Taking the Stand
Expert-Witness Testimony Provides Opportunities to Enhance Your Reputation and Earn Fee Income.
Can you swear to tell the commercial real estate truth, the whole truth, and nothing but the truth? Then you might want to consider a fee-income option that many brokers and other industry professionals take on — testifying at legal proceedings as an expert witness.
Expert-witness work not only can provide additional income for industry professionals but also can boost their reputations and enhance their knowledge. “I learn something new every time I testify,” says W. Darrow Fiedler, CCIM, regional director of Keller Williams Realty in Hermosa Beach, Calif.
What Is an Expert?
While many commercial real estate professionals may be able to use their knowledge as expert witnesses, the niche isn't necessarily for everyone.
An expert witness must “have the ability to take a very complicated, academic concept and communicate it in a very simple and direct manner,” says Stan Gniazdowski, CCIM, CRE, president of Realty Concepts in Guilford, Conn., who says he has been in court hundreds of times. “A lot of people can't do that.”
Rule 702 of Federal Rules of Evidence allows for expert-witness testimony. Roughly two-thirds of contested civil cases use experts, estimates Steven Lubet, a law professor at Northwestern University in Chicago and author of Expert Testimony: A Guide for Expert Witnesses and the Lawyers Who Examine Them. About 90 percent of all cases settle, he says, but those cases often use experts as well. In a nutshell, an expert witness “help[s] the fact finder understand the issues in the case,” Lubet explains. “An expert witness is needed whenever there are facts or conclusions that aren't readily apparent to a layperson, often when there is an issue of interpretation, valuation, or estimation.”
Commercial real estate professionals often testify on issues such as valuation, appraisal, bankruptcy, foreclosure, professional practices, and ethics.
Many attorneys hire appraisers as expert witnesses, says Fiedler, who has testified in about 35 cases. However, “I've offered a different option [as a broker]. Because we are active in the marketplace, we know what happens on a day-to-day basis. I think we offer a broader scope.” But Gniazdowski adds that some types of information must come from certified general appraisers. “A person really has to check the laws where they are to see what they can say or can't say,” he says.
And, participation can be challenging, notes Adrian A. Arriaga, CCIM, broker/owner of AAA Real Estate & Investments in McAllen, Texas, who had his first expert-witness experience last fall. “We as Realtors have a tendency to come up with a win-win situation — and attorneys are going to have a win-lose situation,” he says. “I really enjoyed it, although I was not prepared for the brutalness of the questioning during deposition.”
In part for that reason, Robert Knight, CCIM, president of Knight Real Estate in Austin, Texas, says he often has regretted being an expert witness. “There's going to be a lawyer whose job is … to make you look like a fool,” he says. “He will challenge every assumption. Unless you can really nail your answers and support them with hard data, he's going to get you.”
Contracts and Compensation
Commercial real estate professionals willing to take the stand should execute a contract in advance. The contract should spell out how much they will get paid and when, say those who have done it.
Lubet reminds that although contact between the expert witness and the client is made through a lawyer, “The client is the person who is responsible for paying the expert's fee. You have to have confidence that the client is going to pay you.”
Many expert witnesses take a retainer upfront for research and reports and then are paid hourly for testimony. Fees will vary based on experience and local rates, but they often can range from $50 per hour to $350 per hour, sources say.
Potential expert witnesses should determine whether or not their background fits the bill. They'll need the appropriate credentials to be hired in the first place and will be required to defend their experience and expertise during questioning.
Guy Trusty, CCIM, president of Lodging & Hospitality Realty in Miami, who has testified in a number of hospitality-related cases, notes some basic requirements. “You definitely need to be thoroughly knowledgeable about the area that you are professing to be an expert witness in,” he says. “Second, the nature of the work is confrontational, and it takes a personality that is fairly diplomatic but that also can rebut things … without being belligerent.”
Extras that enhance professional work are important too. Publishing and teaching credentials can be good background, Knight says. In addition, “Advanced designations are a must if you really want to have credibility in the courtroom,” Fiedler says.
To find work, some professionals advertise in expert-witness and other legal directories. However, many get work through clients or colleagues and get referrals once they develop a reputation.
Once on board, an expert witness should expect the following general process, Lubet says. In initial meetings, attorneys discuss retention and review documents to explain the issues in the case. Next, expert witnesses conduct research, evaluation, and investigation, depending on the case and their expertise, he says. Sometimes, they are asked to write a report. Depositions are next, and expert witnesses may be included in settlement negotiations, Lubet says. If the case is not settled, the next step is testifying at a bench or jury trial.
