E & O: What makes a good witness?

The text below is from a talk, entitled "E&O – What makes a good Witness?" delivered by Belinda Schofield, a partner in the CMS Cameron McKenna Insurance and reinsurance group, to the Insurance Institute of London on 23 February 2005.

As a solicitor specialising in professional indemnity work, and particularly professional indemnity in the insurance industry, I am often asked: "What makes a good witness?". Any potential witness faced with the prospect of giving evidence, either in court or to an arbitration panel, is rightly concerned to ensure that his or her performance in the box is credible, and where E & O cases are concerned that they give a professional and competent performance. Some of you may have had experience of giving evidence in court: maybe as a witness to an accident; or in divorce or family proceedings; or in a small claims court. The prospect of being cross-examined as to one's recollection of past events is unsettling. I imagine giving evidence rates quite highly on the stress factor scale; all the more so if the issue is one's own professional conduct and reputation.

So what makes a good witness?

Is it – the wearing of a sombre grey suit? Well, it is certainly not the occasion for the gardening trousers.

Does one have to be well spoken to be a good witness? Speak the Queen's English?

If that were all that was required you would not need a solicitor to be advising you – simply a good tailor and elocution lessons!

What about luck? Is it a game of chance? Does the performance of the witness depend on whether the cross-examiner is Rumpole of the Bailey or some lesser talented or experienced counsel? Luck can play a part – but as with anything it has been my experience that the harder one works the luckier one seems to get.

What about complete recall? Of course, a good witness has to have a degree of recollection of the events to which he can give evidence. But in the absence of any supporting written evidence to corroborate his testimony complete recall of every single event, discussion, conversation relating to a commercial matter would stretch the bounds of credibility. If there are no documents to support a witness's evidence, questions might be asked as to what it was about that particular transaction, one of a number that the person was involved with at the relevant time, that caused him or her to recall the transaction with such an acute and vivid recollection. Moreover, memory can be revived or jogged by reference to the file. A review of relevant correspondence and, in particular, file notes often assists and supports the witness's recollection of past events – which by the time of the trial could be 5, 6 or even many more years after the event.

In short a good witness in an E & O case is one who can speak professionally and cogently to a matter, who has supporting documentary evidence and who is fully and properly prepared.

Today I am going to address what being fully and properly prepared entails and when that preparation should begin. I propose to review the scope of evidence in an E & O case.

• consider what is involved in giving evidence as both a witness of fact and an expert witness
• look at the process of giving evidence in court or before a tribunal as well as the consequences of giving bad evidence.

Because we are talking about E & O cases I thought it would be useful to focus on some of key evidential issues in negligence claims, including the making of attendance notes, records of telephone conversations and emails.

Finally I will leave you with my tips for good practices that can assist in ensuring that if you are ever called upon you can be a good witness.

My message is: the good witness is the competent professional who starts his preparation at the very beginning of each and every transaction he undertakes or is involved in. I am afraid there is no short cut-no magic sombre grey suit that will clothe the witness who is not properly prepared!

Scope of evidence in an E & O case

The question that is posed against a defendant in a professional indemnity case is: has that defendant been negligent or acted in breach of his contract? Has the defendant failed in the way he or she has dealt with the transaction? The evidence before the court will be both documentary-that is all the written evidence - and oral-the witness testimony. The witness giving evidence will speak to the documents, fill in the gaps and add colour. In some cases, significant areas of the case may be wholly dependent upon conflicting oral testimony. The court has to prefer one side's evidence to the other. Whilst judges are usually (not always) polite, in the end, and to quote Colman J, 'Someone has to win; and someone has to lose.'

Nature and scope of his contract with client: all the documentary and oral evidence which goes to establishing what exactly the professional person was asked to do and what he agreed to do for the client.

Duty of care: the evidence will be examined to establish the extent to which the professional person has acted properly and professionally to his client to whom he will owe contractual and tortious duties of care and also to third parties in particular establishing whether or not there has been a holding out by the professional person to a third party that they will undertake something and thus have created a duty of care. Expert evidence is often required to establish what is the standard of conduct by the particular professional at the relevant time

The evidence whether it is written and/or oral will have to establish what was agreed between the parties as to the scope of the work to be undertaken by the professional. In that regard it is very important what was said by whom to whom and when. The FSA may adopt the mantra: if it is not written down it did not happen, but that is not the standard which is applied by the courts. They listen to the all the evidence and it is a question of the weight to which they give it. Unsupported, uncorroborated oral evidence will not however hold as much weight as written evidence. The good witness, therefore, is the one who has the documentary evidence to back him up!

