A look back on the past 20 years of PwC’s study and a glimpse of what the future holds for Daubert challenges.
We are pleased to present the 2020 Daubert Study, continuing our annual analysis of Daubert challenges to financial experts. This marks the 20th anniversary of our study, which began after the U.S. Supreme Court’s 1999 ruling in Kumho Tire Co. v. Carmichael. Over the course of our study, we have continued to see an increase in the number of Daubert challenges to financial experts as well as a trend of reliability and relevance being the primary drivers of financial expert exclusions. At this milestone, we wonder what the future holds for Daubert challenges and what the next 20 years of data may show.
In recent years, there have been discussions of whether Federal Rules of Evidence (“FRE”) 702, which outlines the admissibility rules for expert witnesses, should be amended. Amendments under consideration include: (1) adding to the list of admissibility factors a requirement that “the expert does not claim a degree of confidence that is unsupported by a reliable application of the principles and methods” and (2) clarifying that the “sufficiency of basis” and “reliability of application” requirements of FRE 702 are “questions for the court” and must be proved to the court by a preponderance of the evidence.1 The latter point addresses several cases where these requirements were treated as questions of the weight, rather than the admissibility, of evidence.
It will undoubtedly be interesting to see whether these proposed amendments come to pass, and if they do, how those changes will affect the rate and reasons for the exclusion of financial experts in the years to come.
1.October 2019 Meeting Minutes for the Judicial Conference Advisory Committee on Evidence Rules.
In the 20 years of our study, we have analyzed 2,842 financial expert challenges, including 224 financial expert challenges decided during calendar year 2019. We welcome you to download our study’s trends and observations via the link below.
Since the Kumho decision, Daubert challenges to financial experts have continued to increase. In 2000, there were 55 challenges to financial expert witnesses. This number increased to 168 challenges in 2009 and 224 challenges in 2019.
In 2000, 55% of financial experts were excluded or partially excluded from presenting testimony. The exclusion rate fluctuated around 45% in the subsequent years. However, over the last 20 years the proportion of full exclusions has declined, while the proportion of partial exclusions has risen.
Over the course of our study, accountants/CPAs and economists have been the most frequently challenged financial expert types. On average, accountants/CPAs have seen a slightly higher exclusion rate of 45% over the past 20 years compared to a 20-year average exclusion rate of 41% for economists.
“Financial experts frequently face Daubert challenges when providing expert testimony. It is important for Counsel and financial experts to understand the Daubert criteria, as well as the common reasons for expert exclusions, in order to maximize their chances of withstanding a Daubert challenge.”