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Pioneers - Called to the Stand

Pioneers

Called to the Stand

Charles McClenahan, FSA, has taken his actuarial skills to the world of crime fighting. By providing litigation support and expert testimony, he's doing his part to ensure wrongs are righted and actuaries retain an untarnished reputation.
By: Sam Phillips

To find out more about the world of casualty actuarial forensics and Charles McClenahan himself, The Actuary asked McClenahan for a quick deposition.

Please give us an overview of the job you do that has earned you the "Pioneer" status. I suppose that, like the early American pioneers, an actuarial "pioneer" is one who opens up new territory and, while I certainly can't claim to have originated the casualty actuarial forensics area, I believe I have made a significant contribution to its development. While almost all of my current practice is litigation support and/or expert testimony, at the core of my work is the expertise that I have developed over 40 years as a company actuary, corporate officer, regulator and consultant.

What do you consider the most important case/trial you've worked in/on and why? The most important case I have worked on is a major actuarial/accounting malpractice case which is currently active and upon which I therefore cannot comment. The most personally satisfying case was Angloff v. CIE Service Corporation in which a solvent company which had been placed in receivership based upon unprofessional actuarial work was returned to its previous owner by the Missouri court–the only time I believe this has ever happened.

What's the funniest story you have about being an expert witness? Both actuaries and expert witnesses have well-earned reputations for being humorless. Nonetheless, I was once being cross-examined in Maryland state court and was asked by opposing counsel to leave the stand, walk to a blank flip–chart and then to write a series of numbers, provided by opposing counsel, on the chart. Having complied, I was then asked: "Mr. McClenahan, according to your calculations there ..." at which point I addressed the judge saying: "Your honor, I object to the characterization of these numbers as being my calculations." The judge replied: "Mr. McClenahan, you are a witness, not an attorney, and as such have no standing to make an objection. Nonetheless, the objection you are not allowed to make is well–founded and the court takes notice that you have performed no calculations, but have simply written a series of numbers on a piece of paper."

How many times per year do you testify? What kinds of cases are you involved in? Most of my testimony is in deposition, not in court. I probably give one to two depositions per year and testify in court about once every two years.

I have been involved in cases involving actuarial malpractice, insurance company solvency standards, anti–trust, intellectual property, fraud, voidable preference, damages modeling, applicability of actuarial standards, reinsurance collectibility and, in one case, arson and murder.

Is expert witness the only job you do? Do you have your own expert witness business? I occasionally consult on loss reserving issues but the vast majority of my practice is actuarial forensics, and the majority of that is litigation support, not expert witness.

I do not have my own business. I happily work for Oliver Wyman Actuarial Consulting and give thanks each day that they support me in this endeavor–especially by allowing me to refuse potentially lucrative cases where I do not believe I would be on the "side of the angels."

When did you realize that you, the actuary, could become an expert witness? What was the attraction? How long have you been an expert witness? I have been providing expert testimony since 1969 when I testified at my first rate hearing for my employer–GEICO. While I was with the Illinois Department of Insurance I testified on behalf of the department in hearings, in court, and before the legislature. As vice president of Financial Control for CNA I testified as a percipient witness in deposition and in court. My first expert witness testimony as a consultant was in 1974.

There are four things that attract me to this area. First, the work is incredibly challenging and rewarding. Second, the jokes notwithstanding, the vast majority of the attorneys with whom I have been privileged to work are gifted, dedicated, highly intelligent and pleasant. (They are also terrible at math!) Third, there is nothing in the world that can compete with the rush I get from being cross–examined by a skilled attorney. Finally, I enjoy taking complex issues and explaining them in relatively simple terms. So much of actuarial work seems to go in the other direction.

What new skills have you had to learn to be an expert witness and how did you learn them? George Burns was once asked what was the toughest thing about acting and replied, "Sincerity–if you can fake that you've got it made." Well I have never had a problem with sincerity (see the remarks about my firm, above) but I have had to learn to fake patience. A good opposing counsel will attempt to get under a witness' skin by feigning a lack of understanding of answers. Worse, a bad opposing counsel often truly fails to grasp simple facts, even after repeated tries. I am not, by nature, patient in these situations but I have learned to fake it.

The other skill I have had to learn, but with less success, is to slow down my answers in deposition. I don't think I have made it through a single deposition without the reporter asking me to speak more slowly. In one deposition, where my rapid patter was (over)matched by opposing counsel, the poor reporter simply gave up and said she refused to continue until we slowed down.

Of your career accomplishments, what do you consider to be the most memorable/personally satisfying? It's not the accomplishments I find memorable. It's the people I have been privileged to work with over the years and listing even the most important of those would exceed the reasonable length of a response. My most personally satisfying cases are Angloff v. CIE Service Corporation (mentioned previously) and whatever case I'm working on right now.

What about your actuarial training and experience has been most helpful in your career? What has been most helpful is the way it all fits together. When I'm dealing with a reserve–related insolvency, it is incredibly helpful to have experience as a reserving actuary, the executive responsible for reserving decisions, a regulator of insurer solvency and a consultant. Understanding the pressures and problems associated with each allows for an appreciation of what can reasonably be expected of professional actuaries.

What contributed to your decision to become an actuary? I was an English literature major and headed for a poetry assistanceship at the Writers' Workshop at the University of Iowa (the same program that gave Tennessee Williams a "D" in playwriting) when it dawned on me that far better poets than I were starving. In a rare moment of sanity I asked my father for advice. He asked if I still enjoyed math and I told him I did but that I couldn't see myself as an ivy–covered mathematician. He suggested that I become an actuary–his roommate at Iowa having been an actuarial major–and I said "OK, I'll be an actuary. What's that?"

How do you personally measure success? To what do you attribute your success? How does your background as an actuary figure into the equation? I'm more into satisfaction than success; and if I were into success I would question whether I would be the proper person to judge my own. The fact that I have attained satisfaction I attribute to (in order of importance): being married to a woman I love and who loves me; having the skills to do a job that I find challenging and rewarding; and working for a supportive firm that understands the need for a balance between work and non–work pursuits.

What is the most important lesson you've learned in business? No matter how good the reason may seem at the time, it is not good enough to excuse unprofessional behavior.

What mark/legacy, etc. do you want to leave on the world? How do you want people to remember you? I would like to be remembered as a man who took his work seriously, but not himself.

What are the most significant risks taken in your career and how have they paid off? The risk that paid off the best was, as a two–exam student, accepting an $8,000/year casualty actuarial job as opposed to a $9,000 life actuarial job.

The risk that paid off the least was, as a 26–year–old actuarial assistant, lecturing the Chairman of the Board of GEICO about the need for reserve adequacy.

Is there any particular person you admire? Why? While I admire many people, three come to mind: my wife Debra who has managed to succeed as a wife, mother, actuary and CEO; Ruth Salzmann who, by example, established the standards of actuarial professionalism to which I aspire; and anyone who can understand everything that comes out of ASTIN.

What are your future professional plans? The five cases on which I am currently working threaten to take me right up to retirement. After that I may try to teach somewhere.

If you had extra time on your hands, what would you do? One of the best things about working for Oliver Wyman Actuarial Consulting is that I do have the time for non–work pursuits including collecting and repairing old (1946–1959) Lionel electric trains, my beloved Cubs, old movies and music.

Charles McClenahan can be contacted at charles.mcclenahan@oliverwyman.com.

Sam Phillips is staff editor at the Society of Actuaries.