Experts and their reports can be an expensive, but necessary, element to many types of cases. This is particularly true in divorce cases, whether they are personal or business divorces. In all cases, it is incumbent on the attorney, client, and expert to all have the same understanding of the scope of the work and expectations on expense. Sometimes, it is not possible to absolutely predict how much litigation will cost or account for every variable or obstacle to a project. Consequently, the costs of a case or preparation of an expert report can exceed the expectations of a client.
A recent Superior Court case dealing with an insurance report highlights the problem created by different understandings and expectations between an attorney and the expert he hired on behalf of his clients. More pointedly, it reaffirms the concept that the engagement letter between an attorney and expert (or client and expert) is an enforceable contract and that an oral estimate of costs will not serve to modify or supersede it.
In the case of MCMP v. Gelman, attorney Bruce Gelman hired Marsico Construction Services and their principal, Louis S. Marsico, to provide expert testimony and a report for an insurance coverage dispute Gelman’s clients had with their homeowner’s insurance carrier. Marsico provided the report, which was submitted by Gelman to opposing counsel and the insurance company. However, when Marsico provided his invoice to Gelman, it had costs totaling about $30,000.00 – considerably above Gelman’s expectation based on Marsico’s rough estimate of the cost being between $7,500.00 to $10,000.00. Gelman refused to pay the cost and Marsico demanded that he not use the report in the insurance coverage dispute or at trial. Though not noted in the case, the report is considered hearsay unless otherwise stipulated to and if Marsico refused to testify, Gelman would have been unable to move the report into evidence. Once barred from using the report further, Gelman would later claim that by not having a report, the case settled for less than it could have.
Gelman’s appeal tried to assert that the oral estimate provided by Marsico constituted an enforceable, orally accepted express contract term between Gelman and Marsico’s company. The lynchpin of the case, however, is the engagement letter: Gelman agreed to pay Marsico an hourly rate and Marsico was awarded $20,000.00 after a two-day bench trial for breach of contract.
On appeal, the Superior Court rejected Gelman’s arguments and found that the hourly rate engagement was valid and that the estimate provided by Marsico was “off the cuff” and not an express contract term. That point was particularly true since a written engagement letter with specific terms for the firm’s consulting services followed the oral estimate.
The takeaway from the case applies to clients and attorneys: understand the terms of your engagement letter for professional services. Review them and ask questions about any term you do not understand. Addressing a misunderstanding on the precipice of trial leaves you with few options and may severely prejudice the client (another issue altogether). As seen in this case, the courts will not step in to fix your error or accept a modification to the contract that does not strictly conform the Pennsylvania law on express and oral contracts. You do not want to find yourself paying for a report that only collect dusts in the file.