Of hired guns and ideologues: Why would a law firm ever retain an honest expert witness?

Abstract

Suppose that expert witnesses appearing in litigation are, generically, either honest in their assessment of a fact situation or are advocates who testify in favour of their retaining party, regardless of new information. The type of a witness is known to law firms, who engage with them repeatedly, but not to courts. If the only way an honest witness can credibly reveal their type to a court is by agreeing with some of the position of the opposing party, then the question arises of why a law firm would ever retain an honest expert. We show that it can act as a signalling device in a game between the law firms to communicate private information regarding a party's confidence in winning the case. Our results indicate, inter alia, that the “English” rule of costs allocation can make a socially desirable separating equilibrium less likely, compared to the “American” rule.