An interesting case was recently reported in Philadelphia County involving a court reporting company (a company which transcribes the questions and answers at a deposition) who sued a firm which hired them for nonpayment of the court reporting charges. The firm argued that it was merely an agent for its principal, the company who hired the law firm and therefore, the client who hired the law firm should pay. Does that sound just?
A Philadelphia Court of Common Pleas judge has ruled that lawyers, not clients, are responsible for paying court reporting fees. In JDR Acquisition v. Mitts Milavec, the Court opined that the law firm had a contract with the court reporting firm to record and transcribe eleven depositions in a federal civil case. The client was not a direct party to the contract.
The law firm refused to pay the court reporting bill, arguing it should be paid directly by the client. It argued that it was merely an agent for its client in the relationship. Agency law requires that without an express commitment from the client, the law firm should pay the charges. The Court, however, ruled that agency law did not shield the law firm from paying the charges. The law firm was held responsible because they contracted for the services performed.
Further, attorneys are generally responsible for court reporting bills unless there is an express waiver by the attorney in the engagement contract. An additional complication in this case was there was no written contract with the reporting agency, only an oral contract. However, the Court found that there were sufficient facts and actions to prove an oral contract including but not limited to the ordering of the services by the law firm, the billing by the court reporter to the law firm directly, deposition notices, the law firm address was the billing address for all invoices and there was nothing to suggest that the law firm was deferring to the client for payment of the invoices.
In discussing the agency issue, the Court stated that it seemed to be an issue of first impression in Pennsylvania but that a majority trend nationally favors attorney liability where a client/law firm retainer holds the law firm responsible for litigation services. Under agency law, where an agent has the authority to act for its principal, there are two lines of thought regarding payment of court reporting costs. The first line of thought holds an attorney liable only if he has expressly agreed to pay such services in the retainer. This was true for the instant law firm. The second theory of agency law holds that lawyers are liable for court reporting costs absent express agreement to the contrary because attorneys generally exercise control over the litigation and are more akin to independent contractors than agents. The Court further noted that efficient court administration requires that there be accountability on attorneys unless they have negotiated an express agreement that the court reporter shall be paid exclusively by the attorney’s client.