Engagement Letters for Litigation

Litigation assignments are not the same as other appraisal assignments, and it's better to have your understanding with a client and / or the attorney spelled out in detail.  Otherwise you may spend many more hours than you originally anticipated trying to get an assignment successfully completed.

All of my engagement letters spell out; my business information, the clients name, property identification, the interest to be appraised, date of value, turnaround time and the appraisal fee.  If there are multiple dates of value, extraordinary assumptions or hypothetical conditions those facts are also discussed. 

Litigation engagement letters go farther, they often spell out the hourly rate to be paid by the client for; additional consulting, depositions and court testimony.  Appraiser's usually charge for the entire time they spend at the courthouse regardless of whether they are actually testifying or not.  They may spend hours "riding the bench" or waiting to be called to testify.  What clients who complain about their bills need to understand is that you could have been working during those hours on something else. 

I have asked clients who have trouble writing the pre-trial check "would I take hours to review my work file, travel 30 miles to get here, dress in a suit, pay for parking, go through the metal detectors and sit in an uncomfortable waiting area without reasonable compensation?"  When you get to the courthouse however the attorney and the client usually say hello, maybe shake your hand, and then almost without exception they will disappear and act like they forgot who you are.  Your agreement stated unequivocally that payment for trials must be made in advance, but no one remembers that provision when you get there. 

You would think that if you brought attention to the fact that payment for your services are due and payable in advance that clients / attorneys would just pay you, but I have had attorneys tell me "we have the check in hand and we will give it to you after you testify."  It's a tough spot, if you accept the attorney or clients arm twisting you are basically accepting a contingent fee arrangement.  If you don't act on the spot to refuse services the court officer will be walking you up to the witness stand.  It's one of those "just say no" situations.

If you can find a way to strengthen the contract language in the engagement letter as it relates to payment for preparation and testimony pre-trial then I would use it, but in the end you will likely have to have the courage to demand the payment if you want to comply with USPAP and not get on the stand under threat of non-payment.

Garrett J Steele, ASA, MRICS, BAE at gsteele07@gmail.com is an experienced Michigan Certified General Appraiser specializing in commercial real estate appraisals in Charlevoix, Crawford, Genesee, Lapeer, Livingston, Macomb, Oakland, Roscommon, Washtenaw and Wayne County.  His Internet website is http://www.horizonappraisals.com

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