What is Economic Consulting?
In a competitive business environment that demands complex forecasting and analysis across a broad spectrum of issues, corporate and governmental leaders frequently rely on economic consultants to provide the expert advice they need to make competent, well-informed decisions. Although, economic consultants do indeed perform traditional economic tasks such as reporting on trends in the market and performing quantitative analysis of economic indicators, the scope of a consultant’s work encompasses a far wider range of issues.
One of the primary arenas for economic consulting is private and public litigation. As society becomes increasingly litigious, corporations and governmental agencies often find themselves embroiled in lawsuits requiring expert testimony in the realms of finance and economic analysis. In such cases, testimony from experts plays a key role in determining the outcome of these complicated, and often technical disputes.
In general, economic consulting firms are founded by academics, usually in the fields of economics and business, who wish to apply their knowledge to real world situations by providing corporations and the public sector with research and advice on matters pertinent to their area of expertise. These small “boutique” firms typically are comprised of only a few individuals -- the academics themselves, who are partners in the venture, along with a person who serves in a clerical capacity.
An example of this might be a professor in economics who specializes in financial securities analysis. With the rise of class action suits involving institutional investors who are bitter over major losses to their portfolios, a plaintiff of this type would seek the counsel of an expert to prove fraud on behalf of the originator of a underperforming security. In this instance, an expert in securities analysis would be able to either create a position supporting the correct valuation of the stock or, conversely, demonstrate through analysis of the asset in question, that the issuer of the security misrepresented the value upon which the underwriting was based. The nature of a consultant’s research in this case, would depend on whether they were being employed by the plaintiff or the defendant.
Larger economic consulting firms employ academic experts full-time as members of their staffs, or in some cases to simply serve in a support function for academics who work on a more independent basis. Since larger firms have access to, and can support a greater number of experts, they have the ability to provide a wider breadth of services to clients. Economic consulting firms of this size will often retain experts in the fields of antitrust, securities, business practices, and damages relating to intellectual properties, healthcare, labor, and technology.
While it is certainly true that many economic consultants are academically trained economists, due to the wide spectrum of litigation and policy issues, experts employed by an economic consulting firm may come from a host of different professional backgrounds. As society grows ever more sophisticated, with the introduction of new products and technologies to the market, the field of economic consulting will continue to burgeon. Demand for quality analysis and research in all aspects of the economy, will be crucial. From pharmaceutical companies at odds with one other over patent infringement, to software developers requiring market analysis to secure venture capital, the expertise provided by economic consultants is critical to the success of all such endeavors.
Like policemen, forensic specialists, medical examiners and psychologists in court, economic consultants are only usually asked to look at the facts related to their expertise in a lawsuit and testify to the accuracy and scope of that information.
No matter which side in a lawsuit hires the consultant, an expert witness should never want to or be required to give his or her opinion on which side is correct or how the case should conclude.
Any sort of perceived bias by experts can hurt the case or cause a mistrial.
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