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Is Deferred Payment for Court Reporting Ethical for Attorneys in New York?

Deferring Payment is Ethical Based on New York’s Rules of Professional Conduct

In 2021, Steno expanded our services to attorneys practicing in New York. With that expansion, we offered clients access to DelayPay; our signature deferred payment court reporting option. 

As the first court reporting agency to offer deferred payment for court reporting, some attorneys were skeptical about the ethics of this revolutionary approach to litigation financing. 

To address those concerns, we sought the ethics opinion from Clyde & Co. US LLP, a leading global law firm with more than 50 offices and associated offices across six continents.

A person paying for court reporting services online.

The issue Clyde & Co. evaluated is as follows:

Steno Agency, Inc (“Steno”) DelayPay permits law firms to defer payment to Steno for its court reporting and related services at a higher fixed rate than if the firm paid Steno at the time of service. DelayPay can be arranged through the DelayPay: Recourse Services Agreement (the “Service Agreement”). The Service Agreement states that Steno will provide the firm with an invoice when services are requested; the firm will treat the amount due as a “cost”; and Steno will permit the firm to defer payment until the resolution of the case for which services were requested. As the Service Agreement is presently drafted, such resolution occurs once any funds are disbursed to the client, lienholder, or firm. The Recourse Services Agreement also identifies the day the firm ceases representation of its client as a resolution of the case. The firm is required to keep Steno informed of the status of each case for which services have been provided.

Is Deferring Payment for Court Reporting Ethical for Attorneys in New York?

Based on the issue defined above, Clyde & Co. set out to answer whether the fee arrangements set out Steno’s service Agreement create ethical issues for attorneys who wish to enter into the Service Agreement and, if so, how may they best be addressed.

Clyde & Co. prepared the following two-part answer, which found that it is ethical to offer New York attorneys deferred payment for court reporting services.

Steno is not a law firm and does not provide legal services and is therefore not itself subject to regulation by the regulators of the legal profession in any state, including New York. The fee arrangements between Steno and lawyers who seek to use its services and enter into the Service Agreement does raise ethical issues for such lawyers, but those issues can be addressed in ways that avoid any violation of the rules of professional conduct (the “Rules”) that govern those lawyers.

Steno can provide suggested language for use by its New York-based lawyer clients in their communications with their clients which will enable the lawyers to comply with their ethical obligations in connection with using Steno’s services pursuant to the Service Agreement. The requirements for the language may differ in other jurisdictions.

Clyde & Co. found that the fee arrangements in Steno's Service Agreement:

  1. Are permissible to the extent that they are not contingent on the outcome of the cases;
  2. Do not violate the Rule 5.4 against fee sharing with non-lawyers;
  3. Are a permissible advancement of litigation costs under Rule 1.8(e)(1); and
  4. The identified conflicts of interest can be waived if the lawyers utilizing Steno’s services comply with the requirements of Rules 1.8(a) and 1.8(f) and N.Y.S.B.A. Op. 1181 (2020).

If you’re an attorney interested in learning more about DelayPay and deferring your payment for court reporting, shoot me an email.

You can also read more about why we offer deferred payment options for your litigation fees.

Dylan is the Co-Founder, President and Chief Legal Officer at Steno, where he leads the organization's business development efforts. Dylan is also a founding member of Stalwart Law Group, recognized as one of the top 20 litigation boutiques in California. He is a practicing trial lawyer with more than 15 years of experience in intellectual property, professional liability, and commercial litigation.


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