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The Pitfalls of Preparing a Lay Witness for Trial

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Though not ascertainable at many bankruptcy hearings, the Federal Rules of Evidence apply "in cases under the Code." See Fed. R. Bankr. P. 9017; see, also, Fed. R. Evid. 1101(a). Nonetheless, making an evidentiary record is vital so that, in the event of a subsequent appeal, a record exists of the evidence upon which the lower court based its findings and conclusions. See, e.g., Smith v. Associates Commercial Corp. (In re Clark Pipe and Supply Co. Inc.), 893 F.2d 693 (5th Cir. 1990) (holding that the court had a basis for review because the record contained evidence upon which the lower court based its findings); Mazzeo v. Lenhart (In re Mazzeo), 167 F.3d 139 (2d Cir. 1999) (holding that the bankruptcy court gave insufficient support for its lifting of the stay requiring reversal and remand).

Thus, a bankruptcy practitioner needs the skills of both a business lawyer and a trial lawyer, especially in preparing witnesses for their forthcoming testimony. Preparation of a witness is a case-by-case task, as personalities, experience and confidence levels vary. And although there are many published articles on the preparation of expert witnesses, few place the same emphasis on preparing a lay witness.

Things to Consider in Effective Witness Preparation

There is no complete checklist that directs the preparation of a witness for trial. The potential variations in people and their experiences, as well as the nature of the legal proceedings themselves, require a case-specific determination of the best method of witness preparation. There are, however, some universal guidelines. Though not necessarily complete, the following guidelines will assist you in preparing a lay witness to testify.

Know What Witnesses You Need

As simple as it sounds, the first step in preparing a witness for trial is to determine which witnesses are necessary. To determine which witnesses are necessary, one must analyze what evidence is necessary to support/oppose the requested relief. For example, to establish that an alleged preferential payment was made in the ordinary course, a preference defendant has the burden of proving that the alleged preferential payment was (a) the payment of debt incurred in the ordinary course of business; (b) made in the ordinary course of financial affairs between the debtor and the defendant; and (c) made according to ordinary business terms. See 11 U.S.C. §547(c)(2).

It is not the job of the witness to correct poorly phrased questions, as that is the job of the lawyer. Nor should a witness try to outmaneuver the lawyer through cleverly answered testimony.

Therefore, a preference defendant asserting the ordinary-course defense needs a witness to testify about the reason the payment was made, a witness to testify as to the debtor and defendant's historical financial affairs, and a witness that can testify as to typical payment terms in the specific industry. See Lawson v. Ford Motor Co. (In re Roblin Indus. Inc.), 78 F.3d 20 (2d Cir. 1996). Sometimes this is the same person, but not always. In fact, the preference defendant may need three witnesses to meet §547(c)(2)'s burden as the debtor's accounts payable employee, for example, may have no knowledge as to industry terms or the basis for the alleged preferential payment. See Fed. R. Evid. 602.

Another example is when a debtor attempts to establish that its proposed reorganization plan satisfies the fair and equitable requirements of 11 U.S.C. §1129(b)(2). To prove that the proposed reorganization plan is fair and equitable, the debtor must prove that both the principal amount to be paid and the applicable interest rate are fair and equitable. See 11 U.S.C. §1129(b)(2). Because the court must determine what the fair market rate of interest is under the circumstances, the debtor needs a witness who can competently testify as to the applicable market and as to fairness under the circumstances. See Great Western Bank v. Sierra Woods Group, 953 F.2d 1174 (9th Cir. 1992).

The debtor, therefore, may very well need an expert instead of relying on its CEO, who may not have financial knowledge of the applicable market. See Fed. R. Evid. 602, 701 and 702. Once counsel determines the witnesses necessary to meet the applicable burden or rebut an opponent's burden, one must prepare each individual witness.

Know Why You Need the Particular Witness

After witness selection is complete, stay focused on the matters about which each witness will testify. If an expert will testify as to interest rates, examining other witnesses on interest rates is not necessary. Instead, limit direct examination to background facts and the particular matters for which that witness has personal knowledge. See Fed. R. Evid. 602. Then, pass the witness.

Further, understand the source of the testimony. Did the witness have a conversation with the lender, or did someone else relay a message about a conversation with the lender? The former may not constitute hearsay because, when the lender is an objecting party, it is an admission of a party opponent. See Fed. R. Evid. 801(d)(2). However, the latter contains hearsay within hearsay, which may prevent the admission of such evidence. See Fed. R. Evid. 805.

If a particular witness is not necessary, do not call him or her to the stand. As most bankruptcy practitioners are aware, many judges will limit the amount of time to present evidence.

Know the Witness

It is important to know the background and education of the witness. For example, is the witness likely to be brow-beaten by opposing counsel? Or is the witness hot-tempered and likely to erupt on cross-exam? Has the witness ever testified before?

