Editor's Note:
State Bar Ethics Opinions cite the applicable California Rules of Professional Conduct in effect at the time of the writing of the opinion. Please refer to the California Rules of Professional Conduct Cross Reference Chart for a table indicating the corresponding current operative rule. There, you can also link to the text of the current rule.
|
May an attorney pay a non-expert witness for the time spent preparing for a deposition or a trial, even though such preparation does not cause a loss of income?
An attorney may pay a non-expert witness for the time spent preparing for a deposition or a trial, but the attorney must comply with the requirements of rule 5-310(B) of the California Rules of Professional Conduct. Compensation for preparation time or for time spent testifying must be reasonable in light of all the circumstances and cannot be contingent upon the content of the witness' testimony or on the outcome of the matter. Possible bases upon which to determine reasonable compensation include the witness' normal rate of pay if currently employed, what the witness last earned, if currently unemployed, or what others earn for comparable activity.
Rule 5-310(B) of the California Rules of Professional Conduct.
Attorney represents Company in the defense of an environmental litigation arising out of its prior ownership of land. Witness was employed for many years by Company, including the time period covered by the litigation, and is now retired. Witness has detailed knowledge of events occurring during the period in question as well as some notes that are relevant to Company's defense. Attorney wishes to meet with Witness, have him review documents and notes and otherwise prepare for a deposition and possibly a trial and, if necessary, ask him to testify. Witness says he would have to be compensated for his time.
The issue is one of statutory interpretation. Rule 5-310(B) of the California Rules of Professional Conduct (Prohibited Contact with Witnesses) (hereinafter "rule 5-310(B)") neither expressly prohibits payment for a non-expert witness' preparation time, nor expressly permits it. Rule 5-310(B) states:
A member shall not:
(B) Directly or indirectly pay, offer to pay, or acquiesce in the payment of compensation to a witness contingent upon the content of the witness' testimony or the outcome of the case. Except where prohibited by law, a member may advance, guarantee, or acquiesce in the payment of:
(1) Expenses reasonably incurred by a witness in attending or testifying.
(2) Reasonable compensation to a witness for loss of time in attending or testifying.
(3) A reasonable fee for the professional services of an expert witness.
Payments to witnesses are permitted under some circumstances not articulated in rule 5-310, such as statutory witness fees.1 Read literally, rule 5-310(B) first prohibits only payments "contingent upon the content of the witness' testimony or the outcome of the case." But then it goes on expressly to identify three narrow categories of permitted payments: (1) expenses incurred in attending or testifying; (2) compensation for loss of time in attending or testifying; and (3) expert witness fees.
Since Witness is not a named expert and his expenses incurred are not in question, subparagraph (2) provides the only language which could be construed to address compensation for preparation time. Rule 5-310(B)(2) does not expressly permit paying a witness for "preparing," as distinguished from attending or testifying. But neither does rule 5-310(B) anywhere expressly prohibit such a payment. While it is possible to construe the phrase "loss of time in attending or testifying" as inclusive of necessary preparation time, nothing in rule 5-310(B) dictates such construction.
Since rule 5-310(B)'s three numbered subparagraphs are arguably neither conclusive nor comprehensive but serve as examples of payments to witnesses that are not prohibited by the rule, the Committee believes that a witness may be compensated under other circumstances which are not specified in the numbered subparagraphs. Whether such a payment is permitted depends on whether the payment is consistent with the principle stated in the rule: that a member not compensate a witness contingent upon the content of the witness' testimony, or the outcome of the case.
Only a few California cases have interpreted rule 5-310(B) (or its predecessor provisions); however, those cases which have applied the rule focus on its underlying policy and purpose. The only California appellate court decision directly interpreting rule 5- 310 is Ojeda v. Sharp Cabrillo Hospital (1992) 8 Cal.App. 4th 1, 10 [10 Cal.Rptr.2d 230] (analyzing contingent fee consulting contracts and finding them not per se improper, citing Cal. State Bar Formal Opn. No. 1984-79). Cases predating rule 5-310 emphasize the policy prohibiting paying a witness for testimony contingent upon its content or upon the outcome of the case. (E.g., Hare v. McGue (1918) 178 Cal. 740, 741-742 [contingent fee contract hiring a detective to find facts in a divorce suit not improper because the payment not contingent upon the facts found]; Von Kesler v. Baker (1933) 131 Cal.App. 654, 657-658 [court denies expert witness claim for contingent fee under a contract to testify at trial after favorable verdict because such contracts are void as against public policy]; Harris v. Moore (1929) 102 Cal.App. 413, 416-417 [distinguishing Hare v. McGue on its facts and refusing to enforce detective's contingent fee contract because payable only if he found facts useful to spouse].)
