. You have to become an expert in something. Originally, that was me. I was a professor. I did research in this area for 30 years. I wrote three books and 158 published papers. Then that became- and that’s- this is the bucket I fall into. I have an academic degree, and I learned all these skills in my Ph.D. program and learned how to keep learning more skills. I’m going to apply those skills to calculate damages, and that’s what qualifies me as an expert. Now, a client wants you to have a background in the industry and they want you to have experience in these types of litigation because healthcare litigation is different than financial services litigation, which is different than calculating damages and intellectual property. The place this may be going is “All right, I worked at a trading desk for 30 years, but I’m smart and I have an academic degree that qualifies me for this. I can come in and be an expert.” I find myself finding these types of people more often because they’re frankly more credible than me. A jury sees them as someone who has worked in the field for a long time, so when it comes to a specific industry practice testimony, “How things are done, how things should have been done” which is a lot of litigation- A happened but B should have happened. We’ll bring those types of people in and then you still need an economist to calculate the damages. But that’s really where I see a lot of growth is finding these people with expertise in a career. Now, the difficulty there is nobody is born knowing how to be an expert witness. In fact, we mentioned earlier in this talk that I didn’t even know was a job when I became one. That’s true of these guys. They may never have thought of it or never have heard of it. You have to identify good people and then be willing to convince them that this side career is good and train them on how to do it. That is a large area of growth for expert testimony over the next decade.

Noah Bolmer: That’s interesting. People who have either had a long career in a field or are currently still engaged in that career might be more credible.

Dr. Charles Parekh: That’s right. Where you run into trouble is you get someone who was a loan officer at a bank for 30 years and we’re talking about a case where loans were improperly issued. Somebody is suing over that. If they’re still currently a loan officer, sometimes these practices were time specific. This is just how we did things in 2004 and 2005. They could be dragged into this and not credible because they could say, “This should have been done” and somebody’s going to say, “But you’re a loan officer, and you did this over and over for 10 years” and that ruins it. Typically, we have to find people who may be retired and want to move into a new career or still want to work. They don’t have the potential conflicts of someone who is currently engaged in that field. That’s not a hard and fast rule but it is something to look for.

Noah Bolmer: I’d like to move into the more general- What do you find meaningful about being an expert witness? In other words, why are expert witnesses important?

Dr. Charles Parekh: In high school or college, everyone said, “You need to learn this, but you’ll never use it.” They always said that about math and science, but you never heard that about writing, which is the most important skill. As an expert witness you do use it. At my desk, I have all of my academic textbooks, and I refer to them. The fulfilling part of the job is you’re teaching. In this case, you’re not teaching in a classroom, but you’re teaching a jury, a judge, or an arbitrator about the case. If you are a person who is inclined towards teaching and if you are a person who has put a lot of work into academic training, you can use the skills you spent all that time learning to teach juries and other triers of fact. That’s a fulfilling part of the work we do.

Noah Bolmer: I’d like to ask you about your experiences with the attorneys themselves. What aspects of the expert-attorney relationship make for a positive engagement?

Dr. Charles Parekh: It’s a two-sided coin because it’s positive but it’s also terrifying. The reason is these guys are the smartest people in the room. We experts like to think we’re smart, but these lawyers are smart and quick on their feet. The top litigators that tend to work with experts are really good. So you have to be quick on your feet and be honest with them because if you try to say, “It’s like this.” Or “This is the kind of thing that I want to do.” And that’s not right, they will see through it right away. The positive side of this is they get it, and you can speak to them like peers. You don’t have to dumb things down, and that makes the work that we’re doing much easier. You can do the complicated version for your client before you work together to distill it down for the jury or the trier of fact. It’s also the terrifying part because if you don’t know what you’re doing, and you’re not willing to admit that right away, they will see you as what you are right away. It will damage your credibility with them. That’s the good and bad part, but if you’re willing to be upfront with your client, and you’re confident enough in your experience and your abilities to say you don’t know how to do that or “That’s over my head that needs to be another expert.” That’s great. The good part of working with the clients that I have is their experience too. They don’t want to put you anywhere you’re not comfortable. When you say, “I don’t know how to do that” they don’t push back on that. They’re experienced enough to say, “Let’s go get a specific expert in that area and we’ll use them for that piece of it.” That’s a nice part of working with great clients.

Noah Bolmer: One more thing I wanted to ask you about is venues. Have you worked in different venues, such as, state, federal, regulatory, and international?