Giving evidence in Court/Arbitration

What is involved for witness of fact in giving evidence to a court or before a tribunal?

The process involves a forensic investigation of the entire transaction. It entails a very detailed review and analysis of the whole matter. That review can take far longer than the actual transaction itself. I was once involved in a trial that latest a whole year in court. We poured over every letter, every draft of every report, every note and heard every witness involved in a transaction that had taken 6 weeks to complete.

In any litigation each party must give what is referred to as standard disclosure. That is disclose all those documents upon which he relies, but also all those documents that adversely affect his own case, or any other party's case, or support another party's case (CPR 31.6). In practice this means all the files relating to any particular matter in dispute in an E & O case, including all attendance notes – even those scruffy jottings and telephone records.

Any witness of fact can only give evidence as to their own knowledge and their involvement. They may therefore play only a small part, and be one piece of the jigsaw. But you will need to understand the whole picture. If you are the person who had the primary involvement in any matter then you will be the person who will have to go through all the correspondence on the file: every letter, every fax, every email (more of which later) and every file note.

The existence of attendance notes can support the evidence of the witness, providing an aide memoire of the discussion, if not a detailed note of the discussion, recording the attendees and the topics discussed. A note of a telephone call can, and often does assist. Telephone records may also be produced. The assertion that the witness had a telephone conversation when Mr Client was told that his insurance contract would not incept until the 4th of May, rather than as he had requested the end of April, could be verified by attendance note. The telephone records will show whether such a call was placed from the witness' phone to Mr Client's number and for how long that call lasted. Other parties can ask for disclosure of all telephone records – both of landlines and mobile phones if the very occurrence of the call is in question.

Diary entries are often asked for – it has even been known for passports to be produced.

I have frequently been asked if emails and faxes (although the latter less so now) are 'legal' or admissible. The answer is: yes. The only records that are not legally admissible are those created in breach of the Regulation of Investigatory Powers Act 2000. In brief, this renders inadmissible taped conversations where the monitoring or recording of a telecommunication is obtained without the consent of the sender or recipient of the communication.

Indeed, whilst the standard disclosure under the current CPR may be less broad than the previous rules, it is still broadly all documents that are relevant to the issues in the matter that will be disclosable. The witness can be supported by these documents, or can be tripped up! The good witness therefore ensures that the file contains all the necessary documents to support him in the event of any claim, and includes all correspondence and file and attendance notes. He also familiarises himself with the entirety of the file before he gives evidence.

The exception is privileged materials, that is either communications between a client and his solicitor, or communications between a solicitor and a third party, or other documents which have been created with the dominant purpose of seeking legal advice when litigation is either in existence or clearly in contemplation.

Other materials

A witness should be prepared for the fact that other material extraneous to the file can be produced.

Publicity material or websites: how many people are familiar with their company's own publicity material or website? If there is a claim that you will always submit reports or provide responses to a client within 24 hours, any failure to do so will be put to a witness as being contrary to the standards that the company has set itself. Similarly, procedures or risk management manuals may be referred to a witness – any deviation from those procedures will be alleged to be tantamount to a failure on the part of the professional person. Training programmes may be referred to in an attempt to establish that the professional was properly or adequately trained for the task in question.

Most importantly professional guidelines will be referred to. The FSA ICOB Rules applicable to brokers and underwriters in the market, together with the relevant Integrated or Interim Prudential Sourcebook are likely to be referred to. If there has been a breach of these regulatory provisions or rules, it will be submitted that the breach is tantamount to a failure on the part of the professional, and an act of negligence.

The market should note that the FSA consider that their rules and prudential sourcebooks apply in addition and on top of the Lloyd's relevant byelaws. So the Lloyd's byelaws are still relevant to practitioners in this market.

The Court process

Before the parties even get to the courtroom the witness will provide his or her evidence in chief. In a commercial matter the witness statements are exchanged with those of the other side several weeks prior to the hearing. Thus opportunity is afforded for supplemental statements that respond to the other side's witness statements or to late disclosed documents.

