May a client pay a retired former employee for fact-witness preparation and testimony in arbitration?

Plain-English summary

A corporate client needed testimony and pre-arbitration help from a retired former employee. The opinion says counsel may advise a consulting agreement covering expenses, preparation, and testimony without violating Rule 4-3.4(b), unless another law prohibits it.

Preparation time can include meetings with counsel and document review or research. Compensation must be reasonable, based on fair market value of the witness’s time, actual lost wages, or another reasonable rate. The office does not decide whether the agreement complies with applicable law.

In practice

For this proposed fact-witness agreement, the opinion permits reasonable compensation for preparation and testimony under the ethics rule while leaving legal validity to other law.

Common questions

Q: May preparation time be paid?

A: Yes. The opinion includes attorney meetings, review, and research as compensable preparation.

Q: How is the rate limited?

A: It must be reasonable and tied to realistic market value, actual lost wages, or another reasonable rate.

Q: Does the opinion decide whether another law permits the payment?

A: No. It expressly leaves that issue outside its scope.

Background and rules framework

Rule 4-3.4(b) governs the proposed witness payment under the ethics analysis. The opinion conditions its answer on the arrangement not being prohibited by law.

Citations and references

Missouri Rules of Professional Conduct:

• Rule 4-3.4(b)

See also

• ABA Formal Op. 96-402: Payments to Occurrence Witnesses

Source

• Landing page: https://mo-legal-ethics.org/informal-opinion/2011-07/

Original opinion text

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

Question: Attorney’s corporate Client is preparing for binding arbitration of several pending matters. The testimony and pre-arbitration assistance of one fact witness, now a retired, former employee of Client with years of involvement in the matters in dispute, will be essential to establishing Client’s case. May Attorney advise Client to enter into a consulting agreement with the witness to reimburse the witness for out-of-pocket expenses and to pay the witness an hourly rate for case preparation and time spent testifying?

Answer: Unless the arrangement is prohibited by law, Attorney would not violate Rule 4–3.4(b) by advising Client to enter into the proposed consulting agreement with the witness. Fact witnesses may be compensated for preparation time, including pre-trial meetings with attorneys and time spent on review and research. The rate of compensation must be reasonable and based on a realistic assessment of the fair market value of the witness’s time or on actual lost wages or some other reasonable rate. Whether the compensation agreement comports with applicable law is a matter outside the scope of this opinion.