Rule 5-310 (B) is identical, except for non-substantive matters, to DR 7-109(C) of the American Bar Association ("ABA") Model Code of Professional Responsibility (all references to "EC" and "DR" are to the ABA Model Code of Professional Responsibility).2 Unless otherwise indicated, the commentary applicable to DR 7-109(C) may be considered in construing California's rule.3
The fundamental policy behind DR 7-109(C)'s witness payment limitation is that "[w]itnesses should always testify truthfully and should be free from financial inducements that might tempt them to do otherwise." (EC 7-28.) But EC 7-28 goes on to state that "[a] lawyer should not pay or agree to pay a non-expert witness an amount in excess of reimbursement for expenses and financial loss incident to his being a witness . . . ." (Emphasis added.) No authority exists determining exactly what the emphasized language includes or excludes, which leaves the intended meaning of "incident to" open to reasonable interpretation.
Looking to other ethical standards and codes for guidance, rule 3.4(b) of the ABA Model Rules of Professional Conduct (hereinafter "MR"), the successor to DR 7-109(C), states only that "a lawyer shall not . . . falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law . . . ." This newer formulation eliminated the drafting problem of DR 7-109(C) by simply leaving the matter up to individual states. However, by doing so, MR 3.4(b) arguably offers even less guidance than its predecessor.4
The Comment following MR 3.4(b) states: "[I]t is not improper to pay a witness' expenses or to compensate an expert witness on terms permitted by law. The common law rule in most jurisdictions is that it is improper to pay an occurrence witness any fee for testifying and that it is improper to pay an expert witness a contingent fee."
Unfortunately, this Comment does not end the inquiry either. It begs the question whether preparation payment is a prohibited "fee for testifying" in the sense of purchased testimony or, instead, is part of permissible "expenses incurred" or "compensation for loss of time."
Given the ambiguities in the language of the California and ABA standards, it is appropriate to interpret the language based on the principles underlying those standards, as articulated above. Viewed with those principles in mind, reasonable compensation for preparation time, the amount and nature of which is discoverable and admissible at trial, seems no more objectionable in principle than expert witness fees. In some cases, accurate testimony without substantial preparation may be impossible.5
As noted above, the language of rule 5-310, DR 7-109(C), and other standards provides no express guidance on how to determine whether compensation is reasonable. The Wisconsin State Bar Association's Committee on Professional Ethics, opinion number E-89-17 (1989) concluded, "We believe that this determination would have to be made on a case-by-case basis."
Possible objective bases upon which to determine reasonable compensation might include the witness' rate of pay if currently employed, what the witness last earned if currently unemployed, or what others earn for comparable activity.
The New York State Bar Association's Committee on Professional Ethics has twice considered the question how to determine reasonable compensation. In its Opinion Number 547 (1982), it acknowledged:
Problems may arise when the witness is self-employed or is compensated on a commission basis, or when weekends and night-hours are devoted to preparation, and in that event, closer consideration should be given to the matter of assessing the amount to be paid. But even recreation time is susceptible to valuation. Attorneys are frequently called upon to elicit proof of unliquidated damages, and should not feel at a loss in coping with the vagaries of the situation.
When the New York State Bar Association's Committee on Professional Ethics revisited the subject in its Opinion Number 668 (1994), it examined separately whether an attorney could pay a non-expert witness $150 per hour for time spent (i) assisting in the fact- finding process of a litigated matter where the individual may be a witness, and (ii) preparing to testify, testifying, and attending the trial. Assuming client consent, the committee found no impropriety with the payments in either circumstance. In analyzing whether the amount was reasonable, the committee observed:
DR 7-109(C) is designed to prevent compensation that would have a tendency to lead to the production of fraudulent evidence and to the giving of falsely colored testimony as well as to the prevention of outright perjury. Further the rule also is influenced by the notion that the testimonial duty, like other civic duties, is to be performed without pay, the sacrifice being an inherent burden of citizenship. On the other hand, not everyone views testifying at trial as an honor or civic duty, especially when the individual incurs expenses or suffers a financial loss. We must attempt to draw the line between compensation that enhances the truth seeking process by easing the burden of testifying witnesses, and compensation that serves to hinder the truth seeking process because it tends to influence witnesses to remember things in a way favorable to the side paying them. (Emphasis added; citations omitted.)
