As commercial damages consultants, one question we are always asked when meeting with a potential new client is “What are your hourly billing rates?” It is certainly a reasonable inquiry, and we dutifully provide the answer. In many instances, a “go/no go” decision may be reached right then and there, as the client may only view the choice of an expert as a litigation accessory or option. However, such thinking does not allow for an assessment of the benefit side of what is really a value proposition. In this article, we discuss avenues of inquiry that can be explored to identify factors or traits that, along with the cost of retention, can yield a more informed decision.
Skill and Expertise: A consultant’s depth and breadth of skill, expertise, and experience in a particular field can significantly impact the quality and efficiency of their work. It is also important to consider whether the consultant not only satisfies current needs but also can adapt to changes or additional needs as the engagement progresses.
Results and Deliverables: A low hourly rate or budget estimate may seem attractive. However, if the quality of the analyses and resulting testimony is lacking in rigor, support, or persuasiveness, the client may incur additional costs to overcome these shortcomings or may miss out on beneficial financial outcomes entirely.
Efficiency: More experienced consultants often work more efficiently and can complete tasks in less time than less-experienced consultants. This means that even if their hourly rate is higher, the overall cost may be lower because they can either accomplish the same work in less time or they can reduce the risk of going down analytical dead-ends.
Reputation and References: Consider a consultant’s reputation and past performance. If a consultant has a proven track record of success (measured by client outcomes, not “wins”) and positive references, their higher billing rate may be justified by their ability to consistently deliver results that best serve client interests.
Team Dynamics: In many consulting projects, consultants work as part of a team that includes in-house staff (who have day jobs but are also critical allies in providing information and insights), outside counsel, and other subject matter experts. It is important to assess how the consultant will be able to work in a collaborative manner with these different groups of participants.
Long-term Value: If consulting services are likely to be needed in multiple matters, focusing solely on hourly rates can lead to a rotating door of retentions that will require a recycling of time, effort, and cost to bring each new expert “up to speed”. In such situations, a consultant who may have higher rates may provide more effective and efficient service in the long-term by providing continuity – even if the initial engagement includes some “learning curve” time for the consultant to learn about your business and the market in which it operates.
In conclusion, while the hourly billing rate is an important factor when hiring a consultant, it should not be the sole or primary consideration. A more holistic evaluation that takes into account the consultant’s skills, track record, efficiency, collaborative abilities, and the needs of your project is essential for making a well-informed decision.
About the Authors
David J. Ottenbreit is a Director with Chess Consulting LLC. For over 25 years, Mr. Ottenbreit has analyzed business operations and financial conditions, determined appropriate damage theories, as well as addressed claims for lost sales and profits, increased costs, reasonable royalties, diminution of shareholder and business entity value, unjust enrichment, and lost wages and compensation. He also has performed investigations of fraud allegations, including employee embezzlement and government contractor false claims allegations. Mr. Ottenbreit has been retained as an expert in damages analysis in federal and state courts and arbitration. Mr. Ottenbreit earned a Master of Science degree in economics from Baylor University. He also holds professional certifications in business valuation (Certified Valuation Analyst) and fraud examination (Certified Fraud Examiner).
Rodney Bosco is a Director with Chess Consulting LLC. Over the past 40 years, he has conducted economic impact assessments and their underlying causes pursuant to disputes, investigations, business valuations, and regulatory proposals. Measures of economic impact have included profits, cash flow, enterprise and shareholder value, personal and household earnings, royalties, out-of-pocket costs, over- and under-payments, and risk-adjusted present value conversions. Mr. Bosco – whose work has been used to proffer expert testimony in federal and state courts, in arbitrations and before a subcommittee of the U.S. Congress – holds professional certifications in financial forensics, business valuation, and fraud examination.