When the witness is called to give evidence he or she goes into the witness box. This can be a desk, or table, particularly if the hearing is before an arbitration tribunal, or an elevated pulpit. The witness is then sworn in. Holding the relevant holy book the witness repeats the following form of words:

"I swear by almighty God that the evidence I shall give shall be the truth the whole truth and nothing but the truth"

Alternatively, a witness can affirm the truth of his/her evidence. The purpose is not merely to strike the fear of God, but to emphasise to the witness the seriousness and gravity of the situation, more of which below.

The witness is then asked by his counsel – that is friendly fire – to confirm who he/she is and that his/her statement is true. Then without further ado he/she is handed over to the opposition for cross-examination.

The emphasis is on examination. Beware entrapment – the whole purpose is to get the witness to concede critical facts. They are not going to be easy questions: Were you negligent? Did you fail in your duty? The questioner will refer to written materials, not necessarily in chronological order. It is for this reason that the witness needs to ensure that not only was the statement that he/she prepared and submitted earlier one which was made after the witness had considered all the disclosed documents, but also that when giving evidence he/she is familiar with the trial bundles. This is not the time to get flummoxed trying to find the particular document your hostile cross-examiner is referring to.

Simultaneous transcripts of the oral evidence may be taken. This can be distracting. Not only are you being asked a fairly detailed question from your hostile examiner referring you to one or even two pages of documentation, but just to your right is a pc screen upon which appears, after the shortest of delays, the words that learned counsel is speaking to you. Worst still your own words then appear verbatim after a lapse of only 5 or so seconds. The transcript has its uses – the question can be re-read to you. It also means that the cross-examiner does not have to rely upon his notes of what you have said – they are there in all their glory before him.

Once a witness has started giving evidence there is no conferring – no "phoning a friend" or "asking the audience". A witness cannot confer with his or her own legal adviser. A witness is not allowed to discuss his/her evidence with anyone, even if the witness is giving evidence over several days. The witness is on his/her own.

And the consequences for not telling the truth – perjury: see Lord Archer (need I say more?).

Perhaps the most significant risk to the professional is reputation. Whilst many professionals accused of negligence initially consider that they would welcome the opportunity to "clear their name", the truth is that one's reputation is more exposed in the process of cross-examination than at any other time. The whole purpose of cross-examination will be to undermine that reputation, even if it is only in respect of that one transaction.

Can the reluctant witness avoid being called to give evidence? It is possible to obtain a witness order (or as it used to be referred to, a subpoena). If a witness does not co-operate with his former employers for example, he may consider that he has successfully avoided being called as a witness. The witness' former employer or the other side may, however, be prepared to take the risk of hearing what he has got to say!

Expert witness

In professional indemnity claims there is more often than not a need for the court to seek assistance from experts on the question of the general practice of members of the defendant's profession at a particular time. The parties each call their own expert and if they do not agree there will be competing views as to what is the relevant standard of care.

In law, the standard of care of any member of a profession is the conduct which one would reasonably expect from ordinary members of that profession, that is the reasonably competent and well-informed member of the expected profession (Saif Ali v Sydney Mitchell (1980)). The expert will be called to say what that expected level of conduct would be at the time and in the circumstances, and opine on whether the defendant met that standard.

But take heed, for those people who set themselves at the forefront of their profession at the cutting edge will be expected to jump the high hurdles which they set (NRG v Bacon Woodrow (1997))

For any of you contemplating the role of an expert witness, whilst I would not wish to deter, and indeed would always encourage market practitioners to do so, the following may explain why the role can be just as difficult as that of the witness of fact. It also shows that expert witnesses are subject to different rules from witnesses of fact.

The relevant court procedural rule (CPR 35.3- which sets out the rule in Ikarian Reefer (1993)) provides that the expert witness has an overriding duty to the court. The expert has to provide evidence that is independent, that is uninfluenced by the pressures of litigation or indeed the parties to the litigation. Despite the inevitable pressures from the party instructing the expert to support their case, the expert's evidence must be objective. He/she must provide unbiased opinions that fall within his expertise. He/she must include both the good points and the bad points in his/her evidence.

Most importantly he/she is not a hired gun. The consequences of an expert acting as such, that is, simply giving evidence in favour of the payer of his fees, are serious. The court has considered that it has the power to order costs against the expert. (Phillips v Symes (2004)). In one particular case it was ruled that the expert should pay the costs, where but for his ludicrously biased opinion the action would not have been brought. In one other case the judge was so incensed by the outrageously biased opinion of an expert that he recommended the expert be reported to his governing institute and disciplinary proceedings be instituted against him. That put an end to that career as an expert. (Jacobs J in Pearce v Ove Arup Partnership (2001)).

