Page 6 - Litigation

S6 | MONDAY, JULY 14, 2014 | Litigation
| NYLJ.COM

Top 10 Dos and Don’ts

BY ERIC TIRSCHWELL
AND THEODORE S. HERTZBERG
I
nside and outside lawyers representing For Compensating Fact Witnesses
companies in litigation or investigations will
be familiar with the problem of a former
employee or other fact witness who, following
receipt of a deposition or trial subpoena or a
less formal request to make himself/herself

available, asks to be compensated. For most
litigators, the usual and visceral response is
“no,” out of concern about both the legality of
such compensation and the strategic implica-
tions for the case and the witness’ credibility.
Indeed, in our experience, compensating fact
witnesses for their time is a highly unusual if
not almost unheard of occurrence.

That said, for the rare and exceptional situ-
ation when the only way to secure the coop-
eration and/or testimony of an important fact
witness may be to compensate him or her, it is
important to understand that, while lawyers
must proceed with great caution and care, the
applicable legal and ethical rules in New York
and in many (but not all) other jurisdictions
do afford litigants some latitude to reasonably

compensate nonparty fact witnesses for time
spent preparing to testify, assisting counsel,
and/or testifying, and for related expenses.
After briefly reviewing the basic legal
and ethical framework applicable to New
York lawyers in particular,1 we set out a list
of rudimentary “dos” and “don’ts” that we
hope will assist counsel when faced with the
dificult question of whether and when it is

proper and/or strategically wise to agree to
such compensation. Our discussion focuses
on deposition and trial witnesses but applies
equally in the context of investigations, infor-
mal interviews, and other instances in which
a non-party testifying witness might be asked
to assist counsel in connection with litigation
or potential litigation.

We start with federal and New York pro-
cedural rules, which set a compensation K
loor—but not a ceiling—by requiring that a TOC
witness subpoenaed to testify receive a nomi- IGS
nal per diem fee ($40 per day in the federal B
system, $15 per day in the state system) plus
reimbursement for travel costs.2 Because this
statutorily mandated payment is only for the it does not prohibit the payment or receipt of testimony and cooperate in any investigation, $200 reasonable for former employees turned
witness’ attendance all the witness must do (1) witness fees; (2) “the reasonable cost of administrative, regulatory, or judicial proceed- freelance workers,8 retired former employees,9

is show up. The witness need not familiarize travel and subsistence incurred”; or (3) “the ing. Such contractual provisions, supported by and self-employed consultants.10 In contrast,
himself/herself with the case, review emails or reasonable value of time lost in attendance the consideration of continued employment or the New York Court of Appeals recently held
other documents, nor take other preparatory at any . trial, hearing, or proceeding.”3 The a severance payment, may avoid the problem that paying a surgeon $10,000 for one after-
steps typically necessary to provide mean- second set of guideposts are local ethical entirely, at least for those who work or once noon of non-expert testimony (in which he
ingful, useful, and accurate testimony. Which rules, which, for New York lawyers, means worked for the company.
simply recounted what a patient said to him)
brings us to the crux of the issue: If counsel looking principally to Rule of Professional Con- 2. DO make sure, if you agree to compen- was close enough to “exorbitant” that the trial
wants the witness to do more than appear, duct 3.4(b). While Rule 3.4 similarly prohibits sate a witness for his or her time, that any judge erred in not giving an instruction that
the witness may want to receive additional compensation to a witness “contingent upon such compensation is reasonable. The line while “fact witnesses may be compensated
compensation in turn.
the content of the witness’s testimony or the between reasonable and unreasonable com- for their lost time,” the jury should assess the

For the attorney considering whether his outcome of the matter,” it too authorizes attor- pensation can mean the difference between witness’ credibility by considering “whether
or her client should agree to any such addi- neys to “advance, guarantee or acquiesce in whether the compensation is lawful or crimi- the compensation was disproportionately
tional compensation, there are two essential the payment of reasonable compensation to a nal. Use of a witness’ standard hourly rate or more than what was reasonable for the loss
guideposts. The irst is the federal anti-gratuity witness for the loss of time in attending, testify- the equivalent of lost wages based on a current of the witness’s time from work or business.”11
statute, 18 U.S.C. §201, which criminalizes both ing, preparing to testify or otherwise assisting or most recent job are likely to be considered 3. DON’T—under any circumstances—make
the payment and receipt of anything of value counsel, and reasonable related expenses.”4 reasonable.5 If the witness is unemployed or such payment contingent on the content,
for, because of, or to inluence a witness’ sworn From these basic guideposts, as applied by otherwise has no obvious benchmark rate of favorability, or outcome of the testimony.
testimony. But that law also makes clear that
the courts and interpreted in ethics opinions, compensation, counsel must “determine the This is strictly prohibited under both the anti-

the following set of dos and don’ts emerge.
reasonable value of the witness’ time based gratuity statute and the professional conduct
1. For corporate counsel, DO try to avoid on all relevant circumstances.”6 As to travel, rules cited above.12
ERIC TIRSCHWELL is a litigation partner and THEO- the issue proactively by inserting into employ- lodging, and meal costs, avoid the obvious 4. DO know that ethics opinions have con-
DORE S. HERTZBERG is a litigation associate at Kramer ment and/or severance agreements coopera- red lags—irst class tickets, ive-star hotels, irmed the propriety of reimbursing a witness’
Levin Naftalis & Frankel. SAM KOCH, an associate, tion clauses that require an employee to make extended stays, or super-fancy restaurants.7
reasonable attorney fees, whether at the wit-
assisted in the preparation of this article.
himself/herself available for interviews and
Courts have found hourly rates of $125-
ness’ request or at your suggestion, and even