Podcast - Part I: Being an Expert Is a Lonely Business

Dan Small: I'm delighted to welcome to "The Trial Lawyers Handbook" podcast Ian Ratner. Ian is the CEO of GlassRatner and B. Riley Advisory Services, a CPA with 30-plus years of experience as an expert and a forensic accountant. I've had the privilege of working with him on a complex matter, and Ian, welcome to the podcast.

Ian Ratner: Thank you very much. I'm delighted to be here.

Dan Small: Your CV is over 30 pages, so I'm not going to dive into it, but if you could just give us a quick overview of your experience in this stuff.

Ian Ratner: I'd be honored to. I mean, essentially I've been in the same practice area since 1990. I spent a couple of years as an auditor, and then in 1990, I joined Ernst & Young in the forensic and litigation support practice. And since that time, my practice has been pretty much forensic accounting, litigation support and bankruptcy restructure consulting. Depending on the cycle, you know, from 2008 to about 2013, most of my practice was bankruptcy restructure, turnaround management. But generally speaking, over my career, it's been a pretty good mix of those two main practice areas, which actually are the foundational practices of our firm, which I think is very helpful that I've been involved in most of the case types that we're actually involved with. I'm certainly more known as an expert witness, but we do a lot, you know, I do a lot of bankruptcy consulting as well.

Dan Small: So I'm curious, before we dive into this, you've testified or been an expert witness, one thing or another, several hundred times. How do you get into that in the first place? You don't go to school to be an expert witness, you go to a school to get a CPA or whatever, but how did you get in to being an expert witness?

Ian Ratner: Right, so that's a great question. And essentially today, you meet a lot of people that have tremendous background in forensic accounting, investigative accounting, but they've not really testified. And having the testimony experience is really critical and that's hard to get. In 1990, I joined the forensic practice at Ernst & Young, and it was fascinating. We worked on all types of investigations: public company investigations, revenue recognition investigations, loss investigations. And my very first testimony was really a case where nobody else in the office would do it.

So I'm in Atlanta and I'm with Kroll Associates. Kroll was a major forensic provider. And we had a case in the office that I was working on as a relatively junior guy involving a murder case where our client was the defense fund for a police officer accused of murder. The case hinged around a financial motive that the policeman had all these side businesses and his financial life was in trouble, and he was investigating a crime and identified that the victim of the crime had a lot of money on site, and then ultimately went back and he allegedly killed that victim and stole all this money. So we get this case in the office, and it's a lot of financial records and things like that. And the lawyers loved the work we were doing and went to one or two of the senior guys in the office and asked them if they would be the expert to describe all the financial records and all the things we did to dispel the rumor of financial motive. In other words, the allegation that the prosecution had was that this police officer was in trouble, financial trouble, and that's why he perpetrated this crime. There wasn't a lot of direct evidence, and our review showed that he was doing just fine. He wasn't bouncing checks, he wasn't overdrawn on his accounts, all his side businesses were doing well, et cetera, et cetera.

So the lawyers in the office ask the senior team, you know, to testify, and nobody wanted to do it. Nobody wants it, to get involved. It's a murder case. We don't mind doing the work for the law firm, but nobody wanted to testify. So there I am sitting in the office, and the lawyers are here working one day, and I'm a kid. One of the lawyers looks over and says, "Well, Ian, why don't you do it?" And I'm like, I don't know the difference, right? So I'm saying, "Sure, I'll do it." So that was my very first testimony as an expert. I was on the stand, and the jury ended up taking quite a number of days to form their final opinion. Anyways, the fellow was found guilty, but they did thank me for all my good work and all that stuff. And that was really my first testimony.

