Expert Asymmetry: Evidence From Securities Litigation

Modern litigation often involves two separate, extra‐legal features: (1) contingency fee arrangements with the plaintiff‐side attorney, and (2) a “battle of the experts” where the outcome of the case rests on conflicting expert witness testimony. We construct a model to illustrate that when these features occur simultaneously, in contexts where plaintiff‐side attorneys bear the cost of hiring experts upfront, defendants will spend systematically more than plaintiffs on hiring expert witnesses. Our model is motivated by hand‐collected data from a decade of securities class action litigation, where we show that experts polarize into almost entirely plaintiff‐side versus defense‐side experts, that defense‐side experts are more “prestigious” in terms of educational and academic affiliations, and that defense‐side experts are at least 36% more expensive in per‐hour terms. We argue that expert asymmetry could be closed through optimal contracting in certain individual claims, but it is likely a necessary feature of all class actions, such as toxic torts or consumer protection, in an “adversarial” litigation system. This defense‐side advantage therefore provides a newly identified rationale for “inquisitorial” litigation systems, including increased use of court‐appointed experts under Federal Rule of Evidence 706 and state law analogues.