Fighting over talent
Expert witnesses have a problem the moment they step foot into a courtroom. They try to radiate integrity and the kind of honesty that comes with an intellectual devotion to their chosen field. But everyone knows they are on the stand to collect a check.
Two companies that make a lot of money supplying experts for hire, CRA International Inc. of Boston and ERS Group , have gotten into their own legal dispute. In one version of the story, ERS complained that CRA had done it grievous harm and promised to sue the Boston company to make things right in a case that boils down to talent poaching that allegedly went over the line.
But it also suggested one way CRA could make the whole problem disappear: writing a check for $22.5 million.
In its own lawsuit, CRA interprets the communication as a threat. I would have described it as a shakedown, if the facts described on paper are true. But I'm no expert.
CRA, a public company that used to be called Charles River Associates, makes a lot of money in the expert business. It earned more than $27 million on $350 million of revenue in its last fiscal year.
The company divides its business into three parts: finance advice, business consulting, and "litigation and applied economics." That last leg provides expert testimony and other litigation support for clients on subjects like antitrust and intellectual property.
Since November 2004, CRA has purchased five smaller companies. Over the past four years, its earnings have more than tripled. Call it growing by buying.
ERS, which is sometimes known as Economic Research Services Inc., is in a very different situation. It is owned by a Texas company called Sourcecorp Inc., which itself was purchased in a leveraged buyout by Apollo Management Inc. last year.
CRA says Apollo had no use for ERS and put it up for sale as soon as the deal for the parent firm closed. No company that counts people as its principal asset wants to go on the block. Professionals tend to run out of the building as if it's on fire.
And some ERS people ran into the open arms of CRA. Court papers identify 18 of them.
CRA says a law firm representing ERS first wrote to it on May 22, raising claims about at least two of the people involved. By June 19, the same firm allegedly told CRA it would pursue claims "resulting from CRA's campaign to raid the talent, goodwill, and confidential business information" of ERS and suggested the go-away dollar figure. CRA sued in Suffolk Superior Court the next week, seeking a judgment that it did nothing wrong. Neither side wanted to talk to me yesterday.
As with most lawsuits, some of the most interesting questions remain to be asked.
For one, why did ERS complain to CRA when it did? Perhaps it had something to do with press releases issued in April and May promoting the hiring of new talent that had recently left ERS for CRA.
Here's another: If CRA was buying companies and ERS was for sale, did some kind of deal fizzle before employees were recruited from one firm to the other?
The ERS threats look like a legal strategy to a business problem. Consulting companies fight over talent all the time, but rarely sue each other because the professional people are closely connected with clients, and no company wants to drag clients into a lawsuit.
Surely, this case will disappear quietly in time, and that's too bad. Just imagine all the expert witnesses who could take the stand, with their money issues front and center this time.