Key evidential issues in E & O cases

I referred earlier to the scope of the evidence in an E & O case and I just want to quickly refer to a number of issues in a little more detail.

The scope of the retainer is often at the heart of a dispute. The parties will be seeking to establish what the professional person undertook to do. The claimant will contend for the broadest possible case; the defendant will seek to limit the scope of its duties. The evidence, both written and oral, will go to what the professional was asked to do, what they volunteered to do, and what a professional would be expected to do as a matter of market practice. There may have been changes in the instructions as the matter progressed or there may be shared responsibility with others, for example clients or co-professionals in any project.

Let me put this into the context of the insurance market: let us take the case of a broker who receives a call from a client. A later dispute may arise as to whether that broker was merely asked to quote for insurance, or whether he was asked to place insurance. Or, was held in Johnson & Higgins v Aneco (2002), he may have agreed to advise the reinsured on the availability and state of the relevant reinsurance market.

The underwriter may have agreed to act as the leading underwriter in respect of a facility, but what evidence is there to determine the precise scope of his authority on behalf of the following market?

The difficulty for any witness giving evidence will be where these matters are not recorded in writing. Is the evidence in respect of the scope of retainer (i.e. what the professional was asked to do) written and recorded in a letter of retainer or set out in a standard TOBA? Is there written evidence that the terms and scope of retainer were agreed in letters or emails (more of which later)? Or were the terms the subject of discussion and oral agreement. How can the witness be absolutely sure of his recollection in any such discussion, and how can the witness establish that his recollection of events is correct?

I cannot emphasise enough the need for attendance notes.

More evidential issues – how was the contract performed?

Having established what the professional agreed to do, the next question to which evidence is called is whether the professional carried out his job properly and in a non-negligent manner. This leads on to the importance of attendance notes in order that a witness has written evidence supporting this testimony. It is important for the file that will be the basis upon which any witness is relying that it contains attendance notes – they do not have to be detailed verbatim but cryptic jottings can help and assist as memory joggers. Notes of all meetings whether external or even internal. You will not be in an adverse position with your own internal people – but a note of such discussions can corroborate external discussions.

Similarly telephone conversations – not only of those that you have sitting at your desk – but what about all the telephone conversations on the mobile while you are walking to and from meetings. How many of those manage to keep notes of those conversations and how many of us are using our mobiles to ensure that we keep immediate communication with our clients?

The key with attendance notes is that they are as far as possible contemporaneous, that is that they are prepared as close as possible to the time of the actual conversation. If you are in a meeting, notes taking during the course of the meetings are the best. An opposing solicitor may look suspiciously at any apparently self-serving note, whether or not a note created well after the event and has been post dated. Getting such a disclosure from a witness in the box seriously undermines their credibility. It has been my experience that where two parties to a conversation each create their own contemporaneous notes of that conversation, they do not disagree in respect of any material aspect. Such notes created at a later date, when a dispute has emerged bear the hallmarks of being biased to the author's then view and argument.

Other factors to watch are where there have been amendments made to the note. If there is more than one copy of a particular note have the same amendments been made to each. Do such amendments undermine the claim that the note is contemporaneous?

Remember amendments made on Word can sometimes be tracked, disclosing when the changes were made and by whom.

Emails

Just a few words of warning about emails. When are they received? Have they been received in fact? Just because they have been sent from one outbox have they been actually received in the inbox of the recipient or are they stuck in the server. Interrogation of headers of emails can show the timing of transmission and receipt from the servers – but this can be distorted if the timing mechanism on either server is incorrectly set or amended.

Perhaps the more difficult thing for a witness to explain is jargon or colloquialisms that have been used in emails. We all tend to use email in a very informal way. Responding immediately, not giving an email the same attention that we would give to a letter.

That risqué joke: "I'll only write this if I can have dinner with that blonde lap dancer!" may have seemed just harmless fun at the time – but can cause a considerable amount of embarrassment to the witness when asked to explain exactly what was meant.

Emails are often more widely circulated than other documents, which that can spread the net for potential witnesses even wider. If you are on a circulation list of a document there must be a reason: was it intended that you would peer review these documents what was your responsibility etc.?

Emails can be amended by the recipient in their inbox. It is therefore important that emails are retained and there is proper retention and filing: either there are e-files or hard copies are retained. Certain IT specialists claim that they can retrieve anything from a server. Simply deleting and even emptying your trash box does not destroy the evidence – at least so I am told!

