Can a lawyer pay a fact witness for the time spent preparing for and giving testimony?

Plain-English summary

A lawyer for a corporate defendant asked whether he could compensate a former employee, a fact or occurrence witness, for time spent preparing for and testifying at a deposition or trial, and if so, what was reasonable when the witness was self-employed and not paid hourly. The Committee broke the question into three parts: whether a fact witness (as distinct from an expert) may be paid at all, whether the lawyer rather than the client may pay, and how to measure a reasonable fee.

On the first question, ER 3.4(b) bars offering a witness an inducement prohibited by law, and its Comment notes the common-law rule against paying an occurrence witness any fee for testifying. Because the rule turns on whether state law prohibits the payment, the Committee treated it as partly a legal question and analyzed it to aid compliance. It found no Arizona statute or case prohibiting reasonable payment to fact witnesses in civil cases, and followed ABA Formal Opinion 96-402 along with opinions from California, New York, and Illinois, all concluding that paying fact witnesses for lost time does not violate the rule as long as the payment is not for the substance of the testimony and not contingent on the outcome. The Committee held a reasonable fee may be paid for preparation, interview, and testimony time, declined to set a figure, and cautioned that an unreasonably high fee would appear to be an unlawful inducement to color testimony, citing the Arizona witness-influencing statute.

On the second question, because Arizona's ER 1.8(e) requires the client to remain ultimately responsible for litigation costs and expenses advanced by the lawyer, any witness fee the lawyer advances must remain the client's ultimate responsibility unless the client is indigent. On the third question, the Committee adopted the ABA, California, and New York guidance that for an unemployed or self-employed witness a reasonable fee may be gauged by what the person last earned or what others earn for comparable activity, judged case by case, keeping in mind that a fee should not leave the witness "better off" than if the time had been spent earning income.

Currency note

This opinion was issued in 1997, before the State Bar of Arizona's adoption of the 2003 revisions to the Rules of Professional Conduct. Subsequent rule amendments or later opinions may have changed the analysis. Treat this page as historical context, not current guidance. Verify against current rules before relying on any specific rule, deadline, or requirement mentioned here.

Common questions

Q: Can a lawyer pay a non-expert (fact) witness for testifying?

A: Yes. The opinion concluded that nothing in ER 3.4(b) prohibits paying a fact witness a reasonable fee for time spent preparing for, being interviewed for, or giving testimony, and found no Arizona law barring it.

Q: Can the fee depend on winning the case?

A: No. The opinion held the fee may not be contingent on the outcome of the litigation, citing Arizona case law voiding such agreements as against public policy.

Q: If the lawyer pays the witness, who is ultimately responsible for the cost?

A: The client. Under Arizona's ER 1.8(e), the opinion concluded the client must remain ultimately responsible for a witness fee advanced by the lawyer, unless the client is indigent.

Q: How is a reasonable fee set for a self-employed witness?

A: The opinion concluded reasonableness is determined case by case by the lawyer, gauged by what the witness last earned or what others earn for comparable activity, and never so high that it appears to influence the testimony.

Background and rules framework

The opinion construed ER 3.4(b) (fairness to opposing party; unlawful inducements to witnesses) and Arizona's ER 1.8(e) (financial assistance in litigation; client's ultimate responsibility for advanced costs). It relied heavily on ABA Formal Opinion 96-402 and opinions from California, New York, and Illinois, and noted the Arizona witness-influencing statute, A.R.S. section 13-2802.

Citations and references

Rules of Professional Conduct:

• MR 3.4 (fairness to opposing party and counsel)
• MR 1.8 (conflict of interest: prohibited transactions; financial assistance)

Statutes:

• A.R.S. section 13-2802 (influencing a witness, a class 5 felony); sections 13-2803 and 13-2804

Cases:

• Laos v. Soble, 18 Ariz. App. 502, 503 P.2d 978 (1973), contingent witness-fee agreement void as against public policy

Other opinions cited:

• ABA Formal Op. 96-402: paying fact witnesses for lost time
• California Op. 1997-149; New York Ops. 547 (1982) and 668 (1994); Illinois Op. 87-05: reasonable compensation for fact witnesses

See also

• Arizona Ethics Op. 97-02: Settlements and a Client's Insurer
• No other sibling opinions yet indexed.

