Trust me – I’m an expert
Jinfo Blog

4th August 2008

By Tim Buckley Owen

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It really doesn’t seem like a good time to be an expert. There’s a suggestion that securities analysts may get it right by simply blowing with the wind; a law firm has been assessing the chances of suing the rating agencies; and a judge has said that you don’t need expert witnesses in trademark cases. ‘Ten years ago it was easy to make your name as a securities analyst,’ the Economist’s Buttonwood column announced. ‘Take a technology stock, think of a number, double it and then announce that as your price target.’ ‘Nowadays you establish your reputation by being as gloomy as possible,’ the article continues http://digbig.com/4xgrk. It’s all good knock-about stuff – but Buttonwood does make one particularly serious point. One constraint on analysts in the 1990s was the need to keep corporate clients sweet, the writer explains. Since then, reforms introduced by Eliot Spitzer, then attorney-general of New York State, may have done something to make analysts more independent. Broadly similar issues of conflict of interest have now emerged again in the furore over the rating agencies’ scoring of mortgage-backed securities products. In a briefing available through the Mondaq professional advice service http://www.mondaq.com/friend.asp?ef=46906 (registration required), Simon Cooper and Gawaine Batchelor of the international law firm Barlow Lyde & Gilbert have been assessing the chances of successfully suing them. To be honest, their prognosis isn’t too encouraging; you’d need to establish a duty of care, prove a breach and show that you relied on the rating in deciding to invest. After that, there’d be arguments about what loss fell within the scope of the agent’s duty, with the agency saying that it shouldn’t be held responsible for all the investor's loss, which is a consequence of the collapse of the market. Concluding a bad week for experts, the Out-Law newsletter from another law firm, Pinsent Masons, http://www.out-law.com/default.aspx?page=9314 has reported an Appeal Court ruling that you don’t need expert evidence when it comes to deciding if a consumer will be confused by two supposedly similar trademarks. The hearing officer at the UK Intellectual Property Office should be perfectly capable of using their own judgment in such cases – and if they aren’t, then the evidence should come from consumer surveys, not from experts. It’s that ‘wisdom of crowds’ again, and it must all be leaving information intermediaries wondering where they stand when it comes to vouching for their answers – particularly when these incorporate expert opinions on which executives will expect to be able to act. In these three quite different examples, there don’t seem to be any easy answers. Has the time come for information managers to start thinking about caveats, disclaimers and exclusion clauses in the answers they provide?

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