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 vs. 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.