Source

• Landing page: https://tools.dev.azbar.org/RulesofProfessionalConduct/ViewEthicsOpinion.aspx?id=483

Original opinion text

Reproduced from the official source for research purposes. The linked source is authoritative.

A lawyer may pay a fact witness reasonable compensation for time spent preparing for testimony as long as the compensation is not based upon the outcome of the litigation. The client is ultimately responsible for such costs and the reasonableness of the fee must be determined on a case-by-case basis. [ERs 1.8, 3.4]

FACTS

The inquiring attorney represents a corporate defendant (the "Corporation") in a civil lawsuit. A former employee of the Corporation may be a fact/occurrence witness for the Corporation in the lawsuit.

QUESTIONS PRESENTED

1. May a lawyer who represents a defendant corporate client compensate a former employee of the corporation for time spent by the former employee in preparing for and/or testifying at a deposition or trial, where the former employee is a fact/occurrence witness?

2. If a lawyer may so compensate the former employee, what is a reasonable compensation where the former employee is self-employed and operates his/her own business and is not compensated on an hourly basis?

RELEVANT ETHICS RULES

ER 3.4 Fairness to Opposing Party and Counsel

A lawyer shall not:

(b) falsify evidence, counsel or assist a witness to testify falsely, or offer an inducement to a witness that is prohibited by law;

The comment to ER 3.4(b):

With regard to paragraph (b), it 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.

ER 1.8 Conflict of Interest: Prohibited Transactions

(e) A lawyer shall not provide financial assistance to a client in connection with pending or contemplated litigation, except that:

(1) a lawyer may advance court costs and expenses of litigation, provided the client remains ultimately liable for such costs and expenses; and

(2) a lawyer representing an indigent client may pay court costs and expenses of litigation on behalf of the client.

OPINION

There are three levels of inquiry in this matter. First, whether a fact/occurrence witness, as distinguished from an expert, may be paid a reasonable fee for preparing for and testifying in a deposition or trial. Second, if so, may the lawyer pay the fee, as distinguished from the client paying the fee? Finally, what is a reasonable fee when the witness is self-employed and is not paid on an hourly basis? A discussion of each inquiry follows:

1. May a fact/occurrence witness be compensated for time spent preparing for and testifying at trial or deposition?

ER 3.4(b) provides that a lawyer may not offer an inducement to a witness that is prohibited by law. The comment provides that although it is permissible to pay the expenses of a fact witness, "[t]he common law rule in most jurisdictions is that it improper to pay an occurrence witness any fee for testifying. . . ." The Preamble to the Rules of Professional Conduct explains that "[c]omments do not add obligations to the rules but provide guidance for practicing in compliance with these rules." The question under ER 3.4(b), therefore, is whether Arizona law prohibits the payment of fees to non-expert witnesses, which makes it in part a legal question. Although legal questions are beyond the scope of the jurisdiction of this Committee, this question will be analyzed to aid compliance with ER 3.4(b).

Arizona has no statutory or case law prohibiting reasonable payment to fact/occurrence witnesses in civil cases. The American Bar Association recently published a thorough opinion regarding this issue. ABA Formal Op. 96-402. The ABA Committee concluded that Model Rule 3.4(b) does not prohibit the payment of fees to fact witnesses, as long as they are not based on the outcome of the litigation or prohibited by the law of the jurisdiction. The ABA cited an opinion of the Pennsylvania Bar Association Committee on Legal Ethics, which concluded that the payment of fees to fact witnesses is disfavored. The ABA, however, found Pennsylvania's reading of Model Rule 3.4(b) too narrow, and instead reasoned:

[a]s long as it is made clear to the witness that the payment is not being made for the substance or efficacy of the witness' testimony, and is being made solely for the purpose of compensating the witness for the time the witness has lost in order to give testimony in litigation in which the witness is not a party, the Committee is of the view that such payments do not violate the Model Rules.

At least three other jurisdictions, California, New York and Illinois, have issued formal opinions consistent with that of the ABA. The California Rules of Professional Conduct differ from those of Arizona. See Rule 5-310(B) of the California Rules of Professional Conduct. The applicable rule expressly allows for the payment of "[r]easonable compensation to a witness for loss of time in attending or testifying." Id. The rule, however, neither expressly prohibits nor expressly allows compensation for time spent in preparation for testimony. The California Committee found that "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." CA Eth. Op. 1997-149.