Interestingly enough, that trial was at the same time as the O.J. Simpson trial, and it was covered on Court TV. So it was just a very fascinating experience. There I am in a murder case, and it happens to be covered at the same time as the O.J. Simpson case. And, you know, so that was, I think it's a very unique situation, but basically the opportunity came to me and I did it. And it was a good experience. One of the things the Court TV was doing, they were comparing these two murder trials. Our case lasted 12 days or something. And O.J., the case lasted months and months and month. So Court TV was comparing and contrasting these two murder cases in different parts of the country that had a lot of non-direct evidence. So that was my very first testimony.

Dan Small: That's great, that's great. Now you've gone on, as I said, to testify hundreds of times, but you've also done several pretty high-profile, other high-profile cases, including the tobacco litigation and the Deepwater Horizon oil spill. Do you have a favorite quick story from one of those high-profile case?

Ian Ratner: I mean, I'll tell you a little tale where the judge saved me. In some cases, the judge...

Dan Small: We love judges who save us.

Ian Ratner: I mean, the judge literally saved me in the BP oil spill, the Deepwater Horizon case. So this was the main case, the three-phase trial. Phase one was how much oil was spilled into the Gulf. Phase two was was BP negligent or grossly negligent, because that affected the penalty. And then phase three was their ability to pay. So I was an expert in phase three, and it was all experts. These were substantial trials. I mean, there [were] overflow courtrooms, et cetera. Our opinion was that BP had the ability to pay an $18 billion fine. And AlixPartners on the other side, their opinion was that BP could pay a $2 billion fine, so you could see we had a big gap in the opinion. Ultimately, all the work we did to form our opinion was based on oil prices at around $90 a barrel, $95 a barrel, because that's where oil was trending in 2013 and 2014, et cetera, because the trial was in January 2015. And leading up to the trial in November, December 2014, there was a big drop in oil prices. I don't remember what was going on in the geopolitical space, but oil was dropping from $90 a barrel down to $60 a barrel. So there's all kinds of emergency motions that, hey, we need to redo our expert reports. And there's motions being filed that you can't rely on Ratner, this and that. So we're in trial and the judge says, oh, we'll give each side 10 pages to write a summary brief on this topic.

Whatever, whatever, we go to trial. So I'm on the stand. I'm working for the Department of Justice. We issue our opinion in 90 slides. And we're going on, and we get to the analysis on their ability to pay and the future cash flows, and a very skilled lawyer working for BP from Kirkland, he starts pounding me about the underlying assumptions of my opinion. And of course, he is right into the heart of it. He's right into oil prices and the projected oil prices and changes in oil price movement, et cetera, et cetera. And he's really going hard on me. It's about 10, 15 minutes into this topic. And the judge leans over, and as an older judge, in a very thick New Orleans accent, he says to the lawyer, "Counselor," and in a gruff voice he says, "You know, I've been in New Orleans my whole life. If you think oil prices are going to stay down here at $50 a barrel, you're sorely mistaken. Leave the expert alone." Basically the judge pushed him off of this topic. I breathed a sigh of relief, and then we continued down the path and all was good in the expert world. That's perfect. I was getting ready to get unraveled, but the judge redirected the lawyer, which was amazing that the judge got so involved in it. But that happens, as you know.

Dan Small: Oh, absolutely. So I want to talk about the role of the expert a little bit. There's a wonderful quote from 60 years ago, still good today, the Chris Denner case, said that "expert opinion is only an ordinary guess in evening clothes." And so we as lawyers have to, I guess we have to be the tailor here and help dress it up. But it strikes me that there is a wide range of levels of involvement between lawyer and expert. And do you see that? Do you see a range like that? What are your thoughts?