E & O in the insurance market

The following two slides list out areas where underwriters and brokers can find their conduct as professionals being questioned and are areas of potential e&o exposure. Thus these are areas where any witness would want to ensure that they had good files with supporting written evidence.

For both the underwriter and the broker the time of acceptance of the risk is an area where lack of evidence and/or conflicting oral evidence can be an issue, and difficulties can arise in establishing exactly what was presented to the underwriter.

Placement packages on complex risks can be enormous. Has the underwriter been able to read all the material information provided to him? Has all the material information been identified? Has a note been made of the oral presentation? Does the oral presentation supplement the written presentation? Did the underwriter rely on that oral presentation?

It is the duty of the broker to ensure that a fair presentation of the risk is made. In modern times the problem for a broker is often editing the wealth of information that has been provided and ensuring that all material information is put to the underwriter. The broker must ensure that the Insured has provided all the material information. Has the most up to date information been provided? What evidence is there that the broker asked the Insured for all the relevant information?

If the broker made an oral presentation of the risk, where are the notes to establish what was or what was not said? This is an area that is often the subject of conflicting oral evidence, where broker and underwriter compete to convince the court that their recollection is to be believed over the other's.

A second area of concern to both underwriter and broker is that of clarification of the terms of the insurance agreed. If the wording is unclear then evidence will be required as to what the parties each understood was being agreed at the time. A leader may have obligations to the following market to ensure that the wording matches the slip or reflects the risk agreed by underwriters (see judicial dicta in Barlee Marine Corpn. v Trevor Rex Mountain (The "Leegas") (1987), Roadworks (1952) Ltd v Charman (1994) and Roar Marine Ltd. & Others v Bimeh Iran Insurance Co. (1998)). Brokers have obligations to their clients to ensure that the policy wording properly reflects what has been agreed and that the wording meets the client's requirements. Ambiguity leads to the witness having to attempt to explain what was meant and attest to the meaning of shorthand and hieroglyphics.

Finally

It is no wonder that in the light of the scope of the forensic investigation in any E & O case the majority do not end up in court and a significant proportion of all E & O claims settle either by negotiations between the parties or through mediation.

Beware the litigant who is determined that he wants his day in court. Such emotional sentiment will be lost on the commercial dispassionate judicial or arbitral panel who will look at the hard facts of the evidence. They will weigh whose evidence is on the balance of probabilities to be believed. They will measure the defendant professional's conduct against the standard of the reasonably well-informed member of his/her profession, relying upon the evidence of the independent expert.

Whilst it is acknowledged that there is no such thing as the perfect file (or at least one sees such a file very rarely) there is the well-maintained professional file that ensures that a witness can give his evidence with confidence.

Tips and guidelines

So, the tips and guidelines for being a good witness all stem from ensuring that good practices are adopted right from the beginning of any instruction. The good witness will be supported by written evidence so he or she is not wholly dependent upon the foibles of his or her own memory.

That means the creation, filing and retaining of all communications, including all faxes, all emails both incoming and outgoing. Communications should be easily understood – no jargon. The creation of file notes showing what documents were shown or seen by whom and when.

The making of attendance notes of all meetings – internal and external – and of telephone calls. Cryptic jottings at the very least, please, and I say this on behalf of all putative witnesses…and that could be you!

Clarity in the terms of engagement agreed. The witness needs to know what he agreed to do.

The file should set out what has been done. Policies should be issued with wordings agreed in clear unequivocal terms.

The key thing to be a good witness is to be prepared. That preparation starts at the beginning of a retainer and means ensuring that there is a well-documented file to support their oral testimony.

So in just two words: how to be a good witness: BE PREPARED!

Belinda Schofield is one of the senior partners in CMS Cameron McKenna's Insurance and Reinsurance group and has nearly 25 years' experience of working for the insurance market. She handles both domestic and international insurance and reinsurance litigation and non-contentious insurance matters, and specialises in professional indemnity particularly for brokers, solicitors, accountants and actuaries as well as banks and financial institutions. Her portfolio of work also covers directors' and officers' liability, political risks and property insurance. Belinda was involved in the development of our risk management product 'RISKaware' to help major clients manage their risks: this programme won The Lawyer's Client Care Award in 2002. Belinda is recognised in the Chambers & Partners directory as a leader in her field.