Formal ethics opinions from New York in 1982 and 1994 addressed the question under the language of DR 7-109, which permits a lawyer to pay "[r]easonable compensation to a [non expert] witness for his loss of time in attending or testifying." NY Ethic. Op. 547 (1982); NY Eth. Op. 668 (1994). The New York Committee in both opinions cited the purpose of the DR to include the prevention of perjury or falsely colored testimony in return for fees. The 1982 opinion reasoned the rules should be read broadly to allow payment "for loss of time in testifying or in otherwise attending court proceedings and preparing therefor." The 1994 opinion frames the issue clearly in stating "[w]e 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."

Illinois Ethics Opinion 87-05, issued in 1988, addressed this issue and was affirmed by the Illinois Board of Governors. Like New York, the Illinois Committee analyzed the issue under DR -109(c) and concluded that a fact witness could be reimbursed for time spent being interviewed.

Read literally, nothing in ER 3.4(b) prohibits the payment of reasonable fees to fact witnesses. Such fees are not otherwise prohibited by state law. The Committee is persuaded by the reasoning of the ABA Opinion and the opinions from the other jurisdictions discussed above, and believes that a reasonable fee may be paid to a fact witness for time spent preparing for testimony, being interviewed and/or testifying at deposition or trial. The Committee will not opine on what figure would represent a reasonable compensation. This is a question of fact that may vary from situation to situation and it is the attorney's duty to evaluate the reasonableness of any fee, keeping in mind that a fee that is unreasonably high will tend to appear as an illegal and unethical inducement to color testimony. The fee may not be contingent upon the outcome of the litigation. The lawyer would do well to instruct the witness to not allow the fee to color or influence testimony in any way and to memorialize their fee agreement in writing.

2. May a lawyer advance the payment of the fee for a fact/occurrence witness?

Arizona's version of ER 1.8 differs from the Model Rules. Arizona's version requires a client to be ultimately responsible for costs and expenses of litigation that are advanced by a lawyer. Thus, to the extent a fact witness is paid a feel as described above, and that fee is advanced by the lawyer, the client must remain ultimately responsible for the fee, unless the client is indigent. See ER 1.8(e).

3. What is a reasonable fee for a self-employed fact/occurrence witness?

The ABA opinion discussed above explains that compensation to a fact witness must be reasonable and the determination of reasonableness is left to the lawyer. ABA Formal Op. 96-402. For a witness who lost time away from employment, such fee may be based upon the witness' normal hourly rate. Id. For the unemployed, retired or self-employed witness, however, the determination is more difficult, but still must be determined by the lawyer. Id.

The California ethics opinion lends some guidance on this matter and suggests that for an unemployed or self-employed individual, a gauge for a reasonable fee may be what the person last earned or what others earn for comparable activity. As the California Committee explained:

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. CA Eth. Op. 1997-149.

The New York ethics opinion provides:

The amount of compensation that is to be considered 'reasonable' will be determined by the market value of the testifying witness. For example, if in the ordinary course of the individual's profession or business, he or she could expect to be paid the equivalent of $150/hour, he or she may be reimbursed at such rate. NY Eth. Op. 668 (1994).

This Committee finds the above guidelines useful. The precise determination of a reasonable fee for a fact witness must be determined on a case-by-case basis by the lawyer, aided by the above guidelines. As stated above, however, the attorney must remain mindful that a fee that is too high will tend to appear as an improper, unethical inducement. See footnote 4, supra. An attorney should also keep in mind that payment of a fee may appear unreasonable if the fee is so high that the witness is "better off" than she would have been if she spent the time otherwise earning an income rather than testifying or preparing to testify.

CONCLUSION

The Committee believes that payment of a reasonable fee to a fact witness for time spent preparing for testimony or being interviewed, whether for deposition or trial, is not prohibited by ER 3.4, as long as the compensation is reasonable and is not based upon the outcome of the litigation. The determination of what constitutes a reasonable fee must be determined on a case-by-case basis, keeping in mind that it is unethical and illegal to offer a benefit to influence the testimony of any witness. If the fee is advanced by the lawyer, the client must remain ultimately responsible for the fee.