Dr. Charles Parekh: I’ve worked in all of those. I have testified in state, federal, bankruptcy, and federal bankruptcy court.

Noah Bolmer: How is the experience different for an expert witness across different venues?

Dr. Charles Parekh: One thing about state courts is that there are different rules, and there may be different rules around expert discovery. For example, in Pennsylvania, at least when I testified in Pennsylvania state court, there was no deposition of experts. Everything was done on the stand, and it led to a long examination and cross-examination because nothing came out in the deposition. First, in each state court, there may be different rules about what’s privileged and not privileged. Usually, in my experience, privilege follows the federal guidelines, but it doesn’t have to. You have to be careful up front to say, “All right, what are the rules here? What have we agreed to? What does the law say?” That’s the main thing about federal versus state court. One place that I enjoyed was bankruptcy court because bankruptcy court has a couple of things going for it. One is the nature of bankruptcy. There’s X amount owed, and there’s Y left in the bank, and Y is always less than X which is why they’re bankrupt. The court’s main aim is to say, “All right, how do we most fairly distribute Y to all the people that are owed X?” People are going to get not made whole. Some people are going to get screwed, and some people are going to be less screwed by this. Bankruptcy is working hard to say, “How do we do this fairly?” and that that can feel good.

The other thing about bankruptcy is the standards for expert work are different. You’re allowed to assume more things and speculate a little more because the bankruptcy court is involved with getting the right answer. It’s just a judge. There’s no jury in bankruptcy court. You have a smart and experienced prior of fact, who doesn’t need the same level of handholding that a jury would. You get to be a little bolder and a little more adventurous as an expert in bankruptcy court without the risk of being thrown out or using unsupported methodology, especially if you’re upfront about it. In bankruptcy court, you can say, “This doesn’t have any academic support, but here’s why I think it’s the right thing to do.” A bankruptcy judge will usually listen to you. They may not believe you, but they’ll listen. There are differences and that can keep things pretty interesting.

Noah Bolmer: That’s absolutely fascinating about bankruptcy court, and I suppose that partially goes back to what’s important about expert witnesses. Those sorts of decisions are made based on the testimony of expert witnesses. Before we wrap up, do you have any last advice to give expert witnesses and newer expert witnesses in particular?

Dr. Charles Parekh: The hardest part of being an expert is not the expertise itself. You’ve got that, or you wouldn’t be embarking in the career. It’s the relationship building and the and the attracting of business, which is what a managing director expert is responsible for. Once you’re established, and I wish I were there, but I’m not, the phone rings, and you take the work. You don’t have to go out and market. But for a new expert, they need to understand that while they’re going into a technical career, to make it all the way through, it’s a sales job. So, you have to be comfortable with going out and doing sales. Early in my life, I worked retail at RadioShack, and I learned retail sales. What that came down to was you have a problem and I’m going to listen to that problem. Then because I’m an expert in consumer electronics, I’m going to help you solve that problem and you’re going to spend some money on that problem, and you’re going to walk out of here saying, “I got a great deal.” That’s really what being an expert is. An attorney’s going to come to you with a problem and you need to know how to solve that problem in a specific way. This litigation is about this. Here are the three things I can do for you. And then that attorney will be willing to spend money on you-or their client will. Then you’re going to bill them a high bill, and they’re going to walk out of there and say, “That was worth every penny we spent on it.” It just comes down to that model of listening, coming up with the right solution and that comes from knowing your area and doing your homework as to what the right solution is and then executing it. That’s no different than the retail sales experience.

Noah Bolmer: Absolutely sage advice. Thank you, Doctor Parekh, for joining me today at the Round Table.

Dr. Charles Parekh: Thank you for having me. This was a lot of fun.

Noah Bolmer: Of course. Thank you to our listeners for joining me for another Discussion at the Round Table. Cheers.

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After a quarter century helping litigators find the right expert witnesses, Round Table Group’s network contains some of the world’s greatest experts. On the Discussions at the Round Table podcast, we talk to some of them about what’s new in their field of study and their experience as expert witnesses.

At the Round Table with Economics Expert, Dr. Charles Parekh

Dr. Charles Parekh, Managing Director, NERA Economic Consulting

Dr. Charles Parekh is the managing director of NERA Economic Consulting, where he lends his experience in economics to high-stakes litigation, arbitration, and regulatory settings. He has over 20 years of expert witness experience and holds a PhD in public finance from New York University.