The director as expert witness: here is what a corporate director needs to know about becoming an expert witness. There are benefits--and perils--for those who want to take on this role.

AuthorTenenbaum, Marvin
PositionDIRECTOR ROLES

WHILE LEGISLATION such as Sarbanes--Oxley has intensified the focus on corporate governance practices, it has also made many of the very people responsible for overseeing them--corporate directors--experts on these very practices. As a result, directors are sometimes called to testify as expert witnesses in disputes on alleged lapses in governance. And, perhaps because being an expert witness can be intellectually and financially rewarding while also providing a public service to the judicial system, more sitting and former directors are thinking about becoming expert witnesses.

But while the desire to serve as an expert witness can be strong, a director must first learn what he or she will be getting into. There are benefits and perils. Specifically, as a potential expert witness you must learn how to avoid certain risks, prepare for an appearance in court, get word out that you are available to serve, and even know what compensation you can ask for and expect. The learning process is not insurmountable, but without going through it properly, the career of a director as an expert witness may be short-lived.

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Caveat director

A director who is considering becoming an expert witness needs to know of and understand the reputational risk involved. Most people do not realize that the inquiry process for an expert is exceptionally rigorous. For example, when testifying on corporate governance practices, a director will probably be asked about those practices at his or her company. The question might be, "Does your company's board do A, B, C, and D?" If it does not, then the director could have a credibility problem if his opinions are inconsistent with what his company does or has done in practice.

Under no circumstances should a director give the impression that he or she will say whatever needs to be said to make a client "happy." Some potential experts believe that the easy way to be hired as an expert is to do, and say, what they think the client wants. But if you will say anything to make the client happy, you may find that your career as an expert witness will be over before it has barely begun. You must be independent, objective, and able to tell lawyers that you do not agree with the way they are approaching a case. If you can't do that, you are saying that the lawyers, not you, are the expert.

Absolutely and always check for conflicts. Will the work that you will do in any way conflict with the business that you are...

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