WASHINGTON - When the government sues, a banker's best friend is not always a lawyer. Rather, the banker's fate may lie in the hands of an expert witness.
These professionals take the stand and explain the context of the case to the jury. Also, they debunk the government's claims, something lawyers can't do because they can't testify, several expert witnesses and lawyers said at recent conference sponsored by Regulatory Watchdog, a group for directors and officers of failed institutions..
"All these things will enhance your ability to get a fair result from the jury," said Thomas A. Myers, a professional expert witness.
But first, a banker and his lawyer must chose the right expert. That's not always easy. The person must be thoroughly knowledgeable about the particular piece of banking law in question. General knowledge doesn't help, experts agreed.
"We've seen that an error at any point in the testimony can destroy the credibility of the witness," said Catherine J. Galley, vice president of Cornerstone Research, a company that helps out the experts.
Bankers should look for experts with large support staffs who can monitor all the developments in the industry.
And the expert must be able to throw the government's case off track. "You should find people who can elevate the battle to a higher level," Ms. Galley said.
These witnesses cost between $100 and $400 an hour, with some charging less for out-of-court time.
Despite the these high costs, the group said bankers should bring experts into the case early on. This can both scare the government into settling as well as give the expert enough time to prepare, said Dan Brumbaugh, another professional witness.
"That's what we attempt to do," he said.
Once the expert takes the stand, he can change the tenor of the trial.
Ms. Galley said the expert can explain industry practices to the jury. For example, an accusation does not look so bad if it can be shown that other banks are doing the same thing, she said.
Experts also can translate regulatory gibberish into English. That means explaining to jurors the distinction between rules and guidelines, or different roles officers and directors play at an institution.
Timothy W. Koch, a banking professor at the University of South Carolina, said he is most successful when he translates terms into concepts jurors deal with every day. In an Oklahoma City trial last summer, that meant comparing a swap to car insurance. In both cases, bankers purchase the product to guard against risk.
"The jury understands that," he said.
Bankers should employ a variety of experts, defense lawyers agreed. A real estate witness can explain how tax policy changes affected the market.
"They can attack the hindsight theory that because this loan failed, it never should have been made," Ms. Galley said. "We need someone who can bring in the hindsight view, who can say how it really was back then."
Additionally, bankers need an expert to counter the government's damage assessment. This person can testify about how outside factors caused the problems, and thus the bankers should not have to pay, she said.
Finally, the banker needs someone who can plow through the loan files, said Ronald Glancz, a partner at Venable, Baetjer, Howard & Civiletti. The expert can show that economic or regulatory changes, rather than underwriting problems, caused the loan losses, he said.
"The guy can say the government is all wet," Mr. Glancz said.