The New York State Bar Association's Committee on Professional Ethics concluded that reasonable compensation could be determined by the "market value" of the testifying witness (for example, $150 an hour, if that was the witness' ordinary rate of pay). The committee expressly adopted the analysis of its earlier Opinion Number 547 (1982), quoted above, and the conclusion of the Wisconsin State Bar Association's Committee on Professional Ethics, opinion number E-89-17 (1989), that even retired or unemployed persons could be compensated for time spent in preparation, travel, or testifying, even though calculation of the amount might present some difficulties.
Legal limits to witness payments exist which are beyond the scope of this opinion. For example, federal and state laws prohibit bribing witnesses and limit payments to incarcerated witnesses.6 In addition, certain contracts with witnesses may be illegal under common law principles. (See generally 1 Witkin on Summary of California Law, (9th ed. 1987) Contracts, § 611.) Whether a particular payment violates these or other substantive rules is a question of law, upon which the Committee does not opine.7 However, the Committee notes that an attorney may not ethically make or participate in making an illegal payment to a witness even if the payment is not prohibited under rule 5-310. (See rule 3-210 of the California Rules of Professional Conduct (prohibiting a member from advising a violation of any law, rule, or ruling of a tribunal unless the member believes in good faith that such a law, rule, or ruling is invalid); Bus. & Prof. Code, § 6068 (a) (reciting an attorney's duty to support the laws of the United States and California); rule 1-120 (prohibiting a member from knowingly assisting, soliciting, or inducing a violation of the rules of professional conduct or the State Bar Act).)
The opinions of the majority of other ethics committees considering the issue generally reach the same conclusions, as noted. Those opinions are persuasive in their uniformity of reasons and results, and agree with our own analysis of the issues. We conclude that it is not inappropriate to compensate a witness for otherwise uncompensated time necessary for preparation for or testifying at deposition or trial, as long as the compensation is reasonable in conformance with rule 5-310(B), does not violate applicable law, and is not paid to a witness contingent upon the content of the witness' testimony, or the outcome of the case.8 This applies whether the witness is currently employed, unemployed, retired, suspended or in any other employment status.
This opinion is issued by the Standing Committee on Professional Responsibility and Conduct of the State Bar of California. It is advisory only. It is not binding upon the courts, the State Bar of California, its Board of Governors, any persons or tribunals charged with regulatory responsibilities, or any member of the State Bar.
Indeed, the precursor of Model Rule 3.4, DR 7-109 of the Model Code of Professional Responsibility, expressly permitted '[r]easonable compensation to a witness for his loss of time in attending or testifying,' and there is nothing in the history of Rule 3.4 to indicate that the drafters of the Model Rules intended to negate this concept by using the language that they did. . . . The Committee also sees no reason to draw a distinction between (a) compensating a witness for time spent in actually attending a deposition or a trial and (b) compensating the witness for time spent in pretrial interviews with the lawyer in preparation for testifying, as long as the lawyer makes it clear to the witness that the payment is not being made for the substance (or efficacy) of the witness's testimony or as an inducement to 'tell the truth.' The Committee is further of the view that the witness may also be compensated for time spent in reviewing and researching records that are germane to his or her testimony, provided, or course, that such compensation is not barred by local law.
The ABA has taken this view since at least 1965. (See ABA Comm. on Prof. Ethics, informal opn. No. 847 (Aug. 4, 1965) (Payment to Witness (A) Lay (B) Expert) [Canon 39 permits payment of actual expenses and reasonable compensation to persons who cannot afford to come and testify at the statutory fees, with no attempt to influence their testimony, the arrangement being disclosed to the court and jury; includes wages for loss of time or actual expense plus reasonable transportation charges].)
| . |