If, for example, a witness is arrogant, he/she may attempt to outsmart opposing counsel on cross-examination. Such tactics never prove successful and are usually quite apparent. Knowing the witness makes controlling the witness much easier.

Also, know the witness's background. He may claim to have experience in the automotive accounting industry. Was that as CFO of Ford or as a bookkeeper at his father's Exxon station? Don't find out at trial when opposing counsel objects to the star witness's competency.

Know the Audience

Although rare, jury trials do occur in the bankruptcy arena. Obviously, the evidentiary issues arising from a jury trial differ vastly from those arising from a bench trial and are outside the scope of this article.

Even when the judge is the finder of fact, knowing the audience remains important. Indeed, judges can have quite diverse backgrounds. Some were scientists before becoming judges, some have significant oil and gas experience and knowledge, some have very little experience as a judge, and some have been on the bench many years.

Woodshed Your Witness

The best method of finding out how a witness will testify, and exactly what he/she will say, is a good, old-fashioned woodshed session—essentially, talking to the witness alone€so that the witness's attention is focused on trial preparation. Particularly if the testimony is lengthy, draft a script of questions. Send the script to the witness ahead of a woodshedding session and have the witness consider the answers.

Keep in mind that, when creating a draft script, it is important not to draft the answers to the questions because, if the witness takes the script to the stand, opposing counsel is entitled to see it. See Fed. R. Evid. 612. Further, if opposing counsel asks the witness if anyone influenced their testimony, or otherwise told them what to say, the results could be quite unfortunate.

The following are points to review prior to the witness taking the stand:

A. Testimony is not a conversation. Testifying at a hearing/trial is a formal, legal proceeding. The witness is there to make the trier of fact and the opponent understand the position taken and the factual basis for it.
B. Think before you answer. Make sure you understand the question. Do not tell the trier of fact what you think he/she wants to hear. Just answer the question asked.
C. Never guess. When one guesses, one may guess the incorrect answer. Instead, if the answer to the question is not known, the proper response is "I don't know." Further, if the question is not clear, say so and ask for a clarification.
D. Make eye contact with the attorney asking the questions.
E. Do not get angry. Becoming angry sometimes will make you reveal too much information and also might send the wrong message to the judge.
F. When your attorney objects, you should stop talking in order to allow the judge to rule on the objection. After all, some questions are improper and should not be answered.
Then, have a trial run of the witness's testimony. Make sure the witness understands the questions, and pay attention to and understand the answers.

Woodshedding a witness requires not only time and effort on direct exam, but on cross-exam as well. Yes or no questions dictate yes or no answers. It is not the job of the witness to correct poorly phrased questions, as that is the job of the lawyer. Nor should a witness try to outmaneuver the lawyer through cleverly answered testimony. Again, it is the lawyer's job to correct testimony and outmaneuver the opponent through re-direct.

Know the Rules of Evidence

Occasionally, key evidence comes from hearsay testimony. Whether such hearsay testimony supports the case-in-chief, or the hearsay testimony is the smoking gun that devastates an opponent on cross, sometimes hearsay evidence simply must come into evidence.

Fortunately, and for logical reasons, the Rules of Evidence include several exceptions to the hearsay rule. See Fed. R. Evid. 803, 804. The hearsay rule itself defines what is and what is not hearsay. See Fed. R. Evid. 801. There is an important distinction between a hearsay exception and testimony that is not hearsay under Rule 801—evidence that is not hearsay is admissible for all purposes, while exceptions to the hearsay rule often allow hearsay evidence for limited purposes. See Fed. R. Evid. 105, 801, 803.

Further, review the necessary predicates for authentication of documents; most documentary evidence needs a sponsoring witness who can authenticate the proffered exhibit. See Fed. R. Evid. 901. Also, anticipate objections and the appropriate response to them.

For example, one of the most widely misconstrued objections is based on the poorly named "Best Evidence Rule." The Best Evidence Rule, which is set forth in Rule 1002, requires that, "the original writing, recording or photograph is required, except as otherwise provided in these rules or by act of Congress." See Fed. R. Evid. 1002. Among the exceptions set forth in the Rules is that duplicates are admissible. See Fed. R. Evid. 1003.

Some practitioners, however, assert that the Best Evidence Rule requires the presentation of the best evidence of a matter. There is no such rule. Instead, the court, as fact-finder, determines the appropriate weight to give to the evidence. See Fed. R. Evid. 1008.


A wise man once said, "Bankruptcy practitioners do not know the rules of evidence, but they can try a case a lot faster than any trial attorney." This is often correct. However, when one considers the ramifications of a poor evidentiary showing, with either a judge requiring strict evidentiary compliance or because of a subsequent appellate review, it is a lawyer's duty to understand and abide by the rules of evidence.

Understanding the rules of evidence and how to prepare both documentary and testimonial evidence creates an advantage over an opponent. Simply stated, an effective presentation of evidence goes a long way toward getting what the client wants.

Journal Date: 
Tuesday, June 1, 2004

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