Ian Ratner: Yeah, I mean, really, it's fascinating. There's kind of two schools of thought. In the preparation of the expert report or the expert analysis, there is the kind of hands-off approach where the lawyer says, "Hey Ian, here's the mission. You know, go do your work, come back to me, tell me the answer," and, you know, that's that. There's another approach where the attorneys are much more involved in crafting the expert view and helping synthesize all the information. I've worked with lawyers, amazing lawyers, that have different approaches, right? The hands-off approach: "I want you to look at all the materials, you know, come up with your own view." I mean, even if the lawyer's involved, it's our own view. I mean, I'm very focused on that, that these are my opinions, et cetera. But some lawyers really want to help you craft your view and dig through it and help you. And in fact, they themselves end up being much more prepared for the case because they really get a sense of the detailed issues. But there's also the school of thought that's like, "Hey, I hired you to give me your opinion. Here's all the documents. Tell me your opinions." It's completely hands-off. So there's these two different schools, and they both have their pros and cons.

Dan Small: Interesting that you say that. I have strong feelings on this, because I think, now, obviously it's a little different depending on who the expert is, and if it's someone like you with your extraordinary level of experience, but I do think that lawyers too often cede control of their case to the expert. And, you know, I'm sorry, but the lawyer is the captain of the ship. The lawyer ought to be directly involved — not telling the expert what to say, but directly involved in that process. And I have been blessed with having worked with some great experts who understand that and understand the importance of this being a partnership. So I've got strong feelings on that. And I think it's too easy, in some cases, for the lawyer to cede control of it to the expert, but I think it's a mistake.

Ian Ratner: Yeah. I mean, it can be powerful when the lawyer says in open court or something like that, like, "Your Honor, this is his opinion," or when there's argument leading up to a trial. But I do think that the counsel has to really establish the clear mission. What is the mission of the expert work? The mission is these are the four things that we want you to investigate, analyze, opine on. And that way you could really focus the expert on what is their mission and make sure they don't get off track. I will tell you that there are a lot of lawyers that will push experts beyond the comfort zone. And you could see that in practice where you're reading an expert report and it's very argumentative, or it's full of legal opinions, or it has the tone of a pleading or a brief. That is a clue that the expert ceded the project almost to counsel, right? Like an expert report should not be argumentative. An expert report should be, these are the things I looked at, this was my mission, these were the things that I looked, these things were important to me because they directed my opinion, they helped me forecast the future cash flows, they helped my analyze the importance of the balance sheet or whatever you're doing. But the expert report should not be arguing the case. And I will tell you that you see a lot of expert reports that are more argumentative, and I always know that the expert didn't write that report because then you get to the deposition and the expert's the nicest guy in the world and he can't articulate the arguments that are in his report. So it's easy to allow lawyers to edit things and add in maybe comments that are a little aggressive or trying to bolster some part of their case. But in the end, it doesn't really hold.

Dan Small: I'm not going to name any names or identify the case, but you and I recently had a case that was resolved, but the other side's main expert, I think, very much fit into that mold. He was making arguments. He was ignoring key facts. He was basically rendering an opinion based on what the lawyers told him, in some respects. And I think it earned his credibility. I really do. I think he was not as good as an expert as he could have been, because he was so clearly one-sided and biased on that. I don't know your thoughts.

Ian Ratner: You see it often where the expert is really arguing the case and it's kind of a turnoff. I'll give you an example. You're hired to rebut another expert, so you're analyzing that report. You don't have to say he was willfully flawed or, you know, just say like, you know, we don't agree with his opinions. These are the areas where we believe that he made a flaw. I've issued reports where the expert on the other side is, uses nine adjectives to describe some fatal flaw that they see in my report. And it's, the fatal flaw's that I use the 12 percent discount rate and they think it should be 14. I mean, that's not a fatal flaw. So using the word "fatal flaw" makes your report look silly. It's like, OK, I think Ratner's discount rate might have been a little bit aggressive or whatever. You have to temper your thought with what's really happening, you know?

Dan Small: Ian, this is great. If you're willing, will you come back next week and let's talk about preparing the expert witness.

Ian Ratner: I would love to do that. I enjoy it, and I'm honored to participate.

Dan Small: Thank you, Ian Ratner, CEO of GlassRatner and B. Riley. We really appreciate your time.