Many experts start out as nontestifying consultants, whose conclusions are confidential and usually not subject to discovery by the other side, Lubet says. If an opinion that is unfavorable to the client arises, the expert can be paid and released from further involvement, he says. Otherwise, the expert can go on to testify.
Experts at Work
The following experiences just scratch the surface of the types of work that commercial real estate professionals can offer as expert witnesses.
- One of Trusty's first expert-witness experiences involved a Florida hotel that Hurricane Andrew partially had destroyed. The hotel's payments for its air-rights lease were a percentage of its income. After the owner didn't repair several floors of rooms, Trusty was a witness for the city of Miami discussing what the hotel's potential unearned income was. “It really did stretch us about thinking about things that could have been if there had been no hurricane,” he says.
- A recent case of Knight's involved a dispute between a developer and a city that had refused to approve a zoning change. The developer claimed that it had been damaged by its inability to build a shopping center. The city hired Knight to help quantify damages. “You have to go through this immense amount of research, essentially do a pro forma,” he says of the research phase.
- Fiedler once testified in a bankruptcy case involving the property value of a California shopping center. The debtor had said it was worth about $4 million based on the center's existing rents. However, Fiedler placed the value at $6 million based on area rents and some other information — many of the lessees were relatives of the debtor and rents had been suppressed. “In bankruptcy, especially, there can be things going on that trustees don't see,” he says. “Part of being an expert witness is being a quasi-real estate investigator, which can be a lot of the fun, finding out the relationships between properties, owners, and tenants.”
Both at depositions and in the courtroom, expert witnesses carefully must consider their attitude, demeanor, and speech when testifying.
“Getting up on the stand the first time is very intimidating,” Gniazdowski says. To get started, “One of the things I did early on is, if I had a case, I would get there early and stay late and watch the cases,” to see others' testimony, he says.
Lubet, an expert witness and attorney himself, reminds that each case has two sides. “A witness who walks in thinking, ‘I'm right and no one can question me,' is going to be sadly mistaken,” he says.
Those who have been in the hot seat offer myriad suggestions for successful testimony.
“The most important advice … is to maintain your own integrity,” Lubet says. “The second-most important piece of advice is to listen carefully to the question. Sometimes the questions will have a subtle premise,” he says, and a witness who doesn't listen carefully may give the wrong response.
Others dispense similar advice. “Only answer the question that's asked,” Gniazdowski advises. “Don't volunteer information; you may open up a whole other line of questioning. That's a problem I see all the time: Witnesses either in court or public hearings will go off … on a tangent. They're trying to show how much they know.”
In addition, “Always tell the whole truth and never try to bluff your way out of [a situation],” says Knight, who also is an attorney. “And, tell the lawyer on your side what questions to ask so he gets the answers he wants.”
The worst mistake on the stand is arguing with the lawyer, Lubet says. “An important thing for a witness to understand is after cross-examination there is redirect examination,” he says. “Anything that seems to have been left out or mischaracterized during cross-examination can simply come out during redirect. It's not the witness's job to correct those problems — it's the witness's job to answer those questions.”
Expert witnesses also should heed other general advice that is simple but worth remembering. Look and act professional, Fiedler says, ticking off a list of dos and don'ts. For instance, wear business attire and “be positive, upbeat, and smile,” he says. “Sit up straight. Don't talk too close to the microphone. Keep eye contact with the judge, if you can, or the jury. It's important if you can have rapport with a judge. I've had judges interrupt to ask their own questions.”
And expert witnesses should avoid saying words such as “uh,” Trusty advises. People often don't hear deposition testimony directly, they see it in documents. Thus, the witness shouldn't appear to be searching for words, he says.
Finally, Fiedler warns against testifying too often within too short a time frame. “After too many cases, you start to lose credibility,” he says. “It shows that you're a professional expert witness vs. a working professional and part-time expert witness.”
A Specialty Niche
Commercial real estate professionals also can apply the type of work involved in expert testimony toward other fee-income areas such as public testimony and fiscal impact studies.
While expert-witness work may not be for everyone, it's an opportunity for some to earn fees and enhance their reputations. “It's a specialty niche, because there isn't a huge demand for expert witnesses,” Fiedler says. “But what there is, they